Wednesday, 30 December 2015

When power of attorney holder can be prosecuted for offence U/S 409 or S 420 of IPC

Admittedly, in this case the accused/petitioner was the power of Attorney Holder of the firm/Kirti Electricals, of which his brother is said to be the proprietor. The petitioner submitted the quotation on behalf of firm for supply of Generator set. Entire quotation amount of Rs. 2,60,000/- was handed over to the accused-petitioner by way of Bank Draft and he received the Bank Draft on behalf of the firm being its power of attorney holder. He himself deposited the amount in the Bank account of the firm which was being operated by him and also withdrew the entire amount, thereafter closed the Bank account. The Generator set, which was supplied, was defective and delivered in broken condition and immediately thereafter when the defective condition of the Generator was brought to the notice, the same was taken back by the supplier. But in spite of repeated requests the petitioner did not take any step for supply of new Generator set by way of replacement of the broken/defective Generator set nor returned back the amount received by him. As such, the petitioner having got himself fully involved in the matter may be as a power of attorney holder, cannot get himself absolved of both his civil as well as criminal liability.
Orissa High Court
Jayendra C. Shah @ Jayendra Ch. ... vs State Of Orissa on 9 November, 2005
Equivalent citations: 2006 CriLJ 847, 2005 II OLR 737,CLT(2006)Supp.Crl.16

Bench: N Prusty


1. The petitioner has approached this Court challenging the order dated 19.4.2005 passed by the learned Chief Judicial Magistrate, Bolangir in G.R. Case No. 241 of 2003 whereby the contention of the learned defence counsel to discharge the accused/petitioner Jayendra C. Shah @ Jayendra Ch. Shah @ Jayendra Kumar Shah (hereinafter referred to as "Jayendra Shah") from this case was overruled. The learned Court below refused to discharge the petitioner and found prima facie case against him under Section 409/420 of the, Indian Penal Code. The learned Court also ordered "charge be framed against the accused thereunder" and the case was accordingly posted to 25.4.2005 for consideration of charge/framing the charge, directing the accused to remain present on that date personally. It would not be out of place to mention here that since the accused was absent on 25.4.2005, a petition for time was moved on his behalf by his counsel on the ground of illness. Considering the submission made by the learned Counsel for both the parties, petition for time was rejected by the learned Court below and N.B.W. was issued against the accused with notice to bailer. However, by order dated 7.6.2005 of this Court, further proceeding in G.R. Case No. 241 of 2003 was stayed, which is in operation till date being extended from time to time.
2. The case of the petitioner, in short, is that G.R. Case has been instituted against the accused/petitioner in his capacity as proprietor of M/s. Kirti Electrical, Buxibazar, Cuttack. But, in fact, he is not the proprietor nor in any way connected with M/s. Kirti Electricals. According to him, Kirti Kumar Shah @ Kirti Chandra Shah @ Kirti Kumar C. Shah hereinafter referred to as "Kirti Shah") is the Proprietor of M/s Kirti Electricals and the present accused is only a relative of Kirti Shah. Therefore, he is no way involved with the alleged transaction, which is the subject matter of the case, except that he was only the Power of Attorney holder of Kirti Electricals/ its proprietor, for its day-to-day business as well as to deal with all financial matters and accordingly should be discharged. In support of his contention he had filed the Sales Tax clearance Certificate as well as the Income Tax return filed by the said Kirti Shah as Proprietor of M/s Kirti Electricals. As such only M/s. Kirti Electricals or its proprietor is liable to be prosecuted/ proceeded against for any transaction made on behalf of the Firm and not the petitioner, as because he is no way connected with the matter except that he was only a Power of Attorney holder, as stated above.
3. The case of the prosecution, as per the FIR story, is that the informant applied for a loan to Bolangir District Central Cooperative Bank Ltd., Bolangir Branch for the purpose of purchasing a Generator set. The Bank invited quotation towards the cost of generator. The accused/petitioner submitted quotation for supply of Generator set for Rs. 2,60,000/- on behalf of M/s. Kirti Electricals who was the distributing retailer of M/s Veenet Electricals Industries (P) Ltd., Kolkota through its Agent M/s Sunderdas D. Hansraj of Cuttack. The loan was sanctioned by the Bolangir District Central Cooperative Bank Ltd. in favour of the informant. The loan agreement was executed for Rs. 2,60,000/-. One Mr. Rajraj Singhdeo stood as a guarantor. The Bank authority approved the quotation of M/s Kirti Electricals submitted by the accused/Jayendra Shah as its Proprietor, for supply of one generator set of 30 KVA capacity. The order for supply of generator was placed with Jayendra Shah (present accused) and Jayendra Shah accordingly placed orders for supply of generator to M/s Vineet Electricals (P) Ltd. through its distributing retailer M/s. Sundardas D. Hansraj. Finally, the generator set which was supplied, found defective and in broken condition. In that view of the matter the generator and all its accessories were taken back. The accused/petitioner Jayendra Shah received the entire quotation amount of Rs. 2,60,000/- by way of a demand draft from Bolangir District Central Cooperative Bank Ltd. towards the cost of the generator set along with its accessories; representing himself as the Proprietor of M/s Kirti Electricals and he himself encashed the said draft through the Bank of Baroda, Cuttack. After encashing the Demand Draft amount, he paid only Rs. 1,51,200/- by a cheque to M/s. Vineet Electricals Industries (P) Ltd., Kolkota. The cheque was dishonoured on two occasions and bounced. The copy of the bill of M/s. Vineet Electricals Industries (P) Ltd. sent to the informant reveals that the cost of the generator is only Rs. 2,14,000/- against the bill of Rs. 2,60,000/-. Even though the entire amount of Rs. 2,60,000/- was already paid/received by the accused Jayendra Shah on behalf of Kirti Electricals a broken/defective generator set was supplied. Immediately when the defective condition of the generator was brought to the notice, the same was taken back by the supplier and has not yet been replaced nor the amount of money of Rs. 2,60,000/- has yet been refunded to the complainant. Since the complainant incurred a loan from the Bank to pay the entire amount to the accused/petitioner, he is paying interest on the loan amount.
4. On enquiry made by the I.O., it is revealed that the accused has started M/s Kirti Electricals in the name of his younger brother Kirti Shah and he became the power of attorney holder of the said firm to handle all transactions including the financial matters. The present accused himself had received the demand draft of Rs. 2,60,000/- from the Bank and deposited the same in their account in Bank of Baroda, Cuttack for encashment and the entire amount was accordingly credited to the Bank account of M/s. Kirti Electricals in its Current Account No. 927 which was being operated by accused Jayendra Shah as the power of attorney for the said firm. The entire amount of Rs. 2,60,000/- was withdrawn by accused Jayendra Shah and thereafter the account was closed. The accused/petitioner has also categorically admitted in his statement recorded by the Investigating Agency under Section 161 Cr.P.C. that he has an electrical firm in the name and style of M/s Kirti Electricals which was established in the year 1977 and closed in the year 1999 and he had received the Bank draft sent by the informant through Bolangir District Central Cooperative Bank Ltd.
5. As it appears from the Bank record the present accused being elder brother opened the current Account No. 927 in the name of the firm being authorized by all the then partners, of M/s Kirti Electricals, Buxibazar, Cuttack in the year 1987 and was operating the account himself on their behalf. The statements made by the petitioner in para-6 of this Criminal Revision on oath indicates that M/s Kirti Electricals is a proprietorship concern of Shri Kirti Shah and the petitioner is a relation of said Kirti Shah. As such, he is no way involved in the case and therefore, he should be discharged. The impugned order also indicates that he had filed the application to discharge him from the case and along with that application he filed copy of application filed before the Sales Tax Officer for sales tax clearance and also Income Tax returns filed by Kirti Shah as Proprietor of M/s Kirti Electricals. The accused-petitioner's further contention was that he was only holding the Power of Attorney of the firm/his younger brother, who is the Proprietor of the firm, in his favour. Therefore, neither he is any way concerned with the case nor he has any liability for transaction of the firm and his liability, if any, is only of a civil nature and that dispute cannot be adjudicated in this forum.
6. The learned Court finally came to the conclusion that the accused-petitioner had received the demand draft of Rs. 2, 60,000/-, sent by the informant through Bolangir District Central Cooperative Bank Ltd., being disbursed towards the loan amount sanctioned in favour of the informant. He himself had deposited the Bank Draft in the Bank and withdrawn the entire amount. As such there is sufficient materials to frame charge against the accused and under no circumstances the accused can be discharged. Even though some of the documents filed by the accused-petitioner reveals that Kirti Shah is the proprietor of M/s. Kirti Electricals and not the present accused-petitioner, that cannot help the defence to claim discharge of the present accused, since the accused/petitioner was all along involved in the entire transaction. This conclusion was drawn by the learned Court on the basis of the submission made by the learned Counsel for the respective parties, on going through the case diary as well as the statements made by the witnesses recorded under Section 161 Cr.P.C., more particularly the statements of the accused himself and the Senior Manager of the Bank of Baroda, Cuttack. Learned Court below also categorically observed that the documents filed by the accused petitioner with regard to proprietorship of Kirti Electricals are no way helpful to the defence to claim discharge of the present accused and thereby overruled the contention of the learned defence counsel to discharge accused Jayendra Shah and also found prima facie case against him under Sections 409 and 420 of the Indian Penal Code.
7. In support of their contentions, learned Counsel for the petitioner cited a good number of decisions of this Court as well as of the Apex Court with regard to his submission that (a) Section 415 of the Indian Penal Code cannot be attracted to invoke and attract Section 420 of the Indian Penal Code. Therefore, the very framing of charge under Section 420 of the Indian Penal Code is misconceived; (b) it is open for the informant-opposite party to realize the money by filing money suit and realization of money by a money suit is a civil dispute; (c) none of the ingredients of the criminal offence is satisfied on the basis of the F.I.R. which has been lodged against the petitioner, but since as per the Police report the petitioner is only a power of attorney holder of the firm/its proprietor, to handle financial matters, as such he cannot be held responsible for the alleged transaction nor any charge can be framed as against him; (d) at the stage of framing the charge the Court is required to evaluate the materials and documents on record and should not accept it on its face value and the learned Court should riot have accepted the prosecution story as gospel truth - if it is opposed to the commonsense and broad probabilities of the case; (e) learned Court should have assessed all the materials on its proper perspective and should have come to a conclusion after making such assessment.
8. The State as well as the informant contested the case separately and filed their respective notes of argument and both State as well as the informant relied upon and cited the decisions of the Apex Court in (a) the case of State of Orissa v. Debendra Nath Padhi, reported in (2005) 30 OCR (SC) 1 77 on the point as to whether the trial Court at the time of framing charge can consider the materials filed by the accused; (b) the case of Kanti Bhadra Shah and Anr. v. State of West Bengal reported in AIR 2000 S.C. 522 on the point as to whether recording of reason for framing charge against the accused is mandatory; and (c) the case of Misrilal Mangalal v. K. Rajamullu reported in 1978 Crl. Law Journal, 1360 on the point as to whether a charge can be quashed on the ground of its civil nature and both the civil and criminal liability can be enforced against the accused.
9. Considering the factual backdrop of the case as well as the contentions made by the learned Counsel for the respective parties, the main aspect to be looked into in this case is, as to whether the petitioner is liable for the offence committed, if any, and a charge can be framed against him for commission of such offence punishable under Sections 409 and 420 I.P.C., just because he did the entire transaction on behalf of a firm, such as submitted the quotation, received the Bank Draft, encashed the amount and thereafter closed the account, being the power of attorney holder only and not the proprietor/partner of the firm. And further more as to whether a charge can be quashed only on the ground that it is in the nature of a civil liability.
10. In my considered view, keeping in view all the facts and circumstances of the case, all the decisions cited by the learned Counsel for the respective parties need not be gone into, except the decision of the Apex Court in the case of State of Orissa v. Debendra Nath Padhi (supra), which was relied upon by both the informant and as well as the other opposite parties and another recent decision of the Apex Court in the case of S.V. Mazumdar and Ors. v. Gujarat State Fertilizer Co. Ltd. and Anr. reported in (2005) 31 OCR (SC) 645.
11. In the case of State of Orissa v. Debendra Nath Padhi (supra), it has been held that at the time of framing charge or taking cognizance, the accused has no right to produce any material or document having regard to the clear mandate of Section 227 of the Code of Criminal Procedure. That right is granted only at the stage of trial. As such, the trial Court at the time of framing charge need not consider the materials/ documents filed by the accused for his defence. The Magistrate had to consider the materials placed before it by the Investigating Officer only and not by the accused persons at the stage of framing charge. At the stage of framing charge roving and fishing inquiry is impermissible. If the contention of the accused is accepted, there would be a mini trial at the stage of framing of charge. That would defeat the object of the Code. No provision in the Code grants any right to the accused to file any material/ document at the stage of framing charge. That right is granted only at the stage of trial. It is well settled that at the stage of framing of charge the defence of the accused cannot be put forth. The accused cannot be permitted to adduce his defence at the stage of framing charge. The expression "hearing the submissions of the accused" cannot mean opportunity to file material to be granted to the accused and thereby changing the settled law. At the stage of framing of charge hearing the submissions of the accused has to be confined to the material produced by the Police; the width of power of Section 91 is unlimited but there were inbuilt inherent limitations as to the stage or point of time of its exercise, commensurately with the nature of proceedings as also the compulsions of necessity and desirability, to fulfil the task or achieve the object. As such at the stage of framing charge/taking cognizance, the trial Court is only to find out whether there was sufficient ground for proceeding to the next stage against the accused, on the basis of materials produced by the prosecution. For framing of a charge against an accused recording of reasons is not mandatory. The trial Court is not required to specify any reason as to how he is framing charge against the accused. Framing of charge itself is prima facie order that the trial Judge has formed the opinion on the basis of the Police report and documents filed thereto.
It will not be out of place to mention here that even though a case is of civil nature, a criminal proceeding need not be quashed on that ground. Both civil and criminal liability can be enforced against an accused and it is for the petitioner to choose the forum, which he shall avail for the redressal of his grievance.
12. In the a case of S.V. Majumdar and Ors. v. Gujarat State Fertilizer Co. Ltd. and Anr. (supra) while deciding the matter relating to Sections 138 and 14 (1) (2) of the Negotiable Instruments Act for dishonour of cheque issued by/on behalf of Company, the person liable to be prosecuted for the offence under Section 138 is a Company, the Apex Court in paragraphs 8 to 10 of the decision observed/held as follows:
"8. We find that the prayers before the Courts below essentially were to drop the proceedings on the ground that the allegations would not constitute a foundation for action in terms of Section 141 of the Act. These questions have to be adjudicated at the trial. Whether a person is in charge of or is responsible to the company for conduct of business is to be adjudicated on the basis of materials to be placed by the parties. Sub-section (2) of Section 141 is a deeming provision, which as noted supra, operates in certain specified circumstances. Whether the requirements for the application of the deeming provision exists or not is again a matter for adjudication during trial. Similarly, whether the allegations contained are sufficient to attract culpability is a matter for adjudication at the trial.
9. Under Scheme of the Act, if the person committing an offence under Section 138 of the Act is a company, by application of Section 141, it is deemed that every person who is in charge of and responsible to the company for conduct of the business of the company as well as the company are guilty of the offence. A person who proves that the offence was committed without his knowledge or that he had exercised all due diligence is exempted from becoming liable by operation of the proviso to Sub-section (1). The burden in this regard has to be discharged by the accused.
The three categories of persons covered by Section 141 are as follows :
(1)     The   company who committed the offence.
 

(2)     Everyone who was in charge of and was responsible for the business of the company.
 

(3)     Any other person who is a director or a manager or a Secretary or officer of the company with whose connivance or due to whose neglect the company has committed the offence.
 

10. Whether or not the evidence to be led would establish the accusations is a matter for trial. It needs no reiteration that proviso to Sub-section (1) of Section 141 enables the accused to prove his innocence by discharging the burden which lies on him."
 

13. It is well settled that, at the stage of framing charge the Court is only required to evaluate the materials and the documents on record, which was produced by the prosecution, at the face value of which it can be arrived at the existence of all the ingredients constituting the alleged offence under Sections 409 and 420 I.P.C. and in a case where a suit can be filed for realization of the amount due, which is of civil nature, the Criminal Court can interfere in the matter, so far as it relates to the commission of the alleged offence, where the ingredient of criminal law is fulfilled.
 

14. Admittedly, in this case the accused/petitioner was the power of Attorney Holder of the firm/Kirti Electricals, of which his brother is said to be the proprietor. The petitioner submitted the quotation on behalf of firm for supply of Generator set. Entire quotation amount of Rs. 2,60,000/- was handed over to the accused-petitioner by way of Bank Draft and he received the Bank Draft on behalf of the firm being its power of attorney holder. He himself deposited the amount in the Bank account of the firm which was being operated by him and also withdrew the entire amount, thereafter closed the Bank account. The Generator set, which was supplied, was defective and delivered in broken condition and immediately thereafter when the defective condition of the Generator was brought to the notice, the same was taken back by the supplier. But in spite of repeated requests the petitioner did not take any step for supply of new Generator set by way of replacement of the broken/defective Generator set nor returned back the amount received by him. As such, the petitioner having got himself fully involved in the matter may be as a power of attorney holder, cannot get himself absolved of both his civil as well as criminal liability.
15. Keeping in view all the circumstances as narrated above, even though a suit can be filed for realization of the entire amount due, as submitted by the learned Counsel for the petitioner, I am of the view that simultaneously a criminal proceeding can also be initiated against the accused person (petitioner herein) for criminal breach of trust (by a merchant or agent) as well as for cheating and dishonestly indusing delivery of property, if all the ingredients of such offence, which is alleged to have been committed by the accused (herein), are fulfilled.
16. In view of the factual backdrop of the case, so far as it relates to involvement of the present petitioner in commission of the alleged offence punishable under Sections 409/420 IPC as narrated above, more particularly keeping in view the decisions of the Apex Court on the legal position referred supra, I do not find any illegality, irregularity or manifest error of law in the order of the learned trial Court in coming to the conclusion/finding that a prima facie case has been made out against the accused person under Section 409/420 of the Indian Penal Code as well as in directing to frame charge against him and adjourning the case for the purpose of framing charge to some other date. As such, the petitioner has failed to make out a case in his favour and hence there is no reason to interfere with the impugned order.
The Criminal Revision is devoid of any merit and is accordingly dismissed.

However, since the G.R. Case is of the year 2003, learned trial Court shall do well to expedite the trial of the case and complete the trial as early as practicable. All the concerned parties are directed to cooperate in the matter.
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