09 December 1964
Supreme Court


Case number: Appeal (crl.) 128 of 1962






DATE OF JUDGMENT: 09/12/1964


CITATION:  1965 AIR 1319            1965 SCR  (2) 398

ACT: Civil  dispute-Person  hiring  article  for  own  use  later claiming  ownership  by  purchase-Dispute  about  nature  of agreement-Hirer  whether  guilty of breach  of  trust-Indian Penal Code ss. 405 and 406.

HEADNOTE: The  appellant  took an electric motor  from  an  electrical Works  in which the respondent was employed.  Dispute  arose about  the  terms on which the motor had  been  taken.   The appellant wrote a letter to the Works that he had  purchased the  motor  after paying its full price; on  behalf  of  the works it was said that it had only been given on hire.   The Works, through the respondent, filed a complaint against the appellant  alleging  breach  of trust.   The  complaint  was dismissed  by the trying magistrate but in appeal  under  s. 417(3) Criminal Procedure Code the High Court held that  the claim  of ownership made by the appellant in his letter  was not  bona  fide and that by writing the said letter  he  had sought  to cause wrongful gain to himself and wrongful  loss to the works in violation of the entrustment, which made him guilty under s. 406 of the Indian Penal Code.  In appeal  to the Supreme Court by special leave, HELD:The appeal must succeed. Clearly  s.  405  contemplates  something  being  done  with respect   to  the  property  which  would  indicate   either misappropriation or conversion to the offender’s own use, or its use or disposal in violation of the contract express  or implied.   But when as in the present case nothing was  done with  respect  to the use of the property which was  not  in accordance with the hiring agreement between the parties  it cannot  be said there was misappropriation or conversion  of the  property  or its use or disposal in  violation  of  the contract.  The appellant did not part with the possession of the  motor  to any body else; he put it to his  own  use-the purpose  for  which he had taken it.  The use of  the  motor remained the same after the letter in question as before it. The  said letter merely raised a dispute of a  civil  nature between  the  parties  and  there was  no  question  of  any



criminal  breach  of  trust punishable  under  s.  406  with respect to the matter on the basis of that letter. [401 D-F; 402 E]

JUDGMENT: CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 128  of 1962. Appeal  from the judgment and order dated January 30,  1962, of  the  Calcutta High Court in Criminal Appeal No.  429  of 1960. S.   C. Mazumdar, for the appellant. P.   K.  Chakravarti and P. K. Bose, for the respondent  no. 2. The Judgment of the Court was delivered by Wanchoo,  J. This is an appeal on a certificate  granted  by the  Calcutta  High Court.  The appellant  hired  a  westing house,                             399 D.   C.  motor from the Modem Electrical Works  (hereinafter referred to as the Works) on April 4, 1958 on a rent of  Rs. 40  per month.  The hiring period was to last for  at  least three  months and it was agreed that if the motor  or  parts thereof  were lost or damaged by the appellant, he would  be bound to pay the whole cost of the motor and the parts.  The motor remained in the use of the appellant and  hire-charges were   paid  by  him  from  April  1958  to  January   1959. Thereafter  it is said that no hire-charges were  paid.   On June  8, 1959, the appellant wrote a letter to the Works  in which  he said that he had purchased the motor  in  question for  Rs. 600 on condition that the same would be  tried  for three  months,  and if it was found satisfactory  the  money would  be paid and the purchase completed.  The letter  also stated  that  the agreement was that if the  motor  was  not found  satisfactory, the appellant would pay  three  months’ hire  at  Rs. 40 per month and the motor would  be  returned thereafter.  Finally, the appellant said in the letter  that the Works had been paid Rs. 620 in all and thus the purchase had  been completed.  The appellant therefore requested  the Works to give him a slip saying that the motor had been sold to the appellant, as no further money was due to the  Works. On  June 15, 1959, the Works sent a reply to  the  appellant denying  that  any  such agreement as  was  alleged  by  the appellant  had been made.  It was also denied that  Rs.  620 had  been  paid, and therefore the  purchase  was  complete. Finally it was said that the appellant had only paid Rs. 400 and  Rs.  200  were still due from him  for  the  months  of February to June 1959.  The appellant replied to this letter in which he reiterated his stand taken in the earlier letter and  gave  details of how the payment of Rs.  620  had  been made.   Thereafter the Works filed a complaint  through  its servant  Mohd.  Ayub on July 1, 1959 in which after  stating its case it urged that the appellant had committed  criminal breach of trust and was therefore guilty under s. 406 of the Indian Penal Code. On  this complaint the appellant was summoned by the  Presi- dency  Magistrate 9th Court, Calcutta and after taking  some evidence for the prosecution, the Magistrate discharged  the appellant holding that there was no satisfactory evidence of dishonest misappropriation or conversion of the motor by the appellant  to his own use and that the dispute  between  the parties was essentially of a civil nature.  Mohd.  Ayub then went  in  revision to the High Court.  The  High  Court  set aside the order of discharge and directed further enquiry in



the  matter by another Magistrate.  The case then went  back to the Third Presidency Magistrate, Calcutta, 400 who  eventually found the appellant not guilty  and  ordered his  acquittal on the ground that there was dispute  between the  parties as to the actual nature of the transaction  and it could not be said that there was any dishonest  intention on  the part of the appellant to misappropriate  the  motor. Mohd.  Ayub then filed an appeal before the High Court under S. 417(3) of the Code of Criminal Procedure.  Eventually the matter was heard by a Division Bench of the High Court,  and it came to the conclusion that it was clear from the  letter of June 8, 1959 (to which we have already referred) that the same  could  not  have been  written  unless  the  appellant dishonestly in violation of the entrustment wanted to  cause wrongful  loss  to  the complainant  and  wrongful  gain  to himself.   It was further held that the letter did not  show that  there  was  a bona fide claim of  ownership  over  the property and the claim was merely a pretence which could not exonerate the appellant from being punished under S. 406  of the  Indian Penal Code.  ’The appellant then applied  for  a certificate  to enable him to file an appeal to this  Court, which  was granted; and that is how the matter has  come  up before us. We are of the opinion that this appeal must succeed.  It  is not  in  dispute  between the parties  that  the  motor  was entrusted  to the appellant by the Works for his  use.   The dispute  was whether this entrustment was merely by  way  of hire  (which was the case of the Works) or, as was the  case of  the appellant, was on the basis of an agreement  between the  parties that the appellant would purchase the motor  if he  found it satisfactory after trying it for .three  months and pay Rs. 600 as the price and that he would return it  if he  found  it  unsatisfactory during this  period  of  three months  and pay Rs. 40 each month as hire for  that  period. The real dispute between the parties therefore was as to the nature  of  the agreement between them when  the  motor  was entrusted to the appellant in April 1958.  That dispute  was clearly of a civil nature.  The Works however contended that by  writing  the  letter  of  June  8,  1959  the  appellant committed breach of trust and was guilty under S. 406 of the Indian  Penal  Code.  Now in that letter the  appellant  put forward  his  side  of  the case as  to  the  terms  of  the agreement when he took delivery of the motor in April  1958. The question is whether by writing that letter the appellant could  be said to have committed the offence defined  in  s. 405  of  the Indian Penal Code and punishable under  S.  406 thereof.  Now  s.   405 runs as follows :- "Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly mis- 401               appropriates  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." It may be accepted that the appellant was entrusted with the motor by virtue of the agreement between him and the  Works, the  terms of which are seriously in dispute.  The  question however    is    whether    the    ’appellant    dishonestly misappropriated or converted to his own use that motor.   On



the  facts in the present case the motor was handed over  to the appellant for his use even according to the case of  the Works.  Unless therefore it can be shown that the  appellant by doing something to the motor which he was not entitled to do dishonestly misappropriated or converted the motor to his own  use, he cannot be guilty of breach of trust under  this part  of  s.  405.  Now the case of the Works  is  that  the appellant   must  be  deemed  to  have  misappropriated   or converted to his own use the motor by writing the letter  of June  8th.   It is clear however that the  letter  shows  no change  in  the use of the motor, which,  according  to  the Works,  the appellant had hired for his own use.   Therefore it cannot be said that merely by writing that letter of June 8,  the  appellant dealt with the motor in  such  manner  as would  amount to its misappropriation or conversion  to  his own  use by him.  Clearly the appellant was using the  motor for his own purpose before that letter and continued to  use it in the same way after the letter.  That letter  therefore cannot  in  our opinion result in  the  misappropriation  or conversion  of  the motor to his own use  by  the  appellant within the meaning of these words in s. 405      in      the circumstances of the present case. It  is however urged that even if that be so, the  appellant must  be  held to have dishonestly used or disposed  of  the motor  in  violation  of  the  legal  contract,  express  or implied,  which he had made touching the discharge  of  such trust, because of the letter of June 8. Now it is clear from the receipt given by the appellant to the Works when he took the  motor in April 1958 that he was taking it for  his  own use on certain terms.  There is however nothing to show that by writing the letter of June 8 the appellant used the motor in  violation  of any legal contract,  express  or  implied, which  he bad made with respect to it for use of  the  motor was the same before the letter as well as after it.  Nor can it be 402 said  that  the  appellant  had disposed  of  the  motor  in violation  of  any  legal contract which he  had  made  with respect thereto for it is not the case of the Works that the appellant  had  parted with the possession of the  motor  to somebody else.  If, for example, the appellant had sold that motor,  there might have been something to be said  for  the view  that he had disposed of the motor in violation of  the contract  with respect to it even if it was  a  hirepurchase contract.  But on the facts of this case all that the letter of  June 8 does is to put forward the case of the  appellant with respect to the transaction of April 4, 1958.  So far as the  use  of the motor is concerned there has not  been  any change   in  it  to  indicate  either  misappropriation   or conversion or disposal of it in any manner against the terms of  the  contract,  express  or  implied.   Clearly  s.  405 contemplates  something  being  done  with  respect  to  the property  which  would indicate either  misappropriation  or conversion  or  its  use or disposal  in  violation  of  the contract, express or implied.  But where, as in the  present case,  nothing  was  done with respect to  the  use  of  the property  which  was  not  in  accordance  with  the  hiring agreement between the parties, it cannot be said that  there was  misappropriation or conversion of the property  or  its use  or disposal in violation of the contract.  We  are  not expressing  any  opinion as to the correctness of  the  case either of the appellant or of the Works in this behalf.  All that we emphasise is that the letter of June 8 merely raises a’ dispute of civil nature between the parties and there  is no question of any criminal breach of trust with respect  to



the motor on the basis of that letter.  In this view of  the matter we allow the appeal, set aside the conviction of  the appellant and order his acquittal.  The fine, if paid.  will be refunded to him. Appeal allowed.