1993 (2) TMI 345 - HC - Indian Laws

Director Convicted for Misappropriating Rs. 7,00,000; Sentenced to 2 Years, Rs. 70,00,000 Fine; Emphasizes Deterrent Sentencing.

The HC overturned the acquittal of Accused No. 1, a Director of Turner Morrison and Co., for misappropriating Rs. 7,00,000. The court found sufficient ... - Issues Involved:1. Role of law courts in cases of corporate fund misappropriation.2. Admissibility and reliability of witness testimony.3. Evaluation of evidence and determination of guilt.4. Sentencing and quantum of punishment.Issue-Wise Detailed Analysis:1. Role of Law Courts in Cases of Corporate Fund Misappropriation:The judgment addresses the dilemma faced by courts when corporate funds are diverted for personal use and criminally misappropriated by management. The court emphasized that justice requires punishing the guilty regardless of the time lapse if legally permissible. The appeal challenged the acquittal of two respondents by a Metropolitan Magistrate in Bombay, despite clear evidence of misappropriation of Rs. 7,00,000 from Turner Morrison and Co. Ltd.2. Admissibility and Reliability of Witness Testimony:The key witness, Kashiprasad Kedia, testified about the fraudulent transactions but later disappeared. The court discussed the admissibility of his testimony under Sections 32(3) and 33 of the Evidence Act, supported by previous case law. Despite his absence, the court deemed his initial testimony admissible but approached it with caution. The court noted that the prosecution made reasonable efforts to locate him, and his disappearance did not automatically invalidate his testimony. The court relied on the case of Jose v. State of Kerala, where the Supreme Court held that a witness's evidence could be used substantively if reasonable efforts were made to secure their presence.3. Evaluation of Evidence and Determination of Guilt:The court meticulously analyzed the documentary evidence and the testimony of Kashiprasad Kedia. It was established that the amount of Rs. 7,00,000 was channeled through various accounts and ultimately ended up benefiting Mr. Mundhra. Accused No. 1, a Director of Turner Morrison and Co., was found to have orchestrated the diversion of funds through a circuitous route, masking the offense. The court found the explanation provided by Accused No. 1 to be false and incriminating. Accused No. 2, an executive, was acquitted as there was insufficient evidence to prove his conscious involvement in the conspiracy.4. Sentencing and Quantum of Punishment:The court convicted Accused No. 1 under Section 406 of the Indian Penal Code for criminal breach of trust and sentenced him to two years of rigorous imprisonment and a fine of Rs. 70,00,000, with a default sentence of nine months. The court emphasized the need for a deterrent sentence to address the serious nature of the offense and the significant financial loss caused to the company. The court granted Accused No. 1 twelve weeks to deposit the fine and stayed the operative part of the order, including the jail sentence, for the same period.Conclusion:The judgment highlights the court's role in addressing corporate fund misappropriation, the admissibility of witness testimony despite their absence, the thorough evaluation of evidence to determine guilt, and the imposition of a significant sentence to serve as a deterrent. The conviction and sentencing of Accused No. 1 underscore the seriousness of the offense and the court's commitment to ensuring justice.