http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 7  

PETITIONER: JAIKRISHNADAS MANOHARDASDESAI AND ANOTHER

       Vs.

RESPONDENT: THE STATE OF BOMBAY

DATE OF JUDGMENT: 16/03/1960

BENCH: GAJENDRAGADKAR, P.B. BENCH: GAJENDRAGADKAR, P.B. WANCHOO, K.N.

CITATION:  1960 AIR  833            1960 SCR  (3) 329  CITATOR INFO :  RF         1962 SC 673  (2)  R          1963 SC 495  (5)  C          1963 SC1721  (4,5)  RF         1964 SC 864  (25)  E          1966 SC1253  (6)  R          1970 SC 919  (14,26,28)  RF         1972 SC 343  (22)  R          1980 SC  31  (19,22)

ACT: Criminal Breach of Trust--Ingredients of--Common intention-- Meaning of--Indian Penal Code (XLV of 1860), ss. 409, 34.

HEADNOTE: The first appellant was the Managing Director and the second appellant a Director and technical expert of a cloth  dyeing concern known as Parikh Dyeing and Printing Mills Ltd.   The company   entered   into  a  contract   with   the   Textile Commissioner  undertaking to dye a large quantity  of  cloth which  was  supplied to the company for  that  purpose.   In pursuance of the contract certain quantity of cloth was dyed and delivered to the Textile Commissioner by the company but it  failed  to dye and deliver the balance  of  cloth  which remained  in  its  possession and was not  returned  to  the Textile   Commissioner   in  spite  of   repeated   demands. Ultimately  the two appellants were prosecuted for  criminal breach  of trust under S. 409 read with S. 34 of the  Indian Penal  Code  and were convicted for the same in a  trial  by jury. 320 In appeal the High Court reviewed the evidence on the ground of  misdirection  to  the  jury  but  found  that  the   two appellants  were liable to account for the cloth over  which they  had dominion, and having failed to do so each of  them was guilty of the offence of criminal breach of trust.   The High  Court refused to accept the appellants’ plea that  the cloth was old and was eaten up by white ants and moths.   On appeal by the appellants by special leave: Held,  that  to  establish a charge of  criminal  breach  of trust,  the prosecution was not bound to prove  the  precise mode  of conversion, misappropriation or  misapplication  by the  accused of the property entrusted to him or over  which

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 7  

he had dominion.  The principal ingredient of the offence of criminal  breach of trust being  dishonest  misappropriation the mere failure of the accused to account for the  property entrusted  to  him  might  not  be  the  foundation  of  his conviction  in all cases but where he was unable to  account and  rendered  an  explanation for  his  failure  which  was untrue,  an  inference of  misappropriation  with  dishonest intent might readily be made. The  essence  of liability under S. 34 of the  Indian  Penal Code  is the existence of a common intention  animating  the offenders  and  the  participation  in  a  criminal  act  in furtherance of the common intention.  The physical  presence at  the  scene  of  offence of the  offender  sought  to  be rendered  liable  under S. 34 is not, on the  words  of  the statute, one of the conditions of its applicability in every case. Barendra  Kumar  Ghose v. The King Emperor, (1929)  L.R.  52 I.A. 40, followed. Shreekantiah  Ramayya  Munipalli  v. The  State  of  Bombay, [1955] 1 S.C.R. 1177, explained and distinguished.

JUDGMENT: CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 159  of 1957. Appeal  by special leave from the judgment and  order  dated February  14,  1956, of the Bombay High  Court  in  Criminal Appeal  No.  1232 of 1955, arising out of the  judgment  and order  dated  October 3, 1955, of  the  Additional  Sessions Judge for Greater Bombay in Case No. 38 V. Sessions 1955. Purshottam  Tricumdas, B. K. B. Naidu and I. N. Shroff,  for appellant No. 1. Appellant No. 2 did not appear. H.   J.  Umrigar,  R.  H.  Dhebar and T.  M.  Sen,  for  the respondent. 1960.  March 16.  The Judgment of the Court was delivered by SHAH,  J.--At a trial held with the aid of a common jury  in Case No. 38 of the Vth Session 1955 before the 321 Additional  Sessions Judge, City Court, Greater Bombay,  the two appellants were convicted of offences under s. 409  read with  s.  34  of  the Indian  Penal  Code.   The  Additional Sessions  Judge  sentenced  the first  appellant  to  suffer rigorous   imprisonment  for  five  years  and  the   second appellant  to suffer rigorous imprisonment for  four  years. In  appeal, the High Court of Bombay reviewed the  evidence, because  in the view of the Court, the verdict of  the  jury was  vitiated  on account of a misdirection on a  matter  of substantial importance, but held that the conviction of  the two appellants for the offence under s. 409 read with s.  34 of the Indian Penal Code was, on the evidence, not liable to be  set  aside.  The High Court  accordingly  confirmed  the conviction  of the two appellants but reduced  the  sentence passed upon the first appellant to rigorous imprisonment for three years and the sentence against the second appellant to rigorous  imprisonment for one year.  Against the  order  of conviction  and  sentence, the appellants have  appealed  to this court with special leave. The  facts  which gave rise to the charge  against  the  two appellants are briefly these: On  June 15, 1948, the Textile Commissioner invited  tenders for  dyeing  Pugree Cloth.  The Parikh Dyeing  and  Printing Mills  Ltd.,  Bombay-hereinafter to be referred  to  as  the company-of  which  the  first  appellant  was  the  Managing

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 7  

Director  and  the  second  appellant  was  a  Director  and technical  expert, submitted a tender which was accepted  on July  27,  1948,  subject to  certain  general  and  special conditions.  Pursuant to the contract, 2,51,059-3/4 yards of cloth were supplied to the company for dyeing.  The  company failed  to  dye the cloth within the stipulated  period  and there was correspondence in that behalf between the  company and the Textile Commissioner.  Approximately 1,11,000. yards out  of  the cloth were dyed and delivered  to  the  Textile Commissioner.  On March 25, 1950, the company requested  the Textile  Commissioner  to  cancel the contract  and  by  his letter  dated  April  3,  1950,  the  Textile   Commissioner complied  with  the request, and cancelled the  contract  in respect of 96,128 yards.  On November 20, 1950, the contract was cancelled by the 322 Textile Commissioner in respect of the balance of cloth  and the  company was called upon to give an account without  any further delay of the balance undelivered and it was informed that it would be held responsible for " material spoiled  or not accounted for ". On December 4, 1950, the company sent a statement  of  account  setting out the  quantity  of  cloth actually  delivered  for  dyeing,  the  quantity  of   cloth returned duly dyed and the balance of cloth, viz.,  1,32,160 yards remaining to be delivered.  Against the cloth admitted by  the  company  remaining to be delivered,  it  claimed  a wastage  allowance of 2,412 yards and admitted liability  to deliver 1,29,748 yards lying with it on Government account. It  appears  that  about  this  time,  the  company  was  in financial   difficulties.   In  December  1950,  the   first appellant left Bombay to take up the management of a factory in Ahmedabad and the affairs of the company were managed  by one  R.  K.  Patel.   In  June  1952,  an  application   for adjudicating the two appellants insolvents was filed in  the Insolvency  Court  at Ahmedabad.  An insolvency  notice  was also taken out against the two appellants at the instance of another  creditor in the High Court at Bombay.   Proceedings for winding up the company were commenced in the High  Court at Bombay.  In the meantime, the mortgagee of the  machinery and factory of the company had entered into possession under a  covenant reserved in that behalf, of the premises of  the factory of the company. The Textile Commissioner made attempts to recover the  cloth remaining  undelivered by the company.  A letter was  posted by the Textile Commissioner on April 16, 1952, calling  upon the  company to deliver 51,756 yards of cloth lying with  it in  bleached  condition  to  the  Chief  Ordnance   Officer, Ordnance   Depot,,  Sewri,  but  the  letter  was   returned undelivered.  It was ultimately served with the help of  the police on the second appellant in October 1952.   Thereafter on  November  7, 1952, another letter was addressed  to  the company  and the same was served on the second appellant  on November 25, 1952.  By this letter, the company was reminded that 1,35,726-3/4 yards of cloth 323 were lying with it on account of the government and the same had  to  be  accounted for, and  that  the  instructions  to deliver 51,756 yards to the Chief Ordnance Officer, Ordnance Depot,  Sewri,  had  not  been  attended  to.   The  Textile Commissioner   called   upon  the  company   to   send   its representatives  to " clarify the position " and to  account for  the material.  After receiving this letter, the  second appellant   attended   at  the  office   of   the’   Textile Commissioner  and  on  November 27,  1952,  wrote  a  letter stating  that " the main factors involved in not  delivering

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 7  

the  goods in finished state was that the material was  very old  ",  was  "  dhobibleached in  different  lots",  was  " bleached under different conditions and therefore unsuitable for  vat colour dyeing in heavy shades", that it  varied  in length,  weight, and finish and had " lost affinity for  vat colour dyeing".  It was also stated that the company had  in dyeing the basic material, suffered " huge losses" estimated at  Rs.  40,000.  It was then stated: " We  are,  therefore, however  prepared to co-operate with the Government and  are willing to make good the government’s bare cost.  Please let us know the detail and the actual amount to be deposited  so that we may do so at, an early date.  We shall thank you  if we are given an appointment to discuss the matter as regards the final amount with respect to the balance quantity of the basic material." On  December 29, 1952, the premises of the company  and  the place  of  residence of the appellants were raided,  but  no trace  of the cloth was found.  A complaint was  then  filed with  the police charging the two appellants  with  criminal breach  of  trust. in respect of 1,32,4041  yards  of  cloth belonging to the Government. There is no dispute that approximately 1,30,000 yards out of the   cloth  -entrusted  to  the  company  by  the   Textile Commissioner  for  dyeing  has not been  returned.   By  its letter   dated  December  4,  1950,  the  company   admitted liability to deliver 1,29,748 yards of cloth, but this cloth has  not been returned to the Textile Commissioner in  spite of  repeated demands.  That the appellants, as directors  of the company had dominion over that cloth was not  questioned in,  the  trial  court.   The plea  that  there  were  other Directors 324 of the company besides the appellants who had dominion  over the  cloth has been negatived by the High Court and  in  our judgment    rightly.    Direct   evidence    to    establish misappropriation of the cloth over which the appellants  had dominion  is undoubtedly lacking, but to establish a  charge of criminal breach of trust, the prosecution is not  obliged to prove the precise mode of conversion, misappropriation or misapplication  by the accused of the property entrusted  to him or over which he has dominion.  The principal ingredient of   the   offence  being  dishonest   misappropriation   or conversion  which may not ordinarily be a matter  of  direct proof,  entrustment of property and failure in breach of  an obligation to account for the property entrusted, if proved, may in the light of other circumstances, justifiably lead to -an  inference of dishonest misappropriation or  conversion. Conviction of a person for the offence of criminal breach of trust  may  not,  in all cases, be  founded  merely  on  his failure  to  account for the property entrusted to  him,  or over  which he has dominion, even when a duty to account  is imposed  upon  him,  but where he is unable  to  account  or renders  an explanation for his failure to account which  is untrue,  an  inference of  misappropriation  with  dishonest intent may readily be made. In  this  case, on a search of the factory on  December  29, 1952, the cloth remaining to be delivered by the company was not  found.  At the trial, the appellants sought to  explain the  disappearance  of the cloth from the  factory  premises where  it  was stored, on the plea that it was old  and  was eaten  up by white-ants and moths, and had been thrown  away as rubbish.  This plea of the appellants was not accepted by the  High  Court and we think rightly.  No  information  was given at any time to the Textile Commissioner after December 4, 1950, that the cloth had been eaten up by white-ants  and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 7  

moths, and was therefore thrown away or otherwise destroyed. Nor  was  any  evidence led in support of the  plea  by  the appellants. In  this  court, counsel for the first  appellant  contended that  failure to return the cloth may give rise to  a  civil liability to make good the loss occasioned 325 thereby,  but  in the circumstances of the case,  the  first appellant cannot be found guilty of the offence of  criminal breach of trust.  Counsel submitted that the first appellant had  left Bombay in 1950 and had settled down  in  Ahmedabad and was attending to a factory in that town, that thereafter the  first appellant was involved in insolvency  proceedings and  was unable to attend to the affairs of the  company  in Bombay,  and  if, on account of the  pre-occupation  of  the first appellant at Ahmedabad, he was unable to visit  Bombay and the goods were lost, no criminal misappropriation can be attributed  to him.  But the case pleaded by  the  appellant negatives  this  submission.   The first  appellant  in  his statement before the trial court admitted that he often went to  Bombay even after he had migrated to Ahmedabad  and-that he visited the mill premises and got the same opened by  the Gurkha watchman and he found that the heap of cloth lying in the mill was getting smaller every time he visited the  mill and  on inquiry, he was told by the watchman that every  day one basketful of sweepings was thrown away.  He also  stated that  he  was shown several places in the  compound  of  the factory where pits had been filled up with these  sweepings, and  that he found a small heap lying by the side of  the  " Tulsipipe  gutter"  and also in the warehouses in  the  mill premises.   It  is  clear  from  this  statement  and  other evidence  on  the  record that even  after  he  migrated  to Ahmedabad,  the first appellant was frequently visiting  the factory  at  Bombay.   The  evidence  also  discloses   that meetings  of Directors were held from time to time, but  the minutes  of the Directors’ meetings have not been  produced. The books of account-of the company evidencing disbursements to the Directors of remuneration for attending the  meetings and  the  expenses for the alleged collection  and  throwing away  of  the  sweepings  have not  been  produced.   It  is admitted  by  the  first appellant  that  the  letter  dated November 27, 1952, was written by the second appellant under his instructions.  In his statement at the trial, the  first appellant  stated that he was informed of the  letter  dated November 26, 1952, from the Textile Commissioner and that he 42 326 could  not attend the office of that officer because he  was busy  attending  to the insolvency proceedings and  that  he deputed  the  second appellant to attend the office  and  to explain  and discuss the position.  Be then stated, "We  had informed  the Commissioner that the company was prepared  to pay  for  the  cloth remaining after  deducting  the  amount claimed  as damages".  The letter dated November  27,  1952, was  evidently  written  under the direction  of  the  first appellant and by that letter, liability to pay for the cloth after certain adjustments for losses alleged to be  suffered by  the company in carrying out the contract  was  admitted. By  the letter dated December 4, 1950, liability to  deliver the cloth was admitted and by the letter dated November  27, 1952, liability to pay compensation for the loss  occasioned to  the  Government was affirmed.  The appellants  who  were liable to account for the cloth over which they had dominion have  failed  to  do  so, and they  have  rendered  a  false explanation  for their failure to account.  The  High  Court

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 7  

was  of  the opinion that this false defence viewed  in  the light of failure to produce the books of account, the  stock register  and  the  complete absence  of  reference  in  the correspondence with the Textile Commissioner about the cause of disappearance established misappropriation with  criminal intent.  Counsel for the first appellant contended that probably the goods  passed into the possession of the mortgagees  of  the assets  of the company. but on this part of the  submission, no  evidence  was led in the trial court.  Counsel  for  the first   appellant,   relying  upon   the   observations   in Shreekantiah  Ramayya Munipalli v. The State of Bombay  (1), also  contended  that, in any event, a charge under  s.  409 read  with  s.  34  of  the  Indian  Penal  Code  cannot  be established  against the first appellant unless it is  shown that at the time of misappropriation of the goods, the first appellant  was  physically  present .  But  the  essence  of liability  under s.34 is to be  found in the existence of  a common  intention  animating the offenders  leading  to  the doing of a criminal act in furtherance of the (1)  [1955] 1 S.C R. 1177. 327 common  intention and presence of the offender sought to  be rendered  liable  under s. 34 is not, on the  words  of  the statute,  one  of the conditions of its  applicability.   As explained by Lord Sumner in Barendra Kumar Ghose v. The King Emperor(’) the leading feature of s. 34 of the Indian  Penal Code  is  ’participation’  in action.   To  establish  joint responsibility  for  an  offence,  it  must  of  course   be established that a criminal act was done by several persons; the  participation must be in doing the act, not  merely  in its  planning.  A common intention--a meeting  of  minds--to commit an offence and participation in the commission of the offence  in furtherance of that common intention invite  the application  of s. 34.  But this participation need  not  in all  cases be by physical presence.  In  offences  involving physical violence, normally presence at the scene of offence of  the  offenders  sought  to be  rendered  liable  on  the principle  of joint liability may be necessary, but such  is not the case in respect of other offences where the  offence consists  of  diverse acts which may be  done  at  different times   and  places.   In  Shree  Kantiah’s  case   (supra), misappropriation  was  committed by removing  goods  from  a Government  depot and on the occasion of the removal of  the goods, the first accused was not present.  It was  therefore doubtful  whether he had participated in the  commission  of the offence, and this court in those circumstances held that participation by the first accused was not established.  The observations  in Shree Kantiah’s case (supra) in so  far  as they  deal with s. 34 of the Indian Penal Code must, in  our judgment, be read in the light of the facts established  and are  not  intended  to lay down  a  principle  of  universal application. The High Court has found that the two appellants were liable to  account for the cloth over which they had dominion  and. they  failed to account for the same and therefore each  had committed the offence of criminal breach of trust.  The High Court  observed: " In such a case, if accused Nos.  1 and  2 (Appellants 1 & 2) alone were concerned with the receipt  of the goods, if they were dealing with the goods all the time, if  they  were  receiving communications  from  the  Textile Commissioner’s office and sending replies, to (1)  [1924] L.R. 52 I.A. 40, 52. 328 them,  and  if the part played by each of them  is  apparent

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 7  

from  the manner in which they are shown to have dealt  with this  contract, then it is a case of two  persons  entrusted with  the  goods  and  a breach  of  trust  obviously  being committed by both of them’. It  was submitted that the High Court erred in  finding  the appellants  guilty  of offences under s. 409 of  the  Indian Penal Code when the charge framed against them was one under s.  409 read with s. 34 of the Indian Penal Code.  A  charge framed against the accused person, referring to s. 34 is but a convenient form of giving notice to him that the principle of joint liability is sought to be invoked.  Section 34 does not  create an offence; it merely enunciates a principle  of joint liability for criminal acts done in furtherance of the common intention of the offenders.  Conviction of an accused person  recorded,  relying  upon  the  principle  of   joint liability,  is  therefore  for  the  offence  committed   in furtherance  of the common intention and if the reasons  for conviction  establish that the accused was convicted for  an offence committed in furtherance of the common intention  of himself  and  others,  a reference in  the  order  recording conviction  to s. 34 of the Indian Penal Code may appear  to be  asurplusage.  The order of the High Court recording  the conviction of the appellants for the offence under s.  409 of  the Indian Penal Code is therefore not illegal. It  was submitted for the first appellant that the  sentence passed  against  him  was unduly severe, and  that,  in  any event, no distinction should have been made between him  and the  second  appellant  in the matter of  sentence.   It  is evident  on  the findings accepted by us  that  property  of considerable  value  has been misappropriated by  the  first appellant.  He was the Managing Director of the company  an& primarily,  he had dominion over the property  entrusted  to the  company.  The second appellant was, though a  Director, essentially   a   technician.   Having   regard   to   these circumstances,  if  the High Court has  made  a  distinction between  the two appellants, we ought not to interfere  with the  sentence,  which  by  itself  cannot  be  said  to   be excessive. The appeal fails and is dismissed.                                            Appeal dismissed. 329