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2024 DIGILAW 9 (HP)

Mukesh Sharma v. State of Himachal Pradesh

2024-01-02

RAKESH KAINTHLA

body2024
JUDGMENT : Rakesh Kainthla, J. The informant-Brijesh Kharbanda made a complaint to the police asserting that a firm was established in the name and style of MM Square by the petitioner-Mukesh Sharma and the informant-Brijesh Kharbanda on 03.12.2019. Both the partners agreed to abide by all the terms and conditions of the deed. Both the partners agreed to invest 50% amount in the business of the firm. Mukesh Sharma was empowered to purchase the land and carry out the construction and other business activities. The informant invested .1.35 Crore. The construction started in the year 2020. The petitioner was given the work of development of the project. The informant suspected that the payments were being made to un- named building material suppliers, contractors and labourers. He noticed that a large amount of cash was being withdrawn by Mukesh Sharma from the account of the firm. He visited the project site and found that minimum work was carried out by the petitioner. He could not find account books and other relevant documents. He requisitioned books of account and balance sheets of the firm but his request was not considered by the petitioner. He deputed Charan Singh Arora to supervise and inspect the daily activities. Charan Singh and Mukesh Sharma used to share the same room, as the rest of the rooms were being offered for homestay purposes. Charan Singh caught Mukesh Sharma red-handed while he was making the invoices in his own hands with the help of Narender Thakur- contractor. The informant found that Mukesh Sharma had prepared false bill books. Most of the bills were issued under the handwriting of the petitioner. Some of the fake books were obtained under the name of Ajay Kumar, Ashu traders and Kundan Lal Radhakrishnan. The bills were not genuine and on enquiry, it was found that no material was purchased from these firms. All payments were shown to have been made in cash for which, the petitioner was not authorized. The construction quality was also found to be poor. No technical/qualified person was involved. Upkar Singh, Chartered Accountant of the firm gave a few copies of the bank account with the marking of vendors with pen and few invoices. These were found to be fake. Mukesh Sharma provided photocopies of invoices and vouchers through WhatsApp. Original tax returns were also not shown. The maximum investment was made by the informant. Upkar Singh, Chartered Accountant of the firm gave a few copies of the bank account with the marking of vendors with pen and few invoices. These were found to be fake. Mukesh Sharma provided photocopies of invoices and vouchers through WhatsApp. Original tax returns were also not shown. The maximum investment was made by the informant. He also received a notice from Baljeet Singh regarding the payment of liabilities outstanding to him. Baljeet Singh had not provided any services. These acts constituted fraud, misrepresentation and forgery. The police registered FIR No.93 of 2023 dated 19.08.2023 for the commission of offences punishable under Sections 403, 405, 406, 420, 467, 468 and 471 read with Section 120 B of IPC at Police Station Dharampur, District Solan, H.P. 2. The petitioner filed the present petition for seeking pre- arrest bail. It was asserted that the FIR had been lodged on distorted facts. The petitioner never committed any breach of trust. He never forged any documents. All payments were made for the genuine supply of the material. Payments were also made to the persons, who had rendered the services for the project. The complaint has been filed at the instance of Mohit Satija, brother-in-law of the informant. The petitioner started the construction work, as per the terms and conditions. He submitted the income tax return showing the assets and liabilities. The informant started harassing the petitioner on one pretext or the other. The petitioner made complaints against the informant and his brother-in-law but no action was taken. The petitioner was pressurized to give one crore to the informant and hand over his residential flat and vacant land to the informant. The petitioner did not agree to the same and multiple FIRs were lodged against him. The informant also got issued a notice through his counsel for the appointment of the Arbitrator as per the clauses of the partnership deed. The notice was duly replied by the petitioner through his counsel. It is a civil dispute between the parties, which has been given the colour of criminal litigation. There is a considerable delay in reporting the matter. The petitioner is 66 years old and any coercive action by the police will curtail his liberty; therefore, it was prayed that the present petition be allowed and the petitioner be released on bail. 3. The police filed a status report reproducing the contents of the FIR. There is a considerable delay in reporting the matter. The petitioner is 66 years old and any coercive action by the police will curtail his liberty; therefore, it was prayed that the present petition be allowed and the petitioner be released on bail. 3. The police filed a status report reproducing the contents of the FIR. It was asserted that the informant produced the bills and other documents, which were seized by the police. Chartered Accountant-Upkar Singh made a statement that the petitioner was looking after the construction of MM Squares. The petitioner used to make available the bills and the cash vouchers. The bills of Ashu Traders and M/s Kundan Mal Radhakrishnan were verified. Both of them denied that the original bills pertained to their firm. Ajay Kumar stated that he did not know how to write; hence, he used to hand over the blank bills to the petitioner and the petitioner used to fill them. The false bills worth Rs.17,06,312/- were recovered, which were returned by the petitioner. The petitioner is to be interrogated to determine the extent of the amount misappropriated by him; therefore, it was prayed that the present petition be dismissed. 4. The informant filed written submissions asserting that the financial and other dealings were made by the petitioner. Cash withdrawals were made by him and Ajay Kumar. There was a misunderstanding between the petitioner and Ajay Kumar as Ajay Kumar was paying the money to the petitioner. These acts fall within the definition of cheating. The petitioner issued five cheques despite knowing that there was insufficient money in the account. One cheque was dishonoured and the notice was issued to the informant. The FIR was also registered against the informant. The petitioner was entrusted with the money of the firm and he had misappropriated the same. The petitioner is not joining the investigation. No recovery is being effected from him. Ashu Traders and Kundan Lal Radhakrishan have stated that bills were not issued by them. Kundan Lal Radhakrishnan is not dealing in iron bars. The bills books are to be recovered. The documents were forged by the petitioner in connivance with Ajay Kumar & Baljeet and the offence punishable under Section 120B of IPC is also attracted. Therefore, it was prayed that the bail petition be dismissed. 5. I have heard Mr. Ajay Kochhar, learned Senior Counsel assisted by Mr. The bills books are to be recovered. The documents were forged by the petitioner in connivance with Ajay Kumar & Baljeet and the offence punishable under Section 120B of IPC is also attracted. Therefore, it was prayed that the bail petition be dismissed. 5. I have heard Mr. Ajay Kochhar, learned Senior Counsel assisted by Mr. Anubhav Chopra, learned counsel for the petitioner, Mr. Prashant Sen, learned Deputy Advocate General, for the respondent/State and Mr. Ajay Sharma, learned Senior Counsel assisted by Mr. Atharv Sharma, learned counsel for the informant. 6. Mr. Ajay Kochhar, learned Senior Counsel submitted that the dispute between the parties is purely civil. The informant and the petitioner entered into an agreement. The petitioner is carrying out the construction as per the agreement. The informant wants to pressurize the petitioner to give up his share. The notice for the appointment of the Arbitrator has also been issued by the informant. The criminal proceedings have been initiated for ulterior purposes. The petitioner is 66 old and is suffering from various diseases. No fruitful purpose would be served by custodial interrogation of the petitioner; therefore, he prayed that the present petition be allowed and the petitioner be released on bail. 7. Mr Prashant Sen, learned Deputy Advocate General for the respondent/State submitted that the petitioner has misappropriated a huge amount, which is to be recovered by the police. The custodial interrogation is necessary for the recovery of the amount; therefore, he prayed that the present petition be dismissed. 8. Mr. Ajay Sharma, learned Senior Counsel for the informant adopted the submissions of Mr. Prashant Sen and further submitted that the petitioner had misappropriated the money of the firm. He had forged the documents as Ashu Traders and Kundan Mal Radhakrishan have stated that the bill books produced by the petitioner were not issued by them. The petitioner is to be interrogated to recover the money and the bill books; therefore, he prayed that the present petition be dismissed. 9. I have given considerable thought to the submissions at the bar and have gone through the record carefully. 10. It was laid down by the Hon’ble Supreme Court in P. Chidambaram vs. Directorate of Enforcement 2019 (9) SCC 24 that the power of pre- arrest is extraordinary and should be exercised sparingly. It was observed: “67. 9. I have given considerable thought to the submissions at the bar and have gone through the record carefully. 10. It was laid down by the Hon’ble Supreme Court in P. Chidambaram vs. Directorate of Enforcement 2019 (9) SCC 24 that the power of pre- arrest is extraordinary and should be exercised sparingly. It was observed: “67. Ordinarily, arrest is a part of the procedure of the investigation to secure not only the presence of the accused but several other purposes. Power under Section 438 Cr.P.C. is an extraordinary power and the same has to be exercised sparingly. The privilege of pre-arrest bail should be granted only in exceptional cases. The judicial discretion conferred upon the court has to be properly exercised after application of mind as to the nature and gravity of the accusation; the possibility of the applicant fleeing justice and other factors to decide whether it is a fit case for grant of anticipatory bail. Grant of anticipatory bail to some extent interferes in the sphere of investigation of an offence and hence, the court must be circumspect while exercising such power for the grant of anticipatory bail. Anticipatory bail is not to be granted as a matter of rule and it has to be granted only when the court is convinced that exceptional circumstances exist to resort to that extraordinary remedy.” 10. It is an admitted case of the parties that the informant and the petitioner entered into a partnership agreement and the petitioner was entrusted with the construction work. It was submitted that the petitioner had misappropriated the money of the firm, hence, he is liable for criminal breach of trust. It was laid down by the Hon’ble Supreme Court in Velji Raghavji Patel v. State of Maharashtra, (1965) 2 SCR 429 : AIR 1965 SC 1433 : (1965) 2 Cri LJ 431 that a partner of the firm cannot be charged with the criminal breach of trust of the property of the firm. It was observed: “5. On behalf of the appellant, it is contended that even if the prosecution had succeeded in showing that the four items referred to above were realised by the appellant and that he had not accounted for them properly he will not be liable for criminal breach of trust under Section 409 IPC but that his liability would be only of a civil nature. In support of this contention, reliance is placed upon Buban Mohan Rana v. Surendra Mohan Das [ILR(1952) 11 Cal 23]. There the following question was referred for decision by the Full Bench: “Can a charge under Section 406 of the Indian Penal Code be framed against a person, who, according to the complainant, is a partner with him and is accused of the offence in respect of property belonging to both of them as partners?” 6. All the five Judges constituting the Full Bench answered the question in the negative. In the leading judgment which was delivered by Harris C.J., he pointed out that before criminal breach of trust is established it must be shown that the person charged has been entrusted with property or with dominion over property and that a partner does not, in the ordinary course, hold property in a fiduciary capacity. The learned Chief Justice further pointed out that there is really no distinct or defined share of a partner in any item belonging to the partnership. Upon the dissolution of the partnership and after an account is taken it may turn out that a partner who retains an asset is entitled to the whole of the asset and maybe, much more. He referred to the English view that a partner does not hold money belonging to the partnership in a fiduciary capacity and said that this view appeared to him to be correct. Referring to the decision in Queen v. Okhoy Coomar Shaw [13 Bengal Law Reports 707] in which a Full Bench had held that a partner who dishonestly misappropriates or converts to his use any of the partnership property with which he is entrusted or over which he has dominion, is guilty of an offence under Section 405 IPC, Harris, C.J. observed: “The Full Bench never seems to have considered that there is really no partner's share in the property until an account (sic) and it may well be that a partner, who retains an asset, is entitled not only to his share according to the partnership agreement in that asset, but, on taking an account, it may be found that he is entitled to the whole of the asset and considerably more. In such a case, how can it be said that he has been guilty of a breach of trust and has acted dishonestly towards his co-partners if an account would show that he was entitled to everything which he had retained?” He has referred to a number of decisions of the Indian High Courts in some of which the view taken in the Okhoy Coomar Shaw case [13 Bengal Law Reports 707] was followed. One of those cases was Jagannath Raghunathdas v. Emperor [AIR 1932 Bom 47] where it was held that a partner may be prosecuted under Section 406 IPC for failure to account for partnership monies and assets. In that case, the partner who was the accused was given authority by the other partners to collect monies or property and according to the Bombay High Court in these circumstances, he was “entrusted” with dominion over collections made by him. The learned Judges who decided that case had, however, pointed out that the court should approach cases of this kind very carefully because it was impossible to say in many cases what the share of the accused might be, whether the accused was indebted to the firm or whether the firm was indebted to him. The High Court also pointed out that if the firm was indebted to him there might be no dishonest intention in his dealing with the partnership property. In the arguments before us, apart from these three decisions, our attention was called to a few more decisions of the High Courts in India. But whether they take one view or the other they do not seem to add to what has been said in these three decisions. We, therefore, do not feel called upon to make any reference to these decisions. 7. It seems to us that the view taken in Buban Mohan Rana case [ILR(1952) 11 Cal 23] by the later Full Bench of the Calcutta High Court is the right one. Upon the plain reading of Section 405 IPC, it is obvious that before a person can be said to have committed a criminal breach of trust it must be established that he was either entrusted with or entrusted with dominion over property which he is said to have converted to his own use or disposed of in violation of any direction of law etc. Every partner has dominion over property by reason of the fact that he is a partner. This is a kind of dominion which every owner of property has over his property. But it is not dominion of this kind which satisfies the requirements of Section 405. In order to establish “entrustment of dominion” over property to an accused person the mere existence of that person's dominion over property is not enough. It must be further shown that his dominion was the result of entrustment. Therefore, as rightly pointed out by Harris, C.J., the prosecution must establish that dominion over the assets or a particular asset of the partnership was, by a special agreement between the parties, entrusted to the accused person. If in the absence of such a special agreement, a partner receives money belonging to the partnership he cannot be said to have received it in a fiduciary capacity or other words cannot be held to have been “entrusted” with dominion over partnership properties. 9. Mr Chatterjee finally contends that the act of the appellant will at least amount to dishonest misappropriation of property even though it may not amount to criminal breach of trust and, therefore, his conviction could be altered from one under Section 409 to that under Section 403. Section 403 runs thus: “Whoever dishonestly misappropriates or converts to his use any movable property, shall be punished with imprisonment of either description for a term, which may extend to two years, or with fine, or with both.” It is obvious that an owner of property, in whichever way he uses his property and with whatever intention will not be liable for misappropriation and that would be so even if he is not the exclusive owner thereof. As already stated, a partner has, undefined ownership along with the other partners over all the assets of the partnership. If he chooses to use any of them for his own purposes he may be accountable civilly to the other partners. But he does not thereby commit any misappropriation. Mr Chatterjee's alternative contention must be rejected.” 11. Therefore, even if the allegations of the FIR are accepted as correct, no offence punishable under Sections 406 or 409 of IPC is prima facie made against the petitioner. 12. But he does not thereby commit any misappropriation. Mr Chatterjee's alternative contention must be rejected.” 11. Therefore, even if the allegations of the FIR are accepted as correct, no offence punishable under Sections 406 or 409 of IPC is prima facie made against the petitioner. 12. The FIR has also been lodged for the commission of an offence punishable under Section 420 of the IPC, however, the offences punishable under Sections 406 and 420 of the IPC cannot be tried together, as both these offences require different mens rea. Section 406 of IPC provides that whoever being in any manner entrusted with property or dominion over the property commits a criminal breach of trust in respect of that property shall be punished. Thus the essential requirement of Section 406 of IPC is the entrustment of the property, which means that confidence is reposed by a person delivering the property to another person that the property would be utilized in a particular manner. The other person abuses that confidence and instead of using the property in that particular manner appropriates it for his own use. Section 420 of IPC on the other hand, requires deception or misrepresentation based on which the money is paid. Hence both these Sections cannot stand together. It was laid down by Hon'ble Delhi High Court in Wolfgang Rein Versus State 2012 (3) JCC 2042 that a person cannot be charged with the offence of cheating and criminal breach of trust simultaneously for the same transaction. It was observed: “34. Further, a person cannot be charged with the offence of cheating and criminal breach of trust simultaneously for the same transaction because, for the offence of cheating, it is a prerequisite that dishonest intention must exist at the inception of any transaction whereas, in the case of criminal breach of trust, there must exist a relationship between the parties whereby one party entrusts another with the property as per law, therefore, for the commission of a criminal breach of trust, the dishonest intention comes later, i.e, after obtaining dominion over the property by the accused person whereas, for the commission of cheating, the dishonest intention of the accused has to be present at the inception of the transaction.” 13. In the present case, the case of the informant is also that the petitioner being a working partner had dominion over the property of the firm and he had misappropriated the same. It was nowhere stated that any misrepresentation was made by the petitioner to the informant due to which the informant was made to part with the money: hence, prima facie, the offence punishable under Section 420 of IPC is also not made out at this stage. 14. It was submitted that the petitioner had forged the documents as he had written the bills provided by Ashu Traders. The term forgery has been defined in Section 463 of IPC as under: "463. Forgery.--Whoever makes any false documents or electronic record part of a document or electronic record with, intent to cause damage or injury], to the public or any person, or to support any claim or title, or to cause any person to part with property, or to enter into any express or implied contract, or with intent to commit fraud or that fraud may be committed, commits forgery." 15. It is apparent from the definition that a person has to make a false document before he can be said to have committed forgery. Making a false document is defined in Section 464 of IPC. It reads as under: 464. It is apparent from the definition that a person has to make a false document before he can be said to have committed forgery. Making a false document is defined in Section 464 of IPC. It reads as under: 464. Making a false document.—A person is said to make a false document or false electronic record— First.—Who dishonestly or fraudulently— (a) makes, signs, seals or executes a document or part of a document; (b) makes or transmits any electronic record or part of any electronic record; (c) affixes any electronic signature on any electronic record; (d) makes any mark denoting the execution of a document or the authenticity of the electronic signature, with the intention of causing it to be believed that such document or part of a document, electronic record or electronic signature was made, signed, sealed, executed, transmitted or affixed by or by the authority of a person by whom or by whose authority he knows that it was not made, signed, sealed, executed or affixed; or Secondly.—Who, without lawful authority, dishonestly or fraudulently, by cancellation or otherwise, alters a document or an electronic record in any material part thereof, after it has been made, executed or affixed with electronic signature either by himself or by any other person, whether such person be living or dead at the time of such alteration; or Thirdly.—Who dishonestly or fraudulently causes any person to sign, seal, execute or alter a document or an electronic record or to affix his electronic signature on any electronic record knowing that such person by reason of unsoundness of mind or intoxication cannot, or that by reason of deception practised upon him, he does not know the contents of the document or electronic record or the nature of the alteration. 16. It was laid down by the Hon’ble Supreme Court in Mohammed Ibrahim versus State of Bihar 2009 (8) SCC 751 that the prosecution is required to prove that the accused had forged a document by creating a false document to establish the offence of forgery. A false document is when a document is executed claiming to be executed by someone else or authorised by someone else or a document is tampered or signatures are obtained by practising deception. A false document is when a document is executed claiming to be executed by someone else or authorised by someone else or a document is tampered or signatures are obtained by practising deception. It was observed:- “[10] An analysis of section 464 of the Penal Code shows that it divides false documents into three categories: 10.1) The first is where a person dishonestly or fraudulently makes or executes a document with the intention of causing it to be believed that such document was made or executed by some other person, or by the authority of some other person, by whom or by whose authority he knows it was not made or executed. 10.2) The second is where a person dishonestly or fraudulently, by cancellation or otherwise, alters a document in any material part, without lawful authority, after it has been made or executed by either himself or any other person. 10.3) The third is where a person dishonestly or fraudulently causes any person to sign, execute or alter a document knowing that such person could not because of (a) unsoundness of mind; or (b) intoxication; or (c) deception practised upon him, know the contents of the document or the nature of the alteration. [11] In short, a person is said to have made a 'false document', if (i) he made or executed a document claiming to be someone else or authorised by someone else; or (ii) he altered or tampered with a document; or (iii) he obtained a document by practising deception, or from a person not in control of his senses.” 17. In the present case, blank documents were handed over to the petitioner by Ashu Traders which means that sufficient authority was provided to the petitioner to fill the same. Therefore, the document cannot be said to be forged. 18. Heavy reliance was placed upon the entry in the daily diary made in the Police Station, Pachhad at the instance of Kundan Lal Radhakrishan that their bill book was being misused by someone, however, no action was taken on the entry. It was not even mentioned that the police of police station Pachhad registered any FIR against the petitioner for misusing the bill book. Thus, no advantage can be derived from this entry. 19. It was not even mentioned that the police of police station Pachhad registered any FIR against the petitioner for misusing the bill book. Thus, no advantage can be derived from this entry. 19. The police and the informant had asserted that the petitioner had misappropriated a lot of money and the custodial interrogation of the petitioner is required for the recovery of the money. This is not permissible. It was laid down by the Hon’ble Supreme Court in Ramesh Kumar vs. State NCT of Delhi (2023) 7 SCC 461 that the bail proceedings cannot be turned into recovery proceedings. It was observed:- 23. In Dilip Singh v. State of M.P., (2021) 2 SCC 779 : (2021) 2 SCC (Cri) 106, this Court sounded a note of caution in the following words : (SCC p. 780, paras 3- 4) “3. By imposing the condition of deposit of Rs 41 lakhs, the High Court has, in an application for pre- arrest bail under Section 438 of the Criminal Procedure Code, virtually issued directions in the nature of recovery in a civil suit. 4. It is well settled by a plethora of decisions of this Court that criminal proceedings are not for the realisation of disputed dues. It is open to a court to grant or refuse the prayer for anticipatory bail, depending on the facts and circumstances of the particular case. The factors to be taken into consideration, while considering an application for bail are the nature of the accusation and the severity of the punishment in the case of conviction and the nature of the materials relied upon by the prosecution; reasonable apprehension of tampering with the witnesses or apprehension of threat to the complainant or the witnesses; the reasonable possibility of securing the presence of the accused at the time of trial or the likelihood of his abscondence; character, behaviour and standing of the accused; and the circumstances which are peculiar or the accused and larger interest of the public or the State and similar other considerations. A criminal court, exercising jurisdiction to grant bail/anticipatory bail, is not expected to act as a recovery agent to realise the dues of the complainant, and that too, without any trial.” 24. Yet again in Bimla Tiwari v. State of Bihar, (2023) 11 SCC 607: 2023 SCC OnLine SC 51, this is what the Court said : (SCC paras 9-11) “9. Yet again in Bimla Tiwari v. State of Bihar, (2023) 11 SCC 607: 2023 SCC OnLine SC 51, this is what the Court said : (SCC paras 9-11) “9. We have indicated on more than one occasion that the process of criminal law, particularly in matters of grant of bail, is not akin to money recovery proceedings but what has been noticed in the present case carries the peculiarities of its own. 10. We would reiterate that the process of criminal law cannot be utilised for arm-twisting and money recovery, particularly while opposing the prayer for bail. The question as to whether pre-arrest bail, or for that matter regular bail, in a given case is to be granted or not is required to be examined and the discretion is required to be exercised by the Court with reference to the material on record and the parameters governing bail considerations. Putting it in other words, in a given case, the concession of pre-arrest bail or regular bail could be declined even if the accused has made payment of the money involved or offers to make any payment; conversely, in a given case, the concession of pre-arrest bail or regular bail could be granted irrespective of any payment or any offer of payment. 11. We would further emphasise that, ordinarily, there is no justification in adopting such a course that for the purpose of being given the concession of pre-arrest bail, the person apprehending arrest ought to make payment. Recovery of money is essentially within the realm of civil proceedings.” 25. Law regarding the exercise of discretion while granting a prayer for bail under Section 438CrPC having been authoritatively laid down by this Court, we cannot but disapprove the imposition of a condition of the nature under challenge. Assuming that there is substance in the allegation of the complainants that the appellant (either in connivance with the builder or even in the absence of any such connivance) has cheated the complainants, the investigation is yet to result in a chargesheet being filed under Section 173(2)CrPC, not to speak of the alleged offence being proved before the competent trial court in accordance with the settled procedures and the applicable laws. Sub-section (2) of Section 438CrPC does empower the High Court or the Court of Session to impose such conditions while making a direction under sub-section (1) as it may think fit in the light of the facts of the particular case and such direction may include the conditions as in clauses (i) to (iv) thereof. However, a reading of the precedents laid down by this Court referred to above makes the position of law clear that the conditions to be imposed must not be onerous or unreasonable or excessive. In the context of the grant of bail, all such conditions that would facilitate the appearance of the accused before the investigating officer/court, unhindered completion of investigation/trial and safety of the community assume relevance. However, the inclusion of a condition for payment of money by the applicant for bail tends to create an impression that bail could be secured by depositing money alleged to have been cheated. That is really not the purpose and intent of the provisions for the grant of bail.” 20. Therefore, the bail proceedings cannot be used to recover the amount stated to have been mis-utilized by the petitioner. 21. Hence, in these circumstances, prima facie, it is doubtful that the petitioner has committed the offences alleged against him. The petitioner is a senior citizen aged 66 years and keeping him behind the bars will not solve any purpose. Hence, the present petition is allowed and the order dated 08.09.2023 is made absolute. 22. The observation made herein before shall remain confined to the disposal of the petition and will have no bearing, whatsoever, on the merits of the case.