Judgment B.N. SRIKRISHNA, J.:---By this petition under Article 226 of the Constitution of India, the petitioners seek the following reliefs : 1) Issuance of a writ of certiorari or any writ of the same or similar nature to quash and set aside the order of the Central Government dated 17th March 1992 taking a decision not to abolish contract labour in the canteen of the 1st respondent Corporation and a writ directing the 1st and 2nd respondents to abolish the system of Contract Labour in the canteen of the 1st respondent's refinery at Chembur. 2) A declaration that the contract labourers employed in the canteen of the 1st respondent's refinery are regular employees of the 1st respondent; 3) Issuance of a writ of mandamus directing respondent Nos. 1 and 2 to give to the workmen working in the canteen of the 1st respondent's refinery the same wages and service conditions as are granted to the workmen working in the two departmentally run canteens of the 1st respondents. 2. The petitioner is a registered Trade Union. It represents, inter alia, workmen of the contractors engaged by the 1st respondent Corporation, which is a Government company carrying on the business of refining petroleum at its refineries at Mahul, Chembur. The 2nd respondent is a Director of the 1st respondent Corporation. The 3rd respondent is the Union of India and the 4th respondent is a statutory Board under the provisions of the Contract Labour (Regulation and Abolition) Act, 1970 (hereinafter referred to as "the Act"). The 5th respondent is a contractor engaged by the 1st respondents to render catering services in the canteen located within the refinery at Mahul. 3. The 1st respondent's refinery at Mahul, Chembur, is registered as a factory under the Factories Act, 1948 and employs more than 3,000 workers in three shifts. In compliance with their statutory obligation under section 46 of the Factories Act, the 1st respondent have provided canteen facility within the premises of the said factory. The said canteen is not run departmentally by the 1st respondent, but is managed by a contractor who, at the material time when the petition was filed, happened to be the 5th respondent. The canteen of the 1st respondent has been in operation from the inception of the refinery and operates round the clock on all the days of the year. 4. The canteen of the 1st respondent has been in operation from the inception of the refinery and operates round the clock on all the days of the year. 4. The petitioner contends that the 1st and 2nd respondents have sought to discharge their statutory obligations by entrusting the work of running the canteen to a contractor. The canteen, being a statutory obligation, is an integral part of the manufacturing activity carried out in the factory (refinery) at Mahul. The work carried on therein is of a perennial nature and requires a permanent complement of workmen. The petitioner further alleges that, although the canteen within the refinery at Chembur has been managed by a contractor, all activities of the canteen are controlled, supervised, monitored and managed by the 1st respondent. The petitioner gives the details of such activities like menu planning, preparations, various services, operations of canteen stores, operation and deployment of manpower, accounting system and cost control, which are all alleged to be carried out by the 1st respondent's Officers and employees. The petition sets out in detail extracts from the Operating Manual stated to have been issued by the 1st respondent. The petitioner, therefore, contends that the canteen within the refinery is entirely under the supervision, control and management of the 1st and 2nd respondents, the workmen working in the said canteen through the contractor are discharging statutory duties and obligations of the 1st and 2nd respondents, and hence they should be deemed and declared to be the direct employees of the 1st respondent; despite interposition of the middleman, namely, the canteen contractor, and the paper arrangements, the contract system in the Refinery canteen, is merely a sham. In paragraph 13 of the petition are pointed out the following facts as indicative that the real control of the said canteen vests in the hands of the 1st and 2nd respondents : (a) All workmen working in the canteen, though nominally under the contractor, are employed after they meet with the eligibility, qualification and suitability criteria prescribed for particular jobs by the 1st and 2nd respondents; (b) The 2nd respondent maintains an independent section known as A.S. P. (Canteen section) to supervise, manage and administer the canteen. This section is manned by 9 officers whose names have been set out. This section is manned by 9 officers whose names have been set out. (c) A separate Store Department (Canteen) is run by the 1st and 2nd respondents, the supervision, management and control of which is vested in the officers manning the A.S. P. (Canteen section); (d) Employees who look after the Canteen Stores work attached to the canteen are also employees of the 1st respondent.; (e) Gate Passes issued in favour of the canteen workmen of the contractor are issued under the signature of the officers of the 1st respondent Corporation; (f) Pay slips and payment of monthly salary of the canteen workmen are done by the 2nd respondent; (g) The supply of materials and articles to the canteen is done by the 2nd respondent; (h) The day to day menu quality and other details of running the canteen are settled by the 2nd respondent; (i) The 2nd respondent issues notices from time to time indicating what kind of food will be available and what kind of food will not be available in the canteen, and the reasons therefor; (j) The 2nd respondent reimburses the salaries and wages paid to the canteen workmen. 5. The petitioner has annexed to the petition copies of several documents to prove the aforesaid facts and contends that the cumulative effect thereof is that though the canteen is run for name's sake by a contractor, it is really the hidden hand of the 1st and 2nd respondents which controls and runs the canteen. 6. The petitioner contends that the canteen contractor is really a dummy and exercises no control and has no voice in the management of the canteen in the factory. The petitioner points out the stand taken by the canteen contractor, in another proceeding namely Complaint (ULP) No. 255 of 1989, before the First Labour Court at Bombay. The canteen contractor, the predecessor of the present 5th respondent, in terms stated in his affidavit in reply that he was merely a dummy and that the Bharat Petroleum (Refinery) Corporation Ltd., was the real employer. The petitioner has, in paragraph 15 of the petition, extensively quoted extracts from the relevant portions of the said affidavit. 7. The canteen contractor, the predecessor of the present 5th respondent, in terms stated in his affidavit in reply that he was merely a dummy and that the Bharat Petroleum (Refinery) Corporation Ltd., was the real employer. The petitioner has, in paragraph 15 of the petition, extensively quoted extracts from the relevant portions of the said affidavit. 7. The petitioner points out that, apart from the canteen which is run within the refinery premises, the 1st respondent has two more canteens, one each at its Wadi Bunder and Sewree installations where its marketing activities are carried out. These canteens are managed and run departmentally by the 1st respondent Corporation. The petitioner contends that there is wide disparity in the wages and other conditions of service granted to the workmen working in the departmentally run canteen and those of the workmen working under the contractor in the canteen at the refinery. The wide disparity in the wages and other service conditions is brought out, in stark reality, by a chart annexed at Exhibit I to the petition. It is the case of the petitioner that there is no difference in the nature of work done by the workmen in the departmentally run canteens at Wadi Bunder and Sewree installations and the one within the refinery premises, yet there is wide discrimination with regard to the wages and other conditions of service. 8. On the basis of the abovesaid averments the petitioner has taken up a two-fold stand. Firstly, it is contended that this Court should exercise its constitutional powers under Article 226 of the Constitution of India and direct the 1st respondent, which is admittedly "State" within the meaning of Article 12 of the Constitution, to abolish the system of Contract Labour in the Refinery Canteen and to absorb all the concerned workmen as regular employees of the 1st respondent and to extend to them the same wages and service conditions as given to the workman working in the departmentally run canteens. Alternatively, it is contended that even if the contract system is recognised as a real entity and not abolished, then at least the discrimination in the wages and other service conditions between the workmen working in the departmentally run canteens and the contractor run canteen should be abolished by issuance of an appropriate writ to the employers. 9. Alternatively, it is contended that even if the contract system is recognised as a real entity and not abolished, then at least the discrimination in the wages and other service conditions between the workmen working in the departmentally run canteens and the contractor run canteen should be abolished by issuance of an appropriate writ to the employers. 9. As we shall presently see, the saga of struggle of the contract labour in the refinery for abolition of the invidious discrimination has been long and arduous. It is necessary that we set out below some of the milestones in their journey of traveil to facilitate appreciation of the backdrop of the situation : (a) The workmen working in the canteen at the refinery organised themselves and, through the agency of Trade Unions, started agitating for abolition of the discrimination meted out to them in the matter of emoluments and other service conditions. This elicited the reaction of the Corporation of termination of the contract of the previous contractor with the resultant prospect of termination of services of all canteen workers. At this stage, another Union, the Bharat Petroleum Employees' Union, filed Writ Petition No. 3494 of 1989, for abolition of the contract system in which there was a prayer made for a direction to the respondents to abolish the system of employment of contract labour in the refinery canteen. This writ petition was disposed of by an order dated 21st December 1989 made by a learned Single Judge of this Court (R.A. Jahagirdar, J.) who was of the view that it was a case where the 4th respondent, the Regional Labour Commissioner, should forthwith forward to the Union of India the letter addressed by the petitioner Union on the subject of abolition of contract labour system. The learned Judge directed the Government of India to take a decision on the demand of the workmen for abolition of contract labour in consultation with the Advisory Board as provided under the Act. The learned Judge concluded the order by saying "It is expected that the Government will take the decision expeditiously". The learned Judge directed the Government of India to take a decision on the demand of the workmen for abolition of contract labour in consultation with the Advisory Board as provided under the Act. The learned Judge concluded the order by saying "It is expected that the Government will take the decision expeditiously". (b) Pursuant to the directions given by this Court in its order dated 21st December 1989 made in Writ Petition No. 3494 of 1989, the Government of India, in its meeting of the Advisory Board on 30th May 1990, resolved to appoint a Committee to examine and study the issue in detail and submit a factual report, together with its recommendations. The Committee consisted of three members, one of whom was the Regional Labour Commissioner (Central Government), the other being representatives of workmen and employer respectively. (c) Pending deliberations of the Committee, the workmen of the refinery canteen were apprehensive that their services were likely to be dispensed with. The present petitioner Union filed Writ Petition No. 3280 of 1990 in this Court. This petition came to be disposed of by a Division Bench (Per Bharucha, J., as His Lordship then was, and Sugla, J.) at the stage of admission by an order dated 12th November, 1991. In view of the pendency of the matter before the Committee appointed by the Central Advisory Contract Labour Board (hereinafter referred to as "the Board"), the petition was allowed to be withdrawn with liberty to file a fresh petition upon the same grounds, if it became necessary. (d) Since the matter was hanging fire before the statutory authorities for quite some time, there was fresh apprehension in the mind of the workmen that their services would be dispensed with before any positive action was taken in the matter. This resulted in the petitioner filing another writ petition, being Writ Petition No. 2400 of 1991, in which the same reliefs were sought for. (e) On 18th August 1991, when Writ Petition No. 2400 of 1991 came up for hearing before the Division Bench of Kurdukar and Sukumaran, JJ., the respondents applied for time on the ground that the matter was still under consideration before the Committee. Accordingly, adjournment was sought for and obtained upto 20th of August, 1991. On 21st August 1991, when the writ petition came up for hearing before another Division Bench (Mrs. Accordingly, adjournment was sought for and obtained upto 20th of August, 1991. On 21st August 1991, when the writ petition came up for hearing before another Division Bench (Mrs. Sujata Manohar and Patankar, JJ.), a further request for adjournment of six weeks was sought to enable the Committee to submit its report. This request was also granted by the Court. (f) The writ petition once again came up before another Division Bench (P.D. Desai, C.J. and V.P. Tipnis, J.) on 31st October 1991 when it was stated to the Court that the Committee had submitted its report on or about 24th September 1991. The Court directed that a copy of the report of the Committee be produced for perusal of the Court on 20th November 1991. The Court also observed : "In a case of this nature, decision must be taken expeditiously. It is the statutory duty of the appropriate Government to arrive at a proper decision within a reasonable time. Under the circumstances, time for arriving at a decision in accordance with law after consideration of the report of the Committee is granted upto 31st December 1991. The Court makes it clear that no application for extension of time shall be entertained or granted." The Court then adjourned the writ petition to 20th November 1991. (g) As stated earlier, the Committee had submitted its report to the Board on 24th September 1991 in which the Committee, by a majority of 2 to 1, concluded that the canteen facilities were made available by the management of the Bharat Petroleum Corporation Limited (Refinery) to discharge their statutory obligation and that the said activity was not a casual, non-statutory welfare measure. After taking note of the nature of the work carried out in the canteen of the refinery, the Committee, by a majority of 2 to 1, recommended that the system of contract labour in the canteen of the 1st respondent refinery be abolished. Despite division on the issue of abolition of Canteen Labour in the refinery canteen, all three members of the Committee were unanimous in their recommendation that there was no valid basis for the wide disparity in the wages and other benefits of the workmen of the canteen in the refinery, as compared to those of the departmentally run canteens, and that this discrimination should be removed. (h) Despite the report made by the Committee, the Board did not act promptly in the matter nor did the Central Government take any steps in that regard. By its order dated 6th February 1992, after making detailed reference to the terms of reference and the recommendations of the Committee, this Court was of the view that neither the Board nor the Central Government was moving in the matter with the promptitude which was expected and required and, therefore, a peremptory direction was issued to the Board to take up the said subject as the first item on the agenda of its meeting scheduled to be held on 19th February 1992 and to take a decision with regard to the recommendations to be made for the abolition or otherwise of the contract labour in the canteen of the establishment of the 2nd respondent. In view of the fact that the concerned authorities were dragging their feet in the matter and after taking notice of the wide disparity in the wages and other service conditions between the two sets of canteen workers, the 1st and 2nd respondents were directed to state on affidavit whether there was any genuine dispute as to the nature of work done by the canteen workers in the departmentally run canteens as compared to the work of the contractor-run-canteen workers in the refinery. (i) The writ petition once again came up before the Bench on 6th March 1992 at which time it was noticed that the directions given in its earlier order dated 6th February 1992 had not been complied with by the Union of India and the Board. Notice was issued to the Board to show cause why action should not be taken against it in contempt jurisdiction for non-compliance with the Court's directions. The notice was served on the Secretary of the said Board. (The Contempt Notice was subsequently discharged on 20-4-1992 accepting the unconditional apology tendered by the Secretary of the Board and the Union of India). (j) On 23rd March 1992 when the writ petition appeared again on Board, the Union of India and the Secretary of the Board, appeared through the learned Additional Solicitor General and tendered unconditional apology. They also filed an affidavit of the Deputy Secretary, Ministry of Labour, and Secretary of the Board, dated 21st March 1992, which was taken on record. (j) On 23rd March 1992 when the writ petition appeared again on Board, the Union of India and the Secretary of the Board, appeared through the learned Additional Solicitor General and tendered unconditional apology. They also filed an affidavit of the Deputy Secretary, Ministry of Labour, and Secretary of the Board, dated 21st March 1992, which was taken on record. The minutes of the 24th Meeting of the Board held on 28th February 1992 were placed on record. The said minutes showed that, with regard to the issue on which the Board was directed to take a decision, after discussion the Board had noted that the report of the Committee was not unanimous on the issue with regard to recommendation of abolition of the contract labour in the canteen of the 1st respondent refinery and that consequently the Board had decided to leave the matter for decision by Government of India, keeping in view the views expressed in the said meeting. (k) When the writ petition again came up for hearing on 30th March 1992, the respondents made available to the Court a letter dated 17th March 1992 issued by the Deputy Secretary and Secretary of the Board, in which it had been stated "In pursuance of the recommendations of the Board, the matter has been considered in detail by the Central Government and it has been decided not to prohibit employment of contract labour in the canteens of the establishment of Bharat Petroleum Corporation (Refinery) Bombay, for which the appropriate Government under the Contract Labour (Regulation and Abolition) Act, 1970 is the Central Government". The letter requested the Government Counsel to place the above facts appropriately before the Court for its consideration. (l) On 30th March 1992, Writ Petition No. 2400 of 1991 was allowed to be withdrawn by the petitioner with liberty reserved to it to institute a fresh writ petition challenging the decision taken by the Central Government on 17th March 1992 not to prohibit employment of contract labour in the canteen of the 1st respondent's refinery and raising therein all contentions and seeking all reliefs including those which were the subject matter of the earlier Writ Petition No. 2400 of 1991. (m) The present Writ Petition No. 891 of 1992 has been filed by the writ petitioner pursuant to the liberty so reserved in its favour. (m) The present Writ Petition No. 891 of 1992 has been filed by the writ petitioner pursuant to the liberty so reserved in its favour. Rule was issued in this Writ Petition on 20th April 1992 and the petition was posted for interim reliefs on 29th April 1992. On 29th April 1992, this Court took up the writ petition for hearing as to interim relief. After perusing the record and hearing the learned Counsel, this Court was of the view that the question as to whether the work done by the contract labour in the canteen of the refinery was the same as done by the workmen in the departmentally run canteens had to be left to the decision of the Chief Labour Commissioner. Detailed directions were given with a time-schedule for different stages of the inquiry by the Chief Labour Commissioner, who was directed to decide the question within the time specified and to make his report thereupon. In the interregnum, pending such inquiry by the Chief Labour Commissioner (Central), the 1st respondent was directed to pay Rs. 750/- per month per workman, as interim relief, to bridge the gap of disparity, and an order was passed restraining respondents Nos. 1 and 2 from terminating the services of the workmen engaged as contract labour. (n) The 1st respondent challenged the interim order of the Court dated 29th April 1992, before the Supreme Court by filing Special Leave Petition (Civil) No. 744 of 1992. By an order of the Supreme Court dated 19th October 1992 made therein, this Court was requested to finally dispose of this writ petition within four weeks. (o) The Chief Labour Commissioner (Central) has made an order dated 26th August 1992 which has been placed on the record of this Court. Curiously, the Chief Labour Commissioner was persuaded to accept the contention of the 1st and 2nd respondents that the comparison of conditions of service, required to be made for the purpose of Rule 25(2)(v)(a) of the Contract Labour (Regulation and Abolition) Rules 1971, had to be restricted only to the workmen employed in the same establishment of the principal employer. The Chief Labour Commissioner was of the view that the departmentally run canteens of the 1st respondent at its installations at Sewree and Wadi Bunder were totally different establishments from refinery establishment, as the principal employers in both the cases were different. The Chief Labour Commissioner was of the view that the departmentally run canteens of the 1st respondent at its installations at Sewree and Wadi Bunder were totally different establishments from refinery establishment, as the principal employers in both the cases were different. On this reasoning, he held that it was not permissible to compare the wages and service conditions of the two sets of canteen workmen, one working in the canteens in the marketing establishments at Sewree and Wadi Bunder and the other in the canteen in the refinery. In purported exercise of his power under Rule 25(2)(b) of the said Rules and the Explanation thereto, the Chief Labour Commissioner has compared the emoluments of the contract labour in the refinery canteen with those prescribed under the Statutory Minimum Wages Notification and came to the conclusion that the concerned workmen were better off. The petitioners have filed a detailed affidavit objecting to the findings made by the Chief Labour Commissioner in his order dated 26th August 1992. It is against the backdrop of this long-drawn sequence of events that the contentions urged in this writ petition need to be appreciated. 10. Mr. Singhvi, the learned Counsel for the petitioners, raised three principal contentions; (i) the canteen run in the refinery of the 1st respondent is pursuant to a statutory obligation under section 46 of the Factories Act and, therefore, it is an incidental work of the factory itself. Since the factory works round the clock on all the days of the year, the canteen works accordingly; the work in the canteen is of a perennial nature. Since the factory works round the clock on all the days of the year, the canteen works accordingly; the work in the canteen is of a perennial nature. He submitted that following the law laid down by the Supreme Court in (M.M.R. Khan v. Union of India)1, 1990 (Supp.) Supreme Court Cases 191, this Court should take the view that workmen employed in the refinery canteen of the 1st respondent-Corporation should be declared to be the regular workmen of the said Corporation by holding that the interposition of the contractor as a sham intended to defeat the legitimate rights of the concerned workmen, (ii) in the alternative, even if the concerned workmen working in the canteen in the refinery of the 1st respondent are held to be employed through a contractor, the contract and the contractor being assumed to be legally valid, this Court should hold that the concerned workmen are entitled to the same benefits with regard to wages and other service conditions as are available to the workmen in the departmentally run canteens of the 1st respondent Corporation by relying on the provisions of Rule 25(v)(a) of the Contract Labour (Regulation and Abolition) Rules and sections 17 and 18 of the Act and (iii) Lastly, that the order of the Central Government dated 17th March 1992 (factually no such order has been placed on record but only a letter addressed by the Central Government to its Advocate on record conveying that such a decision has been taken on 17th March, 1992 is placed on record) is bad and vitiated for non-application of mind to the factors required to be considered before passing an order under section 10 of the Act. He, therefore, submits that the said order dated 17th March, 1992 should be quashed and set aside and in view of the persistent default on the part of the Central Government in acting promptly in the matter of abolishing of contract labour system and in the peculiar facts and circumstances of the case, this is a fit case where this Court should not remand the matter to the Central Government for reconsideration but, instead, issue a writ of mandamus to the respondents directing the abolishing of the contract labour system in the refinery canteen of the 1st respondent. As consequential relief, he sought a declaration from this Court that all workmen presently working in the refinery canteen of the 1st respondent-Corporation be directed to be given the same wages and other conditions of service as the workmen in the two departmentally run canteens at Sewree and Wadi Bunder establishments. 11. Turning to the first submission advanced on behalf of the petitioner, though we agree that the work carried out in the refinery canteen of the 1st respondent is of a perennial nature and can even be said to be incidental to the manufacturing activity as it is in discharge of the statutory obligation under section 46 of the Factories Act, 1948, there are several of difficulties in accepting the first contention urged by the petitioner. 12. The 2nd respondent has filed a detailed affidavit in the present writ petition and has also relied upon the affidavits filed in the withdrawn Writ Petition No. 2400 of 1991, which have also been placed on record of the present petition. In the affidavits the respondents have controverted several factual averments made in the writ petition. They have denied that day-to-day work of the refinery canteen was carried out directly under the supervision of the 1st respondent's officers; they have also denied that there existed or exists any Operating Manual as extensively quoted by the petitioner. In our view, it would not be possible to resolve these factual controversies and disputed questions of facts without a trial by a competent forum. At any rate, they cannot be satisfactorily resolved in writ jurisdiction. Despite Mr. Singhvi's reliance upon judgment of the Supreme Court in M.M.R. Khan's case (supra), we are unable to accede to the first contention raised by the petitioner. The facts of the present case are distinguishable from those in the case of M.M.R. Khan's. In M.M.R. Khan's case, the Administrative Instructions on Departmental Canteens and Railway Establishment Manual set out detailed rules with regard to running of canteens and the canteens in question were being run in accordance with those instructions. Those instructions and the undisputed facts placed on record led the Supreme Court to take the view that in the case of employees of statutory and non-statutory recognised canteens, the workmen were entitled to the declaration that they were railway servants. Those instructions and the undisputed facts placed on record led the Supreme Court to take the view that in the case of employees of statutory and non-statutory recognised canteens, the workmen were entitled to the declaration that they were railway servants. However, in the case of non-statutory non-recognised canteens, the railway administration having no control over their working, such a declaration was not given. The fact that the workmen in the first two categories of canteen had been treated as railways employees by the Railway Board in some of the canteens also contributed to the decision. We are of the view that the decision in M.M.R. Khan's case will not be of avail to the petitioner herein as it turned on the peculiar facts of that case. We are, therefore, unable to accept the first contention advanced on behalf of the petitioners. 13. The second contention of the petitioner is advanced on the assumption and footing that the workmen in the canteen in the refinery are employed under a real and valid contract between the 1st respondent and the canteen Contractor. The contention is that the refinery and the other two installations where the departmentally run canteens are located should, together, be treated one the establishment of the 1st respondent Corporation for the purpose of a comparison of the emoluments and service conditions of the canteen workmen. It is contended that it is legitimate to compare the emoluments and conditions of service of the canteen workmen in the departmentally run canteens with those of the canteen workmen in the refinery and that such comparison would show wide disparity for which there is no justification. In view of the regulatory provisions of the Act, particularly Rule 25 of the Rules framed thereunder, it would be impermissible for the contractor to give the workmen of the refinery canteen emoluments and service conditions different from those given to workmen of the departmentally run canteens. 14. The learned Counsel for the petitioner relied on the judgments of the Supreme Court in (i) (F.C.I. Workers' Union v. Food Corporation of India)2, A.I.R. 1985 Supreme Court, 488, (2) (Gammon India Ltd. v. Union of India)3, A.I.R. 1974 Supreme Court, 960 and (3) (S.G. Chemicals and Dyes Trading Employees' Union v. S.G. Chemicals and Dyes Trading Ltd. and another)4, (1986)2 Supreme Court Cases, 624. Dr. Chandrachud, the learned Counsel for respondents Nos. Dr. Chandrachud, the learned Counsel for respondents Nos. 1 and 2, however, forcefully contended that the judgment of the Supreme Court in Food Corporation of India (supra) unmistakably shows that "establishment" would be the site where the work is carried on, particularly in the context of the definition of the said expression in section 2(1)(e) of the Act. Relying on another judgment of the Supreme Court in (Messrs Alloy Steel Project v. The Workmen)5, (1971)1 L.L.J. 217 , he contends that the concept of an establishment integrally related to a distinct sites of industrial activity was well recognised even under other cognate statutes like. The Payment of Bonus Act, 1965. He, therefore contended that the Chief Labour Commissioner, in his order dated 26th August 1992, rightly took the view that there could be no comparison between the workmen of the departmentally run canteens at Sewree and Wadibunder and the workmen of the refinery canteen for the simple reason that they were two distinct and different establishments. Counsel emphasised that under Rule 25(2)(v)(a) of the Rules there was an obligation to give the same conditions of service only in cases where the workmen employed by the contractor performed the same or similar kind of work as the workmen directly employed by the 'principal employer' of the 'establishment'. The refinery which is recognized as a factory, is a separate 'establishment' within the meaning of the definition of the said terms in section 2(1)(e)(ii) of the Act. The expression "principal employer" is also defined in section 2(g) and, taking the relevant portion from Clause (ii) of section 2(1) applicable to a factory, it would be clear that the "principal employer" in respect of the refinery establishment would be the person named as Manager of the factory. He submits that the principal employers in the case of Sewree and Wadibunder establishments and the refinery are different and, therefore, there could be no question of invocation of Rule 25(2)(v)(a) of the Rules. Re : Fake entries and defalcation of Rs. 7,00,000 in Malet Welding Works, Tube Mill Division, and Rs. 1,50,000 and Rs. 25,000/- in Messrs Alcock Ashdown Co. Ltd. in the year 1969. In 1969, I was a steel merchant carrying on business at 62, Latif House, Iron Market, Bombay-9, I came in touch with Mr. Kashinath Tapuria, Director of Turner Morrison Co. Ltd. and Alcock Ashdown Co. Ltd. and Dr. 1,50,000 and Rs. 25,000/- in Messrs Alcock Ashdown Co. Ltd. in the year 1969. In 1969, I was a steel merchant carrying on business at 62, Latif House, Iron Market, Bombay-9, I came in touch with Mr. Kashinath Tapuria, Director of Turner Morrison Co. Ltd. and Alcock Ashdown Co. Ltd. and Dr. R.M. Agarwal some time in the year 1968 when I was supplying them iron and steel material for Alcock Ashodown Co. Ltd. and Tube Mill Division of Malet Welding Works, Thane. I also came to know Mr. Haridas Mundhra, father-in-law of Mr. Keshinath Tapuria at a later date. On or about 2nd July 1969, Mr. K.N. Tapuria and Dr. Agarwal brought a pay order in the name of Kashiprasad Kedia Co., of which I was the sole proprietor. They told me that they have made available to me Rs. 7 lakhs at an interest rate of 95 p.a. and they have already negotiated with one Basant Trading Co. who will borrow this money from me at the rate of 12% p.a. interest, whereby I could make a clear 3% p.a. profit, and that I will get better business deals with Alcock Ashdown Co. Ltd. and Turner Morrison Co. Ltd. I was therefore persuaded to enter into this transaction thinking that I will make a clean profit of Rs. 21,000 p.a. without any risk whatsoever, because the Directors themselves were responsible for this whole deal. Similarly in December 1969, Mr. Tapuria and Dr. Agarwal brought a cheque for Rs. 1,50,000 from Alcock Ashdown Co. Ltd. and under similar arrangement and under same terms and conditions, I paid this amount to Kumar Trading Co., 45/47, Apollo Street. On the same date, and at the same time, another cheque for Rs. 25,000/- was brought by them from Alcock Ashdown Co. Ltd. and I parted the same amount on similar arrangements to their nominated firm Hind Products Private Ltd. This Company was located at the similar address of the above mentioned Kumar Trading Co. I also enclose herewith latter dated 11th August 1970 from Alcock Ashdown Co. Ltd., and my letter dated 14th August 1970 sent by Regd. post to Mr. Kashinath Tapuria to adjust these fake entries standing in my books, amounting to Rs. 8,75,000/-. These letters speak for themselves. I also enclose herewith latter dated 11th August 1970 from Alcock Ashdown Co. Ltd., and my letter dated 14th August 1970 sent by Regd. post to Mr. Kashinath Tapuria to adjust these fake entries standing in my books, amounting to Rs. 8,75,000/-. These letters speak for themselves. I may further add that I have supplied lakhs of rupees worth of materials both to Malet Welding Works and Alcock Ashdown Co. Ltd. and every time I took the genuine payment I signed a voucher in both the Companies. You will not find any vourchers signed by me in respect of these three bogus payments amounting to Rs. 8,75,000/-. I may add here that all the monies given by them to me were deposited in the United Bank of India, Sir P.M. Road, Bombay, in the account of Kashiprasad Kedia Co., and immediately these monies were withdrawn and cheques given out to the Companies nominated by Mr. K.N. Tapuria, Dr. R.M. Agarwal and other accessories. I am a simple and honest dealer in iron and steel who believed and trusted the word of Mr. Tapuria and Dr. Agarwal and other Directors of Turner Morrison Co., which is supposed to be a large concern who assured me that I will have a good career by supplying them iron and steel permanently. In good faith I allowed these transactions to go through from my Company. I never suspected at that time that these were all frauds. When I came to know that these were all fradulent transactions, they stopped giving me business and I became a nervous wrack for the past two years and in utter distress, I even tried to commit suicide in August 1970, but unfortunately for me I lived to see this day that such important and big men who are Directors of such Companies like Alcock Ashdown Co. Ltd. and Turner Morrison Co. Ltd., could be such a frauds and dishonest who have deliberately cheated a simple godfearing but trusting person like myself. I have not yet recovered from these shocks and am still living in a state of nightmare and terror from these people. I am prepared to go to a temple and swear on my goddess. I am prepared to go to a temple and swear on my Goddess that this is true. I have not yet recovered from these shocks and am still living in a state of nightmare and terror from these people. I am prepared to go to a temple and swear on my goddess. I am prepared to go to a temple and swear on my Goddess that this is true. I will give you all the papers concerning these fradulent transactions which may be available with me or my bankers. I would further tell you that my wife also became a nervous wreck since this fraud and died on 15th August 1972. Please forgive me for being a tool in the hands of the Directers of Turner Morrison Co. Ltd. and Alcock Ashdown Co. Ltd. and I never realised that they were such blatant crooks. I would further mention that even the 3% difference promised to me was never paid to me till this day and I have not made a penny in all these fradulent transactions. I have been cheated by them, and was not given any work since I came to know of these frauds. Thanking you and begging your forgiveness. Yours faithfully." 26. Shri Desai placed very strong reliance on both the oral evidence of Kashiprasad as also on the aforesaid two documents which according to his more than fully established the prosecution case. As far as the letter dated 14-8-1970, which I shall refer to as the first letter, is concerned, Shri Desai states that it is significant that it is addressed to accused No. 1 and rightly so according to him. He points out that apart from being a Director of the Company and the person-in-charge of Malet Welding Works that accused No. 1 was the person who was responsible for the disbursement of the amount of Rs. 7,00,000 from the Company into a channel that led directly to Basant Trading Works and thereafter into his own bank account. If accused No. 1 was not the Chief Architect of the scheme and if it was not a clandestine transaction which had nothing to do with the supply of goods, there would have been no question of Kashiprasad requesting him to reverse the entries and relieve him of the possible tax complications. Shri Desai links this letter directly with the voucher No. 4755 and the entry at folio 29 in the suspense account of Kashiprasad Kedia showing an advance of Rs. Shri Desai links this letter directly with the voucher No. 4755 and the entry at folio 29 in the suspense account of Kashiprasad Kedia showing an advance of Rs. 7,00,000 and submits that this material conclusively establishes the culpability of the accused. In addition to this, Shri Desai also placed reliance on Kedia's statement recorded by the Income-tax Authorities (Exhibit 14) wherein this witness has, in terms, indicated the entire transactions relating to the receipt by him of Rs. 7,00,000/- from M/s. Turner Morrison Co. and his admission that he virtually provided a book entry to this amount in the hope that he would earn 3% interest by lending his name to the transaction. He has even indicated in this statement that he attempted suicide in the year 1970 when he realised that he was seriously involved in this transaction. 27. As regards the second letter, Shri Desai points out that there is nothing unusual about the witness having made a clean breast of the entire transaction when the same was investigated in the year 1972. According to him, when the voucher (Exhibit X) was detected and it was found that the Company's records showed an outstanding of Rs. 7,00,000/-, the most natural thing was for Kashiprasad to be called and asked to make good the amount. At that stage, he indicated that he had only been used as a channel for diversion of the money to M/s. Basant Trading Co. and that the amount had never been used as a loan by him or for that matter retained by him. The overwhelming documents on record fully support this version and, therefore, according to Shri Desai even if one were to totally disregard Kashiprasad's oral evidence that the documents on record fully substantiate this transaction. 28. Both Shri Rane and Shri Bhatkar, learned Counsel appearing on behalf of the accused, have not only been critical but have been very severe on all the aforesaid evidence which according to him is in total shambles, contradictory inter se, has been virtually fabricated by the new management of the Company and, therefore, cannot involve either of the two accused. They have virtually dissected the evidence with a fine tooth-comb and have forcefully contended that no judicial forum can accept this quality of evidence which briatles with inconsistencies and utter falsity. They have virtually dissected the evidence with a fine tooth-comb and have forcefully contended that no judicial forum can accept this quality of evidence which briatles with inconsistencies and utter falsity. Shri Rane states that the oral evidence of Keshiprasad Kedia has to be viewed with caution in keeping with the earlier decision of this Court which only means that it should not be accepted unless there is overwhelming and reliable support to it. He demonstrates how Kashiprasad Kedia is utterly unreliable in so far as his version before the Court wherein he involves accused No. 2 as the person who put across the proposal regarding the Rs. 7,00,000 to him is directly contradicted by his statement before the Income-tax Authorities where he does not even remotely refer to accused No. 2. Again, Shri Rane points out that in his oral testimony he does not implicate accused No. 1, but he attributes the entire transaction to him before the Income-tax Authorities. On a most crucial issue, learned Counsel demonstrate that it is the version of Kashiprasad Kedia before the Court that he was to earn a profit of 3% on the transaction whereas before the Income-tax Authorities, he mentions 4%. What is contended by the learned Counsel is that their definition of Kashiprasad Kedia as a man of straw is an understatement and that the letters attributed to him and statements attributed to him cannot support the evidence which is otherwise weak because one set of unreliable evidence cannot be corroborated by another set of equally unreliable evidence principally since the central figure from whom all this material emanates is thoroughly dishonest. As an illustration, the learned Counsel referred to the letter dated 20th October 1972, namely, the second letter reproduced above and they have pointed out that Keshiprasad Kedia was incapable of using either words such as "blatant" or the quality of language as is to be found in the letters nor did he have the capacity to get such a letter drafted. According to learned Counsel, it is quite obvious that this letter was prepared by Mr. Hoon, the new Managing Director, and that Kashiprasad Kedia signed it in order to shift the blame on the accused and foist then from the liabilities that were fastened on him. 29. According to learned Counsel, it is quite obvious that this letter was prepared by Mr. Hoon, the new Managing Director, and that Kashiprasad Kedia signed it in order to shift the blame on the accused and foist then from the liabilities that were fastened on him. 29. As indicated by me earlier, the learned Magistrate found it difficult to accept this crucial evidence and has, therefore, refused to rely on it and has acquitted the accused, though not only on this ground. That certain infirmities exist is undisputed, but the real question before me is as to whether this material is required to be rejected completely or whether it is essential to scrutinize it and save certain parts of which can be relied upon. I prefer to start the exercise in the reverse direction with the legal position that been convassed, namely, the fact that Kashiprasad Kedia was not available for cross-examination after the framing of charge on the ground that he had disappeared. The defence pleads that, reasons regardless, on this ground the entire head of evidence must go. Shri Desai states that all reasonable efforts were made to trace him out, including enquiries with his entire family at different places as is evident from the evidence of P.W. 18 Jagannath Shinde. This witness has set out before the Court the details of all the efforts made by him to locate Kashiprasad Kedia, including at various parts of India, enquiries with relatives and different places, where Kashiprasad Kedia could have gone. It was after this that he submitted his report (Exhibit 24) dated 29th December 1979 from which it can safely be concluded that inspite of all possible efforts, Keshiprasad Kedia could not be traced. Shri Desai has put forward two possibilities, the first being that one cannot rule out a situation whereby after the investigations were started Kashiprasad Kedia, who had once attempted suicide and was convicted for the offence might have succeeded in his attempt on a subsequent occasion, which explains his total disappearance. The second possibility was that Kashiprasad Kedia had decided to stay away from any places whereby he could be traced and brought forward as a witness out of fear that he would be shown as an accused and not as a witness. The second possibility was that Kashiprasad Kedia had decided to stay away from any places whereby he could be traced and brought forward as a witness out of fear that he would be shown as an accused and not as a witness. He lastly argued that the witness having been made available for cross-examination at an earlier point of time that no special grievance could be made if he was not subsequently available. 30. The record indicates that Kashiprasad Kedia was available to the prosecution at the time of the trial and that he attended the Court on several dates of hearing when his examination-in-chief and cross-examination went on. It is obvious, therefore, that the prosecution was desirous of producing him as a witness and had no intention of keeping him back. A scrutiny of his evidence also shows that no appreciable success was achieved by the defence in the course of cross-examination. The time has come when this Court will have to take judicial notice of the so-called disappearance of witnesses more so when it happens in the course of a trial. Even though there is not the slightest direct evidence on record that the accused who benefit totally out of such a situation had a hand in this, one cannot rule out the possibility. Undoubtedly, the defence is entitled to insist that no adverse inference be drawn unless there is concrete material on record to establish that Kashiprasad Kedia's non-availablility was ensured by the accused. It would be absured to expect such evidence, but this Court will not shut its eyes to several unhealthy and criminal practices that have now become rempant in the trial couts, the most effective of which is to temper with the prosecution evidence. Hostile witnesses and witnesses who vanish presuppose activity behind the scenes by somebody. Where there are only two parties and the presecution could never have done it, the answer is inevitable. In this case, however, since the situation is unusual, the other possibilities suggested by Shri Desai cannot be ruled out. I do not propose, however, to accord any special benefit to the accused because of Kashiprasad Kedia's non-availability as the face of this case do not justify it. 31. As regards Kashiprasad Kedia's credibility, there does not appear anything intrinsically and inherently falaw with regard to his evidence. I do not propose, however, to accord any special benefit to the accused because of Kashiprasad Kedia's non-availability as the face of this case do not justify it. 31. As regards Kashiprasad Kedia's credibility, there does not appear anything intrinsically and inherently falaw with regard to his evidence. He has displayed the typical character of a trader and it was because of his pliability that he was used for the transaction in question. In fact, the expectation was that it would provide a perfect cover because he was even otherwise a supplier of the Company to whom payments had to be made and an advance of Rs. 7,00,000 would not attract any special or unusual attention and the fact that it is outstanding would only provide a convenient handle at some later point when he would have either been asked to make himself ecarce or to follow the more convenient ploy that is adopted in market circles in this city of declaring himself insolvent. Kashiprasad Kedia, in his turn, was completely dependent on the Company for his business and was, therefore, a willing channel for the transfer of the funds to Basant Trading Company, particularly when he was promised a 3% reward for using his name. It is true that there are some inconsistencies in his statements before different authorities which Shri Rane and Shri Beadkar have termed as absolutely fatal to his evidence. These blemishes are not of such gravity as are sufficient to write off his evidence. The principal reason for it is that the transaction being a cheque payment is evidenced by records of M/s. Turner Morrison Co. Ltd. The instructions to the bank and the bank statements of the respective accounts and Keshiprasad Kedia's oral evidence, statements and correspondence in form and substance completely fit in with these records. The blemishes regardless, it is completely and fully established, therefore, that the amount of Rs. 7,00,000/- was channelised through Kashiprasad Kedia to Basant Trading Company, that this had nothing to do with the supply of material by him and that he did not, in fact, supply any material against this payment. The blemishes regardless, it is completely and fully established, therefore, that the amount of Rs. 7,00,000/- was channelised through Kashiprasad Kedia to Basant Trading Company, that this had nothing to do with the supply of material by him and that he did not, in fact, supply any material against this payment. These records and Kashiprasad's evidence also establish that the amount in question has not been repaid by Basant Trading Company to Kashiprasad Kedia or for that matter by him to the Company and, more importantly, that the amount was never retained by Kashiprasad Kedia, but was passed on to Basant Trading Company immediately in keeping with the instructions given to him. 32. That brings me to the crucial aspect of the matter, namely, the culpability of accused Nos. 1 and 2. It is Kashiprasad Kadia's case in his evidence before the Court that it is accused No. 2 who put forward the proposal to him with regard to the amount of Rs. 7,00,000/-, but in his letter dated 14-8-1970 he squarely involves accused No. 1 alone as the person responsible. In his statement before the Income-tax Authorities, he does not refer to accused No. 2. From these and several other circumstances on record, it is vehemently contended by learned Counsel appearing on behalf of the accused that this is a case in which neither of the accused can be implicated on the basis of this evidence because it is wholly unreliable and unsatisfactory. 33. At this stage, it would be very necessary to advert to the case made out by the accused in their statements recorded under section 313 of the Code of Criminal Procedure. Accused No. 1 admits that at the relevant time, he was a Director of M/s. Turner Morrison Co. and that the current account in question was opened with the Bank of Maharashtra, Fort Branch in the name of Melet Welding Works and also that he and accused No. 2 were authorised to operate the account as also that they executed the necessary documents for obtaining the facilities of Rs. 10,00,000/- from the bank. He totally denies any knowledge of the transaction relating to the withdrawal of Rs. 7,00,000/- from this account which was given to Kashiprasad Kedia or for that matter that the same amount was immediately passed on to Basant Trading Co. He disclaims knowledge of the movement of the amount thereafter. 10,00,000/- from the bank. He totally denies any knowledge of the transaction relating to the withdrawal of Rs. 7,00,000/- from this account which was given to Kashiprasad Kedia or for that matter that the same amount was immediately passed on to Basant Trading Co. He disclaims knowledge of the movement of the amount thereafter. He states that D.P. Tapuria, his nephew, was looking after Hind Products and Tapuria Sons. He admits that the two cheques for Rs. 3,00,000/- and for Rs. 4,00,000/- were given to him, but he states that he was not aware that they were obtained from the accounts of Hind Products and Tapuria Sons. Even though he admits that the cheques were deposited in his account, he states that he had not done so personally. According to him, they were deposited along with several other Pay Orders and cheques. As regards the transaction with Kashiprasad Kedia, he states that he is not aware of the voucher No. 4755 dated 2nd July 1969 for payment of Rs. 7,00,000/- to Kashiprasad Kedia as advance for the purchase of raw materials or for that matter that the voucher was signed by the Accounts Officers and approved by accused No. 2. He disclaims knowledge of the corresponding entry in the cash-book. 34. According to him, the letter (Exhibit B) was never received by him, that he does not know Kashiprasad Kedia and that the copy of Exhibits B is fabricated. He admits that he is the son-in-law of Mr. Mundhra and that his wife is Mr. Mundhra's daughter. He states that he had given a guarantee to Mr. Mundhra's Solicitors for undertaking to take delivery of 51% shares of M/s. Turner Morrison Co., on his behalf and that this was given for a short period and very reluctantly and only because Mr. Mundhra undertook to provide funds for this guarantee. He further states that it was under these circumstances that he yielded to Mr. Mundhra's pressures and that it was Mr. Mundhra who brought several Pay Orders and Drafts and cheques totalling to more than Rs. 30,00,000/- and deposited them into his bank account. He further states that since he had no interest in this transaction that he did not try to find out the origin and sources of these funds. According to him. Mr. Mundhra informed him that he had arranged for the amount of Rs. 30,00,000/- and deposited them into his bank account. He further states that since he had no interest in this transaction that he did not try to find out the origin and sources of these funds. According to him. Mr. Mundhra informed him that he had arranged for the amount of Rs. 7,00,000/- for Tapuria Sons and Hind Products, but did not tell him the source thereof. Mr. Mundhra, according to him, arranged for the guarantee by I.K. Daga, brother of his wife, and he directed accused No. 1 to transfer the entire fund, including this amount of Rs. 7,00,000/-, to the account of I.K. Daga, which was done by means of Pay Orders immediately. 35. According to accused No. 1, he had nothing to do with the funds thereafter, that he has not derived any benefits out of the said transaction and that he has no personal interest whatsoever in it. Specifically, he contends that he had no knowledge of the payment of Rs. 7,00,000/- by M/s. Turner Morrison Co., to Kashiprasad Kedia or by Kashiprasad Kedia to Basant Trading Co., or by Basant Trading Co., to Tapuria Sons and Hind Products and that he came to know about this movement of the funds only during these proceedings. He concludes by stating that the control of M/s Turner Morrison Co. was taken over by Sahu Jain Group in 1972, that there has been continuous litigation between the Mundhra Group and the Jain Group and that there are several cases pending between the parties at the Calcutta High Court and various other courts. According to accused No. 1, it is because he is the son-in-law of Mr. Mundhra that he has been unnecessarily implicated. This, in substance, is the defence statement of accused No. 1 and it is consistent with the line adopted right through the trial and during the conduct of this appeal whereby it is contended that even though admittedly he was a Director of the Company that he was unaware of the diversion of the amount of Rs. 7,00,000/- and that not only did he have no knowledge of the transaction but that he was in no way concerned with it. I have reproduced the defence statement in detail because it contains many admissions which are of some consequence and which would ultimately narrow down the controversy to a significant extent. 36. As far as accused no. 7,00,000/- and that not only did he have no knowledge of the transaction but that he was in no way concerned with it. I have reproduced the defence statement in detail because it contains many admissions which are of some consequence and which would ultimately narrow down the controversy to a significant extent. 36. As far as accused no. 2 is concerned, in his statement under section 313 of the Code of Criminal Procedure, he admits that he was as Executive of M/s. Turner Morrison in 1969, but that there were other Executives above him. He also admits that the account with the Bank of Maharashtra with which we were concerned was specially opened and that he and accused No. 1 were the two persons - in-charge of operating the account. He also admits having approved of a voucher No. 4755 dated 2nd July 1969 and the corresponding entries in the cash book and the debit entry in the ledger at page 29. He states that the voucher was prepared for paying Rs. 7,00,000/- to Kashiprasad Kedia as advance towards purchase of raw-material. He, however, denies having told the witness that he should advance this very amount to Basant Trading Co., which will pay him interest at 11% per year and that he should pay only 9% per year to M/s. Turner Morrison Co. He denies having issued any instructions for transmission of this amount of Rs. 7,00,000/- to Basant Trading Co. He also denies any knowledge with regard to the subsequent movement of these funds. Accused No. 2 also seeks to take advantage of the corporate set-up by referring to names of various other Senior Executives and officers of the Company whose names also appear in connection with the day-to-day transactions such as letters, cheques, vouchers, etc., and tries to disclaim his responsibility in relation to the present transaction. He, however, admits that he issued the cheque for Rs. 7,00,000/- to Kashiprasad Kedia , but his case all through is that he was acting under instructions. He does not, however, name the person who gave him these instructions. He seeks to justify the payment by stating that Kashiprasad Kedia had supplied a good quantity of raw-material to the tube mill prior to the advance, that he was a dealer in steel and that after the advance was made, Kashiprasad Kedia had supplied some raw-material to M/s. Turner Morrison Co. He seeks to justify the payment by stating that Kashiprasad Kedia had supplied a good quantity of raw-material to the tube mill prior to the advance, that he was a dealer in steel and that after the advance was made, Kashiprasad Kedia had supplied some raw-material to M/s. Turner Morrison Co. According to him, he also corresponded with Kashiprasad Kedia asking him to fulfil the commitment of supplying steel. He states that he had no personal interest of any nature in the transaction nor had he derived any benefit thereof. He has produced a letter dated 2nd April 1968 whereby accused No. 1 has given him certain instructions and he emphasised the fact that he was working in the Company under one Mr. Bhave. 37. In substance, accused No. 2, who cannot disclaim his connection and knowledge with the transaction relation to Rs. 7,00,000/- nor can he disclaim the position that he was holding at the relevant time, has sought to point out that he innocently followed the instructions given to him though, significantly, he does not mention the name of the persons who gave him such instructions. It needs to be noted that there is a deliberate reservation in mentioning the name of accused No. 1 anywhere, but at the same time no attempt has been made to mention the name of any other officer. This accused has attempted to pass off the transaction on the ground that it was a simple advance made to one of the suppliers, namely, Kashiprasad Kedia, that attempts were made to adjust it against the steel supplied by him and that in the process no culpability as far as a criminal offence is concerned could be fastened on him. The short question that finally emerges is as to whether the material on record would justify a conclusion that accused No. 2 was not acting as innocently as he makes himself out to be and that he was, in fact, part of a conspiracy to defraud the Company and, therefore, be held liable for the offences with which he has been charged. 38. Digressing here, it would be essential to disposs of the vague explanation set out in support of the charge that the amount of Rs. 7,00,000/- was advanced to Kashiprasad Kedia. There is nothing on record to support this theory. 38. Digressing here, it would be essential to disposs of the vague explanation set out in support of the charge that the amount of Rs. 7,00,000/- was advanced to Kashiprasad Kedia. There is nothing on record to support this theory. Kashiprasad Kedia himself does not state that it was an advance against the material and a scrutiny of all the earlier transactions indicates that it was never the practice to advance money against future orders, and that too huge amounts. There is no letter or reference to any documents on the basis of which such an advance was asked for. Furthermore, the records of the Company do not admit that any adjustments were made in relation to future supplies or otherwise by Kashiprasad Kedia and, therefore, the case with regard to the amount being an advance to him will have to be discarded. This is all the more so when Kashiprasad himself states that the amount of Rs. 7,00,000/- was handed over to him for being paid over to Basant Trading Company on which transaction he was to earn 3%. The simultaneous payment to Basant Trading Co. conclusively establishes this fact. This, to my mind, does represent the true complexion of the transaction. 39. The charge in this case being one of criminal breach of trust, once it is established that the accused were entrusted with the money in question, or that they had dominion over it, the onus of establishing that the funds were not diverted for purposes other than that which was legally permissible would shift to the accused. The record in the present case establishes that accused Nos. 1 and 2 were the persons in-charge of the Company's bank account with the Bank of Maharashtra, with which we are concerned. The record also indicates that immediately on the opening of this account with undue haste, the amount of Rs. 7,00,000/- was paid over to Kashiprasad Kedia. That this payment was not in relation to any goods supplied by him is established and what is more important is that there is nothing on record to support the view that the payment was against future supplies. Shri Rane and Shri Beadkar were extremely critical of Kashiprasad's trustworthiness and consequent credibility. 7,00,000/- was paid over to Kashiprasad Kedia. That this payment was not in relation to any goods supplied by him is established and what is more important is that there is nothing on record to support the view that the payment was against future supplies. Shri Rane and Shri Beadkar were extremely critical of Kashiprasad's trustworthiness and consequent credibility. That Kashiprasad Kedia facilitated the commission of the offence in obvious and one does not have to rely on his honesty while testing his version because the documentary evidence, particularly the relevant bank records, establishes that the money was not paid to him against future supplies. The fact that he passed it on to the Basant Trading Company on the same day completely corroborates his statement that he was told to loan the money to that firm and for his participation in the transaction, he was to receive 3% commission. I cannot brand Kashiprasad Kedia as an accomplice because he could never have been told that the Company funds were being misappropriated. As far as he was concerned, it was a high level business transaction for which his services were being utilised and he was receiving some commission on it. It is quite obvious that it was only after several months that he realised the implications of his name being shown as a debtor in the Company's records and it was at this stage that he came forward with his request to accused No. 1 that the transaction should be sorted out. It is in these circumstance that the explanation put forward by the accused assumes considerable significance. Had the accused come forward with a valid explanation or justification for their conduct either in the course of their statement under section 313 of the Code of Criminal Procedure or by having established this in any other manner, they could have discharged the burden cast on them. 40. As far as accused No. 1 is concerned, on a totality of the evidence in this case, the following position emerges : (a) That he was a Director of the Company and the person in overall charge of Mallet Welding Works in which capacity the Board had appointed him as the main signatory to the bank account in question. 40. As far as accused No. 1 is concerned, on a totality of the evidence in this case, the following position emerges : (a) That he was a Director of the Company and the person in overall charge of Mallet Welding Works in which capacity the Board had appointed him as the main signatory to the bank account in question. (b) That Accused No. 1 was the guarantor in respect of Mundhra"s transaction concerning payment of a huge amount of money which obligation Mundhra had to discharge. The fact that accused No. 1 was the son-in-law of Mundhra is also a circumstance that requires notice. (c) That the amount in question has travelled through certain firms, all of which are managed and controlled by persons within the family from where it finally comes into accused No. 1's bank account is significant, that accused No. 1 did not physically sign the cheque himself is of no consequence and I would, in fact regard it as a tell-tale circumstance because it is essential to note that the money was diverted through a circuitous route with the sole object of masking the offence and leaving as little direct evidence as possible against accused No.1. To this extent, therefore, it is not at all surprising that accused No. 1 did not sign the cheque himself, but got accused No. 2 to do this. One cannot accept for a moment the ridiculous statement made by accused No. 1 that he was unaware of the source of the funds that came to his own bank account in Calcutta even when his own wife was instrumental in the transfer of one of these amounts. On the other hand, the irresistible conclusion in this case is that accused No. 1 planned and executed the diversion of the funds and it makes no difference whatsoever whether this money was intended to be used by him personally or whether it was to go for other purposes. All that matters is the issue as to whether as custodian of the Company's funds he was at all justified in diverting the amount of Rs. 7,00,000 through his own bank account to Mundhra or his nominee. 41. All that matters is the issue as to whether as custodian of the Company's funds he was at all justified in diverting the amount of Rs. 7,00,000 through his own bank account to Mundhra or his nominee. 41. Shri Desai relied on the decision of the Supreme Court in the case of (Deonandan Mishra v. State of Bihar)14, A.I.R. 1955 S.C. 801, wherein the standard of proof in relation to a conviction based on circumstantial evidence has been laid down. The Supreme Court has observed that the circumstances must be individually and collectively established and that they should not leave any doubt whatsoever with regard to the only conclusion which points to the guilt of the accused. Shri Desai laid particular emphasis on the fact that though it is permissible for an accused to demolish the prosecution case by tendering a reasonable explanation in respect of the material alleged against him that, on the other hand, where a false explanation is put forward that this is an incriminating circumstance. In the present case, the explanation put forward by accused No. 1 not only falls short of not casting any doubt on the prosecution evidence, but it is also clear that it is false in material aspects and this only aggrevetes the situation for him. 42. Shri Desai also placed reliance on the decision of the Supreme Court in the case of (Inder Singh v. The State)15, 1979 S.C.J. 10. Shri Desai relied on the following observations in that judgment: "Credibility of testimony, oral and circumstantial, depends considerably on a judicial evaluation of the totality, not isolated scrutiny. While it is necessary that proof beyond reasonable doubt should be adduced in all criminal cases, it is not necessary that it should be perfect. If a case is proved too perfectly, it is argued that it is artificial; if a case has some flows, inevitable because human beings are prone to err, it is argued that it is too imperfect. One wonders whether in the maticulous hypersensitivity to eliminate to rendom innocent from being punished, many guilty man must be callously allowed to escape. If a case is proved too perfectly, it is argued that it is artificial; if a case has some flows, inevitable because human beings are prone to err, it is argued that it is too imperfect. One wonders whether in the maticulous hypersensitivity to eliminate to rendom innocent from being punished, many guilty man must be callously allowed to escape. Proof beyond reasonable doubt is a guideline, not a fatish and a guilty man cannot get away with it because truth suffers some infirmity when projected through human processes." In this case, the Supreme Court has very rightly taken a very practical and down-to-earth approach with regard to situations that almost any Court would be confronted with in a criminal proceeding and has also pointed out that it would be wrong to apply absolute standards in so far as in the search for such total perfection, guilty persons would get undue benefit. In evaluating the evidence and holding that the case is proved beyond reasonable doubt, one is conscious of certain limitations and infirmities, but the question still arises as to whether the substratum of the prosecution case that subsists after pruning what has to be discarded still brings home the charge. It is precisely for this reason that criminal jurisprudence uses the term "reasonable" because blemishes are inevitable in every prosecution and minor deficiencies are only to be expected, but all these are required to be of sufficient substance as to seriously undermine the adifice of the prosecution case. Applying these tests, to my mind, the prosecution has established the charge vis-a-vis the accused No. 1 only. 43. Shri Desai relied on another decision of the Supreme Court in the case of (Kishorachand v. State of Himachal Pradesh)16, (1991)1 S.C.C. 286 . K. Ramaswamy, J., while restating the law relating to convictions based on circumstantial evidence, has summarized the principle that the guilt of the accused must be fully and cogently established and the proved circumstances must bring home the offence to the accused beyond all reasonable doubt. The Court was dealing with the question as to what constitutes reasonable doubt and the manner in which the same can be established had observed as follows: "In assessing the evidence imaginary possibilities have no role to play. What is to be considered are ordinary human probabilities. The Court was dealing with the question as to what constitutes reasonable doubt and the manner in which the same can be established had observed as follows: "In assessing the evidence imaginary possibilities have no role to play. What is to be considered are ordinary human probabilities. It is not necessary that each circumstance by itself be conclusive but there must be a chain of evidence so far consistent and complete as not to leave any reasonable ground for a conclusion consistent with the innocence of the accused and it must be such as to show that in all probability the act must have been done by the accused and the accused alone. There is distinction between facts which may be called primary or basic facts on the one hand and inference of fact to be drawn from them, on the other. In regard to the proof of basic or primary facts, the Court has to judge the evidence in the ordinary way and in appreciation of the evidence in proof of these basic facts or primary facts, there is no scope for the application of the doctrine of benefit of doubt. The Court has to consider the evidence and decide whether the evidence proves a particular fact or not. Whether the fact leads to the inference of the guilt of the accused or not is another aspect. In dealing with this aspect, the doctrine of benefit would apply and an inference of guilt can be drawn only if the proved facts are inconsistent with the innocence of the accused and are consistent only with his guilt. There is a long distance between may be true and must be true. The prosecution has to travel all the way to establish fully all the chain of events which should be consistent only with the hypothesis of the guilt of the accused and those circumstances should be of a conclusive nature and tendency and they should be such as to exclude all hypothesis but the one proposed to be proved by the prosecution. If any of the circumstances proved in a case are consistent with the innocence of the accused or the chain of continuity of the circumstances is broken, or the circumstances or some of them can be explained by any of the reasonable hypothesis then the accused must have the benefit of that hypothesis, and is thereby entitled to benefit of doubt." 44. Reliance was also placed on a decision of the Supreme Court in the case of (Himachal Pradesh Admn. v. Om Parkash)17, 1972 S.C.J.491. While dealing with the principles applicable to a criminal case and the ambit and scope of the concept of reasonable doubt, the Supreme Court observed as follows : "It is therefore difficult to expect a scientific or mathematical exactitude while dealing with such evidence or arriving at a true conclusion. Because of these difficulties corroboration is sought wherever possible and the axis that the accused should be given the benefit of doubt becomes pivstal in the prosecution of offenders, which, in other words, means that the prosecution must prove its case against an accused beyond reasonable doubt by a sufficiency of credible evidence. The benefit of doubt to which the accused is entitled to reasonable doubt, the doubt which rational thinking men will reasonably, honestly and conscientiously entertain and not the doubt of a timid mind which fights any - though unwillingly it may be - or is afraid of the logical consequences, if that benefit was not given. Or as one great Judge said it is not the doubt of a vacillating mind that has not the moral courage to decide but shelters itself in a vain and idle scepticion. It does not mean that the evidence must be so strong as to exclude even a remote possibility that the accused could not have committed the offence. If that were so the law would fail to protect society as in no case such a possibility can be excluded. It will give room for fanciful conjectures or untenable doubts and will result in deflecting the course of justice if not thwarting it altogether. What in effect this approach amounts to is that the greatest possible care should be taken by the Court in convicting an accused who is presumed to be innocent till the contrary is clearly established which burden is always in the accusstory system, on the prosecution. What in effect this approach amounts to is that the greatest possible care should be taken by the Court in convicting an accused who is presumed to be innocent till the contrary is clearly established which burden is always in the accusstory system, on the prosecution. The mere fact that there is only a remote possibility in favour of the accused is itself sufficient to establish the case beyond reasonable doubt. This then is the approach." The Supreme Court was also considering another angle of the law relating to circumstantial evidence whereby even if individual circumstances are not conclusively incriminating the accused, the linking of all of them may forge the chain in arriving at that conclusion. The Court observed as follows : "It is well-established that circumstantial evidence consists in various links in a chain which if complete leads to the undoubted conclusion that the accused and accused alone could have committed the offence with which he is charged. It is said that this evidence is much more dependable than direct evidence provided that no link in the chain is missing. While it is possible that each of these links may not by itself incriminate the accused or be conclusive against him the linking of all of them may forge the chain in arriving at that conclusion." It would be wrong to hold that the present case is one of circumstantial evidence alone. The documentary evidence and the oral evidence complement the circumstantial evidence and fully support it and, therefore, it is unnecessary for me to examine and decide the niceties of the law relating to circumstantial evidence alone. However, I must observe that as far as the question of reasonable doubt is concerned, that it is a fundamental principle of criminal jurisprudence and this test has to be strictly applied and in so doing since the evidence does not admit of any such doubt where accused No. 1 is concerned, there is something to be said as far as accused No. 2 goes and, therefore, the acquittal in his case will have to be confirmed. 45. In this regard, the conclusion arrived at by the learned Magistrate is wholly unsustainable. 45. In this regard, the conclusion arrived at by the learned Magistrate is wholly unsustainable. The trial Court ought not to have lost sight of the fact that persons in-charge of corporate affairs are trustess of all funds that are under their control and which they handle and that there exists a heavy ethical and legal responsibility to ensure that these funds are used for nothing other than the Company's legitimate activities. Where the funds are diverted for a collateral purpose, the offence of criminal breach of trust is complete because wrongful loss is caused to the Company and the ingredients of the offence are satisfied. It was incorrect on the part of the learned Magistrate to have rejected Kashiprasad Kedia's evidence on the ground that it suffers from certain infirmities. That Kashiprasad Kedia was a pliable person, there could be no two opinions about, but it was precisely a person of this type who had to be used by accused No. 1 for the execution of his scheme. One cannot expect a peragon of u/s. two to be chosen as a medium for ciphening off corporate funds. The unique factor about this case is that Kashiprasad Kedia's oral evidence is quite secondary and, in fact, incidental to the proof of the charges which rest entirely on documents and it is only to a very limited extent that his evidence is required to fill in the gaps. One needs to test it on the touchstone of the documents on record and if the evidence satisfies that test as it does, it is clear that he has related the correct facts. It is well-settled law that evidence may be accepted partially or in the whole and where there are certain infirmities the evidence would be of restrictive use; and as has been already indicated by me in this case, the evidence has been used to a very limited extent. 46. As far as the conspiracy charge is concerned, Shri Desai did argue at great length and sought to establish that it can safely be concluded that the two accused in furtherance of a conspiracy to misapropriate the company's funds had been involved in a series of acts which would justify a finding that such a conspiracy did, in fact, exist. As far as the conspiracy charge is concerned, Shri Desai did argue at great length and sought to establish that it can safely be concluded that the two accused in furtherance of a conspiracy to misapropriate the company's funds had been involved in a series of acts which would justify a finding that such a conspiracy did, in fact, exist. I have carefully evaluated all the material produced by the prosecution and there can be little difficulty in holding that accused No. 1 was personally and consciously responsible for the offence under section 409 of the Indian Penal Code in relation to the diversion of the amount of Rs. 7,00,000/-. It would, however, not be permissible to conclude that any conspiracy was in existence for a variety of reasons, the most important of which is that accused No. 2 was a mere employee of the Company unlike accused No. 1 and further since the record indicates that he got no benefit whatsoever from the entire transaction except perhaps special appreciation from his boss, accused No. 1. That he did participate in the transaction is quite certain, but the question is as to whether he did so consciously and with a guilty intent or whether he was used by accused No. 1. Accused No. 2 has stated that he had acted on the basis of instructions given to him. There were one or two persons in the Company above accused No. 2, but it was quite clear from the letter of accused No. 1 to accused No. 2 that he used to report directly to accused No. 1 and that he used to work under him and also that accused No. 1 used to deal with him directly. It would be absurd to expect that accused No. 1 would inform the second accused of his intention to commit an offence by diverting a large amount of Rs. 7,00,000/- out of the Company. It is more plausible to hold that accused No. 1 merely told accused No. 2 to pay an amount of Rs. 7,00,000/- as advance to Kashiprasad Kedia who was the Company's supplier as an advance against material and the second accused did so without having reason to doubt anything. This explains how the voucher for the advance was approved by accused No. 2 and how the transaction is recorded by the Company. 7,00,000/- as advance to Kashiprasad Kedia who was the Company's supplier as an advance against material and the second accused did so without having reason to doubt anything. This explains how the voucher for the advance was approved by accused No. 2 and how the transaction is recorded by the Company. This also explains why Kashiprasad Kedia does not involve accused No. 2 at some stages. It is also certain that at the stage of the payment to Kashiprasad Kedia, he must have been told that Basant Trading Company with which concern accused No. 1 was connected required certain money, that Kashiprasad Kedia should advance the amount in question as a loan for which he would be paid interest and that the corpus for this loan would be given to him by the Company. To my mind, there was nothing that could have made Kashiprasad Kedia suspect of any illegality or underhand business in a transaction of this type because the payment to him was made by cheque from the Company which very amount was advanced through a recorded transaction to Basant Trading Company which conern, in turn, was not a stranger, but one with which accused No. 1 himself was connected. There is same ambiguity with regard to the question as to whether this proposal was put across to Kashiprasad Kedia by accused No. 1 or by accused No. 2. This would not make much difference for the reason that if accused No. 1 did it on his own, as is more likely it is a highly incriminating circumstance against him, but if he got accused No. 2 to do it on the instructions, there is no reason to assume that he was mixed up in schemes concerning accused No. 1, or his family or Mundhra. It would still not be good enough to hold him responsible either for the commission of a criminal offence or a conspiracy charge. The existence of a conspiracy presupposes a guiltyst state of mind and a situation wherein the concerned accused pursuant to a predetermined decision execute a series of acts that constitute a criminal offence. Normally, in such cases, the acts themselves are of such a character that a participation in them could leave no doubt that the concerned accused was aware that he is taking part in the commission of the criminal offence. Normally, in such cases, the acts themselves are of such a character that a participation in them could leave no doubt that the concerned accused was aware that he is taking part in the commission of the criminal offence. In the present case, where the transaction was given the character and garb of an advance to Kashiprasad Kedia and he, in turn, was to advance money to Basant Trading Company, it would be unsafe to hold that accused No. 2 must be fixed with the guilt of having known that this money was being siphoned out of the Company and that it was not to return. On the contrary, it is permissible to conclude that where the payment was by cheque and was duly recorded that accused No. 2 would have safely felt that Kashiprasad Kedia was always obliged to restore the money to the Company or to adjust it against the supplies that were to be made by him. In this view of the matter, the acquittal by the Trial Court under the conspiracy charge stands confirmed. 47. As far as accused No. 2 is concerned, the trial Court has acquitted him and to my mind there does not appear to be sufficient justification to disturb that finding. Signing a cheque on the Company's account or for that matter approving the voucher for the advance made to Kashiprasad Kedia are both functions which accused No. 2 had to perform in the course of his normal duties. The existence of the voucher heavily assists accused No. 2 in so far as it is obvious that accused No. 1 told him that the payment was being made to Kashiprasad Kedia as an advance. Accused No. 1 was the Director of the Company and the person in overall charge as a result whereof accused No. 2 was bound to act under his instructions. If those instructions were in relation to something patently illegal, then accused No. 2 would not have been justified in saying that he participated in the offence at the behest of accused No. 1. Where, however, it is demonstrated that accused No. 1 executed his plan by giving it the garb and venser of a legitimate transaction, it would be unsafe to impute guilty knowledge to accused No. 2. Where, however, it is demonstrated that accused No. 1 executed his plan by giving it the garb and venser of a legitimate transaction, it would be unsafe to impute guilty knowledge to accused No. 2. Apart from all this, the fact that stares one in the face is that there is nothing on record from which it can be inferred that accused No. 2 was to derive any benefit at all from the transaction. On the contrary, the evidence indicates that he got nothing except the torture of being prosecuted before a criminal Court at a later point of time. This does not mean that a responsible Executive of a Company would be justified in executing whatever dishonest schemes his Directors ask him to implement. Far from it, the only reason why accused No. 2 would be entitled to an acquittal is because the complenion of the scheme would not have indicated to accused No. 2 that it was an illegal transaction. It is in these circumstances that the acquittal of accused No. 2 is confirmed. 48. For the reasons indicated above, the order of the learned Magistrate is required to be modified to the extent that the order of acquittal passed in favour of accused No. 1 in respect of the charge under section 409 I.P.C. simpliciter of the Indian Penal Code is set aside. Accused No. 1 is convicted for the offence punishable under section 406 of the Indian Penal Code. 49. In view of the aforesaid findings, it was essential, having regorded a conviction against Accused No. 1, that I hear him on the question of sentence. The judgment had been reserved and when the matter was notified and the order of conviction was pronounced on 24-9-1992, Mr. Rane, learned Counsel appearing on behalf of respondent No. 1, stated that his client would like to negotiate the matter with the complainant-Company and its directors and explore the possibility of resolving the dispute. He pointed out to me that there was a big civil suit pending between the parties and that both the heavy civil and criminal litigations could be concluded if the matter were to be amicably settled. He pointed out to me that there was a big civil suit pending between the parties and that both the heavy civil and criminal litigations could be concluded if the matter were to be amicably settled. It did appear to me rather late in the day for such a request to be made, but Shri Thakore, learned Counsel appearing on behalf of the complainant-Company, also advanced the plea that the Court should grant some time for negotiations. Undoubtedly, a very important issue that would arise, in such circumstances, is the question as to whether after having used the machinery of the trial Court for several years and having taken up the time of this Court virtually for several months in this extremely heavy matter, it was at all open to the parties to settle the matter inter se and to request the Court not to pronounce the judgment. Before this could be considered, it was pointed out that Accused No. 1 was not present in Bombay and that, in any event, time would be required for obtaining requisite instructions. The matter was adjourned from time to time and was finally heard by me on 16-12-1992. On that date, Shri Thakore on behalf of the complainant-Company and Shri Rane on behalf of Accused No. 1 stated that the settlement talks had finally broken down. They advanced their submissions on the question of sentence and at their request it was stood over to 10-2-1993. 50. Shri Thakore stated that the offence under section 409 of the Indian Penal Code is a very serious offence which is why the Legislature has provided for a sentence extending upto imprisonment for life and unlimited fine, depending upon the gravity. It was his contention that the accused in his capacity as a Director of the Company was liable to be convicted under section 409 of the Indian Penal Code. I have pointed out to Shri Thakore, however, that the charge in this case was not framed under section 409 of the Indian Penal Code, but that the same was under section 408 of the Indian Penal Code read with section 109 and 120-B of the Indian Penal Code. I have pointed out to Shri Thakore, however, that the charge in this case was not framed under section 409 of the Indian Penal Code, but that the same was under section 408 of the Indian Penal Code read with section 109 and 120-B of the Indian Penal Code. Shri Thakore pointed out to me that the complaint clearly mentioned section 409 of the Indian Penal Code and that this was only a typographical error which can be corrected and, if necessary, a fresh plea obtained from the accused. To my mind, this procedure is not advisable at this point of time because the trial and the hearing of the appeal having been concluded, if the accused were to contend that such alteration is to prejudice him, it would involve an unnecessary re-opening of the proceedings, which is not permissible. Moreover, I have recorded a conviction against the accused under section 406 of the Indian Penal Code, which is a lessor offence to the one with which he was charged. 51. Shri Thakore pointed out to me that the accused was a Director of a limited Company and that he committed criminal breach of trust in respect of a huge amount of Rs. 7,00,000/-. He has stated that the evidence has also indicated that a similar modus operandi was adopted by the accused why siphoned the amount from a sister Company of which he was the Director, but which is not the subject-matter of the charge in the present case. The Accused is a well-placed person and this substantially aggravatee the nature of the offence. Shri Thakore pointed out to me that the Company brought to the notice of the accused the offence committed by him long before the prosecution and the suits were instituted and that it was open to him to have restored the money to the Company even at that point of time which was almost 24 years back. Shri Thakore made a serious grievance of the fact that the accused who is a businessman has benefited tremandously by having taken this amount of Rs. 7,00,000/- out of the Company and that it must have multiplied at least fifty-fold in the course of the last over two decades. Shri Thakore made a serious grievance of the fact that the accused who is a businessman has benefited tremandously by having taken this amount of Rs. 7,00,000/- out of the Company and that it must have multiplied at least fifty-fold in the course of the last over two decades. He, therefore, submitted that this Court must realistically compute the actual loss that has resulted to the Company and the wrongful gain that has taken place while awarding a sentence. 52. Shri Rane pointed out that the accused is the son-in-law of Mundra and that the entire evidence has been directed towards establishing that it was Mundra who was acting in the background and that the transaction was, in fact, planned by him for the purposes of obtaining money to pay for the shares. Shri Rane made a grievance that accused No. 1 has virtually been used as a front and that the real culprit has not even been prosecuted and towards this end, he indicated that all the other persons who were parties to the transaction, particularly Mundra, are defendants before the Civil Courts. He pleaded that accused No. 1 is being virtually hanged for no fault of his except that he carried out certain instructions and Shri Rane made an impassioned plea that only a token punishment be awarded. The record clearly indicates that within hardly three or four days an amount of Rs. 7,00,000/- had been paid over by accused No. 1 to Vijaykumar Mundra s/o Mr. Mundra through I.K. Daga. Shri Rane contended that, admittedly, the accused has neither retained the amount nor has he benefited from it and in these circumstances it would be harsh to impose a heavy punishment on him on a mechanical consideration that the amount was misapproapriated by him. He also pointed out to me that accused No. 1 is 56 years old, that he has several health problems and further that he has recently undergone surgery. 53. In the first instance, it is essential that the inconsistencies in the record should be sorted out. I have carefully perused the original complaint which does make out a charge under section 409 of the Indian Penal Code. The charge, however, framed by the Court was under section 408 of the Indian Penal Code, which section prescribes a lesser punishment for Criminal Breach of Trust than section 409 of the Indian Penal Code. I have carefully perused the original complaint which does make out a charge under section 409 of the Indian Penal Code. The charge, however, framed by the Court was under section 408 of the Indian Penal Code, which section prescribes a lesser punishment for Criminal Breach of Trust than section 409 of the Indian Penal Code. It would, however, be legally incorrect to convict the accused under section 408 of the Indian Penal Code because that section concerns a clerk or a servent. The accused was a Director of the Company and he was certainly not a clerk. It would be debatable as to whether he was a servant of the Company because the relationship of Master and servant in law would normally be one where the accused is an employee. There is nothing on record to indicate that the accused was an employee in that sense and the record does suggest that he was nominated as a Director in which case a conviction under section 408 of the Indian Penal Code may not be legally sound. It would, however, be open to the Court on finding that the accused has committed the offence of criminal breach of trust to record a conviction under section 406 of the Indian Penal Code which constitutes the same offence, but involves a lesser sentence. Accused No. 1, therefore, stands convicted of the offence under section 406 of the Indian Penal Code. 54. Coming to the grounds that have been adduced by either sides, it is essential that this Court taken cognizance of the realistic quantum of the amount involved in this case which happens to be a large amount of Rs. 7,00,000/-. The offence has taken place in the month of July 1969 at which time, even on a mechanical consideration, the rupee value was very much higher. This is for the limited aspect of considering the money quantum involved in the offence in relation to actual purchasing power. The accused was a Director of a public limited Company in which position the law expects of him to act with a sense of honesty, integrity and with great responsibility. In diverting corporate fund, he was perhaps involving in a form of activity that is indulged in with great impunity. The accused was a Director of a public limited Company in which position the law expects of him to act with a sense of honesty, integrity and with great responsibility. In diverting corporate fund, he was perhaps involving in a form of activity that is indulged in with great impunity. Unfortunately, this does not change the complexion of the fact that even if it is considered a common place white collar industries that it still is a serious criminal offence. To my mind, when instances of this type are established before the Court, it is in the public interest that the law must be firmly and meaningfully applied and having regard to the manner in which companies are subjected to such rackets by Directors, a deterrent sentence is called for. 55. There is another angle to this case, namely, the fact that accused No. 2 was subjected to the prosecution and the lengthy litigation, thereafter, merely because his name figures in the transaction. Accused No. 2 was an employee and accused No. 1 used him for the commission of the offence with the obvious intention that if at all anybody had to face the music later on that the blame would go to accused No. 2. The offence of criminal breach of trust in respect of the company funds was cleverly planned by accused No. 1, but the dishonesty was so deep that an employee was used as a front and a channel for this purpose. There are aggrevating factors. I have had occasion to deal with the evidence of Kashiprasad who, in no uncertain terms, has stated that this transaction had so frightened him that he had attempted suicide. Kedia was a broker and a client of the Company and that accused No. 1 had used him and his bank account as a cover for the commission of the offence is established. Kedia was subsequently not available and there is nothing to indicate as to what happened to him. The reference to this aspect is for the purpose of recording that the offence was carefully planned and that it was executed in a manner whereby on detection, the blame would normally have rubbed off on the other two persons and accused No. 1 would have gone scot-free. Serious cognizance will, therefore, have to be taken of these aspects. 56. The reference to this aspect is for the purpose of recording that the offence was carefully planned and that it was executed in a manner whereby on detection, the blame would normally have rubbed off on the other two persons and accused No. 1 would have gone scot-free. Serious cognizance will, therefore, have to be taken of these aspects. 56. It is a principle of law that unjust enrichment is not permissible. The argument canvassed on behalf of accused No. 1 is that he has not retained the money with him nor has he used it and, therefore, it cannot be concluded that wrongful gain has accured to him. To my mind, this last aspect of the matter is irrelevant, but I am not prepered to hold that wrongful gain has not accrued to the accused. It has been demonstrated that there were in existence a number of firms and companies, all of which accused No. 1 and his family relations and in-laws were running and were connected with and that the money was deliberately routed through as many as these three or four concerns in order to hide the identity of the amount, its origin and its movement and change its complexion altogether, and it was thereafter traced until it reached the son of Mundra. In these circumstances, whether accused No. 1 retained the amount with him for a long time or whether he was a party to all sorts of dubious financial transactions is not of much consequence, but what he would be liable for is the wrongful loss that has accrued to the Company. 57. The amount that was siphoned out of the Company in July 1969 was Rs. 7,00,000/-. Shri Thakore pointed out that this amount is outstanding to the Company and that along with the interest that has accrued over the years, it has accumulated to over Rs. 1,00,00,000/-. It is true that Shri Rane contended that the length of the litigation is not something for which he is responsible, but it would be impossible to deny that accused No. 1 has resisted making good the loss caused by him to the Company for this entire period of time. 1,00,00,000/-. It is true that Shri Rane contended that the length of the litigation is not something for which he is responsible, but it would be impossible to deny that accused No. 1 has resisted making good the loss caused by him to the Company for this entire period of time. On the other hand, as a businessmen, whether directly or indirectly, it must be assumed that he has benefited through the amount which must have multiplied at least ten-fold even if one were to take the most conservative estimate. To my mind, therefore, apart from a jail sentence, which is a must, having regard to the complexion of the present offence, it would be equally necessary and in the public interest to impose a fine on accused No. 1 that would offset such unjust enrichment. Unless this is done, it may unfortunately be assumed that it is most profitable to indulge in such offences. 58. The appeal is accordingly allowed against accused No. 1. The appeal against accused No. 2 stands dismissed. The acquittal of accused No. 2 by the trial Court stands confirmed. As far as accused No. 1 is concerned, his acquittal of the offence punishable under section 120-B of the Indian Penal Code stands confirmed. 59. The acquittal of accused No. 1 in respect of the offence of criminal breach of trust by the trial Court is set aside. Accused No. 1 is convicted of the offence punishable under section 406 of the Indian Penal Code and it is directed that he should undergo a sentence of rigorous imprisonment for two years and that he pay a fine in the sum of Rs. 70,00,000- (Rupees Seventy Lacs only), in default, to undergo rigorous imprisonment for nine months. The substantive sentences to run concurrently. 60. Having regard to the quantum of the fine imposed on accused No. 1, accused No. 1 is granted time of 12 weeks to deposit the fine amount in this Court. The operative part of this order shall be stayed for a period of 12 weeks even as far as the jail sentence is concerned. Office shall furnish to accused No. 1 a certified copy of this judgment on a priority basis. The appeal is disposed of accordingly. Order accordingly. *****