1962 (4) TMI 28 - SC - Companies Law

Conviction under section 120B read with section 409 Indian Penal Code and section 477A Indian Penal Code - Held that - The vouchers were falsified with one intention only and that was to let it go unnoticed that the Union Agencies had got funds from the Insurance Company. If they had shown the money received and paid to Bhagwati Trading Company it was possible to trace the money back to the Insurance Company through Bhagwati Trading Company which received the money from the Insurance Company through crossed cheques as well. Whoever would have tried to find out the source of the money would have been deceived by the entries. The Union Agencies made wrongful gain from the diversion of the Insurance Company s funds to it through Bhagwati Trading Company and the insurance Company suffered loss of funds. The false entries were made to cover up the diversion of funds and were thus to conceal and therefore to further the dishonest act already committed. In the present case introduction of Bhagwati Trading Company in the transactions was the first step to carry out deception about the actual payment of money out of the funds of the Insurance Company to the Union Agencies. The second step of suppressing the name of Bhagwati Trading Company in the papers of the Union Agencies Delhi made it more difficult to trace the passing of the money of the Insurance Company to the Union Agencies and therefore the falsification of the journal vouchers related back to the original diversion of the Insurance Company s moneys to the Union Agencies and was with a view to deceive any such person in future who will be tracing the source of the money received by the Union Agencies. We are therefore of opinion that Gurha has been rightly held to have been in the conspiracy and to have abetted the making of the false journal vouchers.In view of the above we are of opinion that the appellants have been rightly convicted of the offences charged.

Issues Involved:
1. Jurisdiction of Delhi Court to try offences committed in Bombay.
2. Misjoinder of charges.
3. Validity of trial due to misjoinder of charges.
4. Substantive charge under section 409 IPC.
5. Definition of "property" under sections 405 and 409 IPC.
6. Dominion over funds.
7. Definition of "agent" under section 409 IPC.
8. Conviction for conspiracy.
9. Admissibility of confessional statement.
10. Confessional statement under article 20(3) of the Constitution.
11. Establishing Dalmia's connection with Bharat Union Agencies Ltd.
12. Onus of proof.
13. Reliability of Raghunath Rai's evidence.
14. Corroboration of Raghunath Rai's testimony.
15. Knowledge of impugned transactions by Dalmia.

Issue-wise Analysis:

1. Jurisdiction of Delhi Court to try offences committed in Bombay:
The court upheld the decision in Purushottam Das Dalmia v. State of West Bengal, which established that a court with jurisdiction over a conspiracy case also has jurisdiction over offences committed in pursuance of that conspiracy, even if those offences were committed outside its territorial jurisdiction. Therefore, the Delhi court had jurisdiction to try Chokhani for the offence under section 409 IPC.

2. Misjoinder of charges:
The court found that the charges framed under section 409 IPC against Dalmia were not vague and did not constitute a misjoinder of charges. The charge was related to one offence, though the mode of committing it was not stated precisely.

3. Validity of trial due to misjoinder of charges:
Since the court found no misjoinder of charges, the trial's validity was not affected.

4. Substantive charge under section 409 IPC:
The court held that the charge under section 409 IPC was valid. The charge was related to one offence, and the mode of committing it did not make the trial illegal, especially when no prejudice was caused to the accused.

5. Definition of "property" under sections 405 and 409 IPC:
The court held that the funds in the bank accounts were "property" within the meaning of section 405 IPC. The word "property" should be given its widest meaning and includes choses in action and funds in a bank.

6. Dominion over funds:
The court found that both Dalmia and Chokhani had dominion over the funds of the Bharat Insurance Company. Dalmia, as Chairman and Principal Officer, and Chokhani, as an authorized agent, had control over the company's accounts.

7. Definition of "agent" under section 409 IPC:
The court held that both Dalmia and Chokhani were agents within the meaning of section 409 IPC. The term "agent" includes a person who carries on the business of an agent, and both Dalmia and Chokhani fell within this category.

8. Conviction for conspiracy:
The court found that the transactions leading to the diversion of funds were carried out under Dalmia's instructions and approval, establishing his involvement in the conspiracy. Chokhani and Vishnu Prasad were also found to be part of the conspiracy.

9. Admissibility of confessional statement:
The court held that the confessional statement made by Dalmia was voluntary and admissible in evidence. The statement was not made under any threat or inducement.

10. Confessional statement under article 20(3) of the Constitution:
The court found that the confessional statement was not inadmissible under article 20(3) of the Constitution. Dalmia was not in duress at the time he made the statement.

11. Establishing Dalmia's connection with Bharat Union Agencies Ltd.:
The court found sufficient evidence to establish that Dalmia was synonymous with Bharat Union Agencies Ltd. Dalmia's involvement in the company's affairs and his motive to meet the losses of the Union Agencies were established.

12. Onus of proof:
The court found that the prosecution had established the charges against the appellants beyond a reasonable doubt. The evidence on record supported the conclusions arrived at by the courts below.

13. Reliability of Raghunath Rai's evidence:
The court found Raghunath Rai to be a reliable witness. His statements were corroborated by other evidence, and the discrepancies in his statements were not significant enough to discredit him.

14. Corroboration of Raghunath Rai's testimony:
The court found sufficient corroboration for Raghunath Rai's testimony. His statements were supported by documentary evidence and other witnesses' testimonies.

15. Knowledge of impugned transactions by Dalmia:
The court found that Dalmia had knowledge of the impugned transactions. The evidence showed that the transactions were carried out under his instructions and approval.

Conclusion:
The court dismissed the appeals and upheld the convictions and sentences of the appellants. The court found that the appellants had committed the offences charged and that the trial was conducted fairly and in accordance with the law.

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