1979 (10) TMI 214 - SC - Indian Laws

Supreme Court Affirms Conviction for Conspiracy, Breach of Trust

SHIVANARAYAN LAXMINARAYAN JOSHI Versus STATE OF MAHARASHTRA

The Supreme Court upheld the Bombay High Court's judgment, confirming or modifying the conviction and sentence of the appellants under Sections 120B, ... Conviction and sentence of the appellants under Sections 120B, 477A and 409 of the Indian Penal Code Held that:- Having regard to the peculiar facts and circumstances of this case we do not want to penalise the heirs of appellant No. 1 for the sins committed by appellant No. 1, In these circumstances we would reduce the sentence of fine only from two lakhs to one lakh, we would also modify the direction of the High Court that out of the fine ₹ 50,000 will go to the Government. We direct that out of the fine, if realised, the entire amount should be paid to the official liquidator who would distribute the amount rateably amongst the depositors of the bank who have filed their claims, excluding the heirs of 1st appellant With this modification the appeal of appellant No. 1 is dismissed. The High Court has, however, found that so far as accused 2, 3 and 4 were concerned they were original conspirator who had assisted and abetted appellant No. 1 in his attempt to misappropriate the amount. Thus, we do not find sufficient ground for reducing the sentence The theoretical explanation may sound plausible but in the facts and circumstances obtaining in the Laxmi Bank, it seems to us clear that after knowing these two features it is difficult to accept accused No. 24's statement that he continued to believe that the heavy cash balances as disclosed by the cash books were real. The bail of appellants 2, 3, 4 & 24 are cancelled and they will now surrender and serve out the remaining portion of the sentence. Issues Involved:1. Conviction and sentence of the appellants under Sections 120B, 477A, and 409 of the Indian Penal Code.2. Appellant No. 1's resignation and liability for misappropriation.3. Substitution of one chose in action for another as a breach of trust.4. Appellant No. 1's dominion over the misappropriated properties.5. Sentence considerations for appellants Nos. 2 to 4.6. Appellant No. 24's knowledge and participation in the conspiracy.7. Appeal against acquittal filed by the State.Detailed Analysis:1. Conviction and Sentence of the Appellants:The Supreme Court upheld the judgment of the Bombay High Court, which confirmed or modified the conviction and sentence of the appellants under Sections 120B (criminal conspiracy), 477A (falsification of accounts), and 409 (criminal breach of trust by a public servant, banker, merchant, or agent) of the Indian Penal Code. The Court emphasized that it would not interfere with concurrent findings of facts unless there was a grave error of law or a substantial miscarriage of justice.2. Appellant No. 1's Resignation and Liability:Appellant No. 1 argued that he could not be held liable for misappropriation after resigning from the office of the managing director. However, the High Court found that he continued to function as the de facto managing director and had full control over the bank's affairs. This finding was based on thorough evidence analysis, leading the Supreme Court to overrule this contention.3. Substitution of Chose in Action:Appellant No. 1 contended that substituting one chose in action for another did not amount to a breach of trust. The Court referred to precedents, including R. K. Dalmia v. Delhi Administration, which established that directors are trustees of the company's money and property. The High Court found that appellant No. 1 had dominion over actionable claims and misappropriated funds through false entries, making this contention untenable.4. Dominion Over Misappropriated Properties:Appellant No. 1 argued that there was no evidence of his dominion over the misappropriated properties. The High Court found that he had sufficient control and, through a conspiracy, misappropriated Rs. 43.95 lakhs, depriving depositors of their money. The Supreme Court agreed with the High Court's findings, noting that conspiracies are proved through inferences drawn from acts or omissions committed in pursuance of a common design.5. Sentence Considerations for Appellants Nos. 2 to 4:Appellants Nos. 2 and 3, aged 85 and 75 respectively, argued for sentence reduction due to their health and minor roles. The High Court found them to be original conspirators who assisted appellant No. 1. Considering the gravity of the offence, the Supreme Court saw no reason to reduce their sentences but directed the Jail Superintendent to ensure proper medical care.6. Appellant No. 24's Knowledge and Participation:Appellant No. 24 contended that he had no knowledge of the conspiracy and tried to improve the bank's affairs. The High Court found that he had knowledge of the conspiracy and participated in concealing shortages. The Supreme Court upheld this finding, applying the principle from Section 10 of the Evidence Act that acts of one conspirator are attributable to others once a conspiracy is proved.7. Appeal Against Acquittal by the State:The State's appeal against the acquittal of other accused persons was dismissed. The High Court found no clear evidence of their knowledge of the conspiracy, and the approver's statements were inconsistent. The Supreme Court agreed with the High Court's order of acquittal.Conclusion:The Supreme Court dismissed all appeals with modifications in the case of appellant No. 1, reducing the fine from two lakhs to one lakh and directing that the entire amount be paid to the official liquidator for distribution among depositors. The appeals of appellants Nos. 2, 3, 4, and 24 were dismissed without modification in their sentences. The State's appeal against acquittal was also dismissed.