Ram Krishna Murarka v. Kali Prasad Kataruka — 1973 DIGILAW 24 (PAT)

JUDGMENT Narain, J. This is an application by Ram Krishna Murarka for quashing the cognizance taken against him for offences under sections 409, 477A, 485 and 120 B, Indian Penal Code. 2. The circumstances in which cognizance has been taken will appear from the following. On the 27th of August, 1960 petitioner Ram Krishna Murarka and his father Ghanshyam Das Murarka entered into a partnership business with Kali Prasad Kataruka and his father Gangadhar Kataruka under the name and style of United Construction Corporation with its head office at Ranchi. The prosecution case is that Kali Prasad and his father invested Rs. 80,000/- in the business where as the petitioner invested Rs. 10,000/- and all the books of partnership remained with Gangadhar Kataruka, Gangadhar died on the 22nd of July, 1963. There was a power of attorney in favour of the petitioner for doing all acts necessary for the execution of the business It has been alleged that after the death of Gangadhar the petitioner and his father, without the knowledge or consent of Kali Prasad, took away all the books and papers except the cash book which Kali Prasad had kept with him under lock and key Kali Prasad asked them to give him an account of receipts and expenditure of the partnership business but this was evaded and it aroused suspicion in the mind of Kali Prasad. The petitioner is said to have withdrawn money from the Bank of his own signature and that .of Kali Prasad's mother, who after the death of her husband, is said to have been made a partner of the business. The lady's signature is said to have been obtained making false representation to her as she was devoid of judgment. Gradually Kali Prasad discovered a number of frauds, forgeries and embezzlements on the part of the petitioner and his father. They are said to be of the following kinds :- (a) The firm had a number of contracts at different places and the petitioner and his father received over Rs. 10,00,000/- as a result of execution or part execution of these contracts. Out of this amount half was payable to Kali Prasad and his mother but they were not paid. (b) The petitioner and others made a number of fraudulent entries in the books of accounts. 10,00,000/- as a result of execution or part execution of these contracts. Out of this amount half was payable to Kali Prasad and his mother but they were not paid. (b) The petitioner and others made a number of fraudulent entries in the books of accounts. (c) After the death of the father the mother of Kali Prasad was made a partner of the firm but no fresh power of attorney was taken from her. The petitioner and his father floated two fraudulent partnerships and one of them was United Sanitation and Construction Corporation and the other was United Drug House. (d) The firm owned car No. BRN-9435 but this was transferred to the new partnership business. (e) It was also stated that out of the embezzled money the petitioner and his father acquired properties at Namkun and Peace Road at Ranchi. On these allegations a complaint petition was filed by Kali Prasad on 11.8.1969 before the Sub-divisional Magistrate, Ranchi, making the petitioner, his father and his mother as accused. There was an enquiry under section 202 of the Code of Criminal Procedure and, as already stated above, the learned Sub-divisional Magistrate took cognizance of the case against the petitioner only for the offences set out above. 3. On behalf of the petitioner Ram Krishna Murarka, Mr. Nageshwar Prasad has argued that even on the facts as disclosed in the complaint petition, it is utmost a case of civil liability and that a criminal proceeding for the offences as set out above will amount to an abuse of the process of law. It is common ground that it was a case of partnership firm. That being so a question arises whether a partner can be proceeded against for offences, say, of criminal breach of trust. In order that an offence may amount to criminal breach of trust as defined by section 405, Indian Penal Code, there must be entrustment with property or with any dominion over property. The point for consideration is whether on the facts of the case the petitioner can be legitimately said to be entrusted with property or with any dominion over property. The point for consideration is whether on the facts of the case the petitioner can be legitimately said to be entrusted with property or with any dominion over property. The concept of partnership firm is that each partner is the owner of the entire property and in order that a partner is to be charged under section 405, Penal Code, it must be shown that the property belonging to somebody else was entrusted to him. It cannot be said that a partner has been entrusted with his own share in the property. Can it be said that he had been entrusted with other partner's share? This also cannot be answered in the affirmative since partners have no definite share until the accounts have been taken and the debts discharged and the assets divided according to the partnership agreement. In this view of the matter, entrustment with property cannot be held in favour of the prosecution. The above view of mine finds support from a Full Bench decision of the Calcutta High Court in the case of Bhuban Mohan Das V. Surendra Mohall Das A.I.R. 1951 Cal. 69. 4. The next question for consideration is whether it was a case of entrustment with any dominion over property. The answer to this question must also be in the negative. Their Lordships of the Supreme Court in Velji Raghavji Patel. V. The State if Maharashtra A.I.R. 1965 S.C, 1433 have laid down that- “...........In order to establish 'entrustment or dominion' over property to an accused person the mere existence of that person's dominion over property is not enough. It must be further shown that his dominion was the result of entrustment. Therefore, as rightly pointed out by Harris, C.J. the prosecution must establish that dominion over the assets or a particular asset of the partnership was, by a special agreement between the parties entrusted to the accused person.” Manifestly, no special agreement between the parties is pleaded. Reliance, however, is placed upon the existence of a power of attorney in favour of the petitioner. I do not think that the power of attorney can be equated to the kind of special agreement that has been referred to in the aforesaid decision reported in A.I.R. 1965 Supreme court 1433. A.I.R. 1965 S.C. 1433. 5. Reliance, however, is placed upon the existence of a power of attorney in favour of the petitioner. I do not think that the power of attorney can be equated to the kind of special agreement that has been referred to in the aforesaid decision reported in A.I.R. 1965 Supreme court 1433. A.I.R. 1965 S.C. 1433. 5. For the above reasons, I agree with the learned counsel for the petitioner that it is not a case of criminal breach of trust and as such, the facts alleged do not constitute an offence under section 409 Indian Penal Code. 6. In order to show that the cognizance taken for the offence under section 465, Penal Code, is valid, Mr. Prem Shanker Sahay on behalf of the opposite party, referred to the first four items of the schedule which has been appended to the complaint petition and on its basis argued that it was a clear case of forgery on the part of the petitioner. Those items are as follows :- Account written by Sri R. K. Murarka Drawn independently from the Bank :- 1. Payment to petitioner (no details) dated 8.6.63. Rs. 6,670.00 2. Jain Brothers (A/C untraceable) Rs. 31,953.00 3. Banwari Lal & Co. 18.6.63. do Rs. 12,473.00 After the death of Sri Gangadhar Kataruka on 22.7.63. 4. Jain Brothers Calcutta dt. 7.9.63. No S/C Rs. 12,000.00 It will be noticed that against item 1 it is stated that no details are available and that account is not traceable in respect of the item nos. 2, 3 and 4. The argument is that nonexistence of accounts and non-mention of details clearly point to forgery that has been committed by the petitioner in the books of accounts. It is difficult to accept this argument inasmuch as the petition of complaint itself states that there was a power of attorney in favour of the petitioner for doing all acts necessary for execution of the business and that it is not the contention that he had no authority to write the books of account. Therefore, whatever the petitioner wrote, it is argued on his behalf, he did in his capacity as a partner and in-charge of the business. Non-mention of details and non-availability of accounts are, in fact, more a matter of accounting between the partners and do hot partake the character of forgery. Therefore, whatever the petitioner wrote, it is argued on his behalf, he did in his capacity as a partner and in-charge of the business. Non-mention of details and non-availability of accounts are, in fact, more a matter of accounting between the partners and do hot partake the character of forgery. Floating of two companies, transfer of the car in the name of the new partnership business which the petitioner is said to have floated-facts which are relied upon to indicate the case of forgery, in my opinion, do not do so. Even if the petitioner floated two companies and transferred the car in the name of his new company, I do not see how they, by themselves, constitute an offence of forgery contemplated by section 465 of the Penal Code. 7. For offence under section 477 A, Indian Penal Code, learned counsel for the opposite party referred to paragraph 7 of the complaint petition where allegation has been made of the fact that the petitioner took away all the books and papers except the cash book. He, in this connection, also referred to the three items of entries referred to above in the account books wherein no details of payment were given and account of which was untraceable. In order to attract provisions of section 477 A, accused must be a clerk, officer or servant or employed or acting in the capacity of a clerk, officer or servant. In order to show that a partner of a firm can also be a servant of the firm, reliance is placed upon the case of Emperor V. Lalloo Ghella 1904 (1) Cr. Law Journal Reports 757 It has been held there that "under section 477-A, whether a person is a partner or not in a firm if he fills the capacity of its clerk or servant, he comes within its provisions. Here, if the accused was a partner and if as such partner, he was appointed to manage the business of the firm or to write its accounts he acted as its servant and therefore if he falsified accounts he would be liable under that section”. In the present case, there is nothing to show that the petitioner was appointed to manage the business of the firm or to write its accounts as a servant of the firm. In the present case, there is nothing to show that the petitioner was appointed to manage the business of the firm or to write its accounts as a servant of the firm. No. doubt, there was a power of attorney in his favour but this fact cannot clothe the petitioner with the capacity of a clerk, officer or servant Power of attorney means a formal instrument by which one person authorises another to perform certain acts for him. This, in my opinion, without any other materials on record, cannot come to the aid of the prosecution to indicate that the petitioner was a clerk, officer or servant or he was employed or acted in the aforesaid capacity. Then again, the account which is said to have been falsified namely, items 1 to 4 of the schedule set out above, do not, as they arc, indicate falsification of accounts. The matter comes squarely within the purview of accounting which can be appropriately dealt with in a civil proceeding between the parties. 8. Nothing in particular need be said in respect of the cognizance for offence under section 120 B of the Indian Penal Code, since for the offence of criminal conspiracy there must be two or more persons who agree to do or cause to be done an illegal act or an act which is not illegal by illegal means. In the present case, allegation was made against three persons but on an enquiry under section 202 of the Code of Criminal Procedure and looking into materials on record, cognizance has been taken only against the petitioner. Therefore, clearly, cognizance for offence under section 120 B of the Indian Penal Code cannot be allowed to stand. 9. For the opposite party it was argued that this court should not exercise its extraordinary jurisdiction under section 561 A of the Code of Criminal Procedure to quash the cognizance taken. In support of this contention, reference was made to Shriniwas Mohanka V. The State of Bihar 1968 P.L.J.R. 497. In this case it was laid down that if a prima facie case is made out and the points raised before the High court can be raised before the trial court, the High court will not exercise its extraordinary jurisdiction under section 561 A of the Code of Criminal Procedure. In this case it was laid down that if a prima facie case is made out and the points raised before the High court can be raised before the trial court, the High court will not exercise its extraordinary jurisdiction under section 561 A of the Code of Criminal Procedure. The point, however, is whether a prima facie case has been made out or not. Regard being had to the recitals made in the petition of complaint and the law on the point the contention of the opposite party that a prima facie case in respect of the different offences has been made out, cannot be sustained. It has been held in R. P. Kapur V State of Punjab A.I.R. 1960 SC. 866 that where the allegations in the First Information Report or the complaint, even if they are taken at their face value and accepted in their entirety, do not constitute the offence alleged, the inherent jurisdiction to quash proceedings can and should be exercised. Regard being had to the view that I have taken of the matter, I am of opinion that the allegations in the complaint taken at their face value, do not constitute the offences alleged and as such the cognizance taken must be quashed. 10. In the result, the application is allowed. Application allowed.