Delhi District Court
State vs . on 27 January, 2022
IN THE COURT OF SH. ANIMESH KUMAR, METROPOLITAN MAGISTRATE-06, SOUTH EAST DISTRICT, SAKET COURTS, NEW DELHI STATE VS. FIR NO: P.S U's Cre No/2766/2017 JUOGMENT Si, No. of the case Date of its institution Name of the complainant Date of Commission of offence Name of the accused Offence complained of Plea of accused Case reserved for orders Final Order Date of orders Ashok Grover 160/12 Kalkaji 406/420 IPC 200/2 22.06.2017 Sh. B P Jain, S/o Late Sh. T R Jain, Rio H. NO. T-23, Khirki Extn., Malviya Nagar, New Delhi. April 2008 to May 2010. Ashok Grover, S/o Late Sh. Ved Prakash Grover, Rio H. No. H-1484, C R Park, New Delhi. 406/420 IPC Not Guilty 24.12.2021 Convicted 27.01.2022 a BRIEF STATEMENT OF FACTS FOR THE DECISION:- 1. Vide this judgment, | seek to dispose off the case of the prosecution filed against the acoused namely Ashok Grover for having committed the offence punishable u/s 406/420 of Indian Penal Code, 1861 (hereinafter referred as PC"). a Briefly stated, it is the case of prosecution that the accused was running a company a. in the name of Groovy Communication India Pvt. Ltd. (herein after referred as "The Company'). it was duly registered with Provident Fund Department (herein after referred as "PF Authority'). The accused was Director / Managing Director of the Company and was responsible for the conduct of its business. He was also an employer within the of the Employees Provident Fund & Miscellaneous Provisions Act 0, PF officials had visited s found that the from April 2008 meaning of Section 2 (e) 1952 (herein after referred as "PF Act'). In the month of June 201 the Company of the accused and checked its registers wherein it wa accused had not deposited the employees' PF contribution for the period to May 2010, even after deducting the same from their salaries. This was the clear violation of the direction of law as per which the accused was supposed to deposit the contribution within 15 days from the closing of the said month. Thereafter, the present compiaint was filed with the police. 3. After completing the formalities, investigation was carried out by PS Kalkaji and a charge sheet was filed against the accused. Thereafter, charge was framed against the accused vide order dated 15.03.2019 u/s 406/420 IPC, to which he pleaded not guilty and claimed trial. 4. in order to prove the guilt of accused, the prosecution examined following five witnesses: * Sh. BP Jain deposed as PW-1; * Sh. MK Sharma deposed as PW-2; ® inspector Ranjan Kumar deposed as PW-3; 2 peer sentisiseentTAe,, % e Sj Satvinder deposed as PW-4; and * Sl Gajender Yadav deposed as PW-5. 5. PW-1 in his testimony has supported the case of the prosecution. He deposed that on 25.06.2010, he was posted at Regional Provident Fund, Commissioner Officer as Enforcement Officer. He had visited the office of accused Ashok Grover at Nehru Place who was running the business of computer and on checking it was found that accused had alary / wages of his employee which d filed the present complaint te SHO d Ashok Grover had accepted the ent fund with PF authority. He had e said complaint was Ex.PW-1/A not cleared the dues of provident fund cut from the s accused was supposed to deposit. Thereafter, he ha PS Kalkaji with relevant documents where accuse factum of non-deposition of employees' shares of provid also given the list of wages and employees' shares. Th and the acceptance letter of Ashok Grover was Ex.PW-1/B and the list of employees' wage shares was Ex.PW-1/C. ed that he had issued the letter dated 30.06.2015 after which he was transferred to regional office, Dethi East, Dilshad Garden. fice on 31.03.2021 and settled at Meerut. 6. PW-2 in his examination in chief had depos Thereafter he retired from the Dilshad Garden of All the papers are available at the RO Delhi South office. 7. PW-3 in his testimony deposed that on 07.06.2012, he was posted as Sub inspector at Police Post Nehru Place. That day on receiving complainant of B. P Jain regarding EPF, he registered the present case Fir no. 160/12 U/S 406/409/420 IPC PS Kalkaji. Thereafter, he was transferred to ICPP Sri Niwas Puri. Case File was handed over to MHC (R). 8. PW-4 deposed that on 08.04.2016 investigation of the case was entrusted to him on transfer of IO. During investigation he examined employee namely Tom Bahadur. Further, he collected the documents from ROC, Nehru Place Ex. PW4/A. A letter dated 30.06.2015 was received to previous |O Gajender yadav from Mr. M K Sharma, Assistant PF 3 Cemmissianer and as per the said letter, the entire PF amount has been deposited Ex. PWarB. Thereafter, he made enquiry from the bank of accused i.e. Andhra Bank to verify the amounts as paid to the FF department. The bank statements are Ex. PW4IC Thereafter, he submitied the charge sheet betore ihe court Q. PW-5 deposed that on 05.07.2012, the present case was handed over to hin. During course of investigation, he interrogated the accused namely Ashok Grover who told him that he had deposited the EPF amount through cheque in the account no. DL 934603. Thereafter, he received the status report from PF Commissioner (C-Ilird) EPFO Compiex, Sec-23 Qwarka Ex. PW4/B. He verified that the same amount was deposited. 40. After examination of all prosecution witnesses, at the request of Ld. APP, PE was closed on 24.12.2021. Thereafter, statement of the accused u/s 313 Code of Criminal Procedure, 1973 ("Cr.P.C') was recorded on 24.12.2021 wherein he denied the allegations and claimed to have been falsely implicated. 41, Accused has admitted genuineness of document i.e. FIR No. 160/12 u/s 294 CrPC. 12, The Ld. APP urged that testimonies of the material witnesses have remained unchallenged in the cross-examination and there is no reason to doubt their testimonies. The Ld. Counsel for the accused, on the other hand, argued that material contradictions have appeared in the testimonies of the PWs and prosecution has not been able to prove the guilt of the accused beyond reasonable doubt. {t is also submitted that accused has subsequently deposited the PF contrioution with the PF Authoriiy along with administrative charges. Hence, benefit of doubt must be given to the accused. 43. | have heard the Ld. APP and Ld. Counsel for the accused and have perused the case file. 14. Before examining the testimonies of the witnesses, it would be prudent to briefly discuss the legal position invaived in the present case. 4 MOLLE gennene L. PR INVOLVED 15. Section 405 IPC provides for the offence of criminal breach of trust. It reads as under: "405. Criminal breach of trust----Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of faw prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits "criminal breach of trust". [Explanation [1]--A_oerson. being an employer fot an establishment whether exempted under section 17 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952)__or not] wh cts the emol : ntribution from. the wage the empl for credit Provident Fund_or Family Pension Fund established by any law fer the time being in ferce, shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said law, shall be deemed to have dishonestiv used the amount of the said contribution in violation of a direction of law as aforesaid.] [Explanation 2.--A person, being an employer, who deducts the employees' contribution from the wages payable to the employee for credit to the Employees' State Insurance Fund held and administered by the Employees' State Insurance Corporation established under the Employees' State Insurance Act, 1948 (34 of 1948), shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said Act, shall be deemed to have dishonesily used the amount of the said contribution in violation of a direction of law as aforesaid] 16. A bare reading of this provisions makes it very Clear that if any property is entrusted fo any person or that person gets dominion over any property and thereafter dishonestly » 5 misappropriates the same or converts it for his own use or uses it contrary to the contract or lawful directions, then that person is said to have committed the offence of criminal breach of trust. Essential ingredients which need to be established by the prosecution in order to prove the offence of criminal breach of trust are as follows: * Entrustment of the property; and * A dishonest misappropriation or conversion of the property by the person entrusted with the property to his own use; oF * Dishonest use or disposal of the property in vio prescribing the mode in which the entrustment is to be discharged; or * Dishonest use or disposal of the property in violation of the terms of any legal contract either expressed or implied regarding the discharge lation of the mandate of the law of the instrument, or wilfully allowing some other person to do so. 17. Thus, the two distinct parts of the offence of criminal breach of trust are the creation of an obligation in relation to the property over which dominion or control is with the accused and misappropriation in dealing with the property dishonestly by the accused which is contrary to the terms of the obligation created. A reading of this provision suggests that the gist of the offence is dishonest conversion to one's own use of another's property. 18. First and foremost requirement which needs to be established by the prosecution is the "entrustment of property". The property must have been entrusted to a person thereby creating a trust of some kind. The offender must hold the property on trust for some other person or in some way for his benefit. The natural meaning of 'entrusted' involves that the assured, should, by some real and conscious volition have imposed on the person, to whom he delivers the goods, some species of fiduciary duty. Further, the person handing over the property must have confidence in the person taking the property so as to create a fiduciary relationship between them. 49. "Dishonest intention" is the essence of this offence. Dishonest intention to misappropriate is a crucial fact to be proved to bring home the charge of criminal breach of trust. 'Dishonest' is defined in section 24 IPC as wrongful loss and wrongful gain. As per section 23 IPC, 'wrongful gain' means gain by unlawful means of property fo which the person gaining is not legally entitled and 'wrongful loss' is the loss by unlawful means of oraperty to which the person losing it is legally entitled. Misappropriation simpliciter would not be sufficient enough to constitute the offence of criminal breach of trust. 20. It should also be noted that dishonest intention on the part of accused is not required right at the time of entrustment of property. Mere proof of entrusiment of property is sufficient for the offence of criminal breach of trust. Dishonest intention fo misappropriate may develop after the time of entrustment of property. Reference can be taken from the decision of the Hon'ble Allahabad High Court in the case of Ashrafi Lal vs. State 1978 Crd (NOC) 33 (All). 21, The burden of proving such dishonest intention is on the prosecution which can be justiflably inferred from the attending circumstances, the conduct of the accused and a false explanation given by him. Moreover, if the entrustment is proved and the accused fails to account for the property when he is accountable or is not able to offer an acceptable explanation for the loss, the onus to establish which is upon him, or offers a false explanation, a criminal intention may readily be inferred. 22 Once the entrustment is admitted, it is for the accused to explain as to how he dealt with the money. If the explanation is not acceptable, then the offence of criminal breach of trust is proved. Where it is the duty of the accused to pay over money at once or any different periods, his non-payment is prima facie evidence that he has wrongfully appropriated it to himself. Reference can be taken from the case of V. Ramashankar Patnaik vs. State of Orissa, (1983) 3 Crimes 526 (Ori) & in Re, Ch. Venkatasubbayya AIR 1956 Mad 452. \ uA "y L ° ' 23. It should also be noted that once the offence of criminal breach of trust is completed then subsequent return or refund of the misappropriated amount or property is of no consequence and would not absolve the accused fron this offence. At this stage, reference can be taken from the decision of the Hon'ble Supreme Court in the case of Vishwa Nath vs. State of J & K AIR 1983 SC 174. 24, Apart from section 405 IPC, laws related to provident fund contribution are also governed by the Employee's Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred as the "PF Act'). Section 14 of the PF Act provides for the contraventions made by the employers in depositing PF contribution and other charges. Relevant extract of this provision is reproduced below: [1(A]] An employer who contravenes, or makes default in complying with, the provisions of Section 6 or clause (a) of subsection (3) of Section 17 in so far as it relates to the payment of inspection charges, or paragraph 38 of the Scheme in so far as it relates to the payment of administrative charges, shail be punishable with imprisonment for a term which may extend to, but (a) which shail not be less than fone year and fine of ten thousand rupees] in case of default in payment of the employees' contribution which has been deducted by the employer from the employees' 25. Section 6 of the PF Act provides for the contributions which are to be made by the employer of an establishment. Relevant extraci of the said provision is reproduced below: "6. Contributions and matters which may be provided for in Schemes, --5"™ The contribution which shall be paid by the employer to the Fund shail be 6 [ten per cent] of the basic wages, fdearness allowance and retaining allowance (if any)] for the time being payable fo each of the employees [(whether employed by him directly or by or through a contractor)], and the empioyees' contribution shall be equal to the contribution payable by the employer in respect of him and 8 TEGO mess po may, [if any employee so desires, be an amount exceeding [ten per centJof his basic wages, dearness allowance and retaining allowance (if any), subject to the condition that the employer shall not be under an obligation te pay any contribution over and above his contribution payable under this section|" 26. Section 6 of the PF Act clearly provides that the employer ig responsible for making contribution of employer's as well as employees' contribution with the PF Authority. As per Paragraph 38 of Employees' Provident Fund Scheme, 1952 (hereinafter referred as the " PF Scheme'), the employer is liable to deposit the its contribution and employees' contribution (after deducting the same from wages of employees) within 15 days of the close of every month. Relevant extract of the said paragraph is reproduced below" "(1) The employer shall, before paying the member his wages in respect of any period or part of period for which contributions are payable, deduct the employee's contribution from his wages which together with his own contribution as well as an adminisirative charge of such percentage fof the pay (basic wages, dearness allowance, retaining allowance, if any, and cash value of food concessions admissible thereon) for the time being payable to the employees other than an excluded employee, as the Central Government may fix. He shall within fifteen days of the close of every month pay the same to the Fund by separate bank drafts or cheques an account of contributions and administrative charge|:' 27. Any contravention in depositing the contribution u/s 6 would attract consequences u/s 14 of the PE Act. Further, if the contribution is deducted from the wages of employees by the employer and the same has not been deposited with the PF Authority then the same would be a penal offence punishable u/s 406 IPC. 28. The expianation | was added to the Section 405 of The Indian Penal Code, 1860 by way of The Employees Provident Fund and Family Pension Fund (Amendment) Act, 1973. By way of the said amendment, the employers have been held as deemed trustees qua 9 the contribution deducted by them from the salaries of their employees and if any default is made in the payment of such contribution in such fund in violation of said law then it is provided that he/she is deemed to have misappropriated the said contribution dishonestly in violation of direction of law. 29. Section 420 IPC provides for the offence of cheating and dishonestly inducing delivery of property. Simple cheating is punishable u/s 417 IPC. But where there is delivery or destruction of any property or alteration or destruction of any valuable security resulting from the act of person deceiving, the same falls under the ambit of section 420. It reads as under: "S420. Cheating and dishonestly inducing delivery of property.-- Whoever cheats and thereby dishonestly induces the person de- ceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall aiso be liable to fine" 30. The essential ingredients to attract section 420 IPC are: ® Cheating; * Dishonest inducement to deliver property or to make, alter or destroy any valuable security or anything which is sealed or is capable of being converted into a valuable security; and e Mens rea of the accused at the time of making the inducement. 31. It should also be noted that accused should have dishonest intention to cheat right at the time of making the promise or representation. if he does not have any such intention at the very outset and if he subsequently fails to fulfil the said promise, then he cannot be convicted for the offence punishable u/s 420 IPC. Reference can be taken from the 10 decision of the Hon'ble Supreme Court in the case of Hira Lal Hari Lal vs. CBI (2003) 3 SGC 257, 32. Having discussed briefly the legal pasition involved in the present case, | shall now be examining the testimonies of PWs and the defence taken by the accused in the backdrop of the above discussed legal position. FINDINGS 33. As discussed in the preceding part of this judgment, in the instant case, the accused has been charged for the offences of criminal breach of trust and cheating. For the sake of convenience, | shall be discussing the culpability of the accused under these provisions separately. Culpability of the accused for the offence of criminal breach of trust 34, As discussed in the preceding paragraph of this judgment, prosecution is required to establish the factum of "entrustment of property" and its subsequent "misappropriation" in order to prove the guilt of an accused for the offence of criminal breach of trust punishable u/s 405 IPC. Explanation 1 to section 405 IPC is a deeming fiction provision which gets attracted in cases when the employer does not deposit the contribution PF of its employees even after deducting the same from their salaries. As per the PF Scheme, the employer is duty bound to deposit its contribution along with the contribution of its employee within 15 days from the closing of the month. 35. Explanation 1 to section 405 provides that if any employer deducts PF contribution of its employees from their wages/salaries, the employer shall be deemed to have been entrusted with the PF amount. Further, if the employer defaults in depositing the said amount with the PF Authority within the prescribed time period, it would be deemed to have dishonestly used the said amount in violation of direction of law. 11 36. In the instant case, it is the case of prosecution that the accused has committed breach of trust by making default in depositing the PF contribution of iis employees after deducting the same from their salaries. The culpability of the accused for the offence of criminal breach of trust involves examination of two legal issues: Whather the accused has deducted provident fund from the wages af his employees during the year 2008 and 20107 it. Whether the accused has not deposited the deducted provident fund with the PF Authority during the year 2008 and 201 0? 37, | shail be examining these legal issues in the backdrop of evidences available on record separately. Whether the accused has deducted provident fund from the wages of his emblovees during the vear 2008 and 2010? 38, In order to establish the fact that the accused had deducted provident fund from the wages of his employees during the relevant time period, the prosecution had relied upon the testimony of the complainant PW1. PW1 in his testimony had deposed that on 25.06.2010 he had visited the office of accused at Nehru Place and found that the accused had not cleared the dues of provident fund deducted from the salary of his employee. He had proved on record his complaint filed with police Ex. PW1/A, the reply/acceptance letter filed by the accused i.e. Ex. PW1/B and list of employee wages shares Ex. PW1/C. 39. Perusal of the reply/acceptance letter dated 25.06.2010 sent by the accused to the PE Authority would clearly show that the accused had admitted the fact that PF contribution of all eligible employees was regularly deducted, however, the same was not deposited with the PF Authority between April 2008 and May 2010. The said amount which was not deposited with PF Authority was Rs. 44,981/-. List of employees along with their 12 salaries and wages which were deducted during the relevant period could be seen from Ex, PWHC. #t should be noted that when the incriminating materials were put to the accused at us 313 Cr.P.C, the accused had not specifically denied siting the PF contribution of his employees within ken the defence that he had deposited the 40, the time of recording of statement the fact ihat he had not defaulted in depo the prescribed time period rather he had ta share of PF deducted from the salary of his employees with the concerned department. 41. Interestingly, during the DE, the accused while deposing as DW-1 had impliedly admitted the fact that he had not deposited the PF deducted from the wages of his employee within the prescribed period between April, 2008 and May, 2010. Relevant extract of the testimony of reproduced below: i have "1 am the director of Groovy Communication India Pvt. Ltd. already deposited the entire emplovees. employer's contribution and administrative charges with respect fa my establishment registered with PFE denartment at recistration ne. DL/934603_ihrough State Bank of india for the cerlod of 01.04.2008 le 31 03,2009 vide chegue ne. 036380 dated 26.06.2016 for As. 45393/ duly encashed from my aceount with Andhra Bank on 29.06.2010. for the period of O1.04.2909 to 30.08. 2009 vide chegue nga. 938367 dated 29.06.2010 encashed fram my account on 02.07.2010 for As. 22114/- and for the period of 01.10.2009 to 31.05.2010 vide cheque no. 036406 dated 02.07.2010 amounting to As. 28517 encashed__on 06.07.2010 from my account with Andhra Bank." 42. Perusal of the above testimony of accused would clearly suggest that the PF of the employees ~ both employees' and employer's contribution for the period from 01.04.2008 to 31.05.2010 was paid by the accused only in the month of June/July 2010. The said contribution along with other administrative charges was deposited through three cheques dated 29.06.2010, 29.06.2010 and 02.07.2010 respectively. It would imply that the 13 ane peo accused had deducted the employees' share of PF from their wages for the period April, 2008 to May, 2010, however, failed to deposit the same within the prescribed time period. 43. Further, when the notice was sent to the accused by PF Authority regarding default in depositing the PF contribution, he had sent his reply Ex. PW1/B wherein he did not denied the allegations and stated that he could not do the same due to unavoidable circumstances and also informed that he would be depositing the same latest by 28.06.2010. 44. It is interesting to note that the complaint in the present case was filed with the police on 25.06.2010. After the filing of complaint, the accused had deposited the contributions with the PF Authority which could be clearly seen from the testimony of accused as DW-1. The said contributions were deposited with the PF Authority on 29.06.2010. This subsequent conduct of the accused after filing of present complaint becomes relevant u/s 8 of the Indian Evidence Act. 45. Hence, from the above discussions and findings, it would become clear that the accused had indeed deducted the employees' PF contribution from their wages/salaries between the period from April, 2008 and May, 2010. Thus, the accused is deemed to have deen entrusted with the contribution amount. Whether the accused has not deposited the deducted provident fund with the PF Authority during the year 2008 and 2010? 46. In order to establish the fact that the accused had not deposited the PF contribution of its employees even after deducting the same from their wages, the prosecution had relied upon the testimonies of the complainant PW1 and the !Os of the present case ie. PW4 and PW5. 47, As discussed in the preceding paragraph, perusal of testimony of PW1 would clearly suggest that the accused had not deposited the PF deducted from the salaries of 14 his employees with the PF Authority within ihe prescribed time period. Further, perusal of testimonies af [Os Le. PWd and PWS would show that the accused hac deposited the default amount with the PF Authority only after filing of the complaint. 48. Similarly, perusal of the testimony of the accused would show that the accused Nad impliedly admitted the fact that he did not deposit the PF cantribution of Ais employees awhich was deducted from their wages) for the period from 01.04.2008 to 31,.95.2040 within the prescribed time period and had deposited the contribution only in the yaar 2036 i.e. JuneJuly 2010 when the PF Authority had filed the complaint with police after finding the said defaull. 49 AS discussed in the preceding paragraphs of this judgment, the accused was supposed to deposit the PF contribution within 15 days from the closing of the said month. However, employees' contribution for the period from April, 2008 and May, 2010 was deposited only in the month of June, 2010 which would mean that he had defauited in depositing the PF contribution. 50. Hence. as per explanation 1 to section 405 IPC, in the instant case, accused was deemed fo have been entrusted with the PF contribution of his employees when the same was deducted from their salaries/wages during April, 2008 and May, 2010. The accused was supposed the deposit the same within 15 days of the closing of the month. The accused did not do so and committed default which would mean that he was deemed to have dishonestly used the said arnount in violation of directions of law. Thus, presumption of committing criminal breach of trust could be raised against the accused in the present case. The accused could rebut this presumption by leading cogent evidence. 51. However, the entire defence of the accused revolves around the fact that after the iding of complaint, he has settled the matter oy depositing the contributions and administrative charges with the PF Authority in June, 2010. The factum of settlement was 15 denied with the officials of PE Authority even though they had admitted that the accused had deposited the default amount atter the filing of present complaint. Even if itis assumed hat the present matter was setilad, it would nol automatically negate the factum of misappropriation of money on Ihe part af the accused. tis a settied proposition of law that the offence of criminal breach of trust is said to have been committed even if the breach occurred for temporary period or for a moment. g2. Aigo, the fact that the acoused deposited the employees' contribution after the fing them of the offence of criminal breach of trus! e decision of the Han'ble Supreme of present complaint, does not absolve committed by them. Reference can be taken from th Court in the case of Vishwa Naih vs. State of J & K AIR 1983 SC 174, wherein while discussing the effect of subsequent refund of embezzled money by the accused on nis guift for the offence of criminal breach of trust, the Hon'ble Apex Court has interalia nei ithe follawing: "6 We do not consider it necessary fo refer to any decision. The facts and circumstances of this case clearly establish that there was embezziement of the Government monex by the accused, inasmuch as the accused had pul to nersonal_ use the Government money entrusted to him, instead af dsoositing the same in the proper olace. The fact that the accused refunded the amount when the act of his defalcation came to be discovered, does not absolve him of the offence committed by him. The accused happened be a public servant of the Police Department and was posted as Naib-Courty. He was entrusted with the amount seized in two cases F1.R. Nos. 16 and 17. in complete violation of the directions of law he had failed to send the amount te Sadar Courty Udhampur and with criminal intention he had not made any entry of the money in Rahdari Register, while he made its entry in the Malkhana Register No. 1, so that his misappropriation of the amount might not be detected by anybody. He committed criminal breach of trust with respect to this money over which he had complete dominion by putting ihe same io his use between 7th February, 1972 to 8th August, 1972. The refune of ihe amount after detection does not absolve him of the offence" x .
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53. Similar observation has been subsequently reiterated by the Hon'ble Delhi High Court in the case of Sushil Suri vs. CBI & Anr. Cri.M.C. 3842/2008 decided on 21" May 2009 & Rashmi Agarwal vs. Central Bureau of Investigation 2005 (83) DAJ 153.
54. Further, in the instant case, as discussed in the preceding paragraph, since, the factum of entrustment was proved, therefore, now it was for the accused to provide an account for the money. Perusal of the testimonies of Pws as well as testimony of DW4 would clearly suggests that the accused had defaulted in depositing PF contribution within the prescribed time period. This fact has also been impliedly admitted by the accused in his testimony as DW-1. The factum of subsequent deposit of contribution in dune 2010 after filing of present complaint would in fact strengthen the case of prosecution that accused had dishonestly used the contribution amount after defaulting in depositing the same with the PF Authority within the prescribed time period.
55. {t should also be noted that presence of dishonest intention is not required in the offence of criminal breach of trust at the time of entrustment of property. It may devefop after the entrustment of property. In the present case also, while an inference of dishonest intention could not be drawn at the very beginning i.e. at the time of entrustment of property/investment, however, the same developed after the entrustment when the accused had defaulted in depositing the contribution with the PF Authority.
56, Therefore, in view of the above discussions, | am of the considered view that the prosecution has conclusively established the factum of deduction of PF contribution of employees from their wages by the accused and failure / default committed by the accused in depositing the same with PF Authority within prescribed time period. Hence, in view of the explanation 1 to section 405, it shall be deemed that the money was entrusted to accused who had dishonestly used the same in violation of law. 17 \
57. Thus, in view of the above discussion, the prosecution has successfully proved the quilt of the accused for the offence of criminal breach of trust punishable u/s 406 IPC. Culpability af accused for the offence of cheating u/s 420 IPC
58. As discussed in the preceding paragraph of the judgment, it should be noted that mens rea of dishonest intention at the time of making the inducement is the crux of offence punishable u/s 420 IPC. For an offence under this section, it must be proved that the complainant parted with his property acting on a representation which was false to the knowledge of the accused and that the accused had a dishonest intention from the outset. Reference can be taken from the decision of the Hon'ble Supreme Court in the case of State of Kerala vs. A. Pareed Pillai & Anr. (1972) 3 SCC 667 wherein while discussing the contours of criminal offence of cheating u/s 420 IPC, the Hon'ble Apex Court has interalia held the following:
"To hold a person quilty of the offence of cheating, it has to be shown that his intention was dishonest at the time of making the promise. Such a dishonest intention cannot be inferred from the mere fact that he could not subsequently fulfill the promise"
59. This ratio has been subsequently reiterated by the Hon'ble Supreme Court in the case of Hira Lal Hari Lal Bhagwati vs. CBI (2003) 5 SCC 257 wherein the Apex Court has interalia held the following:
"40, It is settled law, by a catena of decisions, that for establishing the offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. Form his making failure to keep promise subsequently, such a culpable intention right at the beginning that is at the time when the promise was made cannot be presumed, It is seen from the records that the exemption certificate contained necessary conditions which were required to be complied with after importation of the machine. Since the GCS could not comply with it, therefore, it rightly paid the necessary duties without laking v 18 advantage of ihe exemption certificate. The conduct of the GCS clearly indicates that these was no fraudutent or dishonest intention of either the GCS or the appellants in their capacities as office bearers right at the time of making application for exemption. AS there was absence of dishonest ad fraudulent intention, the question of committing offence under section 420 of the Penal Code, 1860 does not arise. We dave read ihe chargsheel ag 2 whole. There io no ie fant in the fret information conort of ihe chargesheet indicating or _imoledly any inlentional deception or aucun taishenes! intention en the part of the appellants right fram the time of making the promise or misrepresentation. Nothing has been said on what those misrepresentations were and how the Ministry of Health was duped and what were the roles played by the appellants in the alleged offence. The appellants, in our view, could not attributed any mens rea of evasion of customs duty or charting the Government of India as the Cancer Society is a non-profit organization and, therefore, the allegations against the appellants leveled by the prosecution are unsustainable. The Kar Vivad Samadhan Scheme certificate along with Duncan [(1996) 5 SCC 591: 1996 SCC (Cri) 1045] and Sushila Rani [(2002) 2 SCC 697:
(2002) 2 Apex Decisions] judgments clearly absolve the appellants herein from all charges and allegations under any other law once the duty so demanded has been paid and the alleged offence has compounded. It is also settled law that once a civil has been compromised and the alleged offence has been compounded, to continue the criminal proceedings thereafter would be an abuse of the judicial process.
Perusal of the above discussed case laws decided by the Hon'ble Supreme Court makes it very clear that in order to prove the guilt of an accused u/s 420 IPC, the prosecution is required to prove the existence of dishonest intention on the part of the accused right at the time of making promise or representation. He cannot be heid liable u's 420 IPC for his subsequent failure of fulfilling the said promise. in the instant case, there is nothing in the chargseheet or FIR which would suggest that the accused had dishonest intention to cheat i.e. dishonest intention to not deposit the money deducted from the wages of its employees with the PF Authority right at the time of 19 deducting it. { should be noted that the accused was running a company and had been deducting PF contribution from the wages of its employees regularly. However, he had defaulted in not depositing the employees' contribution only for a period between 2008 and 2010. An inference of dishonest intention right at the outset could not be autornatically imputed on the part af accused.
al cam Further, testimonies of PWs examined by the prosecution would also be of no help to the prosecution in conclusively establishing the guilt of accused for the offence of cheating. Perusal of their respective testimonies would show that none of them had deposed anything on the fact that the accused had the intention to cheat its employee's right at the time when their PF contribution was deducted from their wages. In fact, reply filed by the accused Ex. PW1/B to the notice sent by PW1 would show that the PF could not deposited due to unavailable circumstances.
63. Therefore, in view of the above discussion, | am of the considered view that the prosecution has miserably failed to prove the existence of dishonest intention to cheat on the part of the accused from the outset.
64. In view of the above discussion and findings, the accused stands convicted for the offence of criminal breach of trust punishable u/s 406 IPC and acquitted for the offence unishable u/s 420 IPC. a, .
ee fi Arp oMIeKg), Announced in the open court on 27.01.2022 (Animesh Kumar)" | / MM-06, South East, New Dethi it is certified that this judgment contains 20 ages and each page bears my signatures. Povviwsal K woe -
'(Animesh Kumar) © MM-06, South East, New Delhi/27.01.2022 20