Ram Gopal Sharma vs State of H.P.

Bhawani Singn, J.—These two criminal appeals Cr. Appeal No. 58 of 1984, Ram Gopal Sharma v. the State of Himachal Pradesh and Cr. Appeal No. 62 of 1984. Baldev Raj (Appellant has died) v. State of Himachal Pradesh] arise out of the same judgment of Special Judge, Kangra Division, in Corruption case No. 5 of 1975 whereby the Appellants have been convicted for offences u/s 409 of the Indian Penal Code and Section 5(2) of the Prevention of Corruption Act. Appellant Ram Gopal Sharma (hereinafter referred to as Appellant No. 1) has been sentenced to undergo rigorous imprisonment for a period of five years and to pay a fine of Rs. 20,000/-and in default of the payment of fine, to undergo rigorous imprisonment for a period of two years. u/s 5(2) of the Prevention of Corruption Act, he has been mf sentenced to undergo imprisonment for three years and to a fine of Rs. 10,000/- and in default of the payment of fine, to undergo rigorous imprisonment for a period of one year. Appellant Rattan Dev (hereinafter to be referred as Appellant No. 2) has been sentenced to three years rigorous imprisonment and to a fine of Rs. 5,000/- u/s 409 of the Indian Penal Code and in default of the payment of fine to undergo further rigorous imprisonment for six months. For offence u/s 5(2) of the Prevention of Corruption Act, he has been sentenced to undergo rigorous imprisonment for one year and to a fine of Rs. 5,000/- and in default of the payment of fine, to undergo further rigorous imprisonment for a period of six months. The sentences imposed upon the Appellants have been ordered to run concurrently. The learned Counsel for the parties agrees that these appeals can be disposed of simultaneously by a common judgment. Therefore, they are being taken up together for decision by this judgment.

The facts, in brief, are that Shri O.S. Singh, who was Deputy Superintendent of Police, Anti Corruption Unit, Dha-ramshala, recorded First Information Report(Ex. P.W. 11 /A) on 26-11-1973 at 3 P.M. u/s 409 of the Indian Penal Code read with Section 5(2) of the prevention of Corruption Act. It appears from the body of this document that it has been recorded on the basis of audit report of the accounts of food grains supplied to Pangi area of Chamba district from 1-4-1966 to 31 -3-1970 due to the fact that there was either embezzlement or misappropriation of Government stock of food grains. This is attributed to the gross negligence of responsibility on the part of the District Co-Operative and Supplies Officer, Chamba (Not accused) who was at Killar from 7-9-1969 to 11-9-1969 but did not check the cash with the Inspector, Killar (Appellant Ram Gopal)who was wholly responsible for never checking the stock nor the cash during the year 1969-70. The Clerk, Appellant Rattan Dev, and the Inspector were equally responsible for this lapse as they did not make proper entries in the relevant registers. The report further discloses that the District Co-operative and Supplies Officer, Chamba, and the Appellants at Pangi committed criminal breach of trust as public servants by misappropriating the Government cash under their custody. They were also liable u/s 5(l)(c) of the Prevention of Corruption Act, 1947 for appropriating in a dishonest manner the Government cash in the discharge of their duties as public servants.

From the perusal of the record, it appears that the accounts in question were also audited somewhere during 1970, as appears from Ex. DWS/N. and from this report, the Auditor had worked out the amount to the extent of Rs. 77037.03 on account of the sale proceeds of wheat and rice. It also appears from this document that a deposit of Rs. 9806.55 was made through various Treasury challans and this amount was not set off from the total amount. After deducting this amount from the total, the recoverable amount comes to Rs. 67230.48. Thereafter a sum of Rs. 15875.63 was deposited reducing the total to Rs. 51354.85. It also appears that Appellant No. 1 had informed the office of District Inspector, Civil Supplies, Chamba, that he had given some stocks on credit and recoveries are still to be affected. After verification, it was found by this Auditor that such credits could only be verified to the extent of Rs. 2387.80 and the names of the parties against whom these credits existed also finds mention. These credits appear to have been made under the instructions of the then Block Development Officer. Besides, grains to the extent of 19.00.000 quintals were given to the Forest Firm of Roshan Lal Kuthiala on loan and the same had also been returned to the Naib-Tehsildar. Therefore, adjustment of Rs. 3249/- from the amount aforesaid could be made thereby reducing the amount to Rs. 48105.45. It is also mentioned that the food grains were distributed on the allotment r made by the Food Advisory Committee, Pangi, Panchayat wise and food grains used to be issued by either of the Appellants. As there were no specific orders of the Block Development Officer or the Food Advisory Committee authorizing a particular person to issue or sign the permits, the same were being issued by either of them. It is further mentioned that Appellant No. 1 had asked the office to fix the responsibility of Appellant No. 2 for Rs. 36,000/- on the plea that Appellant No. 2 had issued permits of wheat and rice and neither deposited the amounts in the Treasury nor handed over the same to Appellant No. 1. Such permits issued by Appellant No. 2 were handed over to the office by Appellant No. 1.

The Director, Food and Supplies, Himachal Pradesh, ordered the audit of the food grains and this audit was conducted by shri Gian Singh and submitted the audit report (Ex. P.W. 4/A) on 20-1-1972 and in the penultimate paragraph of the same, he observed that there was either embezzlement or misappropriation of Government stocks worth Rs. ''51565.09, as worked out. This was attributed to the gross negligence of responsibility on the part of the District Co-operative and Supplies Officer who was at Killar from 7-9-1969 to 11-9-1969 but did not check the cash with the first Appellant who was wholly responsible for never checking the stock nor cash during the year 1969-70. The Appellants were equally responsible for this lapse as they did not make proper entries in the relevant registers.

It was found that the shortage for the year 1966-67 was 3.15.180 quintals worth Rs. 332.67 and for 1967-68; the shortage was 5.26.820 quintals of the value of Rs. 787.33. During 1968-69, the shortage was to the extent of 28.95.000 quintals of the value of Rs. 4443.82. Separate case (C.C. No. 6 of 1978) is stated to have been registered qua this amount. The shortage was evidenced on 16-2-1970 when the pending stocks were handed over to the Naib-Tehsildar, Pangi, and the Auditor, it appears, desired the recovery of the amount of Rs. 51565.09 from the Appellants attributing it to them for their negligence for not maintaining proper stocks and cash accounts. Although the District Co-operative and Supplies Officer, Chamba, was also found negligent, however, no case has been registered against him. After the investigation of the case, two charge-sheets were filed in the Court. This case pertains to the shortages for the period 1969-70 and the charge-sheet mentions that the Appellants were entrusted with dominion over the property, namely, wheat and rice etc., valuing at Rs. 460001.27 qua which criminal breach of trust, in furtherance of the common intention of the Appellants, was committed. It is clear that there are variations so far as the amounts arrived at are concerned. First figure is Rs. 48105.85, second figure is Rs. 51565.09 and the third figure is Rs 460001.27 and in case all the year wise figures are summoned up, the total does not tally either with Rs. 48105.85or Rs. 51565.09. The reports of the Auditors differ from each other. They have suggested recoveries on the basis of the dereliction of duty in not maintaining proper accounts. Further, the prosecution is not clear whether it is a case based on the shortage of food grains or it is a case of embezzlement of amounts after sale and recovery of sale price.

The Appellants did not plead guilty to the charge and claimed to be tried. They have tried to cast the responsibility on each other and have made each other responsible for the same. No specific instructions, orders or directions exist as to how and by whom the food grains and cash receipts were handled. Appellant No. 1 has claimed that large numbers of documents, explaining the matter, were not taken into consideration by the auditors at the time of audit. It has also been stated that the Appellants were not associated by the Department while the audit of the accounts was conducted. It has also been explained that the shortage, if any, were of special nature and in special circumstances. Mai practices were committed by the contractors. The go-downs at Killar were Katcha. Moisture and inadequate transport system was also responsible for much of the shortages and to cap it all, the stocks were eaten by rats to an abnormal extent. Appellant No. 1 further states that this additional work was fastened around his neck unwillingly as he used to be away and busy in connections of many other duties. Therefore, it was not possible to undertake this difficult gigantic work at such a highest mountainous and difficult terrain not only of Himachal Pradesh but also of the whole country. Appellant No. 2 claims that the stock register used to be under the lock and key of Appellant No. 1 and the same was never handed over to him. He admits that he was issuing receipts for the part supply and Appellant No. 1 used to issue receipts for the entire loss, as and when he was available, to the contractors. Appellant No. 1 has also led evidence. It is relevant to look to the material part of the statements of the witnesses.

Shri J.R. Mahajan (P.W. 1) states that the carriage of the food grains was done by District Co-operative Federation, Chamba. He was assigned the job of preparing the accounts and he prepared the same with the help of junior editor Shri Dharam Singh. They were prepared with the help of stock register and remittances of Appellant No. 1. Separate accounts of stock used to be maintained in his office for every place. He prepared accounts for 1-4-1969 to 31-3-1970 when the Appellants were posted at Pangi. He states that as per the balance sheet submitted by Appellant No. 1, the stock-in-hand up to 31-3-1970 was 428-13-300 quintals of wheat and 64.63.500 quintals of rice and as Appellant No. 1 had handed over the stock to Naib-Tehsil-dar, Pangi, in accordance with the order of the Deputy Commissioner, actual stock balance had to be obtained from the Naib-Tehsildar, Pangi. It was informed that 7.54.00 quintals of wheat and 39.11.500 quintals of rice were in stock up to March 31. In view of the contradictory position, he states, accounts had to be prepared and the same were done in the register Ex. P.W. 1/A. The relevant statements Ex. P.W. 1/B and Ex. P.W. 1/C were in the hand of Shri Dharam Singh, Junior Auditor, who worked under him, and after preparation of Ex. P.W. 1/B and Ex. P.W. 1/C, information was sent to the Head Office which in turn informed the Accountant General and Deputy Accountant General along with his party had audited the accounts. The statement of this witness is, in fact, of no consequence as in the cross-examination he has stated that everything was done by Shri Dharam Singh, Junior Auditor and he used to sit in a separate room and he did not verify any of the stocks.

Shri Santokh Singh (P.W. 2) is the Assistant Govt. Examiner of questioned Documents. He has examined various documents and his opinion is Ex. P.W. 2/A and his detailed opinion is at P. W. 2/B. As there is no objection as to this part of the matter, a detailed reference to his statement is not necessary.

Shri Gian Chand (P.W 3) took stock from the Appellants on 12-2-1970 and 5-3-1970 and issued receipts Ex. P. W. 3/A and Ex. P.W. 3/B to Appellant No. 1. He admits that the flooring of the god own was katcha and of mud and the grains were stacked on that katcha floor and most of the wheat was insect infected.

Shri Gian Singh (P.W. 4) conducted the inspection of the accounts of food-grains from 14-1966 to 31-3-1970 and submitted his inspection report Ex. P. W. 4/A to the Director, Food and Supplies, Department, Shimla. He states that he gave his report on the basis of whatever necessary records were made available to him by the District Civil and Supplies Officer, Chamba. He admits that there was no Treasury at Pangi during those days and as such money collected by the Inspectors at the spot used to be deposited with the District Civil and Supplies Officer, Chamba, and there used to be book adjustment. He did not refer to such departmental adjustments and could not remember the departments concerned. During the audit, the Appellants usually remained on leave and as and when they came, they were advised to reconcile unofficially by him and they had given him in writing, during his audit, that they would reconcile their accounts and whatever payment was found due to them, the same would be deposited in installments. Ex. D.A. and Ex. D.B. are such letters received by him from the Appellants. They are addressed to the Director, Food and Supplies Department, which were sent by him along with his report to the Director. During the audit, he did not go to Pangi and the audit was conducted at Chamba and he confined his audit to the accounts of the District Civil and Supplies Office, Chamba, and whatever registers were made available to him by the District Civil and Supplies Office pertaining to the distribution of grains, were checked by him but he did not carry out the physical verification of the stocks. For the shortage, the Appellants were required to make out a case justifying the shortage and they were to be referred to the District Civil and Supplies Officer for onward transmission to the Director for taking final decision.

Shri Paras Ram (P.W. 5), a Salesman of Federation of Chamba, states that he used to send food grains to Tarela. He used to weigh the stocks, make entries in the register and thereafter used to send the food grains to 18 carriage contractors to Killar from Tarela. The stock register is Ex. P. 1 and the entries in his hand are at pages 1 to 7 and from pages 16 to 37. He used to issue challenge to every contractor and received receipts from them on the challans. The contractors used to hand over the food grains at Killar to one Naresh Chand Dhawan who was the commission agent of the Federation at that time at Killar. From Killar, the challans were sent direct to the D. C. & S. O. or Federation Office after delivery. The Challan books are Ex. P. 2 to Ex. P. 8 which all are written and signed by him and forms thereof have also been filled by him. The food grains .used to be carried to Killar on sheep, goats and manual labor. The carriage contractors used to distribute the grains in quanta of load which the sheep and goat could be able to carry. He could not say if in that process of distribution any shortage occurred as he used to give food grains to the carriage contractors, for their consumption. Tarela is very damp place. God owns in Tarela were katcha and lot damage was being done by rats. During his stay at Tarela, 1 or half quintal of food grains may have been damaged by the rats, etc.

Shri Bodh Raj (P.W. 6) had taken the carriage contract of food grains from Tarela to Killar from the Federation. He was also Commission agent-at Tarela. At Tarela, the food grains used to be delivered to the Appellants by him. He use& to issue challans of the food grains to be carried to Killar and Appellant No. 1 used to sign in token of receipt and used to return the same. In the absence of Appellant No. 1. Appellant No. 2. Used to receive food grains at Killar. In that case, Appellant No. 2 used to sign the challans in token of receipt.

Food grains which were taken on the sheep and goats, used to take 9 days for coming and going to Killar. The laborers who would carry the loads on their backs took about six days and go and return from Killar. Wheat from Chamba was carried by trucks up to Tissa and from Tissa up to Tarela; it was carried by mules and from Tarela to Killar, by sheep, goats and laborers. Wheat used to reach at Tissa in bags, where it was split up for mule loads and at Tarela it was further split for sheep and goats loads. Very often, this splitting caused shortage. From Tarela to Killar, there was loss of food grains in transit. At Tarela, if the food grains remained in stock for a long time, then the likelihood of the same rotting and destruction by rats could not be ruled out. During his time, some shortages had occurred in wheat but while handing over the charge, he had to make out the differences. The god own at Pangi was of Katcha floor and was underground. He could not say if shortage had occurred at Pangi but at Tarela it was possible.

Shri Dharam Chand (P.W 7), a Junior Auditor, carried out the audit from 1967 to 1970 and he had issued a notice to Appellant No. 1 that an amount of Is. 77037.03 was due from him and the Appellant replied that the food grains had been supplied on credit and the price thereof was still to be recovered and the accounts had to be reconciled by him. Later on, on checking at Killar, Rs. 9806.55 was found to have been adjusted leaving a balance of Rs. 67230.48. He also found that the Block Development Officer, Pangi, had taken food grains worth Rs. 2387.80 on credit from the Appellants and this amount was deductible. He further states that his audit is based on the record maintained in the office of D.C. and S.O., Chamba, and treasury transactions pertaining to the food grains were also taken into account during the audit. The departments which had their branches at Pangi, used to deposit money with them at Chamba and then the D.C. and S.O. used to issue directions to the Appellants to give equivalent amounts to the Branches of the concerned departments at Pangi. The shortage found at the god owns was permissible up to certain limits and beyond that limit it was recovered from the Appellants, in charge of the god own. In his audit, he did not give any shortage allowance to the Appellants and he did not know what practice was prevalent for the supply of food grains by the Federation to Killar. It was not within his knowledge that the Federation had been giving duplicate bills for one and the same amount for transit charges to the department. He did not verify from any Panchayat regarding the food grains supplied by the Appellants on credit during his visit to Killar and he did not know if the Appellants submitted any report to the Department about the quantity of the insect infected food grains and when he visited Killar, it used to take four to five days to reach their from Tarela. He admits that he based his report merely on receipts and not on physical verification. He did not verify the quantity of food-grains supplied from Chamba which reached at Killar.

Shri Ravinder Chand (P.W. 9) admits that the food grains supplied used to weigh but he could not say the quantity of shortage in one quintal of the foodgrains.

Shri O.P. Sudal (P.W. 10) states that in February, 1970, a message was received from the Tehsildar, Pangi, that the Appellants had not been making the correct distribution of the wheat on which he had ordered the Appellants to hand over the charge of the food grains and the cash to Tehsildar, Pangi. He deputed Inspector Inder Mohan and Dharam Singh, Auditor, to check the accounts and the report was received by him on which he had moved the higher authorities for necessary action. The authorities at Shimla had sent Senior Auditor Shri Jaswal to audit the accounts who submitted his report to the Department. According to the Civil Supply manual, god own shortage was permissible to the extent of 0.35 paise per quintal.

Shri Rattan Chand (P.W. 13) admits that Appellant No. 1 had recorded at page 49 of Ex-P. 10 that the wheat was infected with insects and his note is Ex. P. A. B.

Shri Madan Lai (P.W. 18) admits that in carrying wheat from Chamba to Killar, there used to be shortages in transmission. The wheat used to be taken by trucks up to Tissa where it used to be divided in bags for Carriage up to Tarela and there further divided in small bags for carriage by goats and sheep.

Shri B.D. Thapar, (P.W. 19) has given sanction Ex.P.W. 17/A and Ex. P.W 17/B to prosecute the Appellants. He states that he gave sanction after perusing the materials placed before him. The record was placed before him by the office but he could not remember the date when it was seen by him. There were large number of documents which were placed before him and on the basis of the same he recorded the sanction for the prosecution of the Appellants and he did not remember whether the documents were in Hindi or in English.

Shri R.K. Mahajan(p.W. 1) states that he remained posted as Block Development Officer, Pangi, from 1965 to 1969. There used to be a food committee consisting of the B.D.O., one non-official member and the Inspector Co-operative Societies. The policy of distribution of food grains used to be decided by this committee. Appellant No. 1 used to have different type of duties which included touring. In the absence of Appellant No. 1, Appellant No. 2, used to perform the work of distribution of wheat. Appellant No. 1 was also required to remain at the District Headquarters for the preparation of annual returns. He had himself seen the storage god owns at Pangi. They were katcha. Wheat used to be damaged by rats only. During those days, wheat used to be sent from Chamba via Tissa, Tarela, Such pass. It used to be carried on sheep and goats from the height of14500 feet and would get moistened. About 7/8 kilometers of the distance used to remain under snow throughout the year. The Food Committee only used to decide the quantum of wheat to be supplied to each individual depending upon the supply received. The wheat used to be received by the Appellants and they used to maintain the accounts and used to receive the cash. He denies the suggestion that no wastage of wheat by rats was there.

Shri Roshan Lal (P.W. 3) states that in the absence of the Appellants, he used to receive the wheat. Wheat used to become wet on account of being carried on goats and sheep. Appellant No. 1 used to tour to conduct inspection of the societies. He used to visit the District Headquarters in July and August for the preparation of annual returns. On transfer, he had handed over the charge to Appellant No. 1. The god own Pangi had mud flooring.

Entries of this supply of food grains from Chamba have been shown through Ex. P-BB/3 and Ex.P-BB/4. However, according to Tula Ram (P. W. 15), in 1969-70, wheat weighing 532.72.500 quintals and rice 1982. 3.900 quintals was dispatched. In fact, no proper details have been made in the register and the calculations of the amounts appear to be apparently incorrect. Same is the case with respect to the receiving and where the Appellants failed to make any entry in the receipt register of food grains Ex.P-10 for the period 1969-70 except an entry at page 50 showing entry of different quantities of wheat on 10-6-1969 and it is mentioned that the wheat received was 34.86.000. However, as per document Ex. PJ/35, which Is signed by Appellant No. 1 and bears date 28-9-1970, wheat weighing 665.29.000 quintals and rice 183.46.500 quintals were received during 1969-70. Documents in the form of receipts Ex. PJ/1 to Ex. PJ/34 (except Ex. PJ/8, which is receipt of the cost of 10.66.000 quintals of wheat, are on the record. They have been signed by either of the Appellants, and they have been admitted by the Appellants. It appears that the Appellants had issued receipts indicating receipt of more food grains then supplied from Chamba. Either of the two records is incorrect. However, it appears, in view of the inference being drawn in the subsequent part of this judgment, the receipts issued by the Appellants do not indicate the exact quantity of the food grains actually received by them. This leaves no doubt as to how much quantity of food grains was entrusted to the Appellants for distribution and the prosecution itself is neither clear as to this aspect nor as to the actual sale amount involved in this transaction, as already indicated above. Before examining the matter further, it is fruitful to know and understand the provisions of Section 409 of the Indian Penal Code and Section 5 of the Prevention of Corruption Act which are reproduced below:

Criminal breach of trust by public servant, or by banker, merchant or agent. Whoever, being in any manner entrusted with property, or with any dominion over property in his capacity of a public servant or in the way of his business as a banker, merchant, factor, broker, attorney or agent, commits criminal breach of trust in respect of that property, shall be punished with imprisonment for life, or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine".

"5. (1). A public servant is said to commit the offence of criminal conduct.

xx xx xx xx (c) if he dishonestly or fraudulently misappropriates or otherwise converts for his own use any property entrusted to him or under his control as a public servant or allows any other person so to do, or

XX XX XX XX XX XX XX XX

For an offence u/s 409 of the Indian Penal Code, the first essential ingredient to be proved is that the property was entrusted. Section 405 of the Indian Penal Code defines "Criminal Breach of Trust" by a person being in any manner entrusted with property. Before a person can be convicted u/s 409 of the Indian Penal Code, dishonest or criminal intention is to be proved See: Jagroop Singh Vs. State of Punjab, Dishonesty, of course, may be inferred from the surrounding circumstances in case direct evidence of the same is not forthcoming although it is not necessary for the prosecution to prove the manner of misappropriation of the property entrusted to the accused but the allegation has to be exact as to whether it is misappropriation of the property or of the sale proceeds. In Allahabad Bank Ltd. Vs. Commissioner of Income Tax, West Bengal, their Lordships of the Supreme Court observed that the prosecution has to establish first of all that the accused was entrusted with some property and it has to be established further that in respect of that property so entrusted, there was dishonest misappropriation or dishonest conversion or dishonest disposal of the property in violation of law or a legal contract. To establish a charge of criminal breach of trust, it is not the duty of the prosecution to prove the precise mode of conversion or misappropriation of the money entrusted to the accused. Where the accused is unable to account for the same or render explanation to account for the same, dishonest intention may really be made (See Krishan Kumar Vs. The Union of India, and Jaikrishnadas Manohardas Desai and Another Vs. The State of Bombay,

It is quite profitable and instructive to quote para-2 of Sardar Singh Vs. State of Haryana, Which is as under:

The only question which arrases for consideration in this appeal is whether the Appellant could be said to have committed criminal breach of trust in respect of the receipt-book. There can be no doubt and that is amply proved by the oral evidence on record read with the list Ex-PA, that the receipt-book was entrusted to the Appellant in his capacity as Patwari on 6th November, 1967 when he took charge of his post. It must equally be taken to be established that the receipt-book was not in the room of the Appellant when the lock was broken open and charge was forcibly taken from him on 29th December, 1967: vide Exs. PF and PG. The receipt book was thus not returned by the Appellant though he was bound to do so at the time of handing over of charge to his successor. But from this it does not necessarily follow that the Appellant committed criminal breach of trust in respect of the receipt-book. Section 409 can be invoked only if it can be shown that the accused being in any manner entrusted with property or with dominion over property in his capacity as public servant committed criminal breach of trust in respect of that property. The offence of criminal breach is defined in Section 405 and an essential ingredient of this offence is that the accused being in any manner entrusted with property or with dominion over property, dishonestly misappropriates or converts to his own use that property or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged or of any legal contract, express or implied, which he has made touching the discharge of such trust. Here, as we have already pointed out, the Appellant was admittedly entrusted with the receipt-book or in any event with dominion over it, but there is no evidence to establish that the dishonestly misappropriated the receipt book or converted it to his own use or dishonestly used or disposed of the receipt-book. It is quite possible that the Appellant might have lost or misread the receipt-book and hence he might have been unable to return it to the superior authorities. What the section requires is something much more than mere failure or omission to return the receipt-book. The prosecution has to go further and show that the Appellant dishonestly misappropriated or converted the receipt book to his own use or dishonestly used or disposed of it. That, we are afraid, the prosecution has not been able to do in the present case. We are, therefore, of the view that the Appellant was wrongly convicted u/s 409.

Equally important are the observations of Madhya Pradesh High Court in The State of Madhya Pradesh Vs. Hari Mohan and Others, . Para 7 and 14 are relevant:

In Jaikrishnadas Manohardas Desai and Another Vs. The State of Bombay, their Lordships laid down guidelines for proof of charge u/s 409 of the Indian Penal Code in paragraph 4 in the following terms:

"The principal ingredient of the offence being dishonest misappropriation or conversion which may not ordinarily be a matter of direct proof, entrustment of property and failure in breach of an obligation to account for the property entrusted, if proved, may, in the light of other circumstances, justifiably lead to an inference to dishonest misappropriation or conversion. Conviction of a person for the offence of criminal breach of trust may not, in all cases, be founded merely on his failure to account for the property entrusted to him, or over which he has dominion, even when a duty to account is imposed upon him, but where he is unable to account or renders an explanation for his failure to account which is untrue an inference of misappropriation with dishonest intent may readily be made."

It is clear from the aforesaid observations of their Lordships that though the entrustment of property and failure in breach of an obligation to account for the property entrusted are important elements for establishing the charge of dishonest misappropriation, they are not by themselves sufficient and must be considered in the light of the facts and circumstances of the case to find out whether an inference of dishonest misappropriation can be safely drawn".

Thus, after a careful consideration of the entire evidence or record, we find no material for an inference that the six mercury flasks, which were found short on the basis of the record, were dishonestly misappropriated by the accused. There is a reasonable possibility of the same being- used in the mills arid the shortage being due to lapse on the part of the officers concerned in either securing proper requisition-slips or making necessary entries in the Bin Card and the log-book. The acquittal of the accused was, therefore, perfectly proper and there is no justification for inter faience with it.

In Para 10 of L. Dhanya Naik Vs. State, the Court said:

It has to be ascertained then as to whether the Appellant could be indicted for these offences. In order to bring home the charge of criminal breach of trust by a public servant, there have to be an entrustment, thereafter misappropriation or conversion to one''s own use or use in violation of any legal direction or of any legal contract and finally the misappropriation or conversion or disposal must be with a dishonest intention. In order to be dishonest the property must be misappropriated or converted with the intention of causing wrongful gain to one person or wrongful loss to Anr. , that is with the intention to cause gain by unlawful means of property to which the person gaining it is not legally entitled or the loss by unlawful means of property to which the person losing it is legally entitled. As such, every offence of criminal breach of trust though it involves a civil wrong in respect of which the complainant may seek his redress for damages in a civil court yet, every breach of trust in the absence of means read or criminal intention cannot legally justify a criminal prosecution. In short, in intention is the gist of the offence. In the present case, what has been proved against the Appellant? He did not keep the custody of the cheek book. He did not see the payment order. He did not call for the counterfoil when the cheque was presented before him. He did not total up each and individual entry of the cash book or pass book do as to know if a wrong total was given. Besides these nothing can be imputed against him. All this conduct no doubt points out to a certain negligence of his part in performing his official duties. For that negligence he can be preceded for damages in a Civil Court or even departmentally for dereliction of duty. There is no evidence that the Appellant himself misappropriated the amount or enabled Ors. to misappropriate the same. There is no circumstance to infer that he was governed by any criminal intention so that he can be stated to have acted dishonestly while signing these cheques. As such, the finding of the learned Sessions judge that "the Appellant signed the claques knowing full well that the counterfoil cheque was quite different from the cheque which had to be presented at the treasury and it contained an inflated figure than mentioned in the counterfoil cheque" cannot be borne out from the record. Nobody has come to state that both the counterfoils as well as the cheque were presented before the Appellant at one the same time so that he could detect the difference in the two figures. These acts of commission committed by the Appellant, in my opinion, do not convey an impression that any dishonest intention was harbored by him or that he acted dishonestly. In short, he cannot be stated to have committed the offence of criminal breach of trust. Similar will be the position for the offence of forgery or of falsification of account. In fact, the Appellant never prepared the claque nor did he write down the cash book or the pass book. He never shared the criminal intention with Seshaehar and it was the ''latter who prepared all these incriminating documents. The criminal intention was again a necessary ingredient for the offence of forgery u/s 463 of the Indian Penal Code. Similarly,, dishonesty was a necessary ingredient for the offence of making a false document as mentioned in Section 464, Indian Penal Code. No such criminal intention can be inferred against the Appellant. Therefore, in my opinion, he did not commit the offences of forgery, falsification of account or of criminal breach of trust.

Where a person withholds property on account of babied dispute, these are no dishonesty and consequentially no offence. Mere retention or non-rendering of accounts does not necessarily raise a presumption of dishonest misappropriation. In order to assess bonfires of the accused, his explanation may also be examined to eliminate his dishonesty. Deficit need not be the proof of misappropriation and a criminal liability u/s 409 of the Indian Penal Code cannot be fastened on the Appellants for being negligent which may be a good ground for civil liability but is not sufficient to establish a criminal charge. The Appellants may have acted foolishly in not maintaining proper accounts of receipt and supply of food grains and receipt and deposit of sale price but that itself in is not enough to infer and establish a case u/s 409 of the Indian Penal Code. The act, on their part may be due to carelessness or due to lack of proper perception as 10 the manner and process of handling the entrustment but it is not an evidence of misappropriation. Mere breach of proper execution of duty is not necessarily equal to criminal breach of trust there is only a civil liability. Sometimes, breach of duty may be intentional but without being dishonest. It may appear to be dishonest without being really so. In view of such facts, the court should be slow to move. This caution is necessary since there is usually a natural desire to punish the defaulters speedily by having recourse to criminal law.

Two things are essential to constitute the offence. In the first place, there must be a trust and in the second place dishonesty. Where there is one and not the other, it may be a case of civil breach of trust but not one imposing criminal hillbillies. The Appellants have come forward with the plea which relates to the statement of accounts and the prosecution has not proved any evidence of dishonest misappropriation, he accused cannot be convicted on the basis of presumption. Section 5 of the Prevention of Corruption Act requires evidence of fraudulent intention in addition to dishonesty on the part of the accused.

Examination of the matter, as aforesaid, it can be seen that the job of receipt and distribution of the food grains pertains to a place which is at a height of more than 14,500 feet and which remains snow-bound for most of the year. It lacks all amenities of life. Living and serving, especially by an outsider Government servant, is utmost difficult. Only a few are compelled to go and serve at such a place by the Government with an assurance that the next place of their posting would be of their choice. The Appellants are otherwise routine officials of the cooperative department. This work has been entrusted to them in addition to their own duties. It appears to be a huge task and only two officials, the Appellants, appear to have been made responsible for the same. Was it possible? Certainly not There is the work of department; here is the work of receiving, accounting, distributing realizing sales and crediting the same into the Government accounts. It is not understood how these two Appellants only, serving in the lower rung of the department, have been made to face this adventure without relieving them even from their departmental duties. In such a situation it can be easily and reasonably inferred that it was not possible for them to cope with the work and the result was that they failed to notice even the exact quantity that had been coming to the place. They also failed to keep proper account for the same. It is in evidence that the food grains were supplied on permit, on loan and on credit basis. There is also enough indication pointing out that credits have not been fully realized although attempts were made in that direction. Before some significant achievements in this direction could be made, inquiries, audits and inspections were undertaken and the Appellants, instead of looking to the realization of credits, thought of defending themselves. Records, from which they could see the credits, appeared to have been taken away by the auditors.

The audit reports are not clear at all. They vary from each other thereby throwing complete doubt as to the exact extent of the food grains entrusted. Secondly, auditors have only al attributed negligence and not criminal negligence. The auditors! Neither took into consideration all the records relating to these transactions nor associated the Appellants in the audit which should have been done. They could have explained the'' matter in a better way.

The trial court has drawn wrong inferences regarding Ex. DA and Ex. DB. In fact, they proved the bonafides of the Appellants and eliminated dishonesty on their part. Further, they evidence that the food grains had been given on credit and realization of sale proceeds was being undertaken from the customers and then deposited. It further discloses that the matter relates to reconciling of the accounts with various parties, this eliminates the act of misappropriation on their part. These documents further evidence that the Appellants have gone even to the extent of depositing the deficiency from their salary. The bonfire on the part of Appellant No. 1 is further clear from large number of documents, such as, Ex. DW1/A, Ex. DW5/B, Ex. DW5/D Ex. DW5/E, Ex. DW5/F, Ex. DW5/GrEx. DW5/H, Ex. DW5/K, Ex. DW5/P, Ex. DW5/Q, Ex. DW5/R etc.

It is also in evidence that both the Appellants had been handling the food grains. The system of transport, as is clear from the evidence, was quite difficult. The food grains had changed many hands before it reached the destination. Initially it was carried by truck, then by mules and finally by sheep, goats and laborers. Grains were divided on number of Occasions. Finally, look at the god owns. They were thoroughly unsatisfactory. There are vagaries of nature. There are insects and rats, all depending on the grains. In these circumstances, shortages are obvious but the extent of the same has not been proved. In such a situation, it is very difficult to say the exact extent of shortages. It is also difficult to say whether the misappropriation is of food grains or of sale price. More so, in the absence of any complaint of the Appellants selling it in contravention of any requirement, which may be there for the purpose.

Applying the aforesaid principles, decidedly it appears to be case a of handling of a work by the Appellants which was beyond their capacity and there is complete want of dishonesty and fraud on their part and the learned Special Judge has erroneously drew (sic drawn) wrong conclusions in the face of facts and documents to the contrary for getting that in cases where courts can draw inferences, the same have mainly to be drawn in favour of the accused.

The Appellants have been facing the matter since 1971. It is stated that the services of the Appellants were terminated in a parallel departmental inquiry. Shri M.L. Sharma and Shri D.D. Sood, learned Counsel for the Appellants, state that the services of the Appellants were terminated by the department and'' between this period not only Appellant No. 2 died in September, 1988 but also his wife died in June, 1979 leaving minor Praneet Kumar (12) alone in the family and the present appeal is being contested by his brother Shri Baldev Raj u/s 394 of the Code of Criminal Procedure on account of punishment of fine. Appellant No. 1 is also stated to be in a bad state of health. I say nothing except that enough is enough.

The result of the aforesaid examination of this matter is that the prosecution has miserably failed not only in proving the exact nature of the offence committed by the Appellants but also failed to prove the same. There is therefore, merit in these appeals and the same are accordingly allowed. The conviction of the Appellants is set aside. They are acquitted of the charge. Bail bonds and Surety bonds, if any, executed by them in this case are hereby discharged.