Punjab-Haryana High Court
S.P. Bajaj vs State Of Haryana And Anr. on 23 October, 2002
Equivalent citations: (2003)133PLR161
Author: Viney Mittal
Bench: Viney Mittal
JUDGMENT Viney Mittal, J.
1. The present petition under Section 482 of the Code of Criminal Procedure, 1973 (for short, 'the Code') has been filed by the petitioner for quashing of the FIR No. 596 dated November 22, 1997 registered under Sections 408, 420 of the Indian Penal Code, 1860 (for short, 'the Code') at Police Station Model Town, Panipat, District Panipat. A copy of the aforesaid FIR has been appended as Annexure P.1 with the petition.
2. As per the allegations of the FIR registered on the basis of a communication written by Amarjit Singh, Senior Manager, Punjab and Singh Bank, Panipat to the Station House Officer, Police Station, Model Town, Panipat the firm M/s Panipat Crafts and Design, Industrial Area, Panipat had got sanctioned a credit limit of Rs. 75 lacs vide sanction granted on July 25, 1994 against Hypothecation of stock of handloom made fabric and goods. An agreement of hypothecation was entered into between the bank and the aforesaid firm M/s Panipat Crafts and Design, Panipat on July 28, 1994. A current account separate from the aforesaid credit limit was opened being account No. 2075. On a subsequent request of the partners of the firm, the aforesaid limit was enhanced to Rs. 100 lacs on November 25, 1994. (t was stated by the bank, the aforesaid firm having the stocks till August 1997 but when the aforesaid Manager visited the premises/godown of the firm on September 13, 1997 then he found that almost all the stocks of raw material/semi finished/finished handloom goods/fabrics were not existing and the same had been disposed of by the partners of the said firm without depositing the sale proceeds of the same and without consent of the bank. Upon these allegations, it was stated that a fraud had been committed by the aforesaid partners upon the bank and also that a breach of trust had been committed by them as well. Upon this communication, the FIR in question was registered.
3. In the present petition, it has been averred that in fact no case whatsoever was made out under Sections 408, 420 of the Code. Since the firm was having regular transaction with the bank since 1993 and further that the stocks were merely hypothecated and not pledged with the bank and in these circumstances since the title in the aforesaid stock/goods had never passed on to the bank, therefore, the firm and its partners remained the owners thereof and were free to deal with the same and disposed of the same. It is also pleaded in the present petition that the bank had filed an application before the Debts Recovery Tribunal, Jaipur against the partners for recovery of the amount as aforesaid.
4. A reply has been filed to the petition on behalf of respondent No. 1. A plea with regard to sanctioning of the packing credit limit of Rs. 75 lacs originally and Rs. 100 lacs subsequently are admitted. However, it has been stated that on December 12, 1997 an amount of Rs. 2,32,23,820/- was due from the aforesaid firm and partners toward the bank and, therefore, the accused, namely, the partners of the firm were bound to pay the loan with interest.
5. I have heard Shri Baldev Singh, the learned senior counsel appearing with Shri Amandeep Singh, the learned counsel for the petitioner, Shri Rajbir Sehrawat, the learned Deputy Advocate General, Haryana for respondent No. 1 and Shri I.P. Singh, the learned counsel appearing for respondent No. 2 and with their assistance have gone through the record.
6. Shri Baldev Singh, the learned counsel appearing for the petitioner has submitted that in fact it was admitted position between the parties that the stocks of the aforesaid firm of which the petitioner was the partner had been hypothecated with Punjab and Singh Bank, Panipat. The agreement dated June 29, 1994 had been entered between the parties, Shri Baldev Singh on the basis of the aforesaid agreement and on the basis of the fact that the stocks in question had been hypothecated has submitted that the bank as well as the police had completely failed to distinguish between the concept of hypothecation of stocks and their pledging. According to him, the present case was a case of mere hypothecation of stocks of the goods of the firm and these were never pledged by them with the bank. It is maintained by Shri Baldev Singh that since it as the case of hypothecation of stocks/goods, therefore, title in the aforesaid case never passed on to the bank and remained with the firm and its partners and, therefore, they were free to deal with the same and dispose of the same being its owners. According to him, once it is taken that the firm and its partners were the owners of the stocks/goods then there was no question of any breach of trust or mis-appropriation by a person of his own goods and, therefore, the FIR under Section 408 of the Code was totally without any basis. With regard to the allegations under Section 420 of the Code it is maintained by Shri Baldev Singh that the firm and its partners have been duly discharging their liabilities towards the bank, I was only subsequently because of the financial exigencies that they could not repay the amount to the bank. According to him, mere non-payment of the dues by a person to the bank could not attract the provisions of Section 420 of the Code.
7. On the other hand, Shri Rajbir Sehrawat, the learned Deputy Advocate General, Haryana appearing for respondent No. 1 has maintained that the firm and its partners owed a huge amount to the bank and without discharging their liability towards the bank, the firm or its partners were not free to dispose of the goods.
8. I have given my thoughtful consideration to the entire matter and in my considered opinion the plea raised by Shri Baldev Singh, the learned counsel for the petitioner deserves to be accepted. In CBI, New Delhi v. Duncans Agro Industries Ltd., Calcutta1, 1996(3) R.C.R. 60 it was observed by the Apex Court as follows:
"The expression 'entrusted' appearing in Section 405 IPC is not necessarily a term of law. It has wide and different implications in different contexts. It is, however, necessary that the ownership or beneficial interest in the ownership of the property entrusted in respect of which offence is alleged to have been committed must be in some person other than the accused and the latter must hold it on account of some person or in some way for his benefit. The expression 'trust' in Section 405 IPC is a comprehensive expression and has been used to denote various kinds of relationship like the relationship of trustee and beneficiary, bailor and bailee, master and servant, pledger and pledge. When some goods are hypothecated by a person to another person, the ownership of the goods still remains with the person who has hypothecated such goods. The property in respect of which criminal breach of trust can be committed must necessarily be the property of some person other than the accused or the beneficial interest in or ownership of it must be in other person and the offender must hold such property in trust for such other person or for his benefit. In a case of pledgee, the pledged article belongs to some other person but the same is kept in trust by the pledgee. In the instant case, a floating charge was made on the goods by way of security to cover up credit facility. In our view, in such a case for disposing of the goods covering the security against credit facility the offence of criminal breach of trust is not committed."
9. Following the law laid down in Duncans Agro Industries Ltd.'s case (supra) this Court in Sunita Bajaj v. Punjab and Sind Bank,2 (1998)25 Cr.L.T. 43 also quashed a criminal complaint.
10. As per the offence under Section 420 of the Code it is clear that there are no allegations that the aforesaid credit limit was got sanctioned by the firm or its partners by practising any fraud upon the bank. Mere failure to keep up the promise of repayment will not bring the case within the domain of Section 420 of the Code. For this view of mine, I am supported by the Judgment of the Apex Court in Hridaya Ranjan D. Verma and Ors. v. State of Bihar and Ors.,3 2000(2) R.C.R. (Criminal) 484.
11. In view of the above, the present petition succeeds and the FIR No. 596 dated November 22, 1997 registered under sections 408, 420 of the Code registered at Police Station Model Town, Panipat, District Panipat is hereby quashed.