Criminal Breach of Trust; Shams Tabrez Vs. State of West Bengal [Calcutta High Court, 08-07-2016]

Indian Penal Code, 1860 – Sections 405, 406 & 120B – Criminal breach of trust – Calcutta Leather Complex Tanners Association – violation of the terms of agreement – quashing of the criminal proceeding – if any person being entrusted with the property or having dominion over the property, disposes of that property in violation of any legal contract, the said person commits criminal breach of trust. In the instant case the petitioners were entrusted with three Mobile Chrome Recovery Unit Components or they had dominion over the said property as office bearers of Managing Committee of CLC Tanners Association and they disposed of the said property in violation of terms of contract dated May 18, 2005 to which CLC Tanners Association is a party and thereby the action of the petitioners falls within the ambit of criminal breach of trust defined in Section 405 of the Indian Penal Code.

# Calcutta Leather Complex Tanners Association


IN THE HIGH COURT AT CALCUTTA

CRIMINAL REVISIONAL JURISDICTION APPELLATE SIDE

Present: Hon’ble Justice R. K. Bag, J.

Judgment on : 08.07.2016

CRR 770 of 2014 With CRR 1578 of 2015 With CRAN 1589 of 2016 With CRAN 1980 of 2016

Shams Tabrez V. State of West Bengal & Anr. AND Iftekhar Najam V. State of West Bengal & Anr.

For the Petitioners : Mr. Shekhar Basu, Mr. Sandipan Ganguly, Mr. Kaushik Chatterjee, Mr. Prasun Ghosh, (In CRR 770/2014) For the Petitioners : Mr. Subhendu Roy, Mr. R. N. Dutta, Mr. Shirsendu Hazra, (In CRR 1578/2015) For the O. P. No.2 : Mr. Kazi Safiullah, Mr. Anand Keshri, Mr. Akbar Ali, For the State : Mr. Manjit Singh.

R. K. Bag, J.

The petitioner Shams Tabrez has prayed for quashing of the criminal proceeding of G.R. No.905 of 2014 arising out of Calcutta Leather Complex P.S. Case No.62 of 2014 under

# Sections 409/120B of the Indian Penal Code

pending before the Court of Learned Additional Chief Judicial Magistrate, Baruipur, South 24-Parganas. Similarly, the petitioner Iftekhar Najam has also prayed for quashing of the criminal proceeding of G.R. No.905 of 2014 arising out of Calcutta Leather Complex P.S. Case No.62 of 2014 under Sections 409/120B of the Indian Penal Code pending before the Court of Learned Additional Chief Judicial Magistrate, Baruipur, South 24-Parganas. Both the revisional applications arise out of the same criminal proceeding and as such both the revisions are disposed of by this common judgement.

2. One Imran Ahmed Khan, Honorary General Secretary of CLC Tanners Association (in short the opposite party no.2) filed a written complaint before the police on the basis of which Calcutta Leather Complex Police Station Case No.62 of 2014 dated February 20, 2014 under Sections 409/120B of the Indian Penal Code was registered. The contents of the said written complaint disclose that in the month of October, 2013 the new Managing Committee took over charge of Calcutta Leather Complex Tanners Association. The averments made by the opposite party no.2 in the said written complaint indicate that the new Managing Committee came to learn that the petitioner Iftekhar Najam and the petitioner Shams Tabrez and others sold out three Mobile Chrome Recovery Unit Components including pumps, p.h. meters, gear motors, trolley tyres and tubes etc. valued at Rs.80 Lakh approximately as iron scrap while they were discharging the duty as office bearers of Calcutta Leather Complex Tanners Association on January 25, 2012, April 21, 2012, May 23, 2012 and November 9, 2012. The said Mobile Chrome Recovery Unit Components including pumps, p.h. meters, gear motors, trolley tyres and tubes were the assets of Government of West Bengal, but the same were sold out without seeking prior approval from the Government of West Bengal. The show cause notice was served on both the petitioners on February 13, 2014 calling upon them to explain why action will not be taken against them for abusing official position by selling out the property of Government of West Bengal and thereby committing criminal breach of trust. Without waiting for reply of the show cause notice from the petitioners, the opposite party no.2 filed the written complaint for initiating criminal proceeding against the petitioners and others. The police investigated the said criminal case and submitted chargesheet against both the petitioners before the Court of Learned Magistrate on March 11, 2015. Learned Magistrate issued warrant of arrest against both the petitioners on the basis of prayer of the Investigating Officer who claimed that the petitioners absconded and evaded the arrest. By filing supplementary affidavit the petitioners have challenged the order dated March 11, 2015 by which Learned Magistrate issued warrant of arrest against the petitioners. The petitioners have also prayed for quashing of the criminal proceeding on the ground that no offence is made out against the petitioners for facing the trial under Section 409/120B of the Indian Penal Code.

3. By referring to various terms of agreement dated May 18, 2005 executed by and between Government of West Bengal, Calcutta Leather Complex Tanners Association (hereinafter referred to as CLC Tanners Association) and M. L. Dalmia & Co. Ltd. for establishment and maintenance of Calcutta Leather Complex, Mr. Sekhar Basu, Learned Senior Counsel for the petitioner Shams Tabrez contends that the said agreement is a contract within the ambit of Article 299 of the Constitution of India and the terms and conditions of the contract are binding on the parties. Mr. Basu submits that if the petitioners as office bearers of CLC Tanners Association have violated any term of the said contract, the remedy is available in the contract itself. He specifically submits that there is termination clause in the contract for violation of any term of contract by CLC Tanners Association. Mr. Basu argues that the State of West Bengal has no grievance against CLC Tanners Association or its previous office bearers for violation of any term of the contract and as such the State of West Bengal has not initiated the criminal proceeding against the petitioners. He further argues that the present criminal proceeding cannot be started by the police on the basis of complaint of the opposite party no.2 who happens to be the Honorary General Secretary of CLC Tanners Association, when the State of West Bengal has no grievance against CLC Tanners Association for violation of terms of the contract. By referring to the provisions of Section 204 and Section 87 of the Code of Criminal Procedure Mr. Basu submits that the order of issuance of warrant of arrest against the petitioners by showing them as absconders is not justified under the law. He has also relied on several decisions reported in AIR 2015 SC 2195, (2013) 4 SCC 506, (2008) 1 SCC (Cri) 259, (2014) 3 SCC 321 and 1960 Cri.L.J 1436 in support of his above contention.

4. Mr. S. S. Roy, Learned Counsel representing the petitioner Iftekhar Najam submits that the opposite party no.2 filed the written complaint before the police without waiting for the reply to show cause notice issued to the petitioners by the opposite party no.2, which indicates mala fide on the part of the opposite party no.2. He further submits that the properties alleged to have been sold out by the petitioners were not entrusted with the petitioners at any material point of time. Relying on the decision of the Supreme Court in 2009(1) AICLR 287 Mr. Roy submits that the offence under Section 409 of the Indian Penal Code is not made out against the petitioners.

5. Mr. Manjit Singh, Learned Public Prosecutor contends that the dispute resolution mechanism described in the deed of agreement cannot be resorted to as there is no violation of the terms of agreement by CLC Tanners Association. What has been alleged in the written complaint treated as FIR is that the petitioners have sold out the property of the State of West Bengal in an unauthorised manner without seeking approval from the State of West Bengal and thereby the petitioners being entrusted with the said property for maintenance of Calcutta Leather Complex have committed offence which is punishable under the penal law of the land. By referring to various pages of the case diary Mr. Singh specifically submits that the offence under Section 409/120B of the Indian Penal Code is made out against both the petitioners and as such the criminal proceeding should be allowed to come to its logical conclusion.

6. Learned Counsel for the opposite party no.2 submits that the ownership of three Mobile Chrome Recovery Unit Components belonged to the State of West Bengal and the said properties were handed over to CLC Tanners Association for use and maintenance and as such disposing of those assets by the petitioners without seeking approval from the State of West Bengal will amount to offence punishable under the law, irrespective of terms and conditions of the contract executed by and between the parties.

7. There is no dispute that on May 18, 2005 one deed of agreement was executed by and between Government of West Bengal and CLC Tanners Association and M.L. Dalmia and Co. Ltd. for establishment and maintenance of Calcutta Leather Complex in the district of South 24-Parganas. The Calcutta Leather Complex was established for relocating the tanneries which were closed down for protection of environment in compliance with the direction given by the Supreme Court of India. It appears from clause 11 of the said deed of agreement that all infrastructure assets mentioned in clause 4 and any replacement thereof or additions thereto will remain as the property of Government of West Bengal to be used solely for the benefit of all tanners and other production units in Calcutta Leather Complex till completion of payment of capital levies mentioned in clause 7.1 of the deed of agreement. It further appears from the said clause 11 of the deed of agreement that CLC Tanners Association shall have no right to transfer, mortgage, encumber or alienate the infrastructure assets without prior written consent of Government of West Bengal. The clause 4 of the deed of agreement indicates that Mobile Chrome Recovery Unit Components were included within the ambit of infrastructure assets provided by the Government of West Bengal to CLC Tanners Association. The clause 11 of the deed of agreement further indicates that CLC Tanners Association is obliged to use infrastructure assets and maintain the same solely for the benefit of the tanners and other production units located in Calcutta Leather Complex. It is not the case of either of the parties to the proceeding that the capital levies mentioned in clause 7 of the deed of agreement have been paid in full to the Government of West Bengal and as such the ownership of three Mobile Chrome Recovery Unit Components belong to the State of West Bengal and the State of West Bengal is the owner of the said property. It is, thus, established from the said clauses of deed of agreement that the said three Mobile Chrome Recovery Unit Components were entrusted to CLC Tanners Association for use and maintenance solely for the benefit of tanners and other production units located in Calcutta Leather Complex.

8. Now, the question for consideration of the Court is whether three Mobile Chrome Recovery Unit Components were entrusted with the present two petitioners as office bearers of CLC Tanners Association. CLC Tanners Association is a company incorporated under Section 25 of the Companies Act, 1956. It appears from memorandum of association of CLC Tanners Association that the administration of the affairs of the said company is vested in the Managing Committee which will be duly elected by the members of the company at the annual general meeting. It further appears from the said memorandum of association that the Managing Committee comprises President, two Vice-Presidents, Honorary General Secretary, two Honorary Joint Secretaries, Honorary Treasurer and eight committee members. So the Managing Committee of CLC Tanners Association is responsible for use and maintenance of three Mobile Chrome Recovery Unit Components of the Government of West Bengal for the benefit of tanners of Calcutta Leather Complex. Since the Managing Committee of CLC Tanners Association is entrusted with the responsibilities of use and maintenance of three Mobile Chrome Recovery Unit Components belonging to Government of West Bengal, the petitioners being the office bearers of the Managing Committee of CLC Tanners Association cannot take the plea that they are not entrusted with the property, viz, three Mobile Chrome Recovery Unit Components belonging to Government of West Bengal. In my view the petitioners being the office bearers of the Managing Committee of CLC Tanners Association were entrusted with the property, viz, three Mobile Chrome Recovery Unit Components belonging to Government of West Bengal.

9. On perusal of the deed of agreement dated May 18, 2005, I find that the said agreement is not executed on behalf of the Governor of State of West Bengal. In the said agreement Government of West Bengal is represented by the Principal Secretary, Commerce and Industries Department, Writers’ Buildings, Calcutta-700 001. Accordingly, the question whether the said deed of agreement falls within the ambit of Article 299 of the Constitution of India remains open for decision by any competent court of law if the terms of the said deed of agreement are challenged by any of the parties to the said agreement before the court of law. The contention of Mr. Basu is that by selling out three Mobile Chrome Recovery Unit Components as iron scrap, the CLC Tanners Association has violated the terms of deed of agreement dated May 18, 2005 for which remedy is available in the said deed of agreement. It appears from clause 14 of the said deed of agreement that there is dispute resolution mechanism for default of any party in executing terms of the said deed of agreement. The act of disposing of three Mobile Chrome Recovery Unit Components as iron scrap by the petitioners as office bearers of CLC Tanners Association cannot be construed as default in executing the terms of deed of agreement dated May 18, 2005. The opposite party no.2 has made specific allegation in the written complaint treated as FIR that on January 25, 2012, April 21, 2012, May 23, 2012 and November 9, 2012 both the petitioners as office bearers of CLC Tanners Association sold out three Mobile Chrome Recovery Unit Components as iron scrap. Had the said sell of the property been authorised by any resolution of the Managing Committee of CLC Tanners Association, the CLC Tanners Association would have been responsible for making default in executing terms of agreement for which dispute resolution mechanism incorporated in clause 14 of the said deed of agreement would have been attracted. It appears from the statement of Imanul Haque, Manirul Haque, Ramesh Kumar Juneja, Javed Akhtar, Tamir Ahmed recorded under Section 161 of the Code of Criminal Procedure that the said three Mobile Chrome Recovery Unit Components have been sold out as iron scrap by the present petitioners as office bearers of CLC Tanners Association. In view of my above findings, I fully agree with the submission made by Mr. Singh, Learned Public Prosecutor that the dispute resolution mechanism of the deed of agreement dated May 18, 2005 will not be attracted when the petitioners have disposed of the property of the Government of West Bengal as office bearers of CLC Tanners Association without any authorisation from the Managing Committee of CLC Tanners Association or approval of the Government of West Bengal.

10. The criteria laid down by the Supreme Court for quashing of the criminal proceeding in paragraph 102 of

# State of Haryana V. Bhajan Lal reported in 1992 SCC (Cri) 426

are as follows:

“102. ……. (1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused.

(2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code.

(3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused.

(4) Where, the allegations in the FIR do not constitute a cognizable offence but constitute only a non- cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code.

(5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused.

(6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party.

(7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge.”

By applying the above test laid down by the Supreme Court in the facts of the present case, I have to decide whether offence is not made out against the petitioners from the written complaint treated as FIR and other materials collected by the Investigating Officer in course of investigation. The allegations made in the FIR will be taken in their entirety and on the face value for formation of opinion whether any offence is made out against the petitioners from the allegations made in the FIR. Similarly, the statement of witnesses recorded under Section 161 of the Code of Criminal Procedure and other materials collected by the Investigating Officer will be taken on the face value without evaluating the said statement at this stage of the criminal proceeding. I have already observed that three Mobile Chrome Recovery Unit Components belonging to the Government of West Bengal were entrusted with the petitioners as office bearers of the Managing Committee of CLC Tanners Association. I have also observed that the petitioners disposed of the said Mobile Chrome Recovery Unit Components as iron scrap in violation of terms of deed of agreement dated May 18, 2005. Section 405 of the Indian Penal Code defines criminal breach of trust as follows:

# S. 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 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”.

Explanation 1.- A person, being an employer, of an establishment whether exempted under Section 17 of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952) or not, who deducts the employee’s contribution from the wages payable to the employee for credit to a Provident Fund or Family Pension Fund established by any law for the time being in force, 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 dishonestly 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 dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid.”

It appears from the above definition of criminal breach of trust that if any person being entrusted with the property or having dominion over the property, disposes of that property in violation of any legal contract, the said person commits criminal breach of trust. In the instant case the petitioners were entrusted with three Mobile Chrome Recovery Unit Components or they had dominion over the said property as office bearers of Managing Committee of CLC Tanners Association and they disposed of the said property in violation of terms of contract dated May 18, 2005 to which CLC Tanners Association is a party and thereby the action of the petitioners falls within the ambit of criminal breach of trust defined in Section 405 of the Indian Penal Code.

11. In

# Sharon Michael V. State of Tamil Nadu reported in 2009 (1) AICLR 287

the Supreme Court has held in paragraph 10 that the ingredients of Section 409 of the Indian Penal Code are as follows:

“10. …… (i) the accused must be a public servant;

(ii) he must have been entrusted, in such capacity, with property.

(iii) he must have committed breach of trust in respect of such property.”

In the instant case there are no materials to indicate that the petitioners are public servants and as such the petitioners cannot be prosecuted for the offence punishable under Section 409 of the Indian Penal Code. However, the prima facie case is made out against the petitioners for prosecuting them for the offence punishable under Sections 406/120B of the Indian Penal Code.

12. The contention made on behalf of the petitioners that the opposite party no.2 being the third party to the contract cannot prosecute the present petitioners, when State Government has not ventilated any grievance against the petitioners, is not acceptable, because the opposite party no.2 has stated in the written complaint treated as FIR that the opposite party no.2 swung into action as directed by the Director of Industries, Government of West Bengal on January 29, 2014 vide letter no.23/DI/CLC-85/2013. In

# Trilok Nath Mehra V. Commissioner of Police reported in 1960 Cri. L.J. 1436

Learned Single Judge of our High Court has held that the third party to the contract cannot challenge the violation of terms of contract between State and the private party. In this case the petitioners have disposed of the properties belonging to the State of West Bengal as office bearers of CLC Tanners Association in violation of terms of deed of agreement dated May 18, 2005 and the present Honorary Secretary of CLC Tanners Association has made allegation against the petitioners for committing an offence punishable under the law and as such the ratio of Trilok Nath Mehra V. Commissioner of Police (supra) is not applicable in the facts of the present case.

13. The next question for consideration is whether Learned Magistrate was justified in issuing warrant of arrest against the petitioners on March 11, 2015 on the basis of prayer of the Investigating Officer. It appears from record that on March 11, 2015 the chargesheet was submitted against the present petitioners for the offence punishable under Section 409/120B of the Indian Penal Code. Learned Magistrate issued warrant of arrest on the ground that the petitioners were absconding. Section 204 of the Code of Criminal Procedure prescribes the mode of issuing warrant of arrest against the accused, if Learned Magistrate after taking cognizance of an offence forms opinion that the accused must be brought to the court in connection with a warrant case. Similarly, Section 87 of the Code of Criminal Procedure empowers the court to issue warrant for arrest of an accused person if the court has reason to belief that the accused has absconded or would not obey the summons or if the accused fails to appear in the court in response to the summons already issued to him. The order of issuing warrant of arrest against the petitioners in the instant case is also under challenge in this revision. In

# Mehmood Ul Rahman V. Khazir Mohammad Tunda reported in AIR 2015 SC 2195

the Supreme Court has laid down in paragraph 24 that there must be sufficient indication on the application of mind by Learned Magistrate to the facts constituting commission of an offence at the stage of taking cognizance and issuance of process against the accused under Sections 190/204 of the Code of Criminal Procedure, though there is no need of recording speaking order or reasoned order at that stage. This principle is enunciated by the Supreme Court in complaint case where Learned Magistrate can peruse the petition of complaint, record statement of witnesses under Section 200 of the Code of Criminal Procedure and apply his mind for formation of opinion whether the process can be issued against the accused person in connection with an offence punishable under the law. In the present case Learned Magistrate has issued warrant of arrest against the petitioners on the basis of prayer of Investigating Officer after taking cognizance on the police report submitted under Section 173 of the Code of Criminal Procedure. So the ratio of this report is not applicable in the facts of the present case.

14. In

# GHCL Employees Stock Option Trust V. Kranti Sinha reported in (2013) 4 SCC 506

the Supreme Court has laid down in paragraph 14 that before issuing process against the accused person in a criminal case, Learned Magistrate must apply his mind to the facts of the case and record satisfaction with regard to the existence of a prima facie case on the basis of allegations made in the complaint supported by sufficient evidence and other materials on record. This principle is also propounded by the Supreme Court in the facts of a complaint case and as such the ratio of the said report will not be applicable in the facts of the present case.

15. Relying on

# Inder Mohan Goswami V. State of Uttaranchal” reported in (2008) 1 SCC (Cri) 259

the Supreme Court has held in paragraph 14 of

# Vikas V. State of Rajasthan reported in (2014) 3 SCC 321

that the issuance of non-bailable warrant in the first instance without issuing the other tools of summons and bailable warrant to secure attendance of a person would impair the personal property guaranteed to every citizen under the Constitution. In Inder Mohan Goswami and State of Uttaranchal (supra) the Supreme Court has laid down in paragraphs 53 and 56 the circumstances when non- bailable warrant can be issued to compel the attendance of a person before the court of law, which are as follows:

“53. Non-bailable warrant should be issued to bring a person to court when summons or bailable warrants would be unlikely to have the desired result. This could be when:

• it is reasonable to believe that the person will not voluntarily appear in court; or

• the police authorities are unable to find the person to serve him with a summon; or

• it is considered that the person could harm someone if not placed into custody immediately.

………………………………………………………..

56. The power being discretionary must be exercised judiciously with extreme care and caution. The court should properly balance both personal liberty and societal interest before issuing warrants. There cannot be any straitjacket formula for issuance of warrants but as a general rule, unless an accused is charged with the commission of an offence of a heinous crime and it is feared that he is likely to tamper or destroy the evidence or is likely to evade the process of law, issuance of non-bailable warrants should be avoided.”

In the instant case, Learned Magistrate issued warrant of arrest against the petitioners on the basis of prayer of Investigating Officer who submitted that the petitioners were absconding. The petitioners are not charged with any heinous crime in the instant case. The petitioners have been running their business within the Calcutta Leather Complex. The petitioners held the position as the office bearers of CLC Tanners Association. The chargesheet has already been submitted on completion of investigation and as such there is less possibility of tampering with evidence. Under the above circumstances learned Magistrate should have issued summons to the petitioners for their appearance before the court, instead of issuing warrant of arrest at the first instance after submission of the chargesheet. By following the decision of the Supreme Court in Inder Mohan Goswami V. State of Uttaranchal (supra) I am of the view that the order of issuance of warrant of arrest passed by Learned Magistrate is not sustainable in law.

16. The upshot of my entire above observation is that the petitioners are liable to be prosecuted for the offence punishable under Sections 406/120B of the Indian Penal Code in connection with G.R. No.905 of 2014 pending before the court of Learned Additional Chief Judicial Magistrate, Baruipur, South 24-Parganas. The order dated March 11, 2015 passed by Learned Magistrate for issuance of warrant of arrest against the petitioners in connection with G.R. No.905 of 2014 is set aside. Learned Magistrate is at liberty to proceed against the petitioners in accordance with law. With the above direction both the criminal revisions and CRANs are disposed of.

Let a copy of this judgement and order be sent down to the Learned Court below for favour of information and necessary action. The urgent photostat certified copy of the judgement and order, if applied for, be given to the parties on priority basis after compliance with all necessary formalities.

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