IN THE HIGH COURT OF GUJARAT AT AHMEDABAD CRIMINAL REVISION APPLICATION NO. 313 of 2005 FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE N.V.ANJARIA ================================================================
1 Whether Reporters of Local Papers may be allowed to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the judgment ?
4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ?
5 Whether it is to be circulated to the civil judge ?
================================================================ GUJARAT INDUSTRIAL INVESTMENT CORPORATION LTD. & 1 Applicant(s) Versus NARSIBHAI ARJANBHAI NAKHUA & 2 Respondent(s) ================================================================ Appearance:
MR RD DAVE, ADVOCATE for the Applicant(s) No. 1 - 2 MR MC BHATT, ADVOCATE for the Respondent(s) No. 1 - 2 MR LR PUJARI APP for the Respondent(s) No. 3 ================================================================ CORAM: HONOURABLE MR.JUSTICE N.V.ANJARIA Date : 13/12/2012 CAV JUDGEMENT The present revision application is directed against order dated 20.03.2004 passed by the Judicial Magistrate, Umergam, below Exh.4, in Criminal Case No. 426 of 2003, whereby the learned Judicial Magistrate has allowed the application of the respondent-accused discharging them from the charges under section 406 and 114 of the Indian Penal Code. Applicant No.1 is Gujarat Industrial Development Corporation, whereas applicant no.2 is the Deputy Manager, Zonal Office of applicant no.1-Corporation, who was original complainant.
2. The facts of the case may be mentioned. The applicant no.2 original complainant filed a complaint on 22.05.2002 with the Umergam police station, District Valsad against the present respondent no.1 and 2. It was registered as F.I.R. I/138 of 2002. It was stated in the complaint inter alia that respondent no.1 and 2 were the directors of company namely S.S. Nathusing Holding Company Private Limited. The applicant no.1-Corporation had sanctioned Rs.49.00 lakhs on 20.09.1991 as advance to the said company. It was stated that as per the accounts, towards the loan amount Rs.60.00 lakhs was due with interest. The Corporation had issued notices more than once and in the process of recovering the amount, seals were also applied at the company premises. It was further stated that a notice dated 08.01.2002 under section 29 of State Financial Corporations Act,1951, was given to the borrower company which was served on 19.01.2002. Despite service, the directors of the company neither paid the amount nor responded to the notice. It was further stated that therefore on 18.05.2002 the officers of the Corporation went to seal the factory. On reaching the place it was found that watchman of the company was present there, and the company was closed but the doors were open. It was found thereat that two moulding machines and other machineries worth Rs.30.00 lakhs were taken out by the directors behind the back and the same was siphoned off. It was alleged that by disposing of the machinery and not paying the amount of Rs.60.00 lakhs it was alleged that machinery worth Rs.30.00 lakhs and not paying amount of Rs.60.00 lakhs which was due, a criminal offence of breach of trust was committed by both the directors as respondent no.1 and 2.
2.1. Thereafter the police submitted a charge sheet on 04.04.2003 before the court of Judicial Magistrate First Class, Umergam, charging respondent no.1 and 2 for the offences under section 406 and 114 of the Indian Penal Code, 1860. Before the learned Judicial Magistrate, respondent no.1 and 2 preferred an application for discharge under section 227of the Criminal Procedure Code, 1973 (hereinafter referred to as `the Code’). It was contended in the application interalia that they had paid part of the amount towards loan, that the Corporation had taken the possession of properties in the proceedings under section 29 of the State Financial Corporations Act, 1951, that the loan transaction was under a written agreement and that there was a dispute of civil nature and that in the facts of the case it was not making out any criminal offence. It appears that the complainant-Corporation did not file any reply to the application for discharge.
2.2. Learned Judicial Magistrate considered the application and the material before it, he came to a conclusion that the transaction between the parties was one of loan by way of written agreement and the dispute was of civil nature. The learned Judicial Magistrate held that no offence was made out under section 406 and 114, IPC, and consequently discharged respondent no.1 and 2.
3. This court heard learned advocate Mr. R.D. Dave for the applicants and Mr. Jigar Raval, learned advocate holding brief for learned advocate Mr. M.C. Bhatt for the respondents.
4. Learned advocate for the applicants submitted that the order of discharge holding that the offence under section 406 and 114 of the IPC not made out was erroneous in law. It was submitted that the machineries and goods in the factory of the accused persons, which was sealed by the Corporation, and which was meant for satisfying the dues of the Corporation, were disposed of behind the back. The said fact was detected when on 18.05.2002, the General Manager of the Corporation went to the place to apply seals. Two moulding machines and moulds and other accessories, which were estimated to be worth Rs.30.00 lakhs, were siphoned off, and thereby, payment of due amount of Rs.60.00 lakhs was criminally avoided. It was submitted that there is beneficial interest in the said goods and there was entrustment of the goods, It was submitted alternatively that in any view, at the time of framing of charge, the learned Judge could also consider whether any other offence under the Indian Penal Code was made out on the facts and material on record.
4.1 It was submitted that merely saying that the dispute was of civil nature, did not take out the element of criminality and the element of criminal breach of trust to constitute the offence. Learned advocate for the applicants drew support from the decision of Patna High Court in Jayant Kumar Jaiswal v. Bihar State Financial Corporation (2006 Cri.L.J. 3972) to substantiate his submission that if the property is removed without consent and in violation of terms of agreement, an offence of criminal breach of trust is prima facie made out. Patna High Court held that though the case of violation of agreement gives rise to civil liability, since the intention of the petitioners was found prima facie dishonest, they were held liable by the Patna High Court for criminal action also.
4.2 Learned advocate for the applicants next contended that a manifest illegality is committed by learned Judge while passing the order of discharge inasmuch as he has taken into account the documents mark 5/1 to 5/8 while arriving at his decision on the discharge application. It was submitted that those documents were produced by the accused persons the learned Magistrate could not have permitted the accused to produce the same as the accused have no right to submit anything at the time of framing of charge. He further submitted that not only the accused was permitted to produce the documents, those documents were relied on by the learned Judge. He therefore submitted that the order of discharge of the accused was by relying on irrelevant material which were legally not permitted. In this regard, learned advocate for the applicant placed reliance on State of Orissa v Debendra Nath Padhi [(2005) 1 SCC 568] and buttressed the contention that at the stage of framing of charge no provision of Cr.P.C. permits the accused to file any material or documents. It was submitted that in Debendra Nath (supra) the Supreme Court has rather affirmed the law that trial court cannot consider any material filed by the accused while framing the charge.
4.3 On the other hand, learned advocate Mr. Raval submitted that the dispute was for all purposes civil in nature. The rights of the parties arose from the agreement of hypothecation and the allegation of the complainant that the conditions of the agreement were breached and in breach of those conditions the machineries, etc. were clandestinely taken away by the directors of the company to frustrate the recovery of loan by the Corporation, cannot be characterised as a criminal offence. It gave rise to civil liability according to him, and that the Corporation had already acted under section 29 of the State Financial Corporations Act, 1951, and recovered the amount by selling the machineries, etc. available. In support he placed reliance on decision of this court in Nilesh Lalit Parekh, Ex. Managing Director Enarai Finance Limited v. State of Gujarat [(2003) 1 GLH 619].
4.4 He next relied on decision of Calcutta High Court in Sunil R. Ghosh Roy
v. Samar Roy (1987 Cr.L.J. 1603 (Cal.)] wherein it was held that in paying installments towards hire purchase agreement and removal of machine parts by hire does not attract section 405 of I.P.C. and the liability in that is civil in nature. By relying on decision in Central Bureau of Investigation v. Duncans Agro Industries Limited [(1996) 5 SCC 591] he emphasised his submission that no offence of criminal breach of trust is made out. According to the decision in Duncans Agro (supra), it is held by the Supreme Court that where floating
charge was made on goods by way of security to cover the credit facility, the disposal of goods covering the security against credit facility does not amount to making out of offence of criminal breach of trust.
4.5 Regarding the documents at Mark 5/1 to 5/8, it was submitted by learned advocate for the respondent-accused that the decisions of learned Judge was not based on those documents. According to him the other facts and features coming out of the record weighed with the learned Magistrate to arrive at a conclusion that no criminal offence under section 406, 114 IPC was made out. He submitted that those documents were really not considered, merely mentioned in the order. Learned advocate for the respondents by making available to the court, the copies of the documents Mark 5/1 to 5/8 submitted with reference to them that they were duly in the nature of correspondence and nothing turned upon them and even otherwise the conclusion was reached that the dispute was civil. According to his submission, therefore, merely because the documents were produced by the accused and were on record, it was inconsequential.
5. This court has carefully gone through the impugned order. Facts and material on record are considered and in the context, submissions made by respective sides are also considered. Various contentions on merits of the issue whether the ingredients of offences under section 406 and 114 of I.P.C. are made out or not, which are raised by both the sides, need not be delved into, and need not be dealt with. For, it is noticed that learned Judicial Magistrate while passing the order of discharge, permitted the respondent-
accused to produce the documents at Mark 5/1 to Mark 5/8. Against the accused, a charge sheet came to be submitted by the police before the competent court pursuant to F.I.R. lodged by the applicants. The said documents were not part of the charge sheet. They were not produced by the prosecution, but came from the side of the accused-respondents and learned Magistrate permitted those documents to be produced.
5.1 Learned advocate for the respondents made available the copies of those documents in the course of the hearing for perusal of the court. The documents Mark 5/1 to 5/8 were correspondence between the accused and the Corporation, and also included a letter to the Industries Minister addressed by the accused, letter by the Managing Director of the Corporation regarding cancellation of OTS and demanding the unpaid amount, letter by the Corporation regarding taking possession of the stocked goods, etc. In other words, those documents relate to the transaction between the accused persons and the Corporation and in connection with non-payment of the dues. The contents of the documents in question reflected the kind and nature of the transaction between the accused and the Corporation, which was also subject matter of F.I.R. While learned advocate for the respondent no.1 and 2 contended that though the said documents were on record, the decision of learned Judicial Magistrate in allowing the discharge application is not really based upon those documents, however, on perusal of paragraph no.2 and 3 of the impugned order it cannot be gainsaid that the learned Magistrate has taken them into account and considered the same. This reasoning is coloured by consideration of those documents. It is not the issue whether the decision of discharge by the learned Magistrate is based on the consideration of those documents alone or other facts and materials also are taken into consideration is not germane.
6. Supreme Court in Superintendent and Remembrancer of Legal Affairs, West Bengal v. Anilkumar Bhonga [(1979) 4 SCC 274] as well as in State of Bihar v. Ramesh Singh [(1997) 4 SCC 39], observed that at the time of framing a charge the trial court can consider only the material placed before it by the investigating agency, there being no requirement in law for the court to grant at that stage either an opportunity to the accused to produce evidence in defence or consider such evidence, the defence may produce at that stage. But after decision in Satish Mehra v. Delhi Administration [(1996) 9 SCC 7766], the matter of referred to a larger bench. In decision in Devendranath Padhi (supra), the larger bench reiterated the principle that at the stage of framing of charge the accused is not permitted to produce any material in defence and laid down that on the plain meaning of section 227 and section 209 of the Cr.P.C. no provision in the Code grants to the accused any right to file any material or document at the stage of framing of charge and that such right is granted only at the stage of trial.
7. The Supreme Court in Devendranath Padhi (supra) observed as under:
“The acceptance of the contention of the learned counsel for the accused would mean permitting the accused to adduce his defence at the stage of framing of charge and for examination thereof at that stage which is against the criminal jurisprudence. By way of illustration, it may be noted that the plea of alibi taken by the accused may have to be examined at the stage of framing of charge if the contention of the accused is accepted despite the well settled proposition that it is for the accused to lead evidence at the trial to sustain such a plea. The accused would be entitled to produce materials and documents in proof of such a plea at the stage of framing of the charge, in case we accept the contention put forth on behalf of the accused. That has never been the intention of the law well settled for over one hundred years now. It is in this light that the provision about hearing the submssions of the accused as postulated by Section 227 is to be understood. It only means hearing the submissions of the accused on the record of the case as filed by the prosecution and documents submitted therewith and nothing more. The expression 'hearing the submissions of the accused' cannot mean opportunity to file material to be granted to the accused and thereby changing the settled law. At the state of framing of charge hearing the submissions of the accused has to be confined to the material produced by the police.
(para 18)
8. The law laid down is therefore that at the time of framing charge or taking cognizance the accused has no right to produce any material. Once a feature emerges from the record that learned Magistrate in considering the discharge application taken into account the documents produced by the accused persons, the order suffered material irregularity and illegality in view of law laid down in Debendranath Padhi (supra). Therefore, this illegality has to be set right before any proceedings are set right and on that count the order cannot sustain.
9. In the aforesaid view, having regard to the law laid down in Debendranath Padhi (supra), the order dated 20.03.2004 by the Judicial Magistrate, Umergam, passed in Criminal Case No. 426 of 2003 discharging the accused for the offence under section 406 and 114 of the Indian Penal Code is hereby set aside and the case is remanded to the learned Judicial Magistrate, Umergam, for considering and deciding the same afresh. It is directed that learned Judicial Magistrate shall decide the application, exh.4 filed by the accused persons respondents no.1 and 2 herein afresh without taking into account the documents at Mark 5/1 to Mark 5/8 and arrive at a fresh decision sans those documents, on the basis of the facts on record. While deciding the application (exh.4) afresh, learned Magistrate shall not be influenced by his earlier order which is being set aside on the above ground alone, as well as he shall also not be influenced by this order, and decide the same independently and on merits.
10. Since the case is remanded on the aforesaid ground alone, this court has not expressed any opinion on merits. The matter is at large before the learned Magistrate except qualified as above and he shall decide the same again after giving opportunity of hearing to the parties and in light of the above order and without being influenced by the impugned order. The exercise of deciding exh.4 application afresh shall be completed within ten weeks from the date of either side produce a certified copy of this order. Rule is made absolute to the aforesaid extent.
sndevu (N.V.ANJARIA, J.) At this stage Mr. Raval for the respondent requests for suspension of this judgment and order for six weeks to enable the respondents to approach the higher court. The request is opposed by learned advocate Mr. R.D. Dave. Having considered the request in view of what is held and what is directed hereinabove, the request is not accepted and the same is rejected.
sndevu (N.V.ANJARIA, J.)