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CASE NO.: Appeal (crl.)  182 of 2006

PETITIONER: Shiva Nath Prasad

RESPONDENT: State of West Bengal & Ors.

DATE OF JUDGMENT: 03/02/2006

BENCH: B.P. SINGH & S.H. KAPADIA

JUDGMENT: J U D G M E N T [Arising out of S.L.P.(Crl.)No.3987 of 2005] W I T H Criminal Appeal No. 183 of 2006 [Arising out of S.L.P.(Crl.) No.4655 of 2005] Dr. V. Gauri Shanker                    \005.Appellant

       Versus

State of West Bengal & Ors.             \005Respondents

KAPADIA, J.           Leave granted.         These appeals are filed by accused nos.2 and 3  against the impugned judgment of the High Court  of Calcutta refusing quashing of the process issued  by the Chief Judicial Magistrate(CJM), Alipore in  respect of alleged offences under sections 120- B/406/417/420 of the Indian Penal Code (IPC).            The undisputed facts are as follows:         Madhav Prasad Birla (MPB) and Smt.  Priyamvada Devi Birla (PDB) were one of the richest  and the wealthiest couples who had no issues  during their lifetime.  MPB was one of the famous  industrialists from the Birla family.  The couple  executed mutual wills in 1981.  In 1982, the couple  executed mutual wills revoking the earlier mutual  wills.  In 1988, during their lifetime, Smt. Birla  formed four trusts and MPB formed the fifth trust.   These trusts, 5 in number, covered corporate  assets.  On 30th July 1990 MPB died.  On  10.9.1990, Smt. Birla gave directions in respect of  MP Birla Trust under clause 6(b) and made  nominations of beneficiaries in respect of her four  trusts under clause 7(a) of the trust deeds in favour  of three named public charitable institutions, viz.,  Hindustan Medical Institution (HMI), East India  Education Institution (EIEI) and MP Birla  Foundation.  In terms of the said nominations made  after the demise of MPB, the assets of the five trusts  estimated at Rs.2400 crores stood settled for the  benefit of HMI, EIEI and MP Birla Foundation.   However, on 15th April 1999 PDB purported to  revoke all the five trusts (stood dissolved).  On 18th  April 1999, Smt. Birla executed her will by which  she bequeathed all her properties (including the  estate of MPB) to accused no.1, R.S. Lodha and  after him his son, the value of which is around

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Rs.2400 crores.  Smt. Birla died on 3rd July 2004.   R.S. Lodha was a trustee of MP Birla Foundation  (one of the three public charitable institutions).  He  was also a trustee of HMI and EIEI prior to the  dissolution of the five trusts w.e.f. 15.4.1999.   Appellant herein, Shiva Nath Prasad, accused no.2  was also a trustee in the five trusts.  Accused no.3,  Dr. V.Gauri Shanker  was a trustee in HMI, EIEI  and MP Birla Foundation.  He was also a trustee in  three out of five mutual trusts referred to above.           Respondent no.2 herein (complainant), a  former employee working in MP Birla Group,  claiming to be a close associate of late MPB and his  wife, petitioned a complaint in the court of Chief  Judicial Magistrate, Alipore in case no.C/4693 of  2004 alleging offences under the aforestated  sections, viz., 120-B read with 406, 420, 467, 417  and 204 of the IPC, inter alia, on the ground that he  was a witness to the intention and the wishes of the  couple during their lifetime to leave their estate to  charity which decision was made known to  everyone close to the couple including the other  members of the Birla family.  According to the  complainant, the couple had accordingly executed  mutual wills on two occasions, first in the year  1981 and subsequently in 1982.  According to the  complainant, when the mutual wills were executed  in 1981 and 1982, he was consulted and he had  taken part in the discussion with MPB.  According  to the complaint, the couple had decided to dispose  of their assets to charity after their demise.   Respondent no.2 herein has further alleged in the  complaint that in 1988 the couple created five  mutual and reciprocal trusts under which the  estate went to charity as the remainder beneficiary.    Respondent no.2 further alleged that he was  involved in the discussion relating to formulation of  the terms and conditions to be mentioned in the five  trust deeds.  He was consulted in the matter of  drafting of the said deeds.  He was also a witness to  the mutual and reciprocal agreements between MPB  and PDB in regard to the five trusts.  He was also a  formal witness to the deeds.  He was also a witness  to the instrument of nominations of the  beneficiaries of the five trusts.  He was also a  witness to the deed of appointment of trustees of  the five trusts.  According to respondent no.2, the  said five trusts were created by the couple as  mutual and reciprocal trusts by which the couple  had mutually agreed to leave their estate, after their  death, to charity and pursuant to that decision they  had nominated the charitable institutions in which  the assets held by the five trusts worth Rs.2400  crores would vest.  According to respondent no.2,  the said five trusts were irrevocable and the three  public charitable institutions nominated by the  couple as beneficiaries were HMI, EIEI and MP Birla  Foundation.  Respondent no.2 was also, in turn,  associated as honorary secretary of HMI, EIEI and  MP Birla Foundation.  Respondent no.2 herein has  alleged in the complaint that he was stunned when  he came to know, on the demise of PDB, that the  first accused R.S. Lodha had claimed that the  estate of PDB, which included the estate of MPB,  belonged to him under the above will dated 18th

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April 1999 made by the deceased PDB.  In his  complaint, respondent no.2, has stated that when  he came to know that R.S. Lodha had made a claim  to the entire estate of the Birlas, he made enquiries  which revealed to him that R.S. Lodha had  criminally conspired with the other accused in  criminally misappropriating assets worth Rs.2400  crores vested by the above five mutual trusts in the  above three charitable institutions and that the  accused had converted the charitable endowment  for personal gain.  Respondent no.2, in his  complaint, has further stated that the accused had  attempted to create false evidence to show that the  five trusts stood revoked and dissolved on 15th April  1999 which is three days before the alleged will  dated 18th April 1999 executed by PDB and thereby  the assets which had vested in the charitable  institutions had been criminally misappropriated by  fraud and conspiracy in which the other accused  had participated actively.  Respondent no.2 herein  has further stated in his complaint that the accused  have conspired to create false evidence in support of  their claim that the five trusts stood dissolved  during the lifetime of PDB herself.  In his complaint,  respondent no.2 has further stated that R.K.  Choudhury, one of the trustees in the three out of  five trusts was not even aware of the alleged  revocation/dissolution of the five trusts by Smt.  Birla during her lifetime, as alleged by the accused.   According to the complaint, there was no revocation  of the five trusts, as claimed by the accused.   Respondent no.2 is a chartered accountant.  In his  complaint, he has pointed out the reasons for the  couple deciding to vest the shares of group holding  companies of MPB in the above three public  charitable institutions, namely, HMI, EIEI and MP  Birla Foundation.  Respondent no.2 has stated that  it was tax planning advised by respondent no.2 and  by R.K. Choudhury.  The purpose of choosing the  three institutions was to make them a vehicle to  promote the charitable activities of MPB group.   Respondent no.2, in his complaint, has  categorically alleged that R.S. Lodha is a qualified  chartered accountant, who had won the confidence  of the couple and who solely planned his way and  eliminated all those who had worked with the  couple so as to make Smt. Birla hopelessly  dependent on him.  According to the complaint,  R.S. Lodha was the exclusive advisor and  consultant of Smt. Birla personally.  He was a  director, auditor and the trustee of different  companies.  According to the complaint, in the last  couple of years prior to 1999, R.S. Lodha had come  to occupy the central place in the scheme of things  of MPB group of companies and charitable  endowments.  Respondent no.2 has further alleged  that similarly Shiva Nath Prasad was a close  confidante of late Smt. Birla, having completed 50  years of service with MPB group of companies.  He  dealt with all the tax matters of Smt. Birla.  He filed  her tax returns.  He entered into correspondence on  her behalf with Income Tax Department.  He was  given a power of attorney to sign, on her behalf, the  tax returns.  He was a trustee of all the above five  mutual trusts.  He was a trustee in the three public

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charitable institutions.  He was also a member of  the managing committee of HMI and EIEI.   Respondent no.2 has further alleged that Dr. Gauri  Shanker was a trustee of all the above three public  charitable institutions.  He was also a trustee of  three of the five mutual trusts, viz., M.P. Birla  Trust, Priyamvada Birla Trust and Priyamvada Birla  Kosh.  Similarly, respondent no.2 has stated in his  complaint that the fourth accused, Sushil Kumar  Daga, was a long standing employee of the MP Birla  Group.  He was a member of the managing  committee of HMI and EIEI.  He was also a trustee  of MP Birla Foundation.  In his complaint,  respondent no.2 herein, has alleged that Shiva Nath  Prasad and S.K. Daga are the witnesses to the letter  dated 15.4.2003 addressed by late Smt. Birla to  R.S. Lodha which has been tendered as codicil in  the probate proceedings pending before the High  Court.  Respondent no.2, in his complaint, has  alleged that Shiva Nath Prasad and S.K. Daga are  the witnesses to the said letter which was created in  pursuance of the criminal conspiracy to  misappropriate the property of the public charitable  institutions.  In his complaint, respondent no.2  herein, has relied upon one more circumstance in  support of his contention that the couple had  always desired to leave their estate, after their  demise, to charity.  In this connection, respondent  no.2-complainant has placed reliance on the  biography of MPB written by Dr. Gauri Shanker in  which a graphic description of the visit by the  couple to Tirupathi has been mentioned.  In the  said book, Dr. Gauri Shanker  has mentioned how  he had taken the draft trust deed of MP Birla  Foundation to His Holiness the Sankaracharya and  got it approved by him.  In the said book, it is  allegedly stated that in the last years of his life, MP  Birla  had desired that his entire estate should go to  charity.  In the said book, it is further recited that  MP Birla Foundation was the foremost institution  formed on 23rd January 1986, its trustees were the  three daughters of K.K. Birla, brother-in-law of MP  Birla, two professionals from the industrialist group  etc. and later Smt. Birla also joined its board as the  chairperson and as the trustee.    According to the  biography, the couple expressed their desire to give   their wealth and properties to God and accordingly  Dr. Gauri Shanker was requested to translate that  idea into reality by drawing a deed of trust.  The  final draft was prepared.  It was taken to  Kanchipuram.  It was placed before His Holiness  Sankaracharya and accordingly the deed was  sanctified.  This book was published in 1993.  This  circumstance is relied upon in the complaint to  show that Dr. Gauri Shanker was aware of the  decision of MPB and PDB to dedicate their entire  wealth to charity and yet he took part in the  conspiracy to divert the endowment worth Rs.2400  crores from charity to the personal kitty of R.S.  Lodha and after him, his son.  According to the  complaint, R.S. Lodha, alongwith Shiva Nath  Prasad and Dr. Gauri Shanker were the trustees of  the said three public charitable institutions whose  property stands criminally misappropriated by the  first accused pursuant to a criminal conspiracy by

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the other accused who committed criminal breach  of trust.  This was possible by virtue of the power  and influence of R.S. Lodha and by reason of the  long familiarity of the other accused with the  couple.  According to the complaint, MPB died on  30th July 1990.  Upto the time of his death, he had  done nothing to show the slightest inclination to  change his charitable intentions or to put an end to  the mutuality expressed wills of 1982 and the trust  deeds of 1988 and on the contrary in January and  February 1989, the couple had agreed on the final  nominations in favour of three public charitable  institutions in the presence of the complainant,  Shiva Nath Prasad and R.K. Choudhury.   Respondent no.2 has categorically stated that after  the demise of MPB on 10th September 1990, Smt.  Birla, in fact, executed the nominations in  accordance with the pious wish of her husband and  that the said nominations were mutually agreed  nominations of the five trusts duly executed by her.   The legal effect of the said nominations were  explained by R.K. Choudhury in the presence of the  complainant and in the presence of Shiva Nath  Prasad to Smt. Birla.  Respondent no.2 has further  stated that Smt. Birla was told by R.K. Choudhury  that the said nominations were irrevocable and that  the said Shiva Nath Prasad was fully aware, along  with Smt. Birla, that the five trusts along with the  nominations were mutual and reciprocal and were  irrevocable even by Smt. Birla (survivor) except in  terms of clause 19 which provision was common in  all the deeds.  Respondent no.2 has alleged that in  terms of the nominations agreed between MPB and  PDB, during the lifetime of MPB and made after the  demise of MPB, as explained above, the assets of  the five trusts estimated at Rs.2400 crores stood  finally settled in the three public charitable  institutions as remainder beneficiaries.  Respondent  no.2, in his complaint, has stated that in the  second week of April 1999, R.S. Lodha started  misleading Smt. Birla.  She was made to sign  documents which had the effect of misappropriating  the assets dedicated to and vested in the three  public charitable institutions through the medium  of the five trusts.  Pursuant to the said conspiracy,  on 18th April 1999 which was a Sunday,  R.S.  Lodha separately called three persons to Birla Park,  residence of Smt. Birla and persuaded each one of  them by false representations and fraud to attest a  document signed by the deceased Smt. Birla.  This  document is the impugned will by which all the  properties of the couple under the five trusts stood  diverted from    charity.  They were converted to  become the personal property of R.S. Lodha.  The  three persons were P.L. Agarwal, Dr. Madan S.  Vaidya and Mahabir Prasad Sharma.  Accordingly,  respondent no.2 has complained that the above  acts constituted massive fraud on Smt. Birla and on  the five trusts; that, the said fraud constituted a  criminal breach of trust on the three public  charitable institutions which are deprived of  endowments worth Rs.2400 crores and accordingly  in the complaint respondent no.2 has alleged that  R.S. Lodha had cheated and defrauded Smt. Birla  into believing that she was making a document to

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leave the property to charity as she and her  husband had desired and declared from time to  time since 1981-82.  Respondent no.2 has lastly  stated in his complaint that four years after the  execution of the will dated 18th April 1999, a letter  dated 15th April 2003 termed as codicil is brought  into existence by R.S. Lodha in conspiracy with  Shiva Nath Prasad and S.K. Daga to fortify the will.   It contains a direction in respect of four residential  properties which are now directed to R.S. Lodha  and after him, his son.  Respondent no.2 has  alleged that this letter dated 15.4.2003 is created as  a supporting evidence to the will of 1999.   Respondent no.2, in his complaint, has stated that  Shiva Nath Prasad prepared the balance sheets of  the five trusts as on 15.4.1999 in June 2000 only to  show that the five trusts stood dissolved through  deeds prior to the making of the alleged will dated  18.4.1999.  Respondent no.2 has pointed out that  R.K. Choudhury was a trustee.  He had never  resigned from the trusts.  He had never ceased to be  a trustee.  He is not even aware of the dissolution of  the trusts on 15.4.1999.  In the circumstances, in  his complaint, respondent no.2 has alleged that  there was no revocation, oral or in writing, on  15.4.1999 or at any time later on.  Respondent no.2  has further pointed out in his complaint that the  accused have communicated about the dissolution  of the trusts to the Income Tax Department only on  27th June 2000 when a letter was addressed by  Smt. Birla to the Joint Commissioner of Income  Tax, Calcutta, stating that the five trusts have been  dissolved on 15.4.1999 and that the assets have  been transferred to her as the sole beneficiary.  The  balance sheets of the five trusts as on 15.4.1999  prepared by second accused in June 2000 only to  show that the trusts stood dissolved w.e.f.  15.4.1999.  Respondent no.2 has alleged that the  accused have conspired to create records by  entering into correspondence with Income Tax  Department.  Respondent no.2 has accordingly  relied upon the aforestated circumstance in support  of his allegation of conspiracy to create ante-dated  documents to show retro-active revocation of the  five trusts.  Relying upon the aforestated  circumstances, the complainant has alleged in his  complaint that the accused had entered into a  criminal conspiracy, the ultimate object of which  was to misappropriate dishonestly the charitable  estate and converting the said estate to their own  use.  Respondent no.2 has further alleged that the  object of the alleged will of 1999 was to destroy the  interest of the three public charitable institutions in  which the estate had irrevocably vested; that, the  purported dissolution of the trusts was a step in the  execution of criminal conspiracy; that, the modus  operandi of the accused was to attain this illegal  object fraudulently by showing that the five trusts  were dissolved during the lifetime of Smt. Birla who  was fraudulently induced and cheated as she had  no legal knowledge nor access to independent legal  advice; that, Smt. Birla was a lay housewife who  had no knowledge of legal intricacies; that, she was  deceived into executing a fraudulent will on  18.4.1999.  That the three attesting witnesses were

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also deceived and finally the accused have even  deliberately suppressed the facts relating to the five  trusts from the application for probate made to the  High Court in respect of the alleged will dated  18.4.1999.  Respondent no.2 has stated in his  complaint that a trustee becoming a party to the  dissolution of an irrevocable trust is dishonest and  guilty of criminal breach of trust; that, there was  nothing to show that Smt. Birla was advised to  convert the properties dedicated to public charities  to personal properties and on the contrary by filing  and signing balance sheets of five trusts the  accused have sought to create evidence of the  dissolution of the trusts and thereby they have  aided and abetted misappropriation of the  properties belonging to public charitable  institutions.  The accused have used their dominant  position in the five trusts and in the three public  charitable institutions to illegally revoke the five  trusts and thereby dishonestly misappropriated the  properties of the three public charitable institutions  which constituted offence punishable under section  120-B read with section 406 of IPC.  In execution of  the conspiracy, the accused, in fact,  misappropriated the properties of the public  charitable institutions by illegally showing that the  five trusts stood revoked and by transferring the  properties held by five trusts or the three public  charitable institutions to Smt. Birla as her personal  properties as is evidenced from the balance sheets  filed on behalf of the five trusts by the second  accused.  Hence, respondent no.2 has alleged that  the accused were also guilty of substantive offence  of criminal breach of trust under section 406, IPC.   Respondent no.2 has also alleged in his complaint  that R.S. Lodha was liable for offence punishable  under section 420, IPC inasmuch as he was the  instrumentality of procuring the will dated  18.4.1999 by inducing Smt. Birla by false  representation to sign the said will, divesting the  properties from charity and converting it to the  assets of the first accused.  Lastly, respondent no.2  has alleged that accused nos.2, 3 and 4, all of  whom were trustees and/or members of managing  committee in one or more of the three public  charitable institutions had connived both by  positive acts of commission and omission to aid and  abet accused no.1 R.S. Lodha in the offence of  criminal breach of trust for which they are liable to  be punished under section 109 read with section  406, IPC.  Accordingly, respondent no.2 vide his  aforestated complaint prayed for issuance of  process under section 120-B read with sections  406, 420, 467, 417 and 204, IPC and also  substantive offences under sections 120-B, 406,  420, 417 and 204 of IPC.          To complete the chronology of events, suffice it  to state that vide order dated 05.10.2004, CJM  Alipore held that a prima facie case for offence  under sections 120-B/406/417/420 IPC was made  out against the accused.  Accordingly, cognizance  was taken.  Accordingly, accused were summoned  on 29.11.2004.         Aggrieved by the said order dated 05.10.2004  of CJM Alipore, accused no.2-Shiva Nath Prasad

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moved the High Court under section 482 of Code of  Criminal Procedure (Cr.PC) for quashing the  proceedings vide complaint case no.C4693/04  pending before CJM Alipore under sections  406/417/420/120-B, IPC.  By the impugned  judgment, the High Court has refused to intervene  and set aside/quash the criminal proceedings.   Hence, the accused have come in appeal to this  court.          Shri Harish N. Salve, learned senior counsel  appearing on behalf of Shiva Nath Prasad submitted  that in 1983 G.D. Birla died.  At that time, there  was tension within the Birla family over division of  assets.  M.P. Birla and Smt. Birla were unhappy  and hurt with the way they were treated during  partition.  Despite the couple being issueless, the  couple did not take assistance from any member of  the Birla family in the running of their business  and in the running of M.P. Birla group of  companies.  R.S. Lodha was closely associated with  the couple.  Over the years, Smt. Birla came to  repose a lot of faith, confidence and affection on  R.S. Lodha.  She openly declared that R.S. Lodha  would be her successor.  In this connection, learned  counsel placed reliance on the minutes of the board  meeting of Birla Corporation Ltd. held in September  2001 in which meeting nominees of financial  institutions and banks were present.  In their  presence, Smt. Birla declared that R.S. Lodha was  to be her successor.  Learned counsel further  submitted that R.S. Lodha was also made  chairperson of four holding companies in M.P. Birla  group in 1999 within one week from 18.4.1999.  He  was also made the co-chairman of the main  manufacturing companies controlled by the group  headed by Smt. Birla and all the key senior  executives of the group were aware of her wishes.   Learned counsel submitted that on the death of  Smt. Birla, the other Birlas have come together to  grab control of the M.P. Birla group for free under  the facade of charity. It was pointed out that in  August 2004 Birlas filed an application in the High  Court for probate of two alleged wills allegedly made  by the couple on 13th July 1982 claiming the same  to be mutual wills.  It is the case of the appellant  herein that the said 1982 wills were revoked during  the lifetime of M.P. Birla and Smt. Birla.  Further, it  is urged that no explanation has been given for not  applying for probate of the said wills of M.P. Birla  who died on 30th July 1990 for 14 long years.   Learned counsel submitted that the Birlas have  themselves signed documents showing Smt. Birla  as the sole intestate heir of M.P. Birla which  documents are totally contrary to the present case  of mutual wills mentioned in the complaint.   Learned counsel next contended that the criminal  case filed by  respondent no.2 herein, R.P. Pansari,  is one such attempt on the part of the Birlas; that,  the case has been instituted only to harass R.S.  Lodha and other individuals who were close to Smt.  Birla; that, the complainant has been set up by the  Birlas to harass R.S. Lodha; that, the complainant  is a disgruntled ex-employee of M.P. Birla group;  that, the complainant had nothing to do with three  charitable institutions after April 2000; that, he had

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nothing to do with M.P. Birla group after December  2001; that, immediately after the filing of the  complaint, R.P. Pansari was rewarded with a job at  a basic salary of Rs.1,75,000/- per month by the  grandson of B.K. Birla and accordingly it was  submitted that the complaint constituted an abuse  of the process of law.         Learned counsel submitted that the foundation  of the complaint is based on averments which are  false in view of the documents annexed to the  complaint.  In this connection, learned counsel  submitted that the five trust deeds clearly show on  bare reading that the trusts were set up with a  private object to provide benefit to individual  beneficiaries with absolute power of alienation of  the entire trust property and income without any  compulsion for charity.  It was urged that on a bare  reading of the trust deeds it is clear that they were  expressly made revocable and, therefore, it is not  open to the complainant to claim that the said five  private trusts were irrevocable when on the face of  the documents, they are revocable.  Learned  counsel further submitted that the very fact that  nominations were made on 10th September 1990 by  Smt. Birla shows that nothing prevented her from  making further nominations superseding the earlier  nominations dated 10.9.1990.  Learned counsel  submitted that even the nominations dated  10.9.1990 were not entirely charitable.  In fact, in  value terms it was more in favour of private  individual members of Birla family.  Learned  counsel submitted that the deceased Smt. Birla was  in sound health and she actively looked after her  business and had undertaken busy travel  schedules as recently as February 2003.         Learned counsel submitted that even if all the  allegations in the complaint supported by  documents annexed thereto were believed to be  true, the same did not disclose the ingredients of  the offence of criminal breach of trust as there was  no entrustment of property of one in the hands of  another.  Similarly, the ingredients of the offence of  cheating are also not disclosed in the complaint.   Learned counsel urged that the issues raised in the  complaint are complicated issues of civil law  relating to mutual wills and mutual trusts which  cannot be decided by a criminal court and which  issues should be relegated to regular civil  proceedings before a court of competent  jurisdiction.  Learned counsel urged that the five  trusts were expressly made revocable.  In this  connection, reliance was placed on clause 19 of the  Trust Deed.  Learned counsel urged that the  complainant has relied upon, in the complaint, oral  agreements for which oral evidence cannot be  permitted to be adduced as such oral evidence was  contrary to the terms of the written documents and  was, therefore, barred under sections 91 and 92 of  the Indian Evidence Act, 1872.  Similarly, the  allegations of the trust property having vested in  three public charitable institutions, upon  nomination, being made in their favour by Smt.  Birla, have no substance because the properties  mentioned in the nominations were only to be  transferred to the nominees on the death of the

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settlor/sole beneficiary, namely, Smt. Birla and,  therefore, there was no basis for alleging that the  assets had vested in the three charitable  institutions upon nominations being made by Smt.  Birla.  In this connection, it was further pointed out  that the nominations made by Smt. Birla were in  supersession of her nominations made earlier.  In  the circumstances, there was no merit in the  allegations made in the complaint that the assets  covered by the trusts stood vested in the three  public charitable institutions on issuance of  nominations/directions in 1990.  According to the  learned counsel, the complaint made by respondent  no.2 herein smacks of malafides particularly when  he has been appointed at a salary of Rs.1.75 lacs  per month in one of the rival Birla companies soon  after his making the above complaint.   As regards  the scope of section 482, Cr.PC, learned counsel  submitted that since the complaint was frivolous,  vexatious, oppressive and malicious, the High Court  should have exercised its powers under section 482,  Cr.PC because such powers are required to be  exercised ex debito justitiae or for the ends of  justice.  Learned counsel relied upon various cases  in which criminal proceedings have been quashed  at the initial stage to prevent abuse of process of  court and for the ends of justice.  In this  connection, reliance was placed on several decisions  of this court, more important being R.P. Kapur v.  State of Punjab [AIR 1960 SC 866]; State of  Haryana & Ors. v. Bhajan Lal & Ors. [1992  Suppl. 1 SCC 335]; Madhu Limaye v. The State  of Maharashtra [1977 (4) SCC 551] and  Madhavrao Jiwajirao Scindia & Ors. v.  Sambhajirao Chandrojirao Angre & Ors. [1988  (1) SCC 692].  Learned counsel submitted that the  power of the court to grant discharge under section  245(2), Cr.PC in a warrant case instituted otherwise  than on a complaint did not impinge on the  inherent power of the High Court under section 482  of Cr.PC to quash proceedings in appropriate cases.   In this connection, reliance was placed on the  judgment of this Court in the case of  Pepsi Foods  Ltd. & Anr. v. Special Judicial Magistrate &  Ors. [1998 (5) SCC 749].  Learned counsel  submitted that exercise of inherent power to quash  the proceedings is called for in cases where the  complaint did not disclose any offence or that the  complaint was frivolous, vexatious or oppressive.   Learned counsel submitted that in the present case  the complainant has tried to distort the facts in  order to give an impression of an offence.  That the  said attempt was grossly frivolous, vexatious and  oppressive and, therefore, the High Court should  have quashed the process issued by the CJM,  Alipore.  On the question of breach of trust, learned  counsel submitted that there was no entrustment of  property which is the main ingredient of the offence  under section 405; there was no valid creation of  trust under the five trust deeds; there was no  creation of a beneficial interest in the three public  charitable institutions; that Smt. Birla was the only  beneficiary under the trust deeds till she died; that,  there was no vested interest created in any  beneficiary other than Smt. Birla under any of the

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five trust deeds and lastly the revocation of the four  trusts did not amount to the extinguishment of  vested or beneficial interest of any other person  under the trust deed so as to constitute an act of  conversion.  Learned counsel submitted that on  reading the five trust deeds in the light of the  aforestated proposition of law it would become clear  that, in the present case, there was no trust  because the settlor, the trustee and the beneficiary  in all the five trusts was one and the same person,  viz., M.P. Birla in M.P. Birla Trust and Priyamvada  Devi Birla in the other four trusts.  As sole  beneficiary, both M.P. Birla in M.P. Birla Trust and  Priyamvada Devi Birla in other four trusts, had  absolute power of disposition of the trust property  and also over the trust income including the power  of bequest by nomination.  The beneficial interest of  M.P. Birla in the trust property was the same as the  legal ownership which vested in him as a trustee  and if the beneficiary and the trustee were the same  person and if the beneficiary has the same right as  the trustee, then there can be no beneficial interest  under section 3 of the Indian Trusts Act, 1882 and,  therefore, it was urged that, in the present case,  there was no valid creation of a trust, as alleged.   Learned counsel submitted that in any event the  said five trusts were private in nature and a mere  contingency in charity would not make such trusts  public and thereby bring them out of the provisions  of Indian Trusts Act.  In this connection, it was  urged that the sole beneficiaries of the trusts were  M.P. Birla and Smt. Birla and that reference to  charity in clause 8 was a mere contingent interest  and, therefore, such provision cannot transform the  nature and character of the private trust into a  public or charitable trust.  Learned counsel urged  that the primary purpose of the settlor was to  benefit the members of his family and, therefore,  the trusts in the present case were private trusts  and not public trusts, as alleged by the  complainant.  Learned counsel urged that, in the  present case, there was no complete dedication to  charity under these five private trusts even  according to the intention of the settlor or in terms  of the trust deed.  Further, learned counsel  submitted that since there was an express clause of  revocation, one cannot say, as sought to be  contended, that a public trust came into existence  for charitable purposes.  Learned counsel urged  that there was no vesting on any point of time in  three public charitable institutions as on 10.9.1990  or in any charity under clause 8 of the trust deed,  as submitted by the complainant; that, the proviso  to clause 6 (b) in Smt. Birla’s four trust deeds  excluded the right of her husband to sell the trust  property and consequently Smt. Birla had a right to  sell/alienate the trust property without any  restrictions; that, this provision further indicates  that the trust property was or could be completely  extinguished by Smt. Birla by operation of all or any  of her powers as the trustee/settlor.  Learned  counsel urged that by clause 5 of the trust deed  Smt. Birla was vested with the power of alienation  of the corpus of the trust and the income therefrom.     In this connection, reliance was placed on clauses

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5, 10, 11(iii), 11(iv) and 11(xxi) of the trust deeds.   In the circumstances, learned counsel submitted  that the powers of Smt. Birla under the trust deeds  were similar to the powers of a testator under a will;  that, just as a testator could deal with his property  covered in the will during his lifetime and just as  under the will the legatee/beneficiary had no vested  interest in the bequest under the will which is  merely contingent upon the acts of the testator  during his lifetime so also Smt. Birla under the five  trust deeds was a testator of a will and she had full  authority to deal with the property covered by the  will/trust during her lifetime, the beneficiary having  no vested interest in the bequest.  Learned counsel  further urged that even as far as property of M.P.  Birla Trust was concerned, the deceased had full  beneficial interest in the corpus during her lifetime;  that, there was nothing in the deed of trust that  made her directions given under clause 6(b)  irrevocable; that, Smt. Birla could have nominated  a member of the family even after the  nominations/directions of September 1990 without  committing  breach of trust; that, even if Smt. Birla  had named a charitable trust during her lifetime,  she could have changed the direction and given it to  any other trust whether charitable or non- charitable.  In any event, the directions were to  operate only upon her death.  In this connection,  reliance was placed on the letter dated 12th  September 1990 addressed by Smt. Birla to East  India Investment Company Pvt. Ltd. requesting that  the shares in the trust property may be transmitted  to her name as she was the sole survivor of her late  husband.  Learned counsel submitted that even the  letter which Smt. Birla wrote to Income Tax  Department intimating dissolution of the private  trusts on 15.4.1999 with the enclosed balance  sheets showed that the assets and the income of  the trusts was all along included in the personal  Income Tax returns of Smt. Birla.  In conclusion,  learned counsel urged that M.P. Birla and Smt.  Birla had granted absolute right in the trust  property unto themselves, and the second bequest,  if any, under clause 8 was in favour of charity  which had failed and, therefore, there was no  entrustment of property as contemplated by section  405, IPC.  The sole beneficiary of all the five trusts  was Smt. Birla who had revoked the trusts in the  year 1999 and, therefore, the appellant cannot be  accused of committing breach of trust, as alleged in  the complaint.  Any disposal by Smt. Birla in her  own favour or to those claiming under her can  never fall within the meaning of section 405, IPC.   The act of the deceased in revoking the trusts  and/or treating the property as her own and  disposing of the same by will cannot constitute  breach of trust under section 405, IPC.         Shri R.F. Nariman, learned senior counsel  appearing on behalf of Dr. Gauri Shanker-accused  no.3 submitted that Dr. Gauri Shanker is 83 years  old.  He is the senior advocate of this court.  He  joined Indian Revenue Service in 1948 and held,  during his tenure, senior positions.  He was  appointed an advisor to L.K. Jha Commission.  He  was personally known to late M.P. Birla and

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through M.P. Birla, he came to know Smt. Birla.  He  was close to the couple.  He used to advise them on  personal and corporate matters.  He came to know  R.S. Lodha through M.P. Birla. He had seen the  couple placing reliance on R.S. Lodha.  He had seen  the couple giving responsibility to R.S. Lodha from  time to time.  He was consulted by the couple in  matters of religion, philosophy, charity, business  and taxation.  According to Dr. Gauri Shanker,  Smt. Birla was a wise lady, well read and proficient  in several languages.  According Dr. Gauri Shanker,  on the demise of G.D. Birla, M.P. Birla had  conveyed his dissatisfaction over the division of  management of Birla companies.  In the last few  years of his life, M.P. Birla had gradually handed  over the charge of M.P. Birla group of companies to  Smt. Birla.  After the demise of M.P. Birla, Dr. Gauri  Shanker remained close to Smt. Birla.  He advised  her on personal and corporate matters.  Towards  the end of 1990 Smt. Birla had told Dr. Gauri  Shanker that she had decided on R.S. Lodha as her  successor and she was desirous of making a will for  this purpose.  According to Dr. Gauri Shanker, Smt.  Birla had told him that she would revoke five  private trust deeds before making her will.  It was  further submitted that even according to  Dr. Gauri  Shanker although he was a trustee of three trusts  out of five private trusts created in 1988 none of the  properties settled in the trusts had been  transferred/recorded in the names of the trustees  and that all the five private trusts were revocable.   Further, Smt. Birla had asked Dr. Gauri Shanker to  prepare a will by which she would bequeath the  right, title and interest of all that she owned to R.S.  Lodha whom she used to treat like her son and in  consonance of the detailed instructions of Smt.  Birla, Dr. Gauri Shanker had drawn up a will dated  18.4.1999 which was duly registered and which is  annexed to the criminal complaint.  Learned  counsel submitted that in fact Dr. Gauri Shanker  was told by Smt. Birla that she had dissolved the  five private trusts before executing the will.  After  four years Smt. Birla had expressed her desire to  give further directions regarding her properties and  consequently a letter, based on her instructions,  was drafted by Dr. Gauri Shanker which was signed  by Smt. Birla on 15.4.2003 in the presence of Shiva  Nath and S.K. Daga.         Learned counsel submitted that from the plain  reading of the complaint and the documents  appended thereto, it was clear that there is no  allegation at all regarding the offences of cheating  under section 417/420, IPC; no allegation is found  in the pre-summoning evidence of respondent no.2  or M.P. Sharma and, therefore, no process could  have been issued under section 417/420, IPC and,  therefore, it was submitted that the impugned order  of CJM dated 5.10.2004 suffered from the vice of  non-application of mind.  Learned counsel  submitted that summoning of the accused in a  criminal case was a serious matter.  In the present  case, according to learned counsel, the impugned  order of the magistrate summoning the accused  does not indicate application of mind to the facts of  the case.  That, in the present case, there is no

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allegation against Dr. Gauri Shanker regarding  creation of letter/codicil dated 15.4.2003; that, the  allegations are directed only against R.S. Lodha,  Shiva Nath Prasad and S.K. Daga.  No allegations  whatsoever have been made against Dr. Gauri  Shanker even in relation to the revocation of five  private trusts and, therefore, the complaint does  not make out a case of any overt act being  committed by Dr. Gauri Shanker in relation to the  revocation of the five private trusts and hence, there  is no reason for issuing summons to Dr. Gauri  Shanker.  Learned counsel urged that the case  against Dr. Gauri Shanker on the point of  conspiracy was at the highest that he was a trustee  of three public charitable institutions and that he  was also a trustee of the three out of five private  trusts; that, he remained a silent spectator to the  alleged acts of other accused in criminally  misappropriating the properties of three public  charitable institutions pursuant to a criminal  conspiracy to commit criminal breach of trust with  the common intention to destroy charitable trusts.   That, in any event, the allegations of conspiracy  against Dr. Gauri Shanker were vague, general and  completely lacking in factual particulars and,  therefore, according to the learned counsel there  was no reason for the magistrate to issue process  against Dr. Gauri Shanker.         Learned counsel lastly submitted that the  complaint needs to be quashed for the simple  reason that it suffers from malafides; that, the  complaint is harrasive, attended with malafides and  is a tool of oppression adopted by the Birlas to  terrorise Shiva Nath Prasad, S.K. Daga and Dr.  Gauri Shanker into succumbing to the pressure  and thereby making difficult for R.S. Lodha to have  the last will of Smt. Birla probated.  Learned  counsel urged that the entire complaint is brought  about by Birlas who are working behind the scene.   That the choice of four accused is made on selective  basis; that the four accused were close to Smt.  Birla; that, although the position of Dr. Gauri  Shanker was identical with the other trustees, viz.,  R.K. Choudhury and Kashinath Tapuriah, the latter  have been left out of the complaint which  unequivocally demonstrates that the criminal  complaint constitutes a gross abuse of the process  of law attended with malafide and, therefore, the  High Court ought to have quashed the criminal  complaint under section 482 of the Cr. PC.         To understand the basis of the complaint we  need to understand the concept of mutual wills,  mutual and reciprocal trusts and secret trusts.  A  will on its own terms is inherently revocable during  the lifetime of the testator.  However, "mutual wills"  and "secret trusts" are doctrines evolved in equity to  overcome the problems of revocability of wills and to  prevent frauds.  Mutual wills and secret trusts  belong to the same category of cases.  The doctrine  of mutual wills is to the effect that where two  individuals agree as to the disposal of their assets  and execute mutual wills in pursuance of the  agreement, on the death of the first testator (T1),  the property of the survivor testator (T2), the  subject matter of the agreement, is held on an

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implied trust for the beneficiary named in the wills.   T2 may alter his/her will because a will is  inherently revocable, but if he/she does so, his/her  representative will take the assets subject to the  trust.  The rationale for imposing a "constructive  trust" in such circumstances is that equity will not  allow T2 to commit a fraud by going back on her  agreement with T1.  Since the assets received by T2,  on the death of T1, were bequeathed to T2 on the  basis of the agreement not to revoke the will of T1 it  would be a fraud for T2 to take the benefit, while  failing to observe the agreement and equity  intervenes to prevent this fraud.  In such cases, the  Instrument itself is the evidence of the agreement  and he, that dies first, does by his act carry the  agreement on his part into execution.  If T2 then  refuses, he/she is guilty of fraud, can never unbind  himself/herself and becomes a trustee, of course.   For no man shall deceive another to his prejudice.   Such a contract to make corresponding wills in  many cases get established by the Instrument itself  as the evidence of the agreement [See: Law of  Trusts and Equitable Obligations by Robert  Pearce and John Stevens pages 320 and 321];  See also : Re Dale (Deceased) reported in  1993(4) All.ER page 129].  In the case of mutual  wills generally we have an agreement between the  two testators concerning disposal of their respective  properties.  Their mutuality and reciprocity depends  on several factors.  Mutual wills and trusts are  evidenced by the Deeds themselves (the recitals,  terms and conditions mentioned therein) as also by  the surrounding circumstances, namely, the  simultaneity and the similarity of the terms of the  wills/trusts, the pattern of successive wills, the  reciprocity of one to the other, the age of the  settlors, the value of the estates, dying of the  settlors without any issues, making of the last will  without reference to the revocation of previous wills.   Lastly, in law we have the concept of accessory  liability for having assisted in a breach of trust.  In  such a case the accused is not charged for having  received trust income or assets for his own benefit  but for having acted as an accessory to a breach of  trust.          We have referred to the doctrine of mutual and  reciprocal wills and trusts only to understand the  basis of the complaint.  At this stage we are  required to read the complaint as it is.  Suffice it to  state at this stage of the matter that the couple had  executed mutual wills in 1981 and 1982; followed  by reciprocal trusts in 1988 which are in almost  identical words.  The scheme of the mutual deeds  read together is almost identical.  It is not disputed  that a mere declaration can create a trust  obligation, particularly when the settlor is the sole  trustee under the trust.  Before us what is argued  by the appellants is that there is no valid creation of  trust; that, there was no "vesting" of the assets in  the three public charitable institutions; that, the act  of Smt. Birla in revoking the trusts and/or treating  them as her own property was within her  competence; that, the trusts were revocable; that, at  the highest it is case of failure of the second charity  and that predominantly the dispute is a civil

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dispute.  At this stage, we may point out that what  is complained of in the complaint filed by  respondent no.2 herein is regarding the acts of  management including dissolution of the trusts and  making of the will by which trust properties have  been allegedly converted dishonestly into personal  properties of R.S. Lodha constituting an offence of  criminal misappropriation under sections 405 and  406 and cheating under section 420, IPC.  Here we  may add that question as to whether Smt. Birla had  the authority to revoke is different from the  allegation that the acts of setting up personal title  to the trust property constituted criminal breach of  trust and that, the act was performed with the  intent of converting trust property into private  property pursuant to a conspiracy by the accused.   In the complaint, respondent no.2 herein has  averred that he was present and consulted when  the couple opted for mutual wills in 1981, 1982 and  even in 1988 when mutual and reciprocal trusts  were executed.  The complaint is based on the  alleged oral agreement and understanding between  the husband and wife regarding disposal of  properties on their demise.  Suffice it to say that  these facts in issue are matters of evidence.  The  question as to whether there existed a valid trust or  that Smt. Birla was entitled to dissolve the trust  even during her lifetime are defences which can be  taken at the appropriate time.         As stated above, in this case we have mutual  wills and mutual and reciprocal trusts in 1981,  1982 and 1988; clauses 7(b) and 8 of the trust deed  reflect charitable intention coupled with  nominations of 1990.  What we would like to stress  is that the complaint is based on an important  aspect of mutual trust.  The allegation is that the  beneficial interest (enforceable not against the  assets but against the trustees) is dishonestly  misappropriated by the accused.  The complaint is  about dishonestly setting up personal title to the  trust property.  The complaint is based on mutual  and oral agreements imposing secret trust  obligations as evidenced by the trust deeds.  In this  connection we may reiterate that "secret trust" is a  doctrine evolved to prevent fraud; that, fraud is not  an ingredient for the application of the said  doctrine.  However, the substance of the complaint  here is that the secret trust has become the reason  for fraud because the legatee under the secret trust  is made to believe by the accused that she was the  beneficial owner, free from any trust [See: Re  Cleaver (Deceased) reported in 1981 (2) All.ER  1018].  Lastly, we may point out that in a matter of  this type, oral evidence was admissible to prove  what is called "fraud" [See: Ottaway v. Norman  reported in 1971 (3) All.ER 1325].                    We have entered into the above discussion, not  to express any opinion, but to answer the main  plank of the argument advanced on behalf of the  appellant that this case basically involves a civil  dispute.  None of our observations be treated as  expression of our opinion on the rightfulness of the  claim made in the complaint.         In conclusion, we may quote Law of Crimes by

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Ratanlal and Dhirajlal page 2069 :

"In a case under section 406 the question of  trust must be fully inquired into.  For this  purpose it is essential that the whole  prosecution evidence should be recorded.  It is  impossible to guess at an interim stage, what  will be the result of the inquiry.  Consequently,  when only a few of the prosecution witnesses  have been examined, it is too premature to  decline to examine any more witnesses for the  prosecution and discharge the accused on the  ground that the case is of a civil nature."

       Before us, number of judgments have been  cited in support of the case that respondent no.2  (complainant) is the disgruntled employee of the MP  Birla Group of Companies and that he has been put  up by the Birlas, hence, the complaint is based on  malafides and should, therefore, be dismissed.  We  need not go into the said judgments as the basic  principle settled in the citations is that the question  of malafides has to be decided on the facts of each  case.  At the outset, we reiterate that credentiality    of the complainant at this stage is not relevant.  As  stated above, in this case, what is alleged by the  complaint, inter alia, is that he was a privy to the  discussions and consultations and thinking which  went into making of the mutual wills and the  mutual trusts; that, he was a formal witness to  some of these deeds and that he was aware that the  couple had mutually agreed to the disposal of the  property to charity after their demise.  In the facts  and circumstances of this case, at this stage, we are  not inclined to accept the argument that the  complaint should be dismissed at the initial stage  on the ground of alleged malafides of the  complainant.          We reiterate that our observations in the  judgment should not be read as our opinion on the  merits of the matter.  Similarly, the applicability of  the relevant section to the facts of the present case  does not arise at this stage.         For the above reasons, we find no merit in  these appeals and the same are accordingly  dismissed.