P (PLP)

As requested by the Assistant Registrar Co‑operative Societies in his letter Exh. P. O., dated 1st October, 1948, the Deputy Commissioner, Sargodha, directed Major Ashraf, Magistrate First Class, Sargodha (P. W. 3), to deliver possession of the Jagdish Cotton Factory to the Co‑operative Department on the same day. Major Ashraf went to comply with the order but the inventories prepared at the time of taking over by the petitioner on 9th November, 1947, were not available. He ordered new inventories to be prepared and, as this work was about to commence, he received a message from the Deputy Commissioner to report to him immediately. He did so and was ordered not to deliver possession of the Jagdish Cotton Factory to the Co operative Department until further orders. Possession was subsequently delivered, in the absence of the petitioner, to Pir Fateh Shah, Inspector Co‑operative Ginning and Wheat purchase (P. W. 9) and Gul Muhammad, Shop Inspector (P. W. 12) by Hafiz‑ul‑Rahman (D. W. 21) on 30th October, 1948. Nobody had the inventories which were prepared on 9th November, 1947, and possession ,was taken of whatever was found in the factory. A new inventory of goods delivered was prepared and signed by Hafiz‑ul‑Rahman and Muhammad Iqbal, Engineer, on behalf of the firm Khan Sahib Chaudhri Abdul Karim and Company and by Pir Fateh Shah and Gul Muhammad on behalf of the Co operative Department. Somewhere in the beginning of 1949, the original' inventories Exhibits P. B., P. C. and P. D. were discovered and after comparison it was alleged to have been found that several articles, including the diesel oil engine in dispute, were missing. All articles other than this engine appear to have been satisfactorily accounted for and there is no dispute about them. Their value ‑was stated to be about Rs. 60,

000. The value of the engine was stated by Ata Muhammad (P. W. 7) to be about Rs.

250. In lieu of the Jagdish Cotton Factory, another factory in Sargodha called the Japan Cotton Factory was allotted to the petitioners' firm and its possession was delivered by Mian Gul Muhammad (P. W. 12) to the firm through Haft‑ul‑Rahman, son of Chaudhri Abdul Karim, on 28th October 1948. On 17th January 1949, Raja Fazal Dad Khan, Inspector Police (P. W. 14) came to Sargodha fof making enquiries about some case. He saw a letter in the District Magistrate's Office, which has not been produced, and wrote Exh. P. R/1, dated 22nd January, 1949, to Pir Fateh Shah asking when the Jagdish Cotton Factory was allotted to the Co‑operative Department and why' was possession not delivered to them immediately. He' directed that inventories should be checked and a detailed report of the missing articles be prepared. A reply to the enquiry was given the same day vide Exh. P. R., and on 23rd January 1949. a report Exh. P. R/2 was made by Raja Fazal Dad Khan', Inspector Police, to the District Magistrate, alleging misappropriation on the part of the‑ petitioner and suggesting a search of the Japan Cotton Factory. The District Magistrate deputed Khan Abdur Rahim, Extra Assistant Commissioner, District Rehabilitation Officer, Sargodha (P. W. 2), to accompany Raja Fazal Dad, Inspector Police, to the Japan Cotton Factory and conduct a search. He did so on 24th January, 1949, and took Zar Khan and Ata Muhammad, employees of Jagdish Cotton Factory, to identify things. Neither the petitioner nor his son was present at the time of this visit. Ashfaq Parvez, Manager of the firm, was there and the diesel oil engine was being repaired on a platform which appeared to have been recently constructed. Raja Fazal Dad Khan, Inspector of Police, has admitted that the petitioner was not in the factory and the engine was not working at that time. It was being " oiled or overhauled", to use his words. The engine was removed to the police station and a case was registered under section 406 against the petitioner resulting in his conviction, as stated above. Ashfaq Parvez (D. W. 17) has deposed that the engine was received from Lahore in a dismantled condition and, according to his instructions, Abdul Majid and Muhammad Ahmad mechanics were assembling it when the police came and took it away. Mistri Ismail (D. W. 14) has deposed that the engine was sent to Lahore for repairs and, before its return, Jagdish Cotton Factory was taken away from the petitioners firm who were given another factory in its place. Instructions were then sent to Lahore for the early return of this engine because it had to be delivered to the Jagdish Cotton Factory. The engine was accordingly returned unassembled. The explanation given for its being allowed to remain in Lahore from April to November 1948, is that the petitioners firm had obtained electric connection from the Electric Supply Company in or about March 1948 for the working of the factory and did not need this engine. When the petitioner's firm was shifted to Japan Cotton Factory they had the electric connection transferred to that factory. There also they did not require the oil engine. According to Hafiz-ul-Rahman (D. W. 21), he was not prepared to deliver possession to the Co‑operative Department in the absence of the inventories but was persuaded by Pir Fateh Shah to do so on the assurance that the articles belonging to the petitioner's firm would be restored to them and the articles belonging to the factory, if any we're found missing, would be restored by the petitioner's firm after checking things with the inventories. It is admitted by the prosecution that no checking took place and no demand was made for the restoration of the diesel oil engine before the police came to Japan Cotton Factory and took the engine away on 24th January 1949. A couple of months after possession of Jagdish Cotton Factory had been handed over by Hafiz‑ul‑Rahman to the Co‑operative Department on 30th Octobcr, 1948, a letter Exh. P. X., dated 8th January 1949, was sent by the petitioner's firm signed by Mr. Aziz Alam on behalf of the Managing Director to the Director of Industries, West Punjab, Lahore. It said that the petitioner's firm had to hand over charge of the Jagdish Cotton Factory in the absence of inventories and some articles belonging to them were in the factory which they were not allowed to remove. It was added that there might have been some articles belonging to the factory which went over to the side of the firm. It was, therefore, requested that copies of the invento ries be provided for making necessary adjustments. The trial Court said that this document was received in the office of the Director of Industries after the removal of the engine by the police from the Japan Cotton Factory, probably because of the date, 29th January 1949, written in a seal affixed on this letter marked Exh. P. K./

1. The Superintendent of the Director's Office Hakim Abdul Aziz (P. W 4) has, however, deposed in his supplementary statement, dated 9th August 1949 that the letter Exh. P. K. was received by him in his office on 10th January 1949. He put his initials and the date of receipt (marked Exh. P. K/2) on the letter. There is another letter, Exh. D. C., sent by the petitioner to the Deputy Commissioner, Sargodha, dated 3rd November 1948, i.e., three days after delivery of possession of Jagdish Cotton Factory. It said that if anything was found short the firm would make that good. The letter was produced by Mr. Saeed Hasan, Head Clerk in the Office of the Director of Industries (P. W. 5). It is stated by the learned counsel for the petitioner that the trial Court refused to pay any attention to the contents of this letter on the ground that it. was addressed to the Deputy Commissioner, Sargodha, and could not have been in the Office of the Director of Industries. It is pointed out that there is an endorsement on the letter showing that copies were sent to the Director of Industries. Rehabilitation Commissioner and Registrar, Co‑operative Societies. At the commencement of the trial the petitioner was 'told that he was accused of having misappropriated a large number of articles, enumerated in the question, including the diesel oil engine and was asked to show cause why he should not be convicted. He denied that he had misappropriated anything and, after taking evidence, the trial Court could not find that he had misappropriat ed anything except the diesel oil engine. In the course of his judgment, the learned Magistrate says that "Judged by all canons of equity and fair play ...I exonerate the accused of all blame with respect to these twelve items. The vexed question of item No. 3 has usurped most of the time and energy of the parties and they have approached it diametrically from different angles". After discussing the evidence the learned Magistrate says "When all is said the fact remains that the accused has failed to discharge the trust in respect of engine Exh. P.

1. This engine was removed, according to Zar Khan (P. W. 6) in October 1948, to be installed by him in the Japan Cotton Factory and 'vas also seen installed by him in the factory in the month of November 1948". Whilst discussing the defence version, the learned Magistrate said "what for the engine remained lying at Lahore after its repairs from May 1948, to November 1948, is not known. Moreover, when it had already been repaired why it was kept at all in the Japan Cotton Factory from November 1948, to 24th January, 1949. I put scant reliance on the statements of Ashfaq Parvez (D. W. 17). It is sheer nonsense that after its return in November 1984, to the Japan Cotton Factory, the engine was put on a foundation to test it. Engine could have been returned to the Co‑operative Department as it .was, but it was not done so far the reasons best known to the accused and his servants. The note of Khan Abdur Rahim, Exh. P. F., when he recovered the engine and my inspection of the spot show that the engine was on a foundation. When I visited the Japan Cotton Factory a heap 8f bricks with cement pieces lay near the spot of recovery and these appeared to be pieces of a fresh dismantled foundation. The place of the foundation had openings, which appeared to have been recently shut in the wall of the arms section corresponding to the pullies. This showed that the engine had been installed on a permanent foundation to work the machinery. From the above, it would be apparent that the accused bad no intention to return the The learned counsel for the petitioner argues that the construction of a new platform on the premises of the Japan Cotton Factory does not show that the petitioner had no intention of returning the engine. The platform might have been constructed for some purpose of the petitioner's business and the engine might have been placed on that platform for assembling or repairs. Assuming the possibility that the engine was at Lahore when possession of Jagdish Cotton Factory was delivered, the learned Magistrate observed : "To me it appears that the accused thought that nobody was going to consult the original inventory and detect about the engine, and if at the most it was detected, he would pay a nominal price, so the dishonest intention of the accused in not returning the engine even from November 1948, to 24th January 1949, is quite apparent". Discussing the personal liability of the petitioner, the Magistrate said : "No evidence has been led to show that the firm Khan Sahib Chaudhri Abdul Karim has any partners and, if any, who they are. None of then: has come to Court. It appears that the accused is .the sole important figure of the concern ...He is a Managing Director of Khan Sahib Chaudhri Abdul Karim and Company and has interests in various other concerns". Finally, it is observed in the judgment that "the engine has been working and is not new

As is apparent, the District Rehabilitation Officer assessed its value of recovery". The reference here is to the evidence of Saeed‑ul-Zaman, District Rehabilitation Officer (D. W. 15), who has deposed that he sent a letter, Exh. D. W. 15/A, dated 7th March, 1950, to Messrs. Abdul Karim and Company calling upon them to pay the price of the articles "consumed" by the company. A list of those articles, Exh. P. W. 15/B, was attar' to the letter, and includes the diesel oil engine in question which was valued at Rs.

900. This item was, however, scored out by the witness in order to have its value reassessed. The witness deposed that similar demands for the value of goods "consumed" were sent to various other allottees at the same time as the demand was sent to the petitioner's company and no demand was made from any of the allotees before that. In appeal the learned Sessions judge has observed that "evidence was led to show that the engine required repairs, and was therefore, sent from Sargodha to Lahore from which place it was received back in' November 1948. Assuming all that to be correct, the fact remains that the appellant failed to inform the h next allottee or the lessor of the facts relating to the engine or his inability to return it immediately. Even after the receipt of the engine at Sargodha in November 1948, he retained it till the police raided his new factory and recovered the engine from his possession". There is a mistake in this observation. It is in evidence that the petitioner had informed the authorities that the engine had been sent to Lahore for repairs, vide Exh. D. D., dated 2nd April, 1948. In‑ view of the evidence regarding the despatch of the engine to Lahore in April 1948, and its return to Sargodha in November 1948, the learned Sessions judge l as, in my opinion, correctly assumed that the engine was returned in November 1943. The learned counsel for the Crown concedes that the engine was sent to Lahore in 1948 in view of the clear mention of the oil engine in the octroi receipt Exh. D. L./2. He, however, contends that it might have been returned shortly afterwards and then removed from Jagdish Cotton Factory to Japan Cotton Factory in October 1948, before possession of the factory was handed over to the Co‑operative Department on 30th October 1948. He contends that the documents relating to the return of the engine produced in defence merely show that some machinery, in separate parts, was received by the petitioner's firm at Sargodha from Lahore on 25th November 1948. Apart from the fact that there is the evidence of Ashfaq Parvez ('D. W. 17) and Nazir Hussain (D. W. 19) to show that it was this very engine which was brought from Lahore to Sargodha on 25th November 1948, it was open to the prosecution to inspect the octroi registers and show that the engine was returned to Sargodha before November 1948. This was not done and the assumption made by the learned Sessions Judge was, therefore, justified. The question is whether the retention of this engine by the petitioner's firm from November 1948, to January 1949, amount to an offence and, if so, who is responsible for the offence. Criminal breach of trust for which the petitioner has been convicted is defined in section 405 Pakistan Penal Code. It reads as follows :‑ "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 law 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". It will be noticed that the first essential element is entrustment of property. It is said that there was no entrustment of property in this case. The property was leased for a specified period. It is stated at page, 979, Ratan Lal's Law of Crime, 16th Edition that where goods are delivered to a person in pursuance of a contract for their purchase, there is no entrustment which would give rise to a trust and the mere fact that the person denies receipt of goods delivered does not render him guilty either of criminal misappropriation or criminal breach of trust. Similarly, it is argued, where property is let or leased to a person for his use no trust can be said to have been created in respect of that property. In Mani Lal v. Emperor (33 Cr. L. J., p. 866) the petitioner owned a flour mill in Jhansi and took electric current from the Electric Supply Company. The accounts produced by the Company showed that he had used 554 units in February 1931. On 26th March 1931, he sent a letter to the company saying that two servants of the company had removed his meter on 24th March saying that they Would either return it or install another in its place on the following day but they had not done so. The Company made enquiries and found that their servants had not removed the meter and prosecuted Mani Lal for criminal breach of trust. It was suggested that the accused had been tampering‑with the meter and fearing discovery he had removed it and falsely reported that the servants of the Company had taken it away. This statement of the case was accepted by the trial Court and the accused was convicted under 406 Penal Code. His appeal was dismissed and in revision it was held by the Allahabad High Court that on the findings of the lower Courts that a meter was installed by the Electric Supply Company in the mill of the accused, that it was not there and that the servants of the Electric Supply Company 'had not removed it the offence‑under section 406 Penal Code had not been established. The accused was no doubt responsible for the meter. But he had given a deposit of Rs. 75 to the company and if he was unable to produce the meter its price could be recovered from the deposit. The failure of the accused to produce the meter did not by itself constitute an offence of criminal breach of trust. In order to establish this offence, it must be proved that the accused dishonestly misappropriated or converted to his own use the property entrusted to him or dishonestly used or disposed of that property in violation of any law prescribing the mode in which such trust was to be discharged or of any legal contract, express or implied, which he had made touching the discharge of such trust. The learned judge deciding the case expressed his inability to see how the words of section 405 embraced the case of a man who took an article on hire and failed to produce it. There must be some evidence to show that he had acted dishonestly. The mere failure to return the article hired does not prove dishonesty, nor does the mere failure to deliver possession of the property to the lessor on the expiry of the lease amount to criminal breach of trust. There is no evidence in this case to show that the lessor or the new allottee ever demanded the return of the engine from the petitioner or that the petitioner ever denied possession of the engine or that he refused to return it. In Rangi Lal v. Emperor, A. I. R. 1930 Oudh, p. 321, it was observed by Raza J., that mere retention of money or mere failure to return it does not raise a presumption of dishonest misappro priation; nor does the mere fact that payment was delayed show a criminal intention. The ingredients of the offence of criminal breach of trust are somewhat broadly stated but there is no doubt as to their meaning. The sections dealing with this, offence are intended to punish an offence of which dishonesty is the essence. Every breach of trust is not criminal. It may be intentional without being dishonest or it may appear to be dishonest without being really so. In such cases the Courts should be slow to move and this caution is all the more necessary because there is a tendency to secure speedy results by having recourse to criminal law. In Kanhaiya Lall u. Emperor (38 Cr. L. J., p. 491) Nanavutty J., said that it is only when there is evidence of a mental act of fraudulent misappropriation that the commission of embezzlement becomes an offence punishable as criminal breach of trust. It is this mental act of fraudulent misappropriation that distinguishes an embezzlement amounting to a civil wrong or tort from the offence of criminal breach of trust punishable under section 496 Penal Code. Every offence of criminal breach of trust involves a civil wrong in respect of which the complainant may seek redress in a Civil Court; but every breach of trust, in the absence of mens rea, is not criminal. In Ruhmani Ammal v. Muthuswami Reddi (27 Cr. L. J. p , 331) the accused was entrusted with an engine which he sold to a third person but possession was not delivered and the engine was available to the true owner who suffered no loss, by the sale. It was held that the conviction of the accused for criminal breach of trust was not sustainable. The terms of the new lease relating to Japan Cotton Factory contained in the letter of allotment, Exh: D. G., on which reliance was placed by the appellate Court for maintaining the conviction of the petitioner, were not communicated to him as stated in the judgment. This letter, dated 29th September 1948, was addressed to Chaudhri Abdul Karim and Company, Industrial Area, Sargodha. There is no proof that it was `delivered to the petitioner; nor is there anything to show that possession of the Japan Cotton Factory was given to him. The inventory of the articles in Japan Cotton Factory, Exh. P. H./1, dated 28th October 1948, was not signed by the petitioner but by someone else for Chaudhri Abdul Karim and Company. As regards the personal liability of the petitioner, it has been held in S. G. Guha v. Emperor (A.

1. R. 1930, Rang. p. 332), that a person who is a manager of a firm cannot be held criminally liable for any breach of trust if the entrustment of goods was made to the firm and not to him personally. There is nothing to show that possession of Jagdish Cotton Factory was delivered to the petitioner in his personal capacity and not as a representa tive of the firm to which the factory was allotted. I am in agreement with the views expressed in the cases mentioned above and it must be held that the retention of the engine in dispute by the petitioner's firm for a few months after the termination of their lease, i.e., from 1st October, 1948, to 24th January, 1949, in the absence of any proof of mens rea, does not amount to criminal breach of trust and no personal responsibility in respect of this retention devolves upon the petitioner. There is no evidence that any wrongful gain was derived by the petitioner or any wrongful loss was caused to the lessor or the new allottee by this retention. The trial Court has sated that the petitioner is interested in various other concerns, and it is proved that he was not present at the time of handing over the Jagdish Cotton Factory. There is no evidence that he had any knowledge as to when this engine was returned to Sargodha or where it was kept until it was taken away by the police. The petitioner's conviction under section 406 Pakistan Penal Code cannot, therefore, be upheld. I set aside his conviction and the sentence of Rs. 1,000 fine, or three months' simple imprisonment in default of payment.: The fine, if paid, will be refunded. The Rehabilitation Department are at liberty to claim rent or compensation from the petitioner's firm for the retention of this engine after the termination of the lease in their favour until its recovery. A. H. Revision allowed.