Laxmi Nr. Sah v. State of Bihar — 1983 DIGILAW 180 (PAT)

Judgment Surendra Narain Jha, J. In this application, the petitioner prays for quashing the order of cognizance dated 1.5.80 passed in G.R. No. 831 of 1979/T.R. No. 1638 of 1981 by the Chief Judicial Magistrate, Madhubani and also the entire criminal proceeding. 2. The facts are these the petitioner was and is the proprictor of Om Flour Miles situated in the town of Jainagar. He entered into a contract with the Bihar State Food and Civil Supply Corporation Patna (here in after the corporation) in 1974 as agent for dehusking paddy to be collected from different godowns of the Corporation situate in different Blocks of the district. The Corporation headed by a Managing Director has its district offices at district level (hereinafter referred to as 'the district office' managed by a District Manager. The Corporation has its one such district office at Madhubani. There was an agreement between the petitioner and the Corporation. Under the terms of the agreement, the petitioner had to deposit security and also to furnish an indemnity bond. According to the terms of the agreement, the petitioner agreed and bound himself for the milling of the procured paddy according to the directions of the District Manager. Clause 4 of the agreement also indicates that the petitioner, as agent shall maintain arrangements at different Blocks/Market to receive food grains on behalf of the corporation. Under clause 17 of the agreement, the Miller will present a bill for supplies and service in the prescribed form duly supported by such certificates of weight, quantity, rebate in price and other documents as may be prescribed from time to time by the corporation. It is stipulated in the agreement that the corporation will arrange to make payment within seven days (Working) from the date the bill is received in the office to the miller of the amount due to him by crossed cheque or demand draft on the nearest branch of the State Bank of India or its subsidiaries. A copy of the agreement was produced at the time of hearing of this application. It is stated that under the terms of the said agreement, the petitioner commenced the work of dehusking paddy after collecting from different godowns as per directions of the District Manager. A copy of the agreement was produced at the time of hearing of this application. It is stated that under the terms of the said agreement, the petitioner commenced the work of dehusking paddy after collecting from different godowns as per directions of the District Manager. The petitioner under the terms of the agreement had to deliver dehusked paddy at the rate of 62 5 quintals for every 100 quintals of fair average quality and the delivery of the same was to be done at the Mill Gate. It is not disputed that the petitioner began his work and he used to receive quite good amount of paddy from time to time and the same was delivered to the corporation through its officer of the district office in shape of rice in accordance with the specified rate and there was no complaint against the petitioner. It is stated in the petition that the petitioner submitted his bills from time to time. But he did not receive any substantial payment and the amount due to him by then swelled up to above Rs.54,000/- and odd. In the meantime, the petitioner again received a consignment of paddy, but as the paddy was not of good and average quality but it was rotten therefore the petitioner immediately informed and made a complaint to the District Manager about the quality of the paddy but the District Manager turned deafears to the complaint of the petitioner. The petitioner still delivered back the rice as per specification and refused to take up any fresh work till his dues were paid up on this act of the petitioner, the District Manager got displeased. The District Manager despite the reminders and requests made on behalf of the petitioner, did not make any arrangement either for settling up the accounts or for making payment to the petitioner and the matter was dragged on. It is also stated in the petition that in view of the repeated demands made by the petitioner, the District Manager got so much annoyed that he managed to institute a proceeding against the petitioner under the Maintenance of Internal Security Act and got a notice served on the petitioner to show cause as to why he should not be prosecuted under the Maintenance of Internal Security Act. A copy of the said notice has also been annexed with the application marked as Annexure-1. A copy of the said notice has also been annexed with the application marked as Annexure-1. The petitioner in pursuance of the notice filed his show cause and ultimately the proceeding was dropped. 3. The petitioner under such circumstances finding himself helpless sent a letter to the corporation regarding his outstanding dues but he did not hear anything in reply from the Corporation. On the other hand, the petitioner received a copy of the letter dated 15.1.79 sent by the District Manager to the Corporation and from that letter the petitioner learnt for the first time, that the corporation is claming a huge quantity of rice from the petitioner which was not a fact. In July, 1979, all on a sudden, the petitioner learnt that one Gokul Nath Mishra, the District Manager has lodged a written report in Jainagar police Station against the petitioner for an offence under section 406 of the Indian Penal Code where in it was alleged that the petitioner failed to return 442 quintals and 50 kilograms of rice and as much he is liable under section 406 of the Indian Penal Code. The police, on the basis of the said written report, registered a case against the petitioner. A copy of the first information report is annexed to this application marked as Annexure 2. It was alleged in the first information report that accused Laxmi Narain Sah (petitioner) has committed a breach of trust in respect of 442 quintals and 50 kilograms of rice amounting to Rs.88,500/- and the same has been misappropriated by the petitioner and thus he has made himself liable to be punished under section 406 of the Indian Penal Code. The learned Chief Judicial Magistrate, On the basis of the allegation contained in the first information report, took cognizance against the petitioner under section 406 of the Indian Penal Code observing that a prima facie case under section 406 of the Indian Penal Code is found to have been made out against the petitioner. The petitioner being aggrieved by this order has filed this application for quashing the same. 4. Learned counsel appearing on behalf of the petitioner submitted that no offence has been made out against the petitioner as alleged in the first information report. According to him, if at all it will be a case, it will be a case of civil liability. 4. Learned counsel appearing on behalf of the petitioner submitted that no offence has been made out against the petitioner as alleged in the first information report. According to him, if at all it will be a case, it will be a case of civil liability. It was submitted that under the terms of the agreement, the officers of the Corporation and the district office had the right of inspection and, in fact, from time to time they regularly inspected the Mill premises, checked the relevant papers and stock register and they never claimed any shortage or anything irregular. According to the learned counsel, the case has been filed against the petitioner by the District Manager of the Corporation just to save his own skin. The first information report is silent with regard to submission of the bills by the petitioner and about non-payment of the dues of the petitioner in violation of the terms of the contract. 5. Before I deal with the submission of the learned counsel, it is relevant to mention here that the corporation has filed a Money Suit No. 9 of 1980 against the petitioner claiming a sum of Rs.88,000/- and odd which is pending in the civil court. The moot question I have to examine in this case is as to whether on the facts and circumstances of this case the petitioner is at all liable under section 406 of the Indian Penal Code. In a criminal case, unless the statute either clearly or by necessary implication rules out mens rea as a constituent part of the crime, an accused cannot be found guilty of an offence unless he has a guilty mind. There is presumption that guilty intent is an essential element of an offence. It is well established rule that none is guilty under the criminal law unless he has a guilty mind. Section 406 says that whoever commits criminal breach of trust shall be punished with imprisonment of either description for a terms which may extend to three years or with fine or with both. It is well established rule that none is guilty under the criminal law unless he has a guilty mind. Section 406 says that whoever commits criminal breach of trust shall be punished with imprisonment of either description for a terms which may extend to three years or with fine or with both. The offence of criminal breach of trust is committed when a person who is entrusted in any manner with property or with dominion over it, dishonestly misappropriates it or converts it to his own use or dishonestly uses it or disposes it of in violation of any direction of law prescribing mode in which the trust is to be discharged. In the case of criminal breach of trust not only entrustment but also conversion of property to his own use or its dishonest use must be established. In view of such position in law, I have to examine whether the petitioner is at all liable for any criminal proceeding. 6. I have already mentioned earlier that there was an agreement between the petitioner and the corporation for dehusking of the paddy. Certain terms were stipulated in the agreement. One of the terms was that the petitioner would deliver rice to the Corporation and the Corporation will also make arrangement for the payment within seven days from the date of receipt of the bill. According to the petitioner, he submitted several bills to the Corporation after delivery of the rice but no substantial amount was paid to him and the amount swelled up to about Rs.54,000/- and odd. Besides this, according to the petitioner the Corporation wanted that the petitioner should receive rotten quality of paddy and should supply good rice for it, which was not accepted by the petitioner and this also annoved the District Manager. It is also relevant to point out that there is a clause No. 25 in the agreement which is an arbitration clause. According to clause 25, all disputes and differences arising out of or in any way touching or concerning this contract whatsoever (except as to any matter the decision of which is expressly provided for in the contract) shall be referred to the sole arbitration of any person appointed by the Managing Director of the State Food Corporation, Patna. According to clause 25, all disputes and differences arising out of or in any way touching or concerning this contract whatsoever (except as to any matter the decision of which is expressly provided for in the contract) shall be referred to the sole arbitration of any person appointed by the Managing Director of the State Food Corporation, Patna. In view of this clause, if there has been any difference between the petitioner and the Corporation, the matter ought to have been referred to the arbitration of the sole arbitrator appointed by the Managing Director of Corporation. But, I find that instead of doing that the Corporation has already filed a money suit for the recovery of Rs.88,000/- against the petitioner, which is pending in the civil court and on the other hand, the District Manager has also filed a criminal case against the petitioner for an offence punishable under section 406 of the Indian Penal Code, cognizance of which has also been taken by the Chief Judicial Magistrate, Madhubani, as I have already stated above. 7. Learned counsel also submitted that the cognizance is barred under section 468 of the Code of Criminal Procedure. He submitted that the date of cognizance is 1.5.80 for the cause of action alleged to have taken place in the year 1974-75. According to the learned counsel, the cognizance has been taken beyond the period of three years. In reply to this argument, the learned counsel appearing on behalf of the State submitted that section 468 of the Code has no application in this case, because if at all any offence has been made it has been made under Section 409 of the Penal Code and not under section 406, whatever may be the position, I do not feel inclined to give any opinion on this point because on the facts and in the circumstances of this case, I feel that there is no criminal intention on the part of petitioner. If at all there is any liability there may be a civil liability. 8. If at all there is any liability there may be a civil liability. 8. Having given my most anxious consideration to the submissions urged on behalf of the petitioner and having heard learned counsel appearing on behalf of the State, I am of the view that it is a case of civil nature and in view of the fact that the matter is pending before the civil court for the realisation of Rs.88,000/- from the petitioner, it is not desirable and proper that the petitioner should also be dragged in the criminal court for the same cause of action. It is not disputed that there is an agreement between the parties and in the deed of agreement when there is an arbitration clause I fail to understand why not the matter was referred to the sole arbitrator according to the terms of the agreement. Therefore, in such circumstances, I think that the continuation of the criminal proceeding shall be an abuse of the process of the court and it must be quashed. 9. For the reasons stated above, the application is allowed and the impugned order dated 1.5.80 passed by Shri R.C. Jain, Chief Judicial Magistrate, Madhubani, in G.R. 831 of 1979/ T.R. No. 1638 of 1983 is hereby quashed. Application allowed.