Karnataka High Court
Sri. Raghuram M V vs The State Of Karnataka on 1 August, 2023
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NC: 2023:KHC:26779
CRL.RP No. 195 of 2020
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 1ST DAY OF AUGUST, 2023
BEFORE
THE HON'BLE MRS JUSTICE M G UMA
CRIMINAL REVISION PETITION NO. 195 OF 2020
BETWEEN:
SRI RAGHURAM M.V.,
AGED ABOUT 45 YEARS,
S/O SRI M. VENKATARAMAIAH
ADDRESS: NO.1, 9TH MAIN,
MAIN ROAD, SIR M.V. MARG,
CHENNAMMANAKERE ACHUKATTU,
BSK 3RD STAGE,
BENGALURU - 560 085
...PETITIONER
(BY SRI: RAJATH FRANCIS,
SRI: AIYAPPA .K.G., ADVOCATES)
AND:
Digitally signed
by PAVITHRA N 1. THE STATE OF KARNATAKA
Location: High BY C K ACHUKATTU PS,
Court Of BENGALURU,
Karnataka
REPRESENTED BY
STATE PUBLIC PROSECUTOR,
HIGH COURT BUILDING,
AMBEDKAR VEEDHI,
BANGALORE - 560 001
2. MR. LAKSHMINARAYANA N.V.
S/O VENUGOPAL N.V.,
AGED ABOUT 45 YEARS,
OCC: BUSINESS,
R/O NO.119/2, NRV NILAYA,
GANESH MANDIR ROAD, 2ND BLOCK,
THYAGARAJA NAGAR,
BENGALURU - 560 028
...RESPONDENTS
(BY SRI: K. NAGESHWARAPPA HCGP FOR R1
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NC: 2023:KHC:26779
CRL.RP No. 195 of 2020
SRI: V. VISHWANATH SETTY, ADVOCATE FOR R2)
THIS CRL.RP IS FILED UNDER SECTION 397 READ WITH
SECTION 401 CR.P.C PRAYING TO ALLOW THIS CRL.RP BY SETTING
ASIDE THE ORDER DATED 04.11.2019 PASSED BY THE COURT OF
THE IV ADDITIONAL C.M.M., AT BENGALURU, IN C.C.NO.10132/2018
THEREBY DISCHARGING THE PETITIONER FOR THE OFFENCE
P/U/S.406, 504, 506 OF IPC.
THIS CRL.RP, COMING ON FOR ADMISSION, THIS DAY, THE
COURT MADE THE FOLLOWING:
ORDER
The petitioner-accused in C.C.No.10132/2018 on the file of the learned IV Additional CMM, Bengaluru (for short 'the trial Court'), is impugning the order dated 04.11.2019, dismissing the application filed by him under Section 239 of Cr.PC, seeking discharge for the offence punishable under Sections 504, 506 and 406 of IPC.
2. Brief facts of the case are that, the case was registered for the offence punishable under Sections 406, 405, 425, 420, 463, 464, 468, 504 and 506 of IPC on the basis of the FIR lodged by SLV Group Construction Firm (hereinafter referred to as 'the Firm' for short) on 05.07.2013. After investigation, charge sheet came to be filed against the accused for the offence punishable under Sections 504, 506 and 406 of -3- NC: 2023:KHC:26779 CRL.RP No. 195 of 2020 IPC. The accused appeared before the trial Court and filed an application under Section 239 of Cr.PC seeking discharge. The said application came to be dismissed under the impugned order dated 04.11.2019.
3. Being aggrieved by the same, the accused is before this Court.
4. Heard Sri Rajath Francis on behalf of Sri Aiyappa K.G., learned counsel for the petitioner and Sri K. Nageshwarappa, learned counsel for respondent No.1- State and Sri V. Vishwanath settee, learned counsel for respondent No.2. Perused the materials on record including the trial Court records.
5. Learned counsel for the petitioner submitted that the petitioner is a partner in the Firm. The Partnership Deed was entered into on 05.07.2013, where there are four partners. Subsequently, there was an Amalgamation Deed entered into between the partners on 18.11.2013, under which, various properties belonging to the partners, which were adjoining one another were decided to be amalgamated for the purpose of having joint khatha. A specific clause was included in the -4- NC: 2023:KHC:26779 CRL.RP No. 195 of 2020 amalgamation deed to the effect that there will not be transfer of right, title and interest in respect of Schedule Item Nos.1 to 9 properties amongst the partners. It is also made clear that the only purpose of execution of Deed of Amalgamation is to obtain joint amalgamated khatha in respect of the Schedule Items described therein in their joint names from BBMP, Bengaluru. Under such circumstances, the properties bearing plot Nos.27 and 28 in Sy.No.30/4 of Gubbalala village, Raghavendra layout, Uttarahalli Hobli was never transferred in favour of the Firm to attract any of the offences for which, charge sheet was filed.
6. Learned counsel further submitted that when admittedly the petitioner is a partner in the Firm, there is no entrustment of the properties in question in favour of the partners to allege commission of the offence under Section 406 of IPC. When there is no entrustment of the property to the accused or when the other parties were not having exclusive domain over the property, it cannot be said that there is breach of trust by the petitioner. He has placed reliance on the -5- NC: 2023:KHC:26779 CRL.RP No. 195 of 2020 decision of Bhuban Mohan Das Vs. Surendra Mohan Das1 in support of his contention that when the parties are partners, they hold the property and use the same for the purpose of business. Anyone of the petitioner will not be entrusted with the property exclusively by other partners. Under such circumstances, Section 405 of IPC cannot be invoked.
7. Learned counsel has also placed on the decision of Rashid Raza Vs. Sadaf Akhtar2 in support of his contention that the allegations made against the petitioner is of simple nature that he has mortgaged the properties in favour of the Bank without brining it to the notice of the other partners. If at all the said allegations are to be accepted, it amount to simple allegations, but it will not be considered fraud, as alleged against the petitioner. Even when such allegations of misusing the property of the Firm is made against the petitioner, the partnership deed refers to arbitration clause and other partners could have raised dispute before the arbitrator. Filing of criminal complaint is not the remedy available to other partners of the Firm.
1 AIR 1951 CAL 69 2 (2019) 8 SCC 710 -6- NC: 2023:KHC:26779 CRL.RP No. 195 of 2020
8. Learned counsel also placed reliance on the decision of the co-ordinate Bench of this Court in Sumitra Suryanarayan Banavasi & Others Vs. State of Karnataka3 in support of his contention that when vague and general statements are made regarding life threat, it will not attract either Section 124 or 506 of IPC. Merely stating that there was life threat by the accused is not sufficient to constitute any of these offences. Therefore, he would contend that the trial Court ought to have discharged the petitioner for the offence punishable under Sections 504, 506 and 406 of IPC. Accordingly, he prays for setting aside of the impugned order passed by the trial Court and to discharge the accused for the above said offences.
9. Per contra, learned counsel for respondent No.2 opposing the revision petition, submitted that serious allegations are made by the complainant who is one of the partners of the Firm. Admittedly, the petitioner is the partner of the Firm in question. There was a Deed of Amalgamation dated 01.01.2015. The individual partners amalgamated their 3 Crl.P.No.10557/2013 DD: 20.06.2013 -7- NC: 2023:KHC:26779 CRL.RP No. 195 of 2020 properties to have joint khatha in respect of the Schedule Item Nos.1 to 9 appended to the amalgamation deed.
10. Learned counsel further submitted that petitioner had collected all the original title deeds of several properties standing in the name of the complainant and deposited the original title deeds in respect of site bearing Nos.27 and 28 formed in Sy.No.30/4 of Gubbalala Village, Raghavendra Layout, Uttarahalli Hobli, Bangalore South Taluk, which is part of the amalgamated khatha standing in the name of the partnership firm and has raised loan from the Bank without revealing this fact to the complainant and other partners of the Firm. Thereby, he has committed criminal breach of trust as defined under Section 405 of IPC and punishable under Section 406 of IPC.
11. Learned counsel also submitted that on 16.10.2016, the accused came to the house of the complainant and abused him in filthy language and gave life threat. Therefore, Sections 504 and 506 of IPC are attracted. Since there are prima-facie materials against the petitioner to attract Sections 506, 504 and 406 of IPC, the trial Court has rightly rejected the application -8- NC: 2023:KHC:26779 CRL.RP No. 195 of 2020 filed under Section 239 of Cr.PC. There is no merit in the contention raised by the petitioner. Hence, prays for dismissal of the revision petition.
12. Learned counsel for the petitioner has produced copies of all the relevant documents which are not disputed by learned counsel for the respondents.
13. Learned HCGP for respondent No.1- State submits that sufficient materials are placed before the Court to constitute the offence punishable under Sections 504, 506 and 406 of IPC and therefore, revision petition is liable to be dismissed.
14. In view of the rival contentions urged by learned counsel for both the parties, the point that would arise for my consideration is;
"Whether the impugned order passed by the Trial Court suffers from perversity or illegality and calls for interference by this Court?"
My answer to the above point is in the 'Affirmative' for the following;
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NC: 2023:KHC:26779 CRL.RP No. 195 of 2020 REASONS
15. It is the specific contention of the complainant that the accused being the partner of the Firm, mortgaged two sites bearing Nos.27 and 28 formed in Sy.No.30/4, situated at Gubbalala Village, Raghavendra Layout, Uttarahalli Hobli, Bengaluru South Taluk and obtained loan by depositing the title deeds. This fact was not brought to the notice of other partners and thereby, committed breach of trust punishable under Section 406 of IPC.
16. Learned counsel for the petitioner drawn my attention to the clause in the amalgamation deed, where the parties have agreed to the clause which reads as under;
"We hereby declares that by execution of this deed of amalgamation, there will not be transfer of right, title or interest in respect of the schedule Item Nos.1 to 9 properties among us. That the only purpose of execution of this deed of amalgamation is to obtain joint cum-amalgamated Khatha in respect of the schedule Item Nos. 1 to 9 properties herein in our joint names from the Bruhath Bangalore Mahanagara Palike, Bangalore."
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NC: 2023:KHC:26779 CRL.RP No. 195 of 2020
17. The Clause referred to above makes it clear that, it was not the intention of the partners to transfer their individual right, title and interest in respect of the Schedule Properties including site Nos.27 and 28 referred to above and the only intention with which the amalgamation deed was entered into is to have a amalgamated khatha from BBMP. None of the Clauses in the deed of amalgamation dated 18.11.2013 refers to entrustment of the properties in question in favour of the petitioner herein.
18. Learned counsel for respondent No.1 has drawn my attention to one of the Clauses in the partnership deed dated 05.07.2013, wherein the partners have contributed immovable properties as capital to the Partnership Firm. Such contribution also refers to site Nos.27 and 28 belonging to the petitioner. Even if it is to be considered that the sites in question were contributed by the petitioner as capital to the Partnership Firm and he raised loan behind the back of other partners including the complainant, the question arises whether Section 405 of IPC will be attracted.
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NC: 2023:KHC:26779 CRL.RP No. 195 of 2020
19. To attract Section 405 of IPC, there must be entrustment of the property in favour of the accused, which he dishonestly misappropriated or converted to his own use. It is specifically stated that the petitioner had dishonestly used the properties viz., site Nos.27 and 28 standing in the name of the Firm for raising loan in his individual capacity. Nowhere it is stated that the property was entrusted to the petitioner as a partner of the Firm. It is also not the contention of the complainant that the petitioner was in exclusive dominion over the property. All the individual partners are the working partners and there is no clause either in the partnership deed or in the amalgamation deed to suggest entrustment of immovable properties to the exclusive dominion of the petitioner.
20. The High Court of Calcutta in Bhuban Mohan Das (supra) considered a similar situation, where the partner was alleged to have committed criminal breach of trust by taking the articles belonging to the Partnership Firm and thereafter pleaded his ignorance about the same. The full Bench of Calcutta High Court discussed at length about the requirement that are to be satisfied to invoke Sections 405 and 406 of IPC and held at para Nos.49, 49A, 50, 52, 54 and 55 as under;
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NC: 2023:KHC:26779 CRL.RP No. 195 of 2020
49. The first question, therefore, for consideration is can a patnr. be said to be in any. manner entrusted with partnership property as against the other patnr. or patnrs. In my view normally not. Section 15, Partnership Act, proviles subject to any contract that the property of the firm shall be held & used by the patnrs. exclusively for the purposes of the business. That in my view means all the patnrs. as between themselves jointly hold & use the partnership property for the purposes of the business & no one patnr. can be said to be entrusted with the partnership property as against the other patnr. or patnrs. under the Ordinary incidents of partnership law under the Partnership Act.
49a. The second question is can a patnr. be said to have dominion over the partnership property as against the other patnr. or patnrs ? The same Section 15, Partnership Act, in my judgment precludes such idea. In the case of a partnership it is joint dominion by all the patnrs. over the partnership property.
50. These are the two primary conditions one of which must be satisfied before other elements of the offence under Section 405, Penal Code, need be considered. As in my view these two primary conditions cannot be satisfied in the case of a patnr. under the ordinary incidents of partnership law under the Partnership Act, no patnr. can prosecute his co-patnr. for criminal breach of trust in respect of partnership property.
52. It is quite true that Section 15, Partnership Act, as well as many other sections thereof are subject to any special contract between the patners. Great liberty is given to patners. to form their own contract of partnership & the terms of contract vary between one partnership & another. If therefore there is any special contract of partnership by the very terms of which either an entrustment is made of any specific property to another patnr. or any exclusive dominion given in respect of the same to one particular patnr. as against the others then such a case may in appropriate circumstances come within the operation of Section 405, Penal Code; except such kind of special contract therefore there cannot be criminal breach of trust by one patnr. as against the other in respect of partnership property.
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54. The reason, therefore, of holding that a patnr. cannot be prosecuted by another patnr. for criminal breach of trust in respect of partnership property under Section 406, Penal Code, is two-fold. The nature, character & incident of partnership property are such that during the subsistence of the partnership there cannot be, except by special agreement with which we are not concerned here, any entrustment or dominion & secondly partnership property is net a specific & ascertainable property & is of so equivocal & problematic a nature until dissolution & accounts, that it is not susceptible to be used in a manner which can bring into operation Section 405, Penal Code. It is only when such ordinary character & nature of the partnership property are varied by special contract of partnership so as to create entrustment of any specific property in favour of one patnr. as against the others or so as to give exclusive dominion of such property to one patnr. as against the other that there can be any scope of application of Section 405, Penal Code.
55. Banerjee J:- I agree. To constitute the offence of criminal breach of trust there must be entrustment of property in respect of which the breach of trust is charged. It closely resembles the offence of embezzlement under the English law. The section requires entrusting any person with property or with any dominion over property. It further requires dishonest misappropriation or conversion of that property by the person charged, to his own use, or dishonest disposal of it. The offence consists of any one of four positive acts namely, misappropriation, conversion, user, or disposal of property."
(emphasis supplied)
21. From the decision of the full Bench of Calcutta High Court, it is clear that unless, there is entrustment of the property which results in embezzlement, misappropriation or
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NC: 2023:KHC:26779 CRL.RP No. 195 of 2020 conversion of the same by the accused with dishonest intention, Sections 405 and 406 of IPC cannot be invoked.
22. In the present case, even though specific allegations are made and prima-facie materials are placed before the Court to contend that the petitioner has appropriated the property for his own use to the exclusion of the Firm or other partners, the important ingredient that is required to invoke Sections 405 and 406 of IPC i.e., entrustment of the property to the petitioner is lacking in the entire complaint.
23. Learned counsel for the petitioner has placed reliance on Rashid Raza (supra), where the Hon'ble Apex Court by referring to its earlier decision held at para Nos.4 to 6 as under;
"4. The principles of law laid down in this appeal make a distinction between serious allegations of forgery/fabrication in support of the plea of fraud as opposed to "simple allegations". Two working tests laid down in paragraph 25 are : (1) does this plea permeate the entire contract and above all, the agreement of arbitration, rendering it void, or (2) whether the allegations of fraud touch upon the internal affairs of the parties inter se having no implication in the public domain.
5. Judged by these two tests, it is clear that this is a case which falls on the side of "simple allegations" as there is no allegation of fraud which would vitiate the partnership deed as a whole or, in particular, the arbitration clause
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NC: 2023:KHC:26779 CRL.RP No. 195 of 2020 concerned in the said deed. Secondly, all the allegations made which have been relied upon by the learned counsel appearing on behalf of the respondent, pertain to the affairs of the partnership and siphoning of funds therefrom and not to any matter in the public domain.
6. This being the case, we are of the view that the disputes raised between the parties are arbitrable and, hence, a Section 11 application under the Arbitration Act would be maintainable."
24. Admittedly, the only allegation made against the petitioner is that he mortgaged two sites in favour of the Bank and obtained loan by deposing the title deeds, without bringing it to the notice of other partners. Admittedly there is an arbitration clause in the partnership deed. It is admitted that till date, the respondent has not raised any dispute before the arbitrator against the petitioner for such mis-appropriation of the property belonging to the Firm. There is no explanation worth mentioning for not raising any dispute before the arbitrator. The only recourse chosen by the complainant is to file the criminal complaint making allegations of criminal breach of trust. When there is no entrustment of the property in question to the petitioner and when Sections 405 and 406 not attracted, it is open for the partners to refer the dispute for arbitration for which, the petitioner will be answerable.
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25. The other penal provisions invoked against the petitioner are Sections 504 and 506 of IPC. The only allegation found in the complaint is that the petitioner had threatened the complainant with dire consequences and also gave life threat. The Co-ordinate Bench of this Court in Sumitra (supra) referred to a situation where such general and vague statement is made in the complaint stating that life threat was given by the petitioners and apart from that, there is no mention as to the actual fact of life threat, mere mentioning that there is life threat which was given by the petitioner is not sufficient to constitute the offence, where a specific words uttered by the petitioner are not stated in the complaint. Therefore, it is held that the offence under Section 504 of IPC is made out.
26. In the present case, if the said analogy is applied, the complainant has made bald allegations that the petitioner has given life threat without there being any other details of the same. There is nothing on record to constitute the offence of criminal intimidation or intentional insult with intention to provoke breach of the peace. Under such circumstances, I am of the opinion that, there are no sufficient materials to invoke either Section 406 or Section 504 and 506 of IPC against the
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NC: 2023:KHC:26779 CRL.RP No. 195 of 2020 petitioner. Even if the allegations made against the petitioner in the complaint is to be accepted as it is, it is not a case to go for trial. Therefore, I am of the opinion that the petitioner has made out a ground to allow his application under Section 239 of Cr.PC.
27. I have gone through the impugned order passed by the Trial Court. It has not taken into consideration the aspects of the matter which are discussed above, but has proceeded to dismiss the application for discharge, which is bad in law. Hence, I am of the opinion that the petition deserves to be allowed and the petitioner is entitled for discharge. Accordingly, I answer the above point in the 'affirmative' and proceed to pass the following;
ORDER The Criminal Revision Petition is allowed. The impugned order dated 04.11.2019 passed in C.C.No.10132/2018 on the file of the learned IV Additional CMM, Bengaluru, is set aside.
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NC: 2023:KHC:26779 CRL.RP No. 195 of 2020 The application filed by the petitioner before the trial Court under Section 239 of Cr.PC is allowed. Accordingly the accused is discharged for the offence punishable under Sections 406, 504 and 506 of IPC.
Pending IA's if any, shall stand disposed off.
Sd/-
JUDGE PN