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2012 DIGILAW 28 (JHR)

R. C. Mahajan v. State of Bihar

2012-01-05

R.R.PRASAD

body2012
JUDGMENT By Court.-Nobody appeared on behalf of the opposite party no. 2. Heard learned counsel for the petitioners and learned counsel for the State. 2. This application is directed against the order dated 7.4.1998 passed in C-1 Case No. 192 of 1998 by the then Chief Judicial Magistrate, Jamshedpur whereby and whereunder, cognizance of the offence under Section 406 read with Section 34 of Indian Penal Code has been taken against the accused persons including these petitioners. 3. It does appear that the complainant lodged a complaint against Indian Steel and Wire Products Ltd., Jamshedpur as well as against these petitioners, who happened to be the General Manager (Works), Vice-President (Corporate) and Senior Manager (Marketing and Sales), as also against the Chairman and Managing Director of the said Company alleging therein that the complainant-company appointed Indian Steel and Wire Products Ltd., Jamshedpur as conversion agent for converting billets into wire rods on payment of conversion charges by the complainant-company. The complainant-company started supplying billets for converting the same into wire rods and it supplied 9,500.958 Metric Tones till 1.4.1997. Thereafter from April-May, 1997 to 21.2.1998 the quantity, which was supplied to the complainant-company, was 26,548.230 Metric Tones but the wire rods converted out of the billets as 1.4.1997 was only to the extent of 1,494.966 Metric Tones. Thereafter the accused-company stopped supplying finished wire rods. Thus, it has been alleged by the complainant-company that the total billets, which were supplied to the accused company, were to the extent of 29,255.55 Metric Tones, but the total stock of billets and wire rods on the date of inspection was found to be 5,778.407 Metric Tones and 5,054.052 Metric Tones respectively and that apart, 350.910 Metric Tones and 6,330 Metric Tones of wire rods had been supplied after 21.2.1998 i.e. the date on which verification was made and thus, the accused-company misappropriated billets/wire rods to the extent of 10,475.219 Metric Tones worth Rs. 12,06,41,632.03/-. 4. On such complaint, cognizance of the offence was taken on 7.4.1998 not only against Indian Steel and Wire Products Ltd., Jamshedpur but also against these petitioners, who at the relevant point of time were the General Manager (Works), Vice President (Corporate) and Senior Manager (Marketing and Sales) of the Company. 5. Being aggrieved with that order, this application has been filed. 6. Mr. 5. Being aggrieved with that order, this application has been filed. 6. Mr. Anil Kumar, learned counsel appearing for the petitioners, submits that taking the entire allegations made in the complaint petition to be true, no criminal offence is made out rather it is out and out a case of civil liability and not a criminal liability and on this ground alone, the order taking cognizance is fit to be set aside. 7. It was also submitted that there was an agreement in between the complainant-company and Indian Steel and Wire Products Ltd., Jamshedpur for converting billets into wire rods but according to the case of the complainant, Indian Steel and Wire Products Ltd., Jamshedpur in spite of being supplied with the billets did not supply corresponding wire rods after its conversion and hence it is only the company who is liable and not these petitioners and moreover these petitioners have never been alleged to have committed any overt act in commission of the offence alleged and in spite of that, the court below has taken cognizance of the offence against these petitioners which is quite illegal and is fit to be set aside. 8. In context of the submission made on behalf of the petitioners, one needs to take notice of the provision of Section 405 of Indian Penal Code, which speaks about the criminal breach of trust, reads as under:- "405. Criminal breach of trust.--Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits "criminal breach of trust". " 9. From perusal of the aforesaid provision, it does appear that if a person is entrusted with the property dishonestly or converts to his own use that property dishonestly uses or disposes of that property in violation of any agreement, one is liable to be prosecuted under Section 406 of Indian Penal Code. 10. " 9. From perusal of the aforesaid provision, it does appear that if a person is entrusted with the property dishonestly or converts to his own use that property dishonestly uses or disposes of that property in violation of any agreement, one is liable to be prosecuted under Section 406 of Indian Penal Code. 10. Here in the instant case, it is never the case of the complainant that these petitioners have been entrusted with the property nor it is the case of the complainant that the said property was misappropriated dishonestly by these petitioners rather it is the case of the complainant that the billets pursuant to agreement arrived at in between the complainant company and Indian Steel and Wire Products Ltd., Jamshedpur were supplied by the complainant-company for its conversion of wire rods and, therefore, even if any criminal breach of trust is made out, that is made out against the accused-company and not against these petitioners. 11. In this respect I may refer to a decision rendered in a case of Keki Hormusji Gharda and Others vs. Mehervan Rustom Irani and Another [ (2009)6 S.C.C. 475 ], wherein it has been held as under:- "The Penal Code, 1860 save and except in some matters does not contemplate any vicarious liability on the part of a person. Commission of an offence by raising a legal fiction or by creating a vicarious liability in terms of the provisions of a statute must be expressly stated. The Managing Director or the Directors of the Company, thus, cannot be said to have committed an offence only because they are holders of offices. The learned Additional Chief Metropolitan Magistrate, therefore, in our opinion, was not correct in issuing summons without taking into consideration this aspect of the matter. The Managing Director and the Directors of the Company should not have been summoned only because some allegations were made against the Company." 12. Under the aforesaid facts and in view of the decision rendered in the case referred to above, the court below appears to have committed illegality in taking cognizance of the offence against these petitioners. 13. The Managing Director and the Directors of the Company should not have been summoned only because some allegations were made against the Company." 12. Under the aforesaid facts and in view of the decision rendered in the case referred to above, the court below appears to have committed illegality in taking cognizance of the offence against these petitioners. 13. Accordingly, the entire criminal proceeding, including the order dated 7.4.1998 passed by the Chief Judicial Magistrate, Jamshedpur in C-1 Case No. 192 of 1998 under which cognizance of the offence has been taken against these petitioners under Section 406/34 of Indian Penal Code, IS hereby quashed. 14. In the result, this application is allowed.