1980 PCr (PLP)

S. S. Sheikh for Respondent No. 1. Rehanul Hassan Farooqui for Respondents Nos. 2 to 5. Date of hearing : 21st October, 1979. In this application under section 561‑A of Cr. P.C. the petitioner seeks quashment o proceedings pending in the Court of A. C. M., Jamshed Quarter, Karachi against the applicant and respondents Nos. 2 to 5 under sections 403, 406, 109, P. P. C. Where the process was issued on 16th August, 1978. The complainant Faisal Malik has alleged in his complaint that he was a partner with the applicant Kazimali Dossa in the firm Supreme Motors with 50% shares for each and the business was carried on Deepchand Ojha Road, Plot No. 538/4‑A in 1974. The complainant claimed to be the active partner. The business was alleged to have thrived and Kazimali Dossa was alleged to have misappropriated a large sum of money. Complainant continued to say that he started his business in U. A. E. in 1977 and the applicant taking advantage of complainant's absence sold away the tenancy of the premises of Supreme Motors along with all its fittings, fixtures and machineries on cash valued at Rs. 7,00,000 to accused Nos. 2 and 3 and swallowed up the proceeds. It was finally alleged in the complaint that Kazimali Dossa held the share of the com plainant in Supreme Motors in trust on behalf of the complainant and had no authority either direct or employed from the complainant to transfer it to anyone and he therefore, committed an offence under section 406/403 P. P.C. and the accused Nos. 2 to 5 having full knowledge of the interest of the complainant in Supreme Motors abetted Kazimali Dossa in the com mission of those offences. No evidence has so far been recorded in the proceedings. The appli cant seeks quashment on the basis that there is civil litigation pending between the parties and the matter in respect of accounts of the partnership is before the High Court in Suit No. 658/78 filed by Kazimali Dossa on 19th August, 1978 where a preliminary decree for accounts was passed by consent of parties on 28th February 1979, and the accounts were being gone into by a Commissioner appointed by the High Court for the purpose of going into the accounts. Mr. Hudda has further contended that a partner cannot be held guilty of an offence under section 403/406, P.P.C. in respect of the partnership property as the partner is co‑owner of partnership assets. He relied upon A I R 1965 S C 1433 where it was held that a partner has general dominion over the assets of the partnership and there is no entrustment to him of the partnership assets, unless there is a special agreement to that effect. In. that case there was an agreement authorising the partner to utilize the recoveries made on behalf of the partnership for partnership business .but the partner had failed to deposit the money of the partnership firm recover ed by him in the account of the firm in the bank. In those circumstances it was held that an offence under section 409, P. P. C. had not been made out against the partner. The following observation of the Supreme Court of India in that case are very relevant :‑ "The owner of property, in whichever way he uses his property and with whatever intention, will not be liable for misappropriation and that would be so even if he is not the exclusive owner thereof. A partner has undefined ownership along with the other partners over all the assets of the partnership. If he chooses to use any of them for his own purposes he may be accountable civilly to the other partners. But he does not thereby commit any mis appropriation." In Abdul Ghayoor v. State (1973 P Cr. L J 119), reported without any detail, it was held that misappropriation by a partner of partnership assets is not an offence. However in that case the facts have not been given and one does not know as to what were the circumstances and facts of the case. In Muhammad Usman v. Jan Muhammad (1972 P Cr. L J 671), decided by late Tufail Ali Rehmani, J. in case of partnership resulting in advancement of money by complainant partner and utilized by accused partner for the purposes of constructing buildings for clients and mutual distribution of profits where the accused had failed to account for the money outstanding and where the complainant had first brought a civil suit for accounts and then filed proceedings under section 406, P. P. C. the learned Civil Judge held that the case was of failure to render account and no charge of criminal mis appropriation was made out as there was ‑no clear allegation in regard to stolen money converted to accused's own use and in these circumstances the proceedings were quashed. ‑Reliance in that case had been placed on Cr. Appeal No. K‑17/69 (Julian Dinshah and another v. Ahmed All and an other, decided by Supreme Court. In Abdul Halim v. . State (P L D 1978 Kar.359)) it was observed by Mushtak Ali Kazi, J. the money realised on behalf of the part nership was not received by a partner in fiduciary capacity and the proper course for the aggrieved partner was to sue for accounts and not to file a criminal case. In that case the criminal proceedings filed by one partner against another partner were quashed. On page 559 of Lindley on Partnership the following opinion of the author is relevant :‑ "No criminal prosecution is sustainable by one partner against an other for stealing, embezzlement or misappropriation." Finally Mr. Hudda referred to 1976 P Cr. L J 156 where it was held by Mr. A. H. Memon, J. that if the facts mentioned do not disclose any offence then the case can be quashed. Mr. S. S. Shaikh, learned counsel for respondent No. 1 Faisal Malik referred to me to the agreement of sale dated 27th July 1978 whereby Kazimali Dossa had sold the tools, instruments and other articles and immovabie relating to the business of a motor workshop at No. 537/4‑A Deepchand Ojha Road as absolute and full owner of the name and not as partner of Supreme Motors to respondents No. 2 and 3 for consideration of Rs. 1,20,000 Mr. S. S. Shaikh has contended that this agreement clearly showed that Kazimali Dossa was not acting as partner of Supreme Motors but had :arrogated to himself the full ownership of those articles and thereby he bad committed a breach of trust as he was merely a ,,partner of 50% in respect of those articles, and not Absolute owner of the same. He has relied upon A I R 1962 S C (?) where it was held that where one partner is given authority, by the other partner to collect money or property of the firm, he is entrusted with dominion over that property and if he dishonestly misappropriates it then he comes within section 405, P. P. C. Reliance in this was placed upon Jagannath v. Raghunathdas (A I R 1932 Bom.57) where Beaumont, C. H. had made similar observations. Mr. Rehanul Hassan Farooqui, learned counsel for respondents Nos. 2 to 5 supported the‑ submission of Mr. B. B. Huda and submitted that the proceedings against his clients should also be quashed. It seems that the trend of authorities is in favour of the view that a partner cannot be held guilty of breach of trust in respect of partnership assets unless a special agreement is shown where a partner is entrusted with the assets of the partnership in a fiduciary capacity. In this case before me no such agreement of special entrustment has been shown to me and the partnership agreement dated 1st October, 1974 which has been filed before me shows that both the partners were to be equal partners and they were entitled to receive any money of the firm and to deposit the same in the name of the firm or otherwise and to invest any part thereof upon such investment or security and in such manner as the said partner shall think fit. It was of course provided that each partner shall be faithful, honest and diligent and shall render true account to the other partner. Bu apart from that there was no special entrustment of any assets of the firm to any partner, and therefore, in view of A I R 1965 S C 1433 where a partner is stated to be having dominion over the entire assets of the property and is described as the owner or part owner of the same, it would be difficult to sustain the conviction under section 405, P. P. C. against the applicant. Although no case has been shown to me where a partner who disposed of the entire assets of the firm showing himself the sole owner of the same was held to be not a case under section 405 or 406, P. P. C. still in view of the trend of the recent decisions in the Supreme Court of India and in our own High Court I am of the view that the liability of the applicant is mostly a civil liability where he has to account for the money which he has realised on account of the sale of the assets of the firm. More particularly so when suit has already been filed by the applicant himself in the High Court and there has been a preliminary decree for accounts by consent of both the partners viz., the applicant and the respondent No. 1 and the accounts are being gone into by the Commissioner for accounts, it would mean sheer harassment to the applicant if he con tinues to be dragged in the criminal Court in spite of the fact that the same matter is pending before the Civil Court. It is to be determined in the Civil Court whether the applicant has to pay any money to the respondent No. 1 or the respondent No. l has to pay any money to the applicant, and therefore, it would be unfair to allow the continuation of the criminal proceedings against the applicant. Mr. S. S. Shaikh had argued that the applicant should have moved an application under section 249‑A of Cr. P. C. before the trial Court. This submission is not without force, but in view of the fact that Civil litigation is pending between the parties, I am of the view that application G under section 561‑A of Cr. P. C. was justified. I am therefore of the view that the Criminal Proceedings under section 406/409 in the Court of A.C.M. Jamshed Quarter, Karachi against the applicant are abuse of the Process of the Court, and therefore, the same are quashed. Since the case against respondents 2 to 5 is dependent upon commission of offence by the applicant basically therefore proceedings against respondents 2 to 5 are also quashed. Proceedings quashed.