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PETITIONER: SOM NARTH PURI

       Vs.

RESPONDENT: THE STATE OF RAJASTHAN

DATE OF JUDGMENT15/02/1972

BENCH: REDDY, P. JAGANMOHAN BENCH: REDDY, P. JAGANMOHAN SHELAT, J.M. KHANNA, HANS RAJ

CITATION:  1972 AIR 1490            1972 SCR  (3) 497  1972 SCC  (1) 630  CITATOR INFO :  APR        1972 SC2522  (8)  R          1974 SC 794  (14)

ACT: Penal Code, Indian (45 of 1860)--Section 405,  409--Criminal Breach of Trust--’Entrusted,’ meaning.

HEADNOTE: The  appellant  who was an employee of the  Indian  Airlines Corporation  was  convicted under s. 409,  Penal  Code,  and section  5(2) read with section 5 (1) (c) of the  Prevention of  Corruption Act, 1947.  The appellant’s duty was to  make reservations  for  the passengers.  The  practice  was  that whenever  the quota was full intending travellers were  re-- quired  to  pay  trunk telephone charges  for  enabling  the Corporation to obtain release of seats from quotas  allotted to  other centers.  The appellant who was incharge  of  this arrangement,  it was alleged, collected Rs.  184.90  towards trunk  telephones  charges but actually deposited  with  the corporation only a sum of Rs. 44.90 and misappropriated  the balance.  The  modus operandi, it was alleged, was  that  he would  demand a higher, amount for Trunk Call  charges  than was  likely  to  be incurred and he would  issue  a  correct receipt  for  this amount on behalf of the  corporation  but after making the trunk call, he would alter the  counterfoil with the actual amount of trunk call charges.  In the appeal to  this Court it was urged that since the prosecution  case as  disclosed  by the evidence was that  the  appellant  had collected  excess  charges representing them  to  be  actual charges  for  trunk calls and not that any excess  over  the actual  charges would be returned to the appellant he  could not  be-convicted either under s. 5(2) read with 5(1)(c)  of the Prevention of Corruption Act or under s. 409 penal code, because, the important ingredient, viz., entrustment of  the amount was absent. Dismissing the appeal, HELD : (i) The expression, ’entrusted in section 409 is used in a wide sense and includes all cases in which property  is voluntarily  handed  over  for a  specific  purpose  and  is dishonestly  disposed  of  contrary to the  terms  on  which possession has been handed over.  As long as the accused  is

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given  possession of property for a specific purpose  or  to deal with it in a particular manner, the ownership being  in some  person  other than the accused, he can be said  to  be entrusted  with  that property to be applied  in  accordance with  the  terms of entrustment and for the benefit  of  the owner.   It  may be that a person to whom  the  property  is handed  over  may ’cc an agent of the person to whom  it  is entrusted  or  to whom it may belong in which case,  if  the agent  who  comes  into possession of it on  behalf  of  his principal, fraudulently misappropriates the property, he  is nonetheless guilty of criminal breach of trust, because,  as an  agent he is entrusted with it.  A person  authorized  to collect  moneys on behalf of another is entrusted  with  the money  when  the  amounts are paid to him,  and  though  the person  paying may no longer have any proprietary  interest, nonetheless,  the  person on whose behalf it  was  collected become the owner as soon as the amount is handed over to the person so authorized to collect on his behalf. [502 D] 498 The State v. Dahyalal Dalpatram, A.I.R. 1960 Bom. 53; In re: Ram  Soonder Poddar & Ors. 1878 (2) Cal.  L.R. 515; In re  : Ramappa,  (1911) 22 M.L.J. 112; in re :  Venkata  Raghunatha Sastri, (1923)45 M.L.J. 133 and the, Crown Prosecutor v.  J. Mclyer and K. S. Narasimhachari, 69 M.L.J. 681, referred to. (ii)In the present case the amounts for trunk call  charges were demanded on behalf of the Corporation and were paid  to the Corporation.  The receipts in respect of the sums,  were given  on  behalf  of the Corporation and it  would  be  the Corporation that would be liable directly to ,the person who had  paid this amount, if no trunk calls were made,  or  any excess over the actual amount of the trunk call charges  was charged by it. The amount was not paid by passengers to  the accused  as such but to the corporation and as soon  as  the receipt for the amount actually received from the passengers was  given by the accused on behalf of the  corporation,  he was entrusted with that amount.  His subsequent con.duct  in falsifying     the     counterfoils     and     fraudulently misappropriating  the  amount  would  make  him  guilty   of criminal breach of trust under s. 409 I.P.C., as also  under section 5(2) read with section 5(1)(c) of the Act. [604 E-H]

JUDGMENT: CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 101  of 1969. Appeal  by special leave from the judgment and  order  dated April 16, 1969 of the Rajasthan High Court in S. B. Criminal Appeal No. 558 of 1966. A.   S. R. Chari and S. B. Wad, for the appellant. K.   B. Mehta, for the respondent. The Judgment of the Court was delivered by Jaganmohan  Reddy,  J. This is an appeal  by  special  leave against  the  judgment  of the Rajasthan  High  Court.   The accused  was  initially charged on  three  counts,  firstly, under  section  5(2)  read  with  section  5(1)(c)  of   the Prevention of Corruption Act 1947 (hereinafter referred  ’to as  ’the  Act’), secondly, under section  409,  I.P.C.,  and thirdly, under section 477A, I.P.C. Thereafter on  15-1-1964 another  Special  Judge charged him on two  counts,  namely, under section 5 (2) read with section 5 ( 1) (c) and section 5  (2)  read with section 5 (1) (w) of the Act.   After  the trial,  the appellant was, however, convicted under  section 409,  I.P.C. and section 5(2) read with section 5(1)(c)  and (d) of the Act and sentenced to rigorous imprisonment of  18

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months and a fine of Rs. 250/- under-section 409, I.P.C. and 18  months’ rigorous imprisonment, and a fine of  Rs.  250/- under section 5(2) read with sections 5(1)(c) and 5(1)(d) of the Act.  The sentences on both these counts were,  directed to run concurrently.  The High Court, however, thought  that the  Special  Judge had not recorded  any  conviction  under section  5(1)(d) of the Act and in that view  confirmed  the conviction  and  sentence  of the appellant  of  18  months" rigorous imprisonment on each of the counts, namely, under 499 section  409,  I.P.C.  and section 5(2)  read  with  section 5(1)(c)  of  the Act, but reduced the fine for each  of  the offences from Rs. 250/- to Rs. 150/-. The  appellant  was employed as a Traffic Assistant  in  the Indain Airlines Corporation’s office at Jaipur and his  duty was  to make reservations of the passengers intending to  go by air and issue tickets.  As it happens, when the quota  of seats  allotted to Jaipur is full, intending travellers  who request  for  accommodation would be required to  pay  trunk telephone  charges for enabling the Airlines Corporation  to obtain  release  of  seats from  quotas  allotted  to  other centers.   The practice of the Airlines was to  collect  the approximate  charges and issue a receipt therefore and if  a seat  was available, the reservation would be confirmed  and accommodation  given  to the passengers if  seats  could  be released  from other centers for Jaipur.  The appellant  who was incharge of these arrangements between 16-2-62 and 30-8- 62, collected Rs. 184.90 towards trunk telephone charges but actually  deposited with the Airlines Corporation a  sum  of Rs. 44.91 and misappropriated the balance of Rs. 139.99. The modus  operendi followed by him, it is alleged, was that  he would  demand  a higher amount for Trunk Call  charges  than were  likely  to be incurred and he would  issue  a  correct receipt  for  those  amounts  on  behalf  of  the   Airlines Corporation but after making the trunk call, he would  alter the  counter-foil  with  the actual  amount  of  trunk  call charges.   On  the  same day he would make  a  daily  return showing  the  actual  amounts  and  deposit  them  with  the Cashier.   A typical sample of the receipts given by him  on behalf of the Airlines Corporation is Exhibit 40 which is as follows INDIAN AIRLINES CORPORATION NEW DELHI. No. 354577     Station Jaipur.  Date : 30-8-62. Received  with  thanks from M/s.  M/Travels, Jaipur  sum  of Rupees  Twenty three and forty nP, being the  amount  T/Call charges to Udaipur and AMD for re-lease of seat.               for INDIAN AIRLINES CORPORATION.                             Sd/-                          Cashier". Rs. 23.40 On  31-8-62,  one M.D. Singh of_the Mercury  Travel  Agency, Jaipur  complained to B.S. Gupta, Incharge of the Office  of the Indian  Airlines  Corporation  at  Jaipur  that   the appellant had 500 collected Rs. 23.40 for proposed trunk call charges from the Agency  but  made no call and no seat was  allotted  to  the passenger  of the Mercury Travel Agency even though one  was available and that seat was given by B. S. Gupta to  someone else.  B. S. Gupta questioned the appellant who then made; a confession of his having collected the amount but not having made  a call.  After-making this confession  he  immediately resigned  his job.  A preliminary inquiry was  conducted  by the Area Manager who thereafter lodged the First Information Report.  The accused denied having collected the amounts  or

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of  having  issued  the receipts  and  further  stated  that whatever  amounts  were; collected by him were paid  in  the office of the Airlines everyday. Both  the  Courts found on the evidence that  the  appellant used  to make trunk calls whenever he was on duty  from  the Indian Airlines Corporation office at Jaipur for the release of  seats and that he would call for and receive trunk  call charges  from  intending passengers.  It  was  further  held proved  that  the appellant gave receipts Exhibited  in  the case  which were in his own hand-writing and signed by  him; and  that it was he who realised the total sum of Rs.  185/- which was entrusted to him and over which he, had a dominion in  his  capacity  as a public  servant.   We  have  already pointed  out  that  the  High  Court  did  not  confirm  the conviction  of  the appellant under section 5(2)  read  with section  5(1)(d)  on the assumption  that  the-said  Special Judge  had not convicted the accused for that  offence,  and since  there is no appeal by the State against this part  of the judgment, the contention on behalf of the State that  he was convicted under section 5(1)(d) has no merits and cannot be sustained. On  behalf  of the appellant it was urged  before  the  High Court  that as the appellant had to fare a  trial  extending over  more  than  3 years incurring  enormous  expenses  for coming  to and from Chandigarh where he was  practicing  law and  was  also  in Jail for some time, the  benefit  of  the Probation  of  Offenders Act should be given  to  him]  This contention  was rejected because the provisions of that  Art were  inapplicable in view of his conviction  under  section 409, I.P.C. As the offence of criminal breach of trust under section  409,  I.P.C. is punishable  with  imprisonment  for life,  the  High Court, in our view, was right  because  the provisions  of section 4 are only applicable to a case of  a person  found  guilty  of having committed  an  offence  not punishable with death or imprisonment for life.  Apart  from this reasoning, section 18 of the Probation of Offenders Act makes,  the  provisions  of that  Act  inapplicable  to  are offence under sub-section (2) of section 5 of the Prevention of Corruption Act. On  behalf of the appellant it is submitted by  the  learned Advocate  that  the  prosecution case as  disclosed  by  the evidence was that the appellant had collected excess charges from the passengers 501 representing  them to be the actual charges for trunk  calls and  not  that any excess over the actual charges  would  be returned  to them.  In view of this evidence, the  appellant could  not be convicted either under section 5(2) read  with section  5(1)(c)  of the Act or under  section  409,  I.P.C. because the important ingredient which is entrustment of the amounts is absent.  In order that any amount can be said  to be  entrusted it should be lawfully made over, but  in  this case  the appellant obtained the amount by cheating  and  by the  commission of an offence.  If there was no  entrustment of  the moneys to the appellant, he could not  be  convicted either  under  section 409 or under section 5(2)  read  with 5(1)(c)  of  the  Act  and is  accordingly  entitled  to  an acquittal  on  both  these  charges.   In  support  of  this contention reliance has been placed on Surendra Pal Singh v. The State(1), where a Bench of the Allahabad High Court held that  the  amounts collected from cultivators by  the  Canal Amin  in  excess of the amount actually due  from  them  and misappropriated by him, did not amount to an entrustment  as he  could  not be a trustee of that money on behalf  of  the cultivators,  from  whom he realised it  because  when  they

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banded  over  the money to the accused,  they  purported  to surrender  all their rights in that money, nor could  it  be said  that  this  money  had  become  the  property  of  the Government  at any stage for him to be considered a  trustee on  its behalf.  This decision was, however, disapproved  in The State v. Dahyalal Dalpatram(2), by a Bench of the Bombay High  Court,  a view with which the High Court  agreed.   In that  case the accused who was employed as a Talati  in  the Revenue  Department,  was  invested with  the  authority  to collect  land revenue and fines.  He was ordered to  recover from the land-holders who had defaulted in paying the moneys but  having  collected them, be did not pay  them  into  the Government Treasury as required by the rules made under  the Land Revenue Code.  The accused was convicted under  section 409, I.P.C. On the question that when the accused  collected the  amount  as  tax alleged to be due  by  the  land-holder though the liability whereof could not be enforced according to law. could it be said that he was then entrusted with the money, the High Court after noticing that the Allahabad High Court  appears to have taken the view that a public  servant collecting the money claiming that it was, due to the  State but  which  in fact was not due to the State, could  not  be regarded as entrusted with the money collected by him,  held that  that  was not a necessary ingredient of  section  405. The learned Advocate sought to distinguish this case on  the ground  that  in  the  Bombay  case  there  was  a  definite direction to collect a specific amount and when that  amount was collected there was entrustment of that money which  was lawfully   collected,  as  such  the  accused  was   rightly convicted.  It was further contended that if looked at  from the point of view of the passengers from whom (1) A.I.R. 1957 All. 122.     (2) A.I.R. 1960 Bom. 53. 502 trunk  call charges were collected, they had  not  entrusted money  to  the  accused because they  had  parted  with  the proprietary  rights thereon and if viewed from the point  of view  of the Airlines Corporation, the money  collected  did not be-come the property of the Corporation and consequently there was no entrustment of it. There  can be no doubt ’that before a public servant can  be convicted  of  an  offence under section  5(1)(c)  or  under section 409, I.P.C. the property which is said to, have been misappropriated  must  be  entrusted to  him.   Section  405 merely provides, whoever being in any manner entrusted with property  or  with any dominion over the  property,  as  the first ingredient of the criminal breach of trust.  The words ’in any manner’ in the context are significant.  The section does not provide that the entrustment of property should  be by  someone or the amount recieved must be the  property  of the  person on whose behalf it is received.  As long as  the accused  is  given  possession of property  for  a  specific purpose  or  to, deal with it in a  particular  manner,  the ownership  being in some person other than the  accused,  he can be said to be entrusted with that property to be applied in  accordance  with the terms of entrustment  and  for  the benefit of the owner.  The expression ’entrusted’ in section 409 is used in a wide sense and includes all cases in  which property  is voluntarily handed over for a specific  purpose and  is  dishonestly disposed of contrary to  the  terms  on which  possession  has been handed over.  It may be  that  a person  to whom the property is handed over may be an  agent of  the  person to whom it is entrusted or to  whom  it  may belong in which case if the agent who comes into  possession of   it   on   behalf   of   his   principal,   fraudulently misappropriates  the property, he is nonetheless  guilty  of

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criminal breach of trust because as an agent he is entrusted with it.  A person authorized to collect moneys on behalf of another  is  entrusted with the money when the  amounts  are paid to him, and though the person paying may no longer have any  proprietary  interest nonetheless the person  on  whose behalf  it  was collected becomes the owner as soon  as  the amount is handed over to the person so authorized to collect of   different  High  Courts in this country  for  nearly  a century, a few of which alone need be examined. In  the  matter of Ram Sounder Poddar &  Ors.(1),  a  Deputy Magistrate convicted the accused under section 406,  I.P.C., an offence over which he had jurisdiction, instead of  under section  409, i.p.c. which was cognizance only by the  Court of  Session.  on  revision  the High  Court  held  that  the proceedings  were contrary to law and the Deputy  Magistrate was directed to commit the accused for trial by the Court of Session.  It appears that the accused who were charged  were Treasury employees.  One of the accused (1)  1878 (2) al. L.R. 515. 503 was  allowed to, write the Treasury Cash Book which was  the duty   of  the  Treasurer.   Taking  advantage  of  it,   he misappropriated  Rs.  16/- by scoring off the entry  in  the account  book.  In this misappropriation he was assisted  by the other accused who was employed to do stamp work.   While holding  the  trial  to  be  without  jurisdiction,  it  was observed  that  section   409 does not as  supposed  by  the Deputy Magistrate, require the property in respect of  which criminal breach of trust is committed, to be the property of Government, but only requires that it should be entrusted to a  public servant in his, capacity as such  public  servant. In  re : Ramappa(1), the accused who was the  Superintendent of some Coffee Curing Works was convicted of criminal breach of trust by misappropriating a large sum of money made up of amounts which he had received from the Manager on the  false pretense  that  they were required for  paying  coolies  who garbled  coffee.   One of the arguments  urged  against  the conviction  was  that  the receipt of  the  money  by  false representation  amounted to an offence of cheating and  that the subsequent appropriation of it by the accused to his own use  was  not  a criminal breach of trust  as  the  criminal intent was present at the time of the receipt of the  moneys from  the  Manager.   Benson and Sundara  Aiyar,  J.,  while rejecting that argument, observed:               "When the accused received the money he did so               as  a servant of the Company for  the  express               purpose  of using it for his master’s  benefit               in  a  particular  way.   He  was,  therefore,               entrusted with the money and his appropriating               it  to  himself clearly  amounts  to  criminal               breach of trust". In  Venkata  Raghunatha Sastri(2), Spencer,  J.,  held  that where a person who had pledged promissory notes with another as  seenrity  for a loan dishonestly induced the  latter  to hand over the same to him by pretending that he required the same for collecting money from his creditors with the aid of which  he  would  pay  cash  to  the  complainant,  his  act constituted an offence of cheating punishable under  section 420,  I.P.C. and that when he dishonestly disposed  of  the notes  in violation of his contract with the pledgee to  use the  money collected in paying off his debt, there was  both entrustment  and  dishonest misappropriation  and  that  the conviction for the offence of criminal breach of trust under section 406, I.P.C. was legal. Both these cases were referred to in The Crown Prosecutor v.

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J.  McIver and K. S. Narasimhachari(3).  The facts  in  this case    also   were   somewhat   similar   to    those    in Venkataraghunatha Sastri’s case (4 ) Madhavan Nair, J (as he then  was) examined the meaning of the word  ’entrusted’  in section  406 and rejected a similar contention as was  urged in  this  case  on behalf of the  appellant  that  when  the accused by deceiving the complainant fraudulently and (1)  (1911) 22 M.L.J. 112. (3)  69 M.L.J. 681. (2)  (1923) 45 M.L.J. 133 (4)  45 M.L.J. 133. 504 dishonestly  induced  him  to  part  with  the  property  in question,  the  offence of cheating was  complete  and  that there  is no room for further holding that the accused  have committed criminal breach of trust also by their  subsequent misappropriation of the property. In the case before us, the practice which was being followed by  the Jaipur office of the Indian Airlines Corporation  is spoken  to  by  M.  U. Menon, P.W. 6,  who  was  a  Personal Assistant to the General Manager of the National Engineering Industries  Ltd.,  Jaipur.  He says that  on  16-2-1962  his General  Manager had directed him to issue  instructions  to the accounts branch for arranging for flight tickets by  air for Delhi.  He first rang up the Indian Airlines Corporation about  the  air passage for eight persons  and  received,  a reply from that office that 8 tickets were not available  at Jaipur  and  they would try from Udaipur  and  Ahmedabad  by trunk   calls.    After  some  time  the   Indian   Airlines Corporation  people rang up telling him that tickets can  be arranged and he should end the money amounting to Rs. 410.50 which included trunk call charges of Rs. 26.50. He thereupon sent  a  slip, Exhibit P-6 to the  accounts  department  for further necessary action.  There was no cross-examination on behalf  of the accused.  Similarly Ganesh Singh, P.W. 3  who is  working for the National Engineering Indus’  his  people contacted Indian Airlines tries Ltd., Jaipur said that  when Corporation  on telephone and enquired about the  fare  etc. they would ask for trunk call charges along with the  amount for tickets.  This would be paid and in fact he pointed  out to the accused and said that he might be one of the  persons whom he met at the office and after he paid the amounts  for the  tickets  and  trunk call charges,  he  would  obtain  a receipt and give it to the company.  This evidence read with other  evidence which has been accepted by both  the  Courts would  show  that whatever may have been  the  criminal  in- tention  of the accused, the amounts for trunk call  charges were  demanded on behalf of the Indian Airlines  Corporation and  were paid to the corporation.  The receipts in  respect of  the sums were given on behalf of the Corporation and  it would  be the Corporation that would be liable  directly  to the person who had paid this amount, if no trunk calls  were made, or any excess over the actual amount of the trunk call charges  was  charged  by it.  The amount was  not  paid  by passengers  to  the  accused  as  such  but  to  the  Indian Airline.,,  Corporation and as soon as the receipt  for  the amount  actually received from the passengers was  given  by the  accused on behalf of the Corporation, he was  entrusted with that amount.  His subsequent conduct in falsifying  the counter-foils and fraudulently misappropriating the  amounts would make him guilty of criminal breach of trust punishable under  section 409, I.P.C. as also under section  5(2)  read with section 5(1)(c) of the Act. There  is,  therefore,  no merit in this appeal  and  it  is accordingly dismissed.

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                               Appeal dismissed. K.B.N. 505