STATE OF GUJARAT versus JASWANTLAL NATHALAL

THE STATE OF (;li.J \UAT

JASWA!\TL\L :\ATllAl.AL

Nm·ember 23, 1967

IS. M. SIKRI, J. M. SllELAT A'.'D K. s. HEGDE. .IJ.]

Indian J>e11ai Code, 1860, s. 409--Government .relling ce111ent 10 con-tractor .a1;ail1.\·~ allotment for spec;fic construction lvork-re.\·po11dtnt tak-ing delivrry 011 behalf of co111ractor Gild di\,erting .ron11~ quantity-H·hether thert• \\'l1S enrru.H111rnt to hiu1-if breach of trt1.,·r cumn1itttd.

The appellant State Government gave on con1r;ict to contractor the work of construction of building. The contractor ln lurn izave that \\'Ork on suh-c0ntract to firm K & Co. and the respondent: \lo·as Jookiniz after the cons1ruc1ion \Vork on behalf of the firm. Upon an ~· :Jlication made to the l)eputy Engineer. A!imcdabad, the contractor w.is allotted 100 ba.Jt,S of cement for construction work. This cement was sold by the Governmenl to the conlrac1or :ind Jclivcrcd to the respondent for and on beho11r of the contractor. After taking deliverv of 1hc cement 1he respandcnl delivered "Only part of it to the conslruc1ion ~i1c and the h:ilance was diverted and 5tocked on accounl of K: & Co. On thC"C facts and. the appel1ant's con1plain1. the respondent \t:as nrosc-cuteJ for hreach of tru't unJer "· 4fl9 of rhc Indian Penal Code. ·rhc rcs110ndcnl's cao.;,e wa!:> that in an1icipa1ion of allolment of cement 10 1h~ contractor. K & C'-0. had utilized son1e of t~cir O\\'O cement and therefore thL' cement diverted to th.:111 \\ra" on ;1ccount of auar.tily alrc;idv uc;cd h\" them for 1he contractor. ·nie Trial Court d.isbclieved rhi" \'cr.:.i0n :lnd l"l111victed !he rec;pondcnl. The J~i1!h ('ourt. hO\\·cvcr. alkn\t:J ;1n .1t1pl'.d ;ind ~c­uuined the respondent.

On appeal to thi~ C'ourt

HELD : Dismi!\sin)! 1he appeal : Th~ pro ... ccutior. hJL! f.1!11.:J 10 prove cntrusiment to 1he rc-.pcndent.

The expression "enlrustmcnt" carries v.·ith it the implic;ilil)O that the person handin~ over anv propcrtv or on \\·hose hchJlf thai propcrtv is handed over to another. continues t0 he it" owner. Fur1her thf: person h;i.nding over the propenv must have confiJcnce in !he pcrian takin.'?, the propertv so as to create n tiduci:tr\· relationship betv,,.ccn 1hcm. mere trJns;1ction of sale cannot ;inH)UJll tl) <!rl L·ntn.hlmcn~. fJ 11 8--(-~

.i\Jthough the Go,ernmcnl h:ld sold the cement in QUt"'St1011 to tho:-contractor solely for !he purpose of f•cine. used in connection ~·ith the construction work, that circumstance JiJ not make the transa:tion in Qt:estion anythin.R other than sale. After the dclivcn• of th~ cement. the Governn1ent had neither anv right nor dominion over it. If the pur-chaser or it~ reprcscntalive had failed to comphr \\ith the TN111ircmcnts of anv Jaw relating to tie cement control. he ~hould havL~ hecn prose-cuted for the same. II could not he held that 1hcrc \V:t<: :in,· hrr;1ch of trust. 141 I C-Dl ·

Ve/ji RaRhva;i.Patrl v. Statt' of Mahara.d11t·a. f1965J ~ SC.R 42Q: Jaswantrai Mnflilal Akhane:v v. State of Ron1bay. [19~61 S.C.R 48'.l. 49R-."OO: Sc.tvendra Natli M11l • ./1t•1ji v. F:111peror. 1.L.R. [1947] I Cal. 97, rcfcrrec! to.

The Ki11g v. Grubb. I 1915] 2 K.B. 683, held in applicable.

CRIMINAL APPELLATE JURISDICTION:' Criminal Appeal No. 93 of J 965.

Appeal by special leaye from the judgment and order dated June 19. 1964 of the Gujarat High Court in Criminal Appeal No. 759 of 1963.

R. H. Dhebar. for the appellant.

N. N. Keswani. for the respondent.

The Judgment of the Court was delivered by

Hcgdc, J. The State of Gujarat has tiled this appeal, by special leave against the order of acquittal made by the High Court of Gujarat in Criminal Appeal No. 759/63 on its file. The respon-dent herein was convicted for an offence under s. 409 IPC by the city magistrate. 7th court, Ahmedabad, and sentenced to suffer rigorous imprisonment for one year and to pay fine of Rs. 500. in default to suffer rigorous imprisonment for four months more. The facts of the case lie within narrow compass. The Gov-ernment of Gujarat gave on contract to Bharat Sewak Samai (Gujarat) the work of construction of building for the govern-ment litho-printing press. From Exh. 20 it appears that the BSS in its turn p:ave that work on sub-contract to firn1 known as M/s. Kaushik & Co .. though it was sought to make out that M/s. Kaushik & Co. were merely appointed to supervise the work. The firm Kaushik & Co. consisted of two partners. The respondent who is the brother of one of the partners was looking after the construction work. On 9-4-62, BSS applied to the Deputy Engi-neer ( construclion sub-division, Ahmedabad) for allotment of ten tons of cement for the construction work in question. ln response to that application. the Deputy Engineer allotted five tons ( 100 bags I of cement and the same was delivered to the respondent for and on behalf of BSS on I 0-4-62. All these fac1' are admitted.

The further case of the prosecution is that after taking delivery of the aforementioned 100 bags of cement, the respondent deli-G vered at the work site sixty bags of cement and the remaining forty bags he sent to the godown of PW2 Tayabali Jiwaji. About these facts also there is no dispute.

From the above facts, the appellant wants us to conclude that the respondent had committed breach of trust in respect of the forty bag~ of cement he sent to the godown of PW2. The case for the respondent is that in anticipation of allotment to BSS Kaushik & Co. had utilized for the construction work in question forty bags of cement helonging to them, and hence he sent forty

bag, ol c~ment to the godown of· PW2 to be stocked for and .on

behalf of Kaushik & Co. The trial court disbelieved that vers1::m and convicted the respondent under s. 409 IPC. The High Court in highly laconic judgmem allowed the appeal and acquitted the respondent. Bdorc examining the correctness of the Higi1 Court's judg-ment 11 j, necessary to mention that in this case the BSS had not made any complaint against the respondent. fn other words. it is not the case of BSS that the respondent who took delivery of hundred bags of cement on their behalf had misappro:iriated forty bags out of the same. The case against the respondenl proceeded on the basis that the government had entrusted to him I 00 bags of cement for the purpose of being used in the construction of the building in question, but he misappropriated forty bags out of the same. Therefore, we haw to sec whether the prosecution has cstabli>hcd the entrusment pleaded and the misappropriation allc~cdWe were not made aware of the conditions under which the government gave the construction work to BSS. The written agreement between the government and the BSS, if there be any. has not been produced in this case. There is also no oral evid-ence in regard to the particulars of the agreement between the government and the BSS. Therefore we have to proceed on the basis that the contract given to the BSS is one of those usual contracts under which it was for the contractor to secure the necessary materials. Evidently because cement was controlled commodity in 1963. BSS had to apply for its allotment. In the absence of any evidence to the contrary we have to proceed on the basis that BSS either paid for the cement in question or it' price was adjusted towards the money due to it. OA the proved facts, it is difficult to accept the contention of the appellant that after the sale of the cement in question the government had any proprietary right over the same. Nor can it be said that the transaction in question resulted in any fiduciarv relationship either between the government and BSS or between the government and the respondent. It was nom1al transac-tion of sale though the sale in question was effected by the gov-ernment on the representation that cement was required for particular purpose.

The term "entrusted" found in s. 405 IPC !!Overns not onlv the words "with the property" immediately following it but also the words "or with any dominion over the property" occurring thereafter-see Velji Raghvaji P,ate/ v. Sratr of Maharashtra(') (ll (196~) ~ S.C.R:429

Bdor~ there can be any entrustment there must be trust mean-ing thereby an obligation aI\nexed to the ownership of property and confidence reposed in and accepted by the owner or declar-ed and accepted by him for the benefit of another or of another and the owner. But that does not mean that such an entrust-ment need conform to all the technicalities of the law of trust-B scc Jaswantrai Mani/al Akhaney v. State of Bombay(' J. The expression 'entruslment' carries with it the implication that the per-son handing over any property or on whose behalf that property is handed over to another, continues to be its owner. Further the person handing over the property must have confidence io the person taking the property so a~ to create fiduciary relationship between them. mere transaction of sale cannot amount to an entrustment. lt is true that the government had sold the cement in question to BSS solely for the purpose of being used In connec-tion with the construction work referred to earlier. But that circumstance does not make the transaction in question anything other than sale. After delivery of the cement, the government had neither any right nor dominion over it. If the purchaser or his representative had failed to comply with the requirements of any law relating to cement control, he should have been prose-cuted for the same. But we are unable to hold that there was any breach of trust. case somewhat similar to the one before us came up for consideration before division bench of the Calcutta High Court in Satyendra Nath Mukher;i v. Emperor('). These are the facts of that case. One Satya Sunder Mitra was contractor. He was granted permit by the Executive Engineer, A.RP. (Sh~1-ters), construction division, to purchase seven tons of cement from Balmer Lawrie and Company. The permit was granted on :he condition that the cement was to be used in the work connected with the construction of shelters. which work he had contracted to do for the Executiv_e Engineer. The finding in the case was that with the help of an employee of Mitra and Chaudhuri who were ba11ians of Balmer Lawrie and Company. six tons of cement were diverted and disposed of for another- purpose. The trial court convicted Satya Sunder Mitra under s. 406 IPC and another for abetting the offence committed by Satya Sunder Mitra. The High Court allowed their appeal, holding that there was no en-trustment qf the cement in question within the ine<ming of the term as used in s. 405 of Indian Penal Code. Tn the course of the judgment it was observed :

"The permit was granted in accordance with the system of control established under the Defence of India

(I) [ 1956] S.C. R. 483. 498-500

(2) I.LR. [1947] I Cal. 97.

Rules. under which an order has been isq1ed by the Gov-ernment of India preventing selling agents rnch as Balmer Lawrie and Company from delivering any cement except under instructions from the Government or lrnm the Cement Adviser. The tr;1n;action. so far as the contractor is concerned, was one of purchase and the property in the cement clearly passed to him. No doubt he could not have obtainc<l the permit throuph the Executive Engineer if it had not been intcndc<l that the cement should be used for the purpose directed by the Engineer, but, in our opinion, in no <ense can it be said that there was any entrustmcnt either of the property or of any dominion over the property.''

We arc of the opinion that the legal position is as explained 111 that decision.

The decision of rhe Kings Bench Divisicm in The King v. Grubb!' I relied on hy Mr. Dhcbar learned counscl for the appel-lant docs not bear on the question under consideration. Thcrc!n. the factum of entrustment was not in dispute. The only question of bw thar arose for decision in that case was whcrher when property is entrusted to company, and the person directing and controliillj! the company, by whose instructions the property had passed into the possession of the company, had converted the same fraudulently. that person can be said to have committed an offence under s. I of the Larceny Act 190 I. The court answered that question in the aftirmative.

I" view of our conclusion that the prosecution has failed to prove the cntrustment pleaded. it io. unnecessary to consider whe-ther on rhe material on record it can be concluded that the res-pondent had mi"1rpropriated 40 hags of cement referred to earlier.

In the r"'ulr. rhis 3ppcal foils and the same is dismi"cd.

'R.K.P.S.

.-lppral di1missed .