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PETITIONER: TULSI RAM

       Vs.

RESPONDENT: STATE OF U. P.

DATE OF JUDGMENT: 27/09/1962

BENCH: MUDHOLKAR, J.R. BENCH: MUDHOLKAR, J.R. IMAM, SYED JAFFER SUBBARAO, K. AYYANGAR, N. RAJAGOPALA

CITATION:  1963 AIR  666            1963 SCR  Supl. (1) 382

ACT: Criminal Trial-Conspiracy-Sanction-Letter of Under Secretary stating   Governor  has  granted   sanction-If   sufficient- Presumption as to official acts-Cheating-Dishonestly- Wrong- ful       gain-Whether       wrongful       loss        also necessary--Sentence-Reduction of-Code of Criminal Procedure, 1898 (Act V of 1898) s.  196A-Indian  Penal Code, 1860  (Act XLV of 1860),s. 420.

HEADNOTE: The  appellants were tried and convicted for  conspiracy  to cheat  certain banks.  The prosecution had put on  record  a letter  from the Under Secretry to Government  which  stated that the Governor had been pleased to grant sanction for the prosecution  of  the  appellants.   The  sanction  was   not challenged  before  the trial court or the High  Court,  but before  the Supreme Court the appellants contended  that  no sanction as required by s. 196A, Code of Criminal  Procedure was  on record and that the document on record did not  show on  its face that the facts of the case had been  considered by  the Governor.  The appellant further contended that  for conviction  for  cheating the prosecution had  to  establish both  that  the  appellants  had  caused  wrongful  gain  to themselves and caused wrongful loss to the banks and that as no  wrongful  loss to the banks had  been  established,  the appellants  could  not  be  convicted  of  cheating  or   of conspiracy to cheat. Held,  that  the appellants were not entitled to  raise  the question of sanction for the first time in the Supreme Court as it required for its decision investigation of facts.  The document  on  record  was an  official  communication  which recited the fact that the Governor had granted the sanction. A  presumption  arose ,that  the sanction had in  fact  been accorded.   A further  presumption arose that  the  official act of granting sanction to which reference was made in  the communication had been regularly performed.  The document on record prima facie satisfied the requirements of s. 196A. Held, further, that to establish that the accused had disho- nestly  induced  another to part with  property  within  the meaning  of s. 420, Indian Penal Code, it was not  necessary

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to  prove  both wrongful gain and wrongful  loss.   Wrongful gain and wrongful                             383 loss were two facets of the definition of dishonesty and  it was  enough to establish the existence of one of  them.   In the  present case, the appellants had made wrongful gain  to themselves  by obtaining credits by unlawful means and  even if no wrongful loss was caused to the banks, the  appellants were guilty of cheating. Sanjiv Ratanappa Bonad v. Emperor, (1932) I. L. B, LVI  Bom. 488, and Kotamraju Venkatarayudu v. Emperor, (1905) L.R. 28 Mad. 90, distinguished. The  sentences  of  imprisonment  imposed  on  four  of  the appellants were reduced to the period already undergone  and a  fine  of Rs. 3,000/- was imposed on each on  the  grounds that  no  useful purpose would be served  by  sending  these appellants to jail after a long interval of time, that these appellants were very young at the time of the commission  of the offences and that they had acted under the influence  of the dominating personality of the main accused.

JUDGMENT: CRIMINAL  APPELLATE JURISDICTION: Criminal Appeals  Nos.  62 and 63 of 1958. Appeals  from the judgment and order dated April 15, of  the Allahabad High Court in Criminal Appeals Nos. 1332 and  1476 of 1954. A.   N. Mulla, B. B. Tawakley, J. P. Goyal, A.    Banerji and K. P. Gupta, for the appellants. G. C. Mathur and C. P. Lal, for the respondents. 1962.   September.  27.   The  judgment  of  the  Court  was delivered by MUDHOLKAR, J.-These are appeals by a certificate granted  by the  High  Court of Allahabad.  They arise out of  the  same trial. : The appellants in both the appeals except Chandrika Singh  were  convicted by the Second Additional  District  & Sessions  judge,  Kanpur, of offences under s.  471,  Indian Penal  Code read with ss. 467 and 468, I.P.C. and  sentenced variously.   Tulsi  Ram, Beni Gopal and Babu Lal  were  each convicted of offences under s. 417 read with s. 420 and Moti Lal of, offences under s. 417, I.P.C. and Lachhimi Narain of offences  under  s.  420,  I.P.C.  Separate  sentences  were awarded  to each of them in respect of these offences.   All the six appellants 384 were,  in  addition, convicted under s. 120  B,  I.P.C.  and sentenced separately in respect of that offence.  In  appeal the High Court set aside the’conviction and sentences passed on  Tulsi  Ram,  Beni,,  Gopal, Babu Lal  and  Moti  Lal  of offences under, s.  471  read with ss. 467 and  468,  I.P.C. and also  fitted  Moti  Lal  of the offence  under  s.  417, I.P.C.It  however,   upheld  the  conviction  of   all   the appellants  under s. 120B, I.P.C. as well as the  conviction of  Tulsi Ram, Beni Gopal and Babu Lal of offences under  s. 417  read with s. 420, I.P.C. As regards Lachhimi Narain  it maintained  the  conviction  and  sentences  passed  by  the Additional Sessions judge in all, respects and dismissed the appeal in toto.  The relevant facts arc as follows : The appellants, other than Chandrika Singh, are members of a Marwari trading family belonging to Rae Bareli and Chandrika Singh was their employee.  The relationship amongst Lachhimi Narain and the first four appellants in Crl.  A. 62 of  1958 would be clear from the- following genealogical

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table                        Bhairo Prasad ------------------------------------------------------------- Sri Niwas (accused)               Sagar Mal ------------------------------------------------------------- :                :                 : Lachhimi         Tulsi Gobardhan- Pahlad Narain Gopal    Ram das           Rai                  :                Babu Lal                  : -------------------------------------------           (Suraj Mal-minor)   Nand Lal                                   (deceased)                                     Moti Lal                                Parshottamdas                               (died during                            pendency of the case).  385 It  is common ground that Lachhimi Narain was the  Karta  of the  family and the entire business of the family  was  done under his directions and supervision.  This fact is material in view of the defence taken by the first four appellants in Crl.  A. 62 of 1958. It  is common ground that the family carried on business  in the  names and styles of (1) firm Beni Gopal Mohan Lal  with head office at Rae Bareli, (2) Tulsi Ram Sohan Lal with head office  at Lalgunj in the district of Rae Bareli,  (3)  firm Bhairon Prasad Srinivas with head office at Rae Bareli,  (4) firm Gobardhan Das Moti Lal with head office at Madhoganj in the  district of Partapgarh and (5) firm  Sagarmal  Surajmal with head office at Unchahar in the district of Rae  Bareli. Though  different  members  of  the  family  were  shown  as partners in these five firms, one thing is not disputed  and that  is  that the business of each and every one  of  these firms  was  being  conducted by and  under  the  orders  and directions of Lachhimi Narain though in point of fact he was shown  as  partner  along with his-  father  Sri  Niwas  and brother Pahlad only in the firm of Bhairo Prasad Srinivas. It  is  common  ground that in May, 1949,  the  firm  Bhairo Prasad Srinivas was appointed the sole importer of cloth for distribution amongst wholesalers in the Rae Bareli district. Prior  to  the appointment of this firm as sole  importer  a syndicate  consisting  of four firms of Rae Bareli  was  the sole importer of cloth in that district.  It would, however, appear that this syndicate failed to take delivery of  large consignments  of  cloth  with the  result  that  the  Deputy Commissioner discovered that cloth bales valued at about Rs. 2,25,000/-  were lying at the railway station and  demurrage on  the  consignment  was mounting every  day.   It  is  not disputed  either that it was at the instance of  the  Deputy Commissioner that the firm Bhairo Prasad Srinivas agreed  to act  as  sole  importers  take delivery  of  the  cloth  and distribute- it 386 amongst  wholesalers.   They  were  also  required  to  take delivery  subsequently  of cloth worth ’over Rs.  23  lakhs. This firm and one other allied firm were also importers  and distributors of foodgrains and salt in the district. Both  the  courts below have held that in  order  to  obtain short  term  credits the appellants hit  upon  an  ingenious device and succeeded in securing credits to the tune of  Rs. 80  lakhs between May, 1949, and December, 1949.  While  the appellant Lachhimi Narain has throughout admitted that  such a  device was resorted to, the other appellants  denied  any

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knowledge of the aforesaid device. The  particulars of the device adopted are these: A  partner or an employee of one of the firms booked small consignments of say two or three bags of rape seed, poppy seed or mustard seed  from  various stations in Rae  Bareli  and  Partapgarh districts to various stations in West Bengal, including  the city of Calcutta.  The person concerned used to execute for- warding notes and obtain railway receipts in respect of such consignments.   These receipts were prepared by the  railway authorities in triplicate, one being given to the consignor, one  sent  to the destination station and one  kept  on  the record  of the forwarding station.  The consignor’s foil  of the  railway receipt was then taken to Rae Bareli and  there it  was  tampered with by altering the number of  bags,  the weight of the consignment and the freight charges.  All this was  admittedly  done  by  minims  under  the  direction  of Lachhimi Narain himself.  These forged railway receipts were then endorsed by the consignor in favour of one or other  of the  firms  Beni  Gopal  Mohan Lal,  Tulsi  Ram  Sohan  Lal, Sagarmal Soorajmal or Bhairo Prasad Srinivas and  thereafter these  firms drew large sums of money commensurate with  the huge  quantities  of goods specified in the  forged  railway receipts and on the security of these railway receipts  drew demand drafts or hundis in  387 favour of variour banks and two firms in Kanpur as payees on a firm styled as Murarka Brothers, Calcutta, as drawee.   It may  be  mentioned  that this firm was  established  by  the family   in  Calcutta  about  a  year  or  so   before   the transactions in question were entered into.  After this firm was  established  in  Calcutta  Lachhimi  Narain  opened  an account  in the name of the firm in the Calcutta  Branch  of the  Allahabad  Bank and authorised Babu Lal  and  Chandrika Singh,  who  was originally an employee of the  firm  Bhairo Prasad Srinivas and was transferred to Calcutta, to  operate on  the account.  The banks which discounted the hundis  and the drafts were the Kanpur branches of the Bank of  Bikaner, the  Bank of Bihar, the Bank of Baroda and the Central  Bank of  India  and the firms were Matadin  Bhagwandas  and  Nand Kishore Sitaram, both of Kanpur.  These payees realised  the amounts  by presentation of the hundis and railway  receipts to Murarka Brothers at Calcutta.  The banks obtained payment through  their  branches  in Calcutta while  the  two  firms obtained payments through certain banks.  To enable  Murarka brothers  at Calcutta to honour the hundis  on  presentation Lachhimi  Narain  and  Tulsi  Ram,  the  _acquitted  accused Srinivas and a munim of theirs named Hanuman Prasad, who was also  an accused but died during investigation, used to  get money transmitted from the firms’ account in the Rae Bareli, Lucknow and Kanpur branches of the Allahabad Bank to the ac- count  of  Murarka  Brothers  at  Calcutta  by   telegraphic transfers.   Delivery of the consignments despatched by  the partners or the employees of the various family firms  could obviously  not  be  taken with the help  of  forged  railway receipts  because had that been done the fraud  would  have’ been  immediately discovered.  Instead, delivery  was  taken through   commission  agents  on  indemnity  bonds  on   the allegation  that the railway receipts had been  lost.   Such bonds  were executed either by one of the partners or by  an employee  and  after getting them verified  by  the  station masters and 388, goods  clerks of the booking stations they were endorsed  in favour  of  the  consignees. It  has  been  established  by evidence--and  it  is  not  disputed  before  us-that  these

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consignees in fact took delivery of the small  consignments- at  the special request of Lachhimi Narain, disposed of  the consignments  and credited the sale proceeds to the  account of  Bhairo Prasad Srinivas or Murarka Brothers at  Calcutta. The  bulk  of these forged railway receipts  is  not  forth- coming,  presumably because, they have been destroyed  after the hundis supported by them were honoured and the  receipts received from the banks or the firms which were payees under the  hundis.  It is the prosecution case that the banks  and the firms obtained discount charges of one or two annas  per cent  for the amounts paid by them, although had the  family firms obtained these amounts by way of loan they would  have been charged interest at 6 to 9 per cent on these amounts. Towards the end of December, 1949, the Kanpur branch of  the Bank of Bikaner and the Bank of Bihar received back a number of hundis unhonoured along with corresponding forged railway receipts.   The Bank of Bikaner received five hundis for  an amount  of  Rs.  3,52,000/- out of which  hundis  worth  Rs. 1,82,000/- had been negotiated by the bank directly with the firm Bhairo Prasad Srinivas and hundis worth Rs.  1,70,000/- through Nand Kishore Sitaram.  Six hundis were received back by  the  Bank of Bihar, Kanpur, valued  at  Rs.  1,92,000/-. These were negotiated through Matadin Bhagwandas.  The  bank adjusted the account by debiting Matadin Bhagwandas with the amount.   These unpaid payees instituted inquiries from  the consignees  and  the  railways and came  to  know  that  the railway  receipts offered as security to them  were  forged. These  railway receipts have been exhibited in this case  in order to prove the charge of forgery.                             389 After  the  cheating  practised  by  the  family  firms  and forgeries  committed by them came to light, Daya Ram, P.  W. 62,  a  partner  in  the firm  Matadin  Bhagwandas  filed  a complaint  before the City Magistrate, Kanpur on January  4, 1950, and B. N. Kaul, Manager of the Bank of Bihar, lodged a report  the police station, Colonelganj, Kanpur, on  January 18, 1950.  The appellants, except Chandrika Singh executed a mortgage  deed on January 5, 1950, in favour of the Bank  of Bikaner  for Rs. 3,62,000/which included Rs. 3,52,000/-  due on  unpaid hundis interest and other charges.  According  to the  prosecution,  Bhairo  Prasad  Srinivas  paid  the  firm Matadin  Bhagwandas Rs. 1,00,000/- and that Lachhimi  Narain executed  a promissory note for the balance of Rs.  92,000/_ in  their  favour.  According to the defence,  however,  the criminal case filed by Matadin Bhagwandas was compounded  by payment  of the amount settled between the parties and  that as a result they stood acquitted of the charge contained  in the complaint of Matadin Bhagwandas. The appellant, Lachhimi Narain, has taken all the blame upon himself He not only admitted that he had obtained credit  to the tune of Rs. 80 lakhs on the security of railway receipts in  which  the  quantities  of  goods  consigned  had   been increased, but also admitted that he had got the  quantities inflated by his munims, Raj Bahadur and Hanuman Prasad, both of  whom  are  dead.   According  to  him,  except  for  the complicity  of  the two munims the whole thing  was  kept  a secret from everybody else.  His defence further was that he had  committed’ no offence as he intended to pity,  off  and did pay off the entire amount raised.  The other  appellants ’admitted that each of them had played some part or other in these  transactions but denied having been a member  of  the conspiracy  and contended what each of them did was ,it  the bidding of Lachhimi Narain, 390 The  first point raised by Mr. A. N. Mulla on behalf of  the

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appellants  was that no sanction as required by s.  196A  of the Code of Criminal Procedure was on the record of the case and,  therefore, the entire proceedings are void ab  initio. He admitted that there is a document on record, Ex.  P 1560, which is a letter addressed by Mr, Dave, Under Secretary  to the  Government  of U. P., Home Department to  the  District Magistrate, Kanpur informing him that the Governor has  been pleased  to grant sanction to the initiation of  proceedings against the persons mentioned in that order.  But  according to  Mr. Mulla, this communication cannot be treated  "either as a valid sanction or its equivalent".  He points out  that for  a  sanction to be valid it must be by a  written  order signed  by  the sanctioning authority and that  no  one  can function  as a substitute for the sanctioning authority  nor can oral consent, even if it was given, be deemed in law  to be valid.  He further contended that the document on  record does  not show on its face that the facts ’of the case  were considered  by the Governor.  His argument is that  had  the true  facts  of this case been placed before  the  Governor, that  is, that the firm Bhairo Prasad Srinivas never  sought its  appointment  as sole importer of cloth for  Rae  Bareli district,  that the firm was in fact prevailed upon  by  the Deputy  Commissioner  to  take  up the  work  and  help  the Government  in  a  critical  situation,  that  though  large credits  were  undoubtedly  obtained  by  making  fraudulent representations  and committing forgeries it was  never  the intention  of Lachhimi Narain to cause loss to anyone,  that in  fact  everyone  has  been paid in  full,  and  that  the prosecution was launched not at the instance of any of these persons  but at the instance of the railway authorities  and that,  therefore,  no  useful purpose  would  be  served  by launching a prosecution, sanction would not have been given. We  did not permit Mr. Mulla to raise this point because  it is not a pure question of law but requires  391 for  its  decision investigation of facts.  It  is  not  his contention  that  there  was  no sanction  at  all  but  the gravamen  of his complaint is that there is no proper  proof of  the  fact  that  sanction was  given  by  the  authority concerned  after considering all the relevant facts  and  by following  the  procedure as laid down in Art.  166  of  the Constitution.  Had the point been raised by the appellant in the  trial  court, the prosecution would have been  able  to lead  evidence  to establish that the Governor had  in  fact before him all the relevant material, that he considered the material  and after considering it he accorded the  sanction and that that sanction was expressed in the manner in  which an  act  of the Governor is required to be  expressed.   Mr. Mulla,  however, says that s. 196A of the Code  of  Criminal Procedure is a sort of brake on the power.-, of the criminal court  to  enquire into the charge of conspiracy,  that  the court does not get jurisdiction to enquire into that  charge unless  the  brake  is removed and that  it  is,  therefore, essential  for the prosecution to establish that  the  brake was removed by reason of the  fact   that  the   appropriate authority had accorded its    sanction  to  the  prosecution after  complying with the provisions of law and that it  was not  obligatory  on the defence to raise an  objection  that there  was no proper sanction.  There would have  been  good deal of force in the argument of learned counsel had Ex.  P. 1560 not been placed on record.  Though that document is not the original order made by the Governor or even its copy, it recites  a fact and that fact is that the Governor has  been pleased  to  grant  sanction  to  the  prosecution  of   the appellants  for certain offences as required by s.  196A  of

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the Code of Criminal Procedure.  The document is an official communication   emanating  from  the  Home  Department   and addressed   to  the  District  ’Magistrate  at   Kanpur,   A presumption  would, therefore, arise that sanction to  which reference  has been made in the document, had in  fact  been accorded.   Further, since the communication is an  official one, a presumption would also arise 392 that  the official act to which reference has been  made  in the  document  was  regularly performed.   In  our  opinion, therefore,  the document placed on record prima facie  meets the  requirements  of  s.  196A  of  the  Code  of  Criminal Procedure  and,  therefore,  it  is  not  now  open  to  the appellants  to  contend that there was no  evidence  of  the grant  of  valid  sanction.   We,  therefore,  overrule  the contention raised by learned counsel . The  next  point urged by Mr. Mulla is that  the  charge  as framed  jumbles up several offences and, therefore, has  led to  miscarriage of justice.  This also is not a point  which had  been taken up in the courts below. That apart, we  do. not  think that there is any substance in this  point.   The objection is with respect to the first charge which reads as follows:               "’That  between  the months of  May  1949  and               December  1949 both months inclusive,  in  the               district of Rae Bareli, Pratabgarh and Kanpur,               Sri  Niwas, Lachhimi Narain, Tulsi  Ram,  Beni               Gopal,  Babulal,  Moti Lal, Brij  Lal  Coenka,               Chajju  Lal and Chandrika Singh agreed  to  do               amongst  themselves and the  deceased  Hanuman               Prasad  and  Purshottom Dass or caused  to  be               done illegal acts viz. the act of cheating the               (1)  Bank  of  Bikaner, Kanpur,  (2)  Bank  of               Baroda, Kanpur (3) Bank of Bihar, Kanpur,  (4)               Central  Bank  of  India,  Kanpur,  (5)   M/s.               Matadin  Bhagwan  Dass, Kanpur  and  (6)  M/s.               Nand Kishore Sitaram of Kanpur by  dishonestly               inducing them to part with huge sums of  money               on the basis of hundis drawn on Murarka Bros.,               Calcutta covered with securities knowing  such               R/Rs.  to be forged and cheated the  aforesaid               Banks and Bankers by using forged documents as               genuine knowing them to be forged in pursuance               of  a  common agreement amongst them  all  and               thereby committed an offence punishable  under               section 120B read with sections 467/468/               393               471  and  420 of ’the Indian  Penal  Code  and               within   the  cognizance  of  the   court   of               Sessions." It is the concluding portion of the charge to which  learned counsel has taken objection.  We do not think that there has at  all been any jumbling up of the charges.  The charge  is just one and that is of conspiracy.  A reference is made  to other  sections of the Code to ’indicate the objects of  the conspiracy  that  is, to cheat and to commit  forgery.   The charge by referring to Various sections of the Indian  Penal Code merely makes it cleat that the object of the conspiracy was   to  forge  railway  receipts’.  which  were   valuable securities     to  commit  forgeries  for  the  purpose   of cheating,      to use forged documents as genuine.  What was meant  by the   charge Was apparently fully  under-stood  by the   appellants  because  they  never  complained  at   the appropriate  stage that they were confused or bewildered  by the  charge.  In the circumstances, therefore,  we  overrule

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this objection also’ of learned counsel. Since  the commission of forgeries by Lachhimi Narain  could not  be  denied  what we have next to  acertain  is  whether Lachhimi  Narain is guilty of cheating and if so whether  s. 420, I.P.C. As held by the learned Additional Sessions Judge and  the  High Court or under s. 417, I. P.C.  as  contended before us.  Learned counsel points out and rightly, that for a person to be convicted under s. 420, I. P.C. it has to  be established  not only that he has cheated someone  but  also that by doing so. he has dishonestly induced the person  who was  cheated to deliver any Property etc.  A person  can  be said to have done a thing dishonestly if he does so with the intention  of  causing    wrongful ’gain to  one  person  or wrongful loss to another person.  Wrongful loss is the  loss by unlawful means of property to which a person is  entitled while  wrongful  gain  to a person means a gain  to  him  by unlawful means of property to which 394 the person gaining is not legally entitled.  Learned counsel contended that there has been no wrongful loss whatsoever to the  banks  and the two firms which  discounted  the  hundis drawn by one or the other of the firms owned by the family . The  High  Court  has held that these firms  did  sustain  a wrongful  loss inasmuch as they got very meagre amounts  for discounting the hundis whereas had the true facts been known to  them, they would not have discounted the  hundis  though they may have advanced loans and charged interest at between 6  and  9% on the amounts advanced.  It was because  of  the fraudulent misrepresentation made to the banks and the firms that  they lost what they could have otherwise been able  to obtain and thus wrongful loss has been caused to them.   We, have  been taken through a large number of documents on  the record  and it is clear from these documents that those  who discounted  the hundis in question were entitled to  charge, apart from the discount charges, interest at 6% or above  in case  of  non-payment within 24 hours  of  presentation.   A reference to some of the exhibits 1440 to 1454 which are the debit vouchers of the Bank of Bikaner and Exs. 1330 to  1345 which  are debit vouchers of the Bank of Bihar clearly  show that  in fact interest in the case of the first Bank  at  6% and in the case of the second at 9% was charged, debited and realised  by these banks from the firms in question for  the entire,  period  during which the hundis  though  presented, remained unpaid.  These documents are only illustrative  but they do indicate that in fact the banks were not deprived of interest.  Learned counsel pointed out that the Managers and officers  of the Banks and the firms were examined and  they do  not say that any loss of interest was caused to them  in these  transactions.  Mr. Mathur who appears for the  State, however,,  pointed  out  that in the nature  of  things  the hundis  could not be presented for payment in less than  ten days and in this connection he referred to Exs.  P. 1106 and 1055.   These are records of bills purchased by the  Central Bank of  395 India, Kanpur.  He referred us to the penultimate columns of these exhibits headed ’date enquired on" and contended  that this  column  contained  the date of  presentation.   As  an illustration  he referred us to the first entry  dated  June 10.   It was the date on which the hundi was  discounted  by the Central Bank of India and then he said that the date  in the penultimate column is June 20 which means that the hundi was presented on June 20.  According to him, therefore,  for this period of ten days and for 24 hours thereafter the bank would  have got only the discount charges and  no  interest.

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The  hundi  in  question  was  realised  on  June  25   and, therefore, according to him all that the bank must have  got was interest for four days.  But it may be pointed out  that the heading of the penultimate column has not been correctly reproduced in the paper book.  We have been referred to  the original and there the heading is "Date enquired".   Bearing in  mind this fact as well as the entry in the  last  column which is headed "non-payment advice sent" we think that what is  stated  in  the penultimate column is not  the  date  of presentation  at  all but some  other  date.   Unfortunately there  is no column in either of the documents to  show  the date  of  presentation.  Therefore, these documents  do  not help the State at all.  Apart from that we may mention  that it  was for the Bank to take care to see that there  was  no delay  in the presentation of hundis and if they  themselves delayed they had to take the consequences.  Further, we  may point out that if the Bank was not able to earn interest  or earn only very little interest in these transactions for  as long  as  ten  days  that would have  been  so  in  all  the transactions,  that is, not merely transactions  which  were supported  by forged railway receipts but also  transactions which were supported by genuine railway receipts.  There is, therefore, no substance in the contention of Mr. Mathur. Mr. Mathur then contends that the fact that the banks  stood the risk of losing their moneys 396 because the railway receipts which  supported the bills were forged documents, wrongful loss must be deemed to have  been caused  to the banks by the action of the firms.   There  is considerable  force in this argument but we do not  wish  to express  any final opinion thereon, because in  our  opinion the  firms  of  the  appellant  have undoubtedly  made  an unlawful gain. No  doubt, Mr. Mulla contended that because the  firms  were able  to  obtain  temporary credits on the  basis  of  their hundis,  it cannot be said that they have made any  wrongful gain  to themselves.  His contention is that the  firms  had good  credit in the market and for obtaining credit  in  the transactions  in question they gave good equivalents in  the shape  of hundis.  He also pointed out that out of  the  180 odd  hundis  drawn  by  the  firms  only  a  very  few  were dishonoured  and  that this happened only in  the  month  of December,  1949.   It  was not shown.,  he  proceeded,  that Murarka  Brothers  on whom the hundis were  drawn  were  not throughout  the period of nine months when the  transactions were  entered into, in a position to meet the hundis.   Out’ of hundis worth Rs. 80 lakhs those ’worth Rs. 74 lakhs  were in fact honoured and even the remaining hundis is would have been  honoured but for the fact that there was slump in  the market and cotton, bales, worth Rs.12 lakhs belonging to the appellants were lying pledged in, the godowns of the Central Bank  of India for securing an amount of Rs. 9  lakhs.   Had these bales been sold in the normal course there would  have been  no crisis in December of the kind which occurred  and’ led  ’to the dishonourment of certain hundis, in  which  the Bank  of Bikanet and Matadin Bhagandas were payees:  Bearing in mind all these facts, learned counsel wants us to draw he inference  that  the  obtaining of credit  was  not  on  the security  of forged railway receipts but oh the security  of hundis themselves which were drawn by parties who had credit in the market and drawn on a party ;which has not been shown not to be possessed  397 of  adequate  funds  to meet the  hundis  throughout  period covered  by  the  transaction& We do  riot  think  that  the

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argument  of  learned counsel has much force.  B.  N.  Kaul, (P.W.  32), the Manager of the Kanpur branch of the Bank  of Bihar, has said that he purchased hundis because the railway receipts; showed that the consignments were large and  their value, was commensurate with the amount for which the  bills had  been drawn.  He added that he would not have  purchased these  hundis  if  the consignments,  were  for  very  small quantities, apparently meaning thereby that if the value  of the  consignments was not commensurate with, the amount  to be  advanced he would not have purchased the hundis.   Apart from  the evidence of Kaul there is also other evidence  to’ show that the real basis of discounting bills was not merely the  credit of the appellant or the security,  afforded  by, these  bills.   Thus  evidence is in  consonance  with,  the normal  banking  practice of discounting hundis,  only  when they  are supported by railway receipts,  of,  consingnments despatched  by  the drawer to, outside parties.   No  doubt, bills  or hundis are themselves securities and  taking  into consideration the credit of the drawer of a hundi a bank may conceivably  discount such hundis but where the, hundis  are themselves supported by railway receipts it would be  futile to  say that the railway receipts were not intended  by  the parties to be regarded as further security for  discounting the bills.  Where a consignor of goods draws a hundi for the price  of the consignment on some bank or firm and  supports that  hundi  with the railway receipt obtained  by  him,  in respect  of the consignment, the party in fact  pledges  the consignment  to the bank discounting the hundi  and,  there- fore,  in such a transaction the railway receipt  cannot  be regarded   as  anything  else  than  a  security  for   that transaction.  If that security turns out to be worthless  or practically  worthless because the value of the  consignment is  only  a fraction of what it was represented to  be,  the discounting of the hundi by, the party 398 drawing  it  must necessarily be regarded as  unlawful.   It would thus follow that the firms in question made a gain  by obtaining  credits and that these credits were  obtained  by them  by  resorting to unlawful means.  The gain  they  made was,  therefore, unlawful.  Mr. Mulla contended that for  an act  to  be regarded as dishonest it is not enough  to  show that one person deceived another and thereby made a wrongful gain but it is further necessary to show that as a result of the deception the other person sustained wrongful loss.   In support of his contention he has relied upon the decision in Sanjiv  Ratanappa  Ronad v. Emperor (1).  That  was  a  case where  the first accused who was a police Sub-Inspector  was found  to have made a false document by altering  a  certain entry  made  by  him  in his diary with  a  view  to  create evidence.   It was argued before the Court that in order  to constitute  an offence of forgery under ss. 463 and 464  the document must be made dishonestly or fraudulently and  those words must be read in the sense in which they are defined in the  Indian  Penal Code and that it was not enough  to  show that  the deception was intended to secure an  advantage  to the deceiver.  Dealing with this argument Baker, J., who was one of the judges constituting the Bench observed at p.  493 :               "The definition of ’dishonestly’ in section 24               of  the  Indian Penal Code.  applies  only  to               wrongful  gain or wrongful loss  and  although               there are conflicting rulings on the  question               of the definition of the word  ’fraudulently’,               the  concensus  of opinion of this  Court  has               been that there must be some advantage on  the

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             one  side  with a corresponding  loss  on  the               other."               Section 463, which defines forgery, runs thus               "Whoever makes any false document or part of a               document  with  intent  to  cause  damage   or               injury, to the public or to any person, or to               (1)   (1932) 1. L. R. LVI Bom. 488.                                    399               support any claim or title, or to cause person               to part with property, or to enter any express               or implied contract, or with intent to  commit               fraud or that fraud may be committed,  commits               forgery." The intention to cause damage or injury to the public or  to any  person is thus an clement which has to  be  established before  a  fabricated  document can be held to  be  a  false document or a forgery.  In view of the terms of s. 463  what the learned judge has observed is understandable and may  be right.   Here,  however, we are concerned with  the  offence under s. 420, I.P.C. which speaks of dishonest inducement as a  necessary ingredient.  As Baker, J., has rightly  pointed out:               "As  dishonesty  involves a wrongful  gain  or               wrongful loss, obviously it does not apply  to               the  present case where no pecuniary  question               arises.  " But, in an offence under s. 420, I.P.C. a pecuniary question necessarily  arises.   The  first part  of  s.  464,  I.P.C. provides that a person is said to make a false document  who dishonestly  or fraudulently makes’ signs etc.,  a  document with  a particular intention and covers cases both  of  acts which are dishonest and acts which are fraudulent.  Where no pecuniary question arises the element of dishonesty need not be established and it would be sufficient to establish  that the  act  was fraudulent and, therefore, it may be,  as  the learned judge has held, that where an act is fraudulent  the intention  to cause injury to the person defrauded  must  be established.  But where the allegation is that a person  has dishonestly induced another to part with property  something different  has to be considered and that is whether he  has- thereby caused a wrongful loss to the person who parted with property or has made a wrongful gain to himself.  These  are the two facets of the definition of 400 dishonesty  and it is enough to establish the  existence  of one’ of them.  The law’ does not require that both should be established.   The decision relied upon by  learned  counsel is,   therefore,  distinguishable.   Learned  counsel   then referred  to the dissenting judgment of  Subrahmania  Ayyar, J., in Kotamraju "Venkatarayudu v. Emperor (1) to the effect that  in regard to offences failing under s. 465 and 461  it must be established that the deception involved some loss or risk of loss to the individual and to the public and that it was  not enough to show that the deception was  intended  to secure advantage to the deceived.  This decision as well  as some  other  decisions referred to by learned  counsel  ’are therefore   distinguishable  for  the  same   reason   which distinguishes  Sanjiv Ratanappa Ronad’s’ case (2)  from  the one  before us.  We are, therefore,/ of the view,  that  the offence of-cheating has been established. The   High  Court  has  found  that  dishonesty   has   been established  against Lachhimi Narain because it was  he  who drew  and  negotiated  the  various  hundis.   According  to learned counsel the prosecution has not established that the other  appellants had either drawn any hundi  or  discounted

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any  hundi, this contention, however, does not appear to  be sound  because there is a finding of the learned  Additional Sessions judge that the appellant Tulsi Ram had sold to  the Central Bank of India certain hundis covered by forged rail- "  way receipts.  He has also found that the appellant  Beni Gopal  had  admittedly booked a consignment of two  bags  of rape  seed from Rae Bareli to Raniganj and drawn a hundi  of Rs.  40.000/- on the basis of the railway receipt which  was tampered  with  and subsequently got  verified  the  stamped indemnity  bond for this very consignment which was sent  to the  firm  Chiranji  Lal  Ram  Niwas  for  taking  delivery. Another consignment of two bags, this time containing  poppy seeds,  was booked by the firm of Beni Gopal and Beni  Gopal drew a hundi for Rs 38,000/ on Murarka (1) (1905) I. L. R. 28 Mad. 90. (2)  (1932) I. L. R. LVI Bom. 488.  401 Brothers  and sold that hundi to the Central Bank of  India. This hundi was supported by a railway receipt which had been tampered  with.  It is on the basis of those  findings  that the  learned Additional Sessions judge convicted both  these appellants  for  an  offence under s.  417/420,  I.P.C.  The learned  Additional  Sessions judge has also held  that  the appellants,  Babu Lal and Moti Lal, were likewise guilty  of offences  under  s.  417/420,  I.P.C.  The  conviction   and sentence passed on Moti Lal was set aside by the High Court. In our opinion the prosecution has failed to establish that Babu Lal had ’either drawn or negotiated hundis supported by forged  railway  receipts.   The  material  upon  which  the learned   Additional   Sessions  judge   has   relied   and, apparently,  on  which the High Court has relied,  does  not touch  these matters at all.  Whatever other part  Babu  Lal might  have played in these transactions his actions do  not bring  home to him the charge under s. 420, I.P.C. For  this reason  his  conviction  and sentence  for  the  offence  of cheating must be set aside and we accordingly do so. The High Court has affirmed the conviction of Tulsi Ram  and Beni  Gopal  for  offences under s. 417/ 420, 1.  P.  C.  As already indicated there is evidence to show that both  these persons  had  taken  part either in the drawing  or  in  the negotiation of hundis which were supported by forged railway receipts.    The  evidence  adverted  to  by   the   learned Additional Sessions judge has not been challenged before us. We   must,   therefore,  confirm  the  conviction   of   the appellants,  Tulsi  Ram and Beni Gopal, for the  offence  of cheating.   We  would, however, like to make it  clear  that having  found that the acts fall under s. 420, I. P.  C.  it was  not  appropriate  for  the High  Court  to  affirm  the conviction under "s. 417/420", 1. P. C. thus indicating that if the offence is not one it is the other. 402 The  only  other question which needs to  be  considered  is regarding conspiracy.  Mr. Mulla fairly admitted that in any case  Lachhimi Narain cannot escape the conviction under  s. 120B  even if all the other appellants are held not to  have been  parties  to the conspiracy because two  other  persons were admittedly associated with Lachhimi Narain.  These per- sons would have been made co-accused in the case but for the fact that they died in the meanwhile. Regarding the other appellants before us, Mr. Mulla strongly contends  that  there  is no  evidence  of  conspiracy.   He concedes  that  he cannot challenge the correctness  of  the findings of the Additional Sessions judge and the High Court regarding  the commission of certain acts by the  appellants but his contention is that those acts are not sufficient  to

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show their complicity of the other appellants in the conspi- racy.   According to him, the other appellants were made  to do  these acts by Lachhimi Narain and that they were not  in the  know  of  the  deception  which  Lachhimi  Narain   had systematically practised in all the transactions.  We cannot accept  the  argument.   At least in so far as  two  of  the appellants are concerned, Tulsi Ram and Beni Gopal, they are guilty of cheating itself.  That fact coupled with the other evidence  referred  to  in the  concluding  portion  of  the judgment   of   the  High  Court,  and   the   circumstances established against each of the appellants are sufficient to warrant  the  conclusion that they were in the know  of  the conspiracy.   In  so far as Babu Lal is concerned  the  acts established  are:  (1) signing four  forwarding  notes;  (2) presenting  a  cheque at the Bank of  Bikaner,  Kanpur;  (3) cashing a cheque; (4) paying off certain hundis  accompanied by  forged  railway receipts; and (5) signing  32  indemnity bonds.  The forwarding notes related to certain consignments on  the  security  of which hundis had  been  discounted  by certain banks, By presenting a cheque to the Bank of Bikaner Kanpur, and by cashing another cheque, Babu La.  403 had  operated on the bank account to which the  proceeds  of certain hundis supported by forged railway receipts had been credited.   These facts, taken in conjunction with the  acts of payment of hundis accompanied by forged railway  receipts would  be  sufficient to establish his connection  with  the conspiracy.   In  addition  to this  circumstance,  he  also signed  or  endorsed 32 indemnity bonds on the  strength  of which  delivery of a large number of  consignments,  railway receipts in respect of which had been forged, was ultimately taken. Similarly  as regards Moti Lal the following acts have  been established:   (1)  signing  of  23  forwarding   notes   in connection with consignments, the railway receipts of  which were  tampered but which supported certain hundis  drawn  by the  firm; (2) he signed or endorsed 52 indemnity  bonds  on the   strength   of  which  delivery  was   taken   of   the consignments, the railway receipts in respect of which  were tampered  with and yet were offered as security to banks  or firms  which  discounted  hundis  for  the  value  of  these consignments.  These circumstances are sufficient to justify the  conclusion drawn by the Additional Sessions  judge  and upheld   by   the  High  Court.   In   addition   to   these circumstances, we must bear in mind the fact that these four appellants  are  closely related to  Lachhimi  Narain,  that their  family business is joint and, therefore, they have  a common  interest.  It is inconceivable that they  could  not have  been  in the know of what was being done  by  Lachhimi Narain.   In  the circumstances we uphold  their  conviction under  s.  120B, 1. P. C. As regards  Chandrika  Singh,  the matter stands on a different footing.  He was originally  an employee  of  the  firm  Bhairo  Prasad  Srinivas  and   was transferred to Calcutta when a year before the  transactions in question commenced, when the firm of Murarka Brothers was established.  He was in charge of paying hundis presented to Murarka 404 Brothers.  The High Court has held him to be a party to  the conspiracy on the basis of the following facts:                         1.    He   signed  the   letter   of               authority, Ex. P-1388 dated- July 22, 1948, by               which   Lachhimi  Narain  authorised  him   to               operate the account of Murarka Brothers in the               Calcutta   branch  of the Allahabad  Bank,  as

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             proved  by Chandrika Chaubey, P. W.  44,  and,               admitted by the appellant;                2.   he  paid Rs. 25,000/- to  the  Hindustan               Commercial  Bank and received the  hundis  and               railway  receipts concerned,, as  admitted  by               him  and proved by G. N. Ghosh, P. W. 57,  and               the voucher Ex.  P- 1232;                3.   he made payments to the Bank of Bihar at               Calcutta  on  behalf of Murarka  Brothers  and               obtained  the  hundis  and  railway   receipts               concerned,  signing  vouchers,  Exs.    P1342,               1343, 1346 and 1348 to 1353 about the same, as               admitted by him; and               4.    he made similar payments to the Calcutta               Branches  of  the Central Bank of  India,  the               Punjab  National Bank and the Allahabad  Bank,               as  admitted by him and, so far as the  Punjab               National  Bank  is concerned,  proved  by  the               receipt  Ex.   P.1375  and,  so  far  as   the               Allahabad Bank is concerned, by the  vouchers,               Exs.   P.1440  to 1446 and 1448  to  1457,  as               admitted by him: The  first  circumstance relied upon by the  High  Court  is really this that he appended his specimen signatures to  the letter  of  authority  signed  by  Lachhimi  Narain  to  the Allahabad  Bank  Calcutta wherein he (Chandrika  Singh)  was authorised  to operate on the account of  Murarka  Brothers. This was done long before  405 the  conspiracy  and,  therefore,  has  no  bearing  on  the question  before  us.   The remaining  three  reasons  would merely  indicate  that Chandrika Singh had paid  the  hundis which  it  was his duty to do.  It may be  that  along  with those hundis forged railway receipts were also submitted  to him  but  from  this  one  circumstance  it  would  not   be legitimate to infer that he had any hand in the  conspiracy. At worst what could be said is that his suspicion could have been  aroused but nothing more.  Therefore, in our  opinion, none  of  the reasons given by the High Court  supports  the conclusion   that  Chandrika  Singh  was  a  party  to   the conspiracy.  Our attention was, however, drawn to a  further reason given by the learned Additional Sessions judge.  That reason is as follows :-               "Chandrika  Singh was asked to explain  as  to               what he did with the forged R/Rs. and why  lie               did not take delivery on them at Calcutta when               they  were  endorsed  in  favour  of   Murarka               Brothers.  To this he replied that he gave the               R/Rs.  of  Calcutta  to  Calcutta   Commission               agents, and he sent other R /Rs to Raj Bahadur               Singh  munim of Bhairo Prasad Sri Niwas.   But               we  find (sic) is that delivery in  all  these               cases  have (sic) been taken by  the  Calcutta               merchants  and  the merchants  of  other  West               Bengal   stations  on  indemnity  bonds.    No               question  has  ever been put to any  of  these               witnesses    even   suggesting   this    plea.               Therefore, the explanation of Chandrika  Singh               appears  to  be  altogether false  and  it  is               evident  that he destroyed the R/Rs.  and  did               not  use them as it was in his knowledge  that               they  were forged and if he presented them  at               the  railway  station for  delivery  then  the               Station  Master  would compare the  number  of               bags  in the corresponding invoices and  fraud

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             would  be  detected.  This  shows  the  common               assent of mind of Chandrika Singh conspirator               406               which  is usual in conspiracy for the  secrecy               of the crime." It seems to us that the reasoning of the learned  Additional Sessions  Judge is faulty.  The reasoning is entirely  based upon  the  assumption that the railway receipts  which  were endorsed  in  favour  of Murarka  Brothers  were  forged  or tampered with.  It has been brought out in evidence that  in point  of  fact the appellants, firms used to  send  genuine consignments  of  food  grains etc.  to  West  Bengal.   The possibility  of railway receipts covering such  consignments begin  endorsed in favour of Murarka Brothers has  not  been ruled out.  The answer given by Chandrika Singh that he gave the  railway receipts to the Calcutta Commission agents  may well have related to the railway receipts in respect of  the genuine  consignments.   There was, therefore,  no  risk  as envisaged  by  the  learned  Additional  Sessions  judge  in Chandrika  Singh handing over the railway receipts  of  such consignments  to Commission Agents for  obtaining  delivery. Apart from that, bearing in mind the general outline of  the device  employed  by the appellants’ firms it would  not  be reasonable to assume that consignments, the railway receipts had  been tampered with were endorsed in favour  of  Murarka Brothers.  On the whole, therefore, we think that the expla- nation  given by Chandrika Singh is reasonable and he is  at least   entitled   to  the  benefit  of  doubt.    III   the circumstances, therefore, we set aside the conviction  under s. 120-B, I. P. C. as well as the sentences passed on him. As regards the sentences, bearing in mind the fact that  the offences  were committed 13 years ago, that the  appeal  was pending  in  the  High  Court  for  about  four  years   and thereafter it took almost three years for the High Court  to prepare  the  paper  book, we think that  grave  though  the crimes  of  Lachhimi  Narain  are,  we  should  reduce   the sentence.  He was  407 52  years of age when these transactions were commenced  and today  he is 65 years of age.  If we affirm the sentence  of imprisonment  for a period of 7 years it will mean  that  he will  be in jail till he is 72 years of age and  perhaps  in failing  health.  No actual loss has resulted to  anyone  by reason of the fraud practised by him and by the family.   He and other members of the family. have suffered a great  deal monetarily during all these years and have also suffered  in their  reputation.   We, therefore, think that it  would  be sufficient  if  we sentence him to  imprisonment  for  three years  and  raise the fine imposed upon him by  the  learned Additional  Sessions judge from Rs. 5,000/- to Rs.  10,000/- or in default to undergo rigorous imprisonment for one year. We modify the sentences passed on him accordingly.  We would make it clear that these sentences are in respect of all the various offences of which Lachhimi Narain has been convicted and that we are not imposing separate sentence or  sentences in respect of each offence for which he has been convicted. In so far as the remaining four appellants are concerned  we think that no useful purpose would be served by sending them to  jail  at  this  distance of  time.   Each  of  them  had undergone a few weeks’ imprisonment before being released on bail and in our opinion instead of sending them to jail  now to  serve  out the remaining sentence it would be  just  and fair  to  reduce the substantive  sentence  of  imprisonment awarded to each of them to the period already undergone  and add  to  it  a fine of Rs. 3,000/- each  or  in  default  to

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undergo  rigorous imprisonment for a period of  six  months. In  doing so we have borne in mind three circumstances,  one of  which  we  have already indicated.  The  second  is  the extreme youth of these persons when the alleged transactions took  place and the third is that though they knew what  was going wrong and hoped to benefit by it, they acted under the influence of the dominating personality of 408 Lachhimi Narain who was the karta of the family.  We  modify the sentences accordingly. Appeals, partly allowed.