1995 JTR(SC) 855
1996 1 AICLR 23 ; 1991 AIR(SC) 1840 ; 1996 AIR(SC) 204 ; 1995 AIR(SCW) 3937 ; 1995 3 AWC 1917 ; 1995 2 BLJR 1383 ; 1995 CriLR 624 ; 1995 3 Crimes(SC) 740 ; 1996 CrLJ 408 ; 1996 1 CurLJ 686 ; 1995 2 EastCrC(SC) 565 ; 1996 ISJ(Banking) 250 ; 1995 6 JT 428 ; 1995 2 MWN(Cri) 238 ; 1996 1 PLJR(SC) 5 ; 1996 1 RCR(Cri) 43 ; 1995 5 Scale 216 ; 1995 6 SCC 142 ; 1995 SCC(Cri) 1051 ; 1995 Supp3 SCR 58 ; 1995 KHC 968
SUPREME COURT OF INDIA
K. Ramaswamy & B.L. Hansaria, JJ.
Anil Saran - Appellant
versus
State of Bihar & Anr. - Respondents
Criminal Appeal No. 1026 of 1995
Decided on 24-8-1995
IMPORTANT POINT
A Magistrate who receives the case on transfer & takes cognizance would not become incompetent to do so merely because the sanction of transfer of case to his file is not in accordance with law.
Act
Referred
:CRIMINAL PROCEDURE CODE : S.482, S.192, S.190
INDIAN PENAL CODE : S.406
(A) The Code of Criminal Procedure, 1973, sections 482, 190, and 192, read with sections 406 and 420 of the Indian Penal Code, are the statutory provisions governing this matter. Section 482 empowers the High Court to quash complaints pending before a Magistrate, while sections 190 and 192 delineate the authority of a Magistrate to take cognizance of an offence either upon receipt of a complaint or through a police report, and outline the procedure for such cognizance, including the special powers of a Chief Judicial Magistrate. Sections 406 and 420 define criminal breach of trust and cheating, respectively, providing the substantive criminal basis for the complaint. The interplay of these provisions determines the jurisdictional competence of the Magistrates and the threshold required to initiate and proceed with criminal proceedings.
(B) Key legal principles include that cognizance is taken of the offence by the Magistrate, not the offender, and can be taken upon a complaint without prior examination of witnesses. A Magistrate receiving a case on transfer retains the power to take cognizance if the complaint constitutes an offence, irrespective of the transfer order's legality. A partner in a firm does not lose the capacity to commit criminal breach of trust, as the offence pertains to property entrusted under a special contract in a fiduciary capacity, not merely to partnership assets. The court must assess whether the complaint prima facie discloses an offence to justify issuing process.
Facts of the case:
The appellant was a partner in a firm that entered an agreement to distribute a film. The second respondent, also a partner, alleged that the first accused firm was entrusted with a second print of the film for exhibition and accounting, but wrongfully retained and exhibited it, conspiring with the appellant and another to defraud the firm. A complaint was filed, cognizance was taken, and the appellant challenged the proceedings before the High Court.
Findings of Court:
The High Court held that the complaint prima facie disclosed offences under the relevant sections, and no jurisdictional error was committed by the Magistrates. The court found that the appellant, though a partner, could be liable for misappropriation under criminal breach of trust, as the offence related to property entrusted under a contract, not the firm's general assets.
Issues:
Whether the High Court had jurisdiction to quash the complaint under section 482 CrPC, whether the Magistrates committed jurisdictional errors in taking cognizance, and whether a partner can commit criminal breach of trust against his own firm.
Ratio Decidendi:
The court determined that cognizance can be taken on a complaint directly or on transfer, and the subsequent action by the Magistrate does not depend on the strict adherence to transfer procedure. The offence of criminal breach of trust arises from a special contract entrusting property to a fiduciary, which can exist between partners concerning specific firm assets, thus the appellant is answerable before trial.
Result:
The appeal was dismissed, upholding the jurisdictional order of the High Court and allowing the criminal proceedings against the appellant to proceed.
(A) The Code of Criminal Procedure, 1973, sections 482, 190, and 192, read with sections 406 and 420 of the Indian Penal Code, are the statutory provisions governing this matter. Section 482 empowers the High Court to quash complaints pending before a Magistrate, while sections 190 and 192 delineate the authority of a Magistrate to take cognizance of an offence either upon receipt of a complaint or through a police report, and outline the procedure for such cognizance, including the special powers of a Chief Judicial Magistrate. Sections 406 and 420 define criminal breach of trust and cheating, respectively, providing the substantive criminal basis for the complaint. The interplay of these provisions determines the jurisdictional competence of the Magistrates and the threshold required to initiate and proceed with criminal proceedings.
(B) Key legal principles include that cognizance is taken of the offence by the Magistrate, not the offender, and can be taken upon a complaint without prior examination of witnesses. A Magistrate receiving a case on transfer retains the power to take cognizance if the complaint constitutes an offence, irrespective of the transfer order's legality. A partner in a firm does not lose the capacity to commit criminal breach of trust, as the offence pertains to property entrusted under a special contract in a fiduciary capacity, not merely to partnership assets. The court must assess whether the complaint prima facie discloses an offence to justify issuing process.
Facts of the case:
The appellant was a partner in a firm that entered an agreement to distribute a film. The second respondent, also a partner, alleged that the first accused firm was entrusted with a second print of the film for exhibition and accounting, but wrongfully retained and exhibited it, conspiring with the appellant and another to defraud the firm. A complaint was filed, cognizance was taken, and the appellant challenged the proceedings before the High Court.
Findings of Court:
The High Court held that the complaint prima facie disclosed offences under the relevant sections, and no jurisdictional error was committed by the Magistrates. The court found that the appellant, though a partner, could be liable for misappropriation under criminal breach of trust, as the offence related to property entrusted under a contract, not the firm's general assets.
Issues:
Whether the High Court had jurisdiction to quash the complaint under section 482 CrPC, whether the Magistrates committed jurisdictional errors in taking cognizance, and whether a partner can commit criminal breach of trust against his own firm.
Ratio Decidendi:
The court determined that cognizance can be taken on a complaint directly or on transfer, and the subsequent action by the Magistrate does not depend on the strict adherence to transfer procedure. The offence of criminal breach of trust arises from a special contract entrusting property to a fiduciary, which can exist between partners concerning specific firm assets, thus the appellant is answerable before trial.
Result:
The appeal was dismissed, upholding the jurisdictional order of the High Court and allowing the criminal proceedings against the appellant to proceed.
K.K.GUPTA, S.K.VERMA
ORDER
K. Ramaswamy, J. - Leave granted.
The appellant was a partner in Mis. Agjevinath Films alongwith the second respondent, Shiv Prakash, and another person, Ajit Jai Tilak. The firm was constituted to distribute, exhibit and exploit the cinematograph films. The firm had entered into an, agreement with producer, Bhojpuri film for distribution of Hamari Dulhaniya and had two prints of the films obtained from the laboratory at Bombay and were arranged for exhibition in Roopak Cinema, Patna. It is the case of Shiv Prakash, the complainant on behalf of M/s. Ajgevinath Films, that the first accused, namely, M/s. Sapna Enterprises, had contracted on June 22, 1988 to take the film, exhibit the same and account for the proceeds in terms of the contract. Pursuant there to, M/s. Sapna Enterprises was entrusted with the second copy of the film for exhibition and they exhibited the film from July 1, 1988. But the first accused had not returned the print to the complainant-second respondent with ulterior and dishonest intention to make wrongful gain and to cause wrongful loss to the second respondent. Subsequently, it came to the knowledge of Shiv Prakash that the first accused colluded and conspired with the appellant and Ajit with an intention to defraud the second respondent; and the firm exploited the second copy of the film in the said cinema and they stealthily and illegally misappropriated "collections and dishonestly made wrongful gain for themselves and caused wrongful loss to the complainant and the said concern". It was also alleged that the appellant and Ajit induced the first accused by conspiracy to illegally obtain the films prepared for themselves and fabricated the documents and thereby Ajit, the first accused firm and the appellant, in collusion and conspiracy with common intention to do mischief, committed the offence referred to earlier. Admittedly, the complaint was filed before the Chief Judicial Magistrate, Patna who, after examining the complainant, transferred the case to Judicial Magistrate-II, Patna whose Presiding Officer then was Mr. A.K. Srivastava. The learned Magistrate examined, three witnesses and thereafter issued process to the appellant and third respondent under Ss. 406 and 420 IPC. The appellant thereafter filed an application under S. 482 of the Code of Criminal Procedure, 1973 [for short, the Code] before the High Court, Patna to quash the complaint.
2. The High Court in the impugned order dismissed the application holding that the complaint prima facie discloses the offence punishable under the sections for which cognizance was taken and process was issued to the appellant and another. The question, therefore, is whether the complainant -second respondent made a prima facie case to take cognizance of the offence and issue process to the appellant and others.
3. It is contended for the appellant that the Chief Judicial Magistrate, having entertained the complaint, was required to examine other witnesses, take cognizance and then could J1ave transferred the case, if he so desired, to a competent Magistrate subordinate to him as envisaged by S. 92(1) of the Code. But, in this case without taking cognizance, the Chief Judicial Magistrate committed manifest jurisdictional error in transferring the complaint to the Magistrate who took further action therein.
4. We find no force in the contention. Though the Code defines "cognizable offence" and "non-cognizable offence", the word cognizance has not been defined in the Code. But it is now settled law that the court takes cognizance of the offence and not the offender. As soon as the Magistrate applies his judicial mind to the offence stated in the complaint or the police report etc. cognizance is said to be taken. Cognizance of the offence takes place when the Magistrate takes judicial notice of the offence. Whether the Magistrate has taken cognizance of offence on a complaint or on a police report or upon information of a person other than the police officer, depends upon further taken pursuant thereto and the attending circumstances of the particular case including the mode in which case is sought to be dealt with or the nature of the action taken by the Magistrate. Under sub-section (1) of section 190 of the Code, any Magistrate may take cognizance of an offence (a) upon receiving a complaint of facts which constitute such offence, (b) upon a police report of such facts, and (c) upon information received from any person other than a police officer, or upon his own knowledge, that such offence has been committed.
5. Sub-section (1) of Section 192 has conferred a special power on the Chief Judicial Magistrate, as normally, the Magistrate taking cognizance of an offence, has himself to proceed further as enjoined by the Code. But, an exception has been made in the case of Chief Judicial Magistrate, may be because he has some administrative functions also to perform. A Magistrate who receives the case on transfer and takes cognizance would not be come incompetent to do so merely because the sanction of transfer of the case to his file is not in accordance with law. The power to take cognizance has been conferred on a Magistrate by S. 190(1) of the Code, and he would not be denuded of this power because the case has come to his file pursuant to some illegal order of the Chief Judicial Magistrate. The former would be exercising his power of taking cognizance even in such a case, because of his having received a complaint constituting the offence. It would not be material, for this purpose, as to how he came to receive the complaint - directly or on transfer from the Chief Judicial Magistrate.
We are, therefore, of the opinion that no error of jurisdiction was committed by the Judicial Magistrate in taking cognizance of the offence.
6. It is next contended that the appellant, being a partner in the complainant firm, cannot be said to have committed criminal breach of trust of his own funds and that, therefore, it is a case of civil liability only. The contention that one partner cannot commit criminal breach of trust against other partners, though prima facie alluring, on facts of this case, it does not appear to be tenable. Partnership firm is not a legal entity but a legal mode of doing business by all the partners. Until the firm is dissolved as per law and the accounts settled, all the partners have dominion in common over the property and funds of the firm. Only after the settlement of accounts and allotment of respective share, the partner becomes owner of his share. However, criminal breach of trust under S. 406 is not in respect of the property belonging to the partnership firm, but is an offence committed by a person in respect of the property which has been specially entrusted to such a person under a special contract and the holds that property in fiduciary capacity under special contract. If he misappropriates the same, it is an offence.
7. At this stage, we have only to see whether the allegations made in the complaint make out the offence prima facie. It is not the case of the complainant that the appellant and the other accused Ajit were entrusted with the dominion of the property of the firm in their capacity as partners of the complainant firm. On the other hand, the complainant firm entered into a contract with the first accused firm - M/s. Sapna Enterprises, entrusted the second film for exhibition and for accounting the sale proceeds in terms of the contract and to return the film. They had neither accounted for, not returned the film. The first accused, the appellant and Ajit, therefore, were alleged to have committed the offences in question.
8. Under these circumstances, we do not think that the imputations alleged against to appellant have been done in his capacity as a partner of the firm. Whether the offence has been made out, whether he is liable and what are the defences open to him are not matters at this stage for consideration. It is for the learned Magistrate to proceed with the trial and to deal with according to law.
The appeal is accordingly dismissed.
Appeal dismissed.
For Citation : 1996 Crl. L.J. 408 = AIR 1996 SC 204 = (1995) 6 SCC 142 = 1995 SCC (Crl.) 1051