9911796707
TMI Blog1972 (9) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... J., H. R. KHANNA, J., gave a dissenting opinion. SHELAT, J. These two appeals, by special leave, arise out of two complaints, both of which were filed in respect of the same transaction and are therefore disposed of by a common judgment. Appeal No. 214 of 1968 is against the judgment of the High Court of Calcutta dismissing, the complaint filed by the appellant on January 5, 1966 under secs. 120B, 406 and 420 of the Penal Code against respondents 2 to 5, who are the directors' and the secretary of M/s Turner, Morrison Co. Ltd. (hereinafter referred to as the company). The case of the appellant in the said complaint may be stated as follows : At the material time, the appellant, one S. Varma and Frank Goldstein were the liquidators of Hungarian Investment Trust Ltd. (in voluntary liquidation) hereinafter referred to as Hungerford). At all material times Hungerford was the registered owner of 51 % of the shares of the company and as much was ordinarily entitled to have the control and management of that company. These 51 % shares numbered 2295 shares of the face value of ₹ 1.000 each. Out of these, 707 shares were in possession of the company. Respondent 5, Haridas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 86 lacs and odd. The receipt (document 2) which Varma executed at the time recorded the fact of the said 707 share certificates having been received by him from Jaffray, and their particulars and numbers. The prosecution case was that as Varma had, then a luncheon engagement he did not wish to carry those scripts together with the corresponding bank transfer forms endorsed by the company, and therefore, gave them back to Jaffray to hold them on his behalf until called for them later in the day. He thereupon took Jaffray's endorsement, viz., shares with me under which Jaffray affixed his signature. There was no dispute that the said endorsement and the signature underneath it were in the handwriting of Jaffray. In order to clarify how the said share certificates remained with Jaffray, Verma also wrote over the said endorsement the following: Dear Mr. Jaffray, I do not want to carry these with me, hence leaving meantime with you personally for delivery to me later. Were this writing to be genuine, the word 'personally' therein would mean safe custoday of Jaffray in his personal capacity as distinguished from that of the company. Later that day, on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rodewald and Mundra, the directors of the Company and A.J. Hormusji, its secretary. Para 3 of the said complaint set out the delivery of the said 707 share certificates with the corresponding blank transfer deeds therefore by Jaffray to Varma, his having executed the receipt in favour of the Company, Jaffray having made the said endorsement and Varma thereafter having written the said note partly by the side of and partly over the said endorsement. Para 9 of the complaint read as follows: That your petitioner has come to know that accused No. 1 (Jaffray) has parted custody of the said 707 shares illegally and wrongfully to Turner Morrison Co., Calcutta in conspiracy with the other three accused connected with Turner Morrison Co. to deprive your petitioner from the physical custody of the said 707 share certificates and the blank transfer deeds with the sole object of defeating your petitioner's right to recover ₹ 86,60,000 from accused No. 4, Haridas Mundhra against physical delivery of 2,295 shares of Turner Morrison Co., Calcutta. The Chief Presidency Magistrate directed, under sec. 156(3) of the Code of Criminal Procedure, the police to make an inquir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he replied that he wanted them together with the rest of the share certificates to be delivered to him, against payment of ₹ 86 lacs, whereupon Mundra threatened that he would see that the said 707 share certificates were not handed over to him. Faced with this threat, he called on his solicitors and instructed them to call for those share certificates immediately. M/s Sanderson and Morgan sent their assistant with their own letter and the letter written by Varma, with whom he, (the appellant) also went. The assistant handed over those letters to Jaffray and asked for the delivery of the share certificates. Jaffray pleaded that it was late in the day, that the office was closed and its key was not with him, but promised that he would send them to his solicitors M/s Orr, Dignam Co. The share certificates were, however, not sent and were later seized by the police from the custody, not of Jaffray, but of Hormusji to, whom Jaffray must have handed them over in his capacity as the secretary of the Company. To the same effect was the deposition of P. R. Chaudhry, the assist-ant of M/s Sanderson Morgan with 'Whom the appellant had on that day approached Jaffray. Wit. N. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n May 27, 1965, for, even according to affray, when Varma saw him on that day complaining that the company had parted with those share certificates to Mundra, he produced them before Varma for his inspection. According to him, Varma at that stage brought out a typed receipt to show that be had inspected the shares . His case was that he objected to the word received in that receipt and wanted instead the word inspected , but. Varma declined to alter the receipt and thereupon be wrote out the words shares with me with a view to clarify that the shard certificates were still in his custody and not with Mundra. He denied his having delivered them to Varma, or Varma having entrusted them to him, or his having promised to hand them over to M/s Sanderson Morgan, and alleged that Hoon later on made an interpolation marked (3) in the said receipt to give a false twist to hi said endorsement and to show that the said certificates were entrusted to 'him by Varma. Since the share certificates remained all along in the possession of the company, the police. seized them, 7 6 Later on from Hormusji. We may note that Jaffray in his deposition did not mention the indemnity bond though ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en- trusted the said share certificates to Jaffray and to record that entrustment wrote the note [portion marked (3) in the receipt and that Jaffray also for that purpose made his endorsement that 'the said share certificates were with him. Reason No. 2 is understandable. It is difficult to appreciate how the Magistrate could remark that Hoon either introduced the receipt in a curious way or that he avoided the issue carefully Ad mittedly, Hoon was not present at the time of the execution of the receipt or the alleged entrustment of the share certificates to affray. Obviously, he could not depose to those two facts from his personal knowledge. There was accordingly no question of his avoiding the issue. These observations, therefore, could not have been justifiably made. As for the third reason, Varma was, no doubt not examined. The question is whether at that preliminary stage when the only consideration was whether a prima facie case of entrustment was made out or not, it was necessary for Varma to be called from England to give evidence ? Besides examining himself, the appellant had examined Majumdar, who claimed to be an eye-witness to the delivery of the said share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Rodewald had delivered them to Varma, and whether Varma, in his turn had handed them over to Jaffray's personal custody to be returned to him later on that day. Therefore, the question as to, bow and in what circumstances the said share certificates were in possession of the Company was totally irrelevant. Equally irrelevant were the reason why the indemnity bond was executed first by Varma and the by the appellant. In any case, the reasons for executing it were not. Par to seek. The Company claimed a lien on those share ,.Certificates on account of its having satisfied the tax liabilities of Turner family as recited in the bond itself. As further recited in the bond, Mundra also claimed those shares by virtue of the, said decree in his favour. According to the appellant, Jaffray and Rodewald, therefore, insisted that, the liquidators of Hunger ford should execute the said bond to cover the company against any risk arising from the said claims. Besides, there was no question of the appellant having to explain how the said share, certificates were in possession of. the company, for, on that aspect the. parties were never at variance. So far as the bond was concerned, bot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of adjudging the truth or otherwise of the person complained against should take place at that stage, for, such a person can be called upon to answer the accusation made against him only when a process has been issued and he is on trial. Sec. 203 consists of two parts. The first part lays down the materials which the magistrate must consider, and the second part says that if after considering those materials there is in-his judgment no sufficient ground for proceeding, 'he may dismiss the complaint. In Chandra Deo Singh v. Piokash Chandra Bose,(1) where dismissal of a complaint by the Magistrate at the stage of sec. 202 inquiry was set aside, this Court laid down that the test was whether there was sufficient ground for proceeding and not whether there was sufficient ground for conviction, and observed (p. 653) that where there was prima facie evidence, even though the person charged of an offence in the complaint might have a defence, the matter had to be left to be decided by the appropriate form at the appropriate stage and issue of a process could not be refused. Unless, therefore, the Magistrate finds that the evidence led before him is selfcontradictory, or intrinsically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to execute the bond if Varma had merely inspected and not received the share certificates. It would also prima facie appear that if faffray had only given their inspection, he would not have allowed Varma to prepare the receipt in the words in which it was couched. In any event, with the word 'received' in it, he would not have written out the endorsement which was capable of showing that the shares were with him because after executing the receipt Varma had left them in his personal custody. In support of the High Court's order counsel for the respon- dents argued that there was no reference of the receipt in the protest application, dated May 7, 1966, that likewise, there was no reference therein of the indemnity bond, that there were contradictions in the versions of Varma and Hoon as to when the appellant signed that bond, that the said share certificates were tinder attachment, and therefore, Jaffray, was not likely to deliver them to Varma, that Majumdar did not mention entrustment in his evidence, that the letter of Varma to Jaffray said to have been carried by Chaudhry when he went to take delivery of the said share certificates was not produced, and lastly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without considering whether despite that omission there was other evidence on record which made out a sufficient ground for proceeding with the case. At the stage of sec. 202 7-L348Sup.C.I./73 inquiry what a complainant has to make out is such a sufficient ground. He need not necessarily produce at that stage all the evidence available to him. Merely because the appellant did not examine Varma, (however important he was) because that would have meant bringing him to India from England at considerable cost, could not be a ground for throwing out his complaint,, even though such of the other evidence he led was capable of making out a prima facie case. There is no gainsaying that although respondent Mundra held only minority shares, he was and continues to be in a position to control the management of Turner Morrison Co. without having to pay the price of the rest of the shares by reason only of the said 707 share certificates being in possession of that company and therefore unavailable to Hungerford to deliver them to him. He had, therefore, sufficient interest, to say the least, to bring about such a position that Hungerford would not be in a position to deliver the said shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Jaffray charging offences under secs. 467, 471, 193, 474 and 109, Penal Code against appellant Hoon, Varma and Majumdar. Though the complaint gives the impression as if the whole of the said receipt dated May 27, 1965 was alleged to be a fabricated document, Jaffray's de-position before the Magistrate makes clear that according to him, the body of the receipt and his own endorsement thereon were genuine and that only the portion said to be falsely fabricated was the writing on it marked '3' purporting to be in Varma's handwriting but written out subsequently by Hoon with a view to give a false twist to the said endorsement. Jaffray's case was that on May 27, 1965, when Varma came to the office of Turner Morrison Co. he brought out 707 shares in question for Varma's inspection, that those shares were never handed over by him or received by Varma, that he made the said endorsement only to show that they were in his possession but that with a view to make out a false case of entrustment to him by Varma, Hoon subsequently wrote out the said portion marked '3'. Jaffray prayed in the complaint that the Chief Presidency Magistrate should direct police ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;s complaint, those proceedings before the police were part and parcel of the proceedings before the Chief Presi- dency Magistrate and therefore production of the receipt there was production before the Magistrate; (2)) that even before that, the receipt had been produced before the High Court and that having been done, it was the High Court alone who could cause a complaint to be filed under s. 195(1) (c) of the Code and not Jaffray. According to Mr. Chagla, after the decree in Mundra's suit No. 600 of 1961 was passed, Hungerford took out execution proceedings claiming therein that Turner Morrison Co. should be made to hand over to the liquidators of Hungerford the said 707 share certificates to enable them to satisfy the said decree by delivering all the 2,295 shares (including the 707 shares in dispute) to Mundra against payment of price thereof by Mundra. Those proceedings were opposed by Turner Morrison Co. on the ground that they did not lie against it as it was not a party to that suit. As 'against that contention, Hoon, as one of the liquidators of Hungerford, filed a counter-affidavit claiming- entrustment of the said shares to Jaffray by Varma an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the police recommending discharge of Jaffray and others who were accused in that case of criminal breach of trust and cheating. But the contention of Mr. Chagla was that though the receipt was not tendered in evidence, it was nevertheless 'produced', an expression which has a wide connotation. There Mr. Chagla is right, for, a document can be said to have been produced in a court when it is not only produced, for the purpose of being tendered in evidence, but also for some other purpose. [cf. In re, Gopal Sidheshwar(1)] on the footing, therefore, that Hoon 'produced' the receipt, the question still would be whether he produced it in a proceeding before a court. Mr. Chagla's argument was that it was produced in a proceeding before the Court of the Chief Presidency Magistrate 'because the investigation by the police was one ordered by him under s. 156(3) of the Code and therefore that investigation was part of the proceedings in his Court. Such a proposition does not appear to be correct. Firstly, the police authorities have under ss. 154 and 156 of the, Code a statutory right to investigate into a cognizable offence without requiring any sanction from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argument, therefore cannot be accepted. In support of the second limb of his argument, Mr. Chagla relied on the affidavit of S. K. Ganguli, the solicitor of Hungerford, dated March 26, 1969, according to which during the course of the said execution proceedings taken out by Hungertord he had produced in the High Court the receipt and the said indemnity bond for inspection by counsel of Mundra and Turner Morrison Co. in the presence of Rodewald who also, along with counsel, inspected the two documents. Obviously, the originals of the receipt and the bond were produced in the Court to satisfy counsel that copies of these documents annexed to the affidavit of Hungerford tallied with the originals and were correct. Since the copies were used as annexures to the affidavit, they certainly can be said to have been produced in the proceedings before the Court. But it cannot be said that their originals were produced in those proceedings, since they were only shown to counsel for the limited purpose of satisfying them that the copies were correct copies. It was nobody's case that those copies were fabricated documents. Jaffray's case was that it was part of the original receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the High, Court alone could have filed or caused to be filed a complaint be-cause the document was at one time produced before, it, then no other court where it is produced subsequently can file a complaint even if the forged document is produced or tendered in evidence in a proceeding before it. If the High Court, in the case stated above, were to consider it inexpedient to file a complaint, a party to a proceeding before the High Court can go on producing ad seriatim that document in several subsequent proceedings in several different courts with complete impunity because the High Court has in respect of the proceeding before it refrained from causing a complaint to be filed against that party. Surely, such a consequence could never have been contemplated when cl. (c) was enacted. The proper construction of that clause, therefore, is that when a party to a proceeding before any court produces or tenders in evidence a document in respect of which an offence, e.g., s. 471 read with s. 467, is alleged to have been committed, it is that court before which the document is produced or tendered in evidence which can file a complaint regarding such an offence and a magistrate cannot tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) of section 156 of the Code of Criminal Procedure. The police registered a case and after investigation submitted a report that it was a false case. The complainant thereafter filed objections against the police report before the Chief Presidency Magistrate on May 7, 1966. The complaint was thereafter sent on June 18, 1966 to a Presidency Magistrate for judicial enquiry. In the course of that enquiry the appellant examined four witnesses. Sachindra Mohan (PW 1), P. N. Chowdhry (PW 2), Hoon appellant (PW 3) and N. K. Majumdar (PW 4). Affidavit of Varma, who was in the United Kingdom, was also filed. Reliance was also placed upon receipt dated May 27, 1965 which readsas follows : Document-2 Document 2/1. Recived from Turner Morrison ; Co. Ltd., Calcutta the following Shares Certificates covering 707 Ordinary Shares of Turner Morrison Co. Ltd., 1. Share Certificate No. 19 fir 3 ordinary shares Nos. 1452, 1593 1594. 2. Share Certificate No. 28 for 695 ordinary shares Nos. 1601-2295. 3 Share Certificate No. 29 for 3 ordinary shares Nos. 1455. 1597 1598. 4. Share Certificate No. 75 for 3 ordinary shares Nos. 1453, 1595 1596 5. Share Certificate ND. 76 for 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted January 5, 1966 observed that no prima facie case of entrustment had been made out, Reference was made to the fact that Varma, who was the central figure, had not made any statement during the course of enquiry. Varma's affidavit was held to be not admissible. The Chief Presidency Magistrate agreed with the Presidency Magistrate and dismissed the complaint. In revision the High Court declined to interfere with the order of the Chief Presidency Magistrate. Reference was made by the High Court also ;to the non-examination of Varma during the judicial enquiry. Mr. Chagla has contended in this Court on behalf of the appellant, that there is prima faice case to show that 707 ,hare scripts were handed over to Varma on May 27, 1965 and thereafter were entrusted by Varma to Jaffray. The refusal of Jaffray to make over those shares to the liquidators of Hungerford Investment Trust Limited or their Solicitors, according to Mr. Chagla, amounts to criminal breach of trust. The said offence, it is staated, has been committed by Jaffray in conspiracy with the other accused. The above stand has been controverted by Mr. Mukherjee on behalf of the State of West Bengal as well as by Mr. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dy of Turner Morrison Co. and were on the morning of May 27, 1965 handed over by Rodewald to Varma when Varma met Jaffray and Rodewald in the office of Turner Morrison Co. It is further stated that Verma because of a luncheon appointment left those shares with Jaffray. Varma, in the circumstances, would have been the most important witness to depose, about the handing over of the share scrips to him by Rodewald and the entrustment of those share scrips immediately thereafter to Jaffray. Verma was not examined during the course of enquiry and this fact resulted in serious infirmity in the evidence adduced by the petitioner. Resort was accordingly had to the filing of the affidavit of Verma. As the evidence of Varma was not of a formal character, his affidavit could plainly be not admitted in evidence. Reliance has then been placed by Mr. Chagla on the statement of Majumdar PW who is alleged to have accompanied Varma when the latter not Jaffray and Rodewald in the office of Turner- Morrison Co. on the morning of May 27, 1965. The state- ment of Majumdar reads as under I know Mr. Hoon and Mr. Varma, and also Mr. Jaffray and also other accused persons. On 27-5-65 I went to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand was made for 707 share scrips and it was mentioned that indemnity bond had been executed on that account. What is significant, however, is that there was no reference in that letter to, any entrustment of the share scrips. Reference has been made by, Mr. Chagla to civil litigation in respect of the share scrips. The said litigation had admittedly nothing to do with the alleged entrustment of share scrips in, question with which we are concerned in the present case. No help can consequently be derived from the decision in the civil case. Our attention was also invited to the statement dated November 14, 1966 made by Jaffray in his case against Hoon and others under section 474 Indian Penal Code. It is, however, open to question whether the said statement of Jaffray can be utilised in this case when that statement is not a part of the record of this case. No process has so far been issued to Jaffray and his statement has not been recorded in this case. Assuming, for the sake of argument, that the statement of Jaffray in the other case can be referred to in the present case, the statement can be of no avail to the appellant because there is no indication in the statement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is sufficient cause for proceeding, he should issue process against the accused in accordance with section 204 of the Code. It may be that the evidence which is required to be adduced by the complainant at that stage may not be sufficient for recording a finding of conviction, but that fact would not absolve the complainant who wants the magistrate to issue a process against the accused person from leading some credible evidence as may prima facie show the commission of the offence. In the present case the Presidency Magistrate, the Chief Presidency Magistrate and the, High Court took the view that there was no sufficient cause for proceeding on the complaint filed by the appellant. I find no sufficient ground to interfere in this appeal under section 136 of the Constitution with the said concurrent finding. No credible material has, in my opinion, been brought on record by the appellant as may show prima facie that there was entrustment of the share scrips in question to the accused. The appeal consequently fails and is dismissed. ORDER In view of the majority judgment, the appeal is allowed and the High Court's judgment and order is set aside. We direct the Chief ..... X X X X Extracts X X X X X X X X Extracts X X X X
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