TaxTMI 
TaxTMI 
1963 (3) TMI 57
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....e Conspiracy Case. At the outset it would be convenient to state briefly the case of the prosecution. One Lala Shankarlal, a political leader and Vice-President of the Forward Bloc and a highly competent commercial magnate, and his nominees held the controlling block of shares of the Tropical Insurance Company Limited, hereinafter called the "Tropical", and he was the Chairman and Managing Director of the said company. He had also controlling voice in another company called the Delhi Swadeshi Cooperative Stores Ltd. The said Delhi Stores held a large number of shares of the Tropical. In or about the middle of 1948, Sardar Sardul Singh Caveeshar, who was controlling the People's Insurance Co. Ltd. and other concerns in Lahore, and Kaul, a practising barrister, came to Delhi. During that year the former was the President of the Forward Bloc and Shankarlal was its Vice-President. Shankerlal, Caveeshar and Kaul conceived the idea of purchasing the controlling block of 63,000 shares of the Jupiter Insurance Company Ltd., hereinafter referred to as the "'Jupiter", a prosperous company, in the name of the Tropical from the Khaitan Group which was holding the said Jupit....
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....nother political worker, (11) Sayana, a businessman of Bombay, and (12) Bhagwan Swarup, the nephew of Shankarlal and a retired Assistant Commissioner of Income-tax of the Patiala State. After forming the conspiracy, the controlling shares of the Empire were purchased in the name of Damodar Swarup for an approximate sum of Rs. 43,00,000/-. For that purpose securities of the Jupiter of the value of Rs. 48,75,000/-were withdrawn by the Directors of the Jupiter without are-solution of the Board of Directors to that effect and endorsed in the name of Damodar Swarup again without any resolution of the Board of Directors to that effect. Damodar Swarup deposited the said securities in the Punjab National Bank Ltd., and opened a Cash-credit account in the said Bank in his own name. He also executed two promissory notes to the said Bank for a sum of Rs. 10,00,000/- and Rs. 43,00,000/- respectively. Having opened the said account, Damodar Swarup drew from the said account by means of cheques a sum of Rs. 43,00,000/- and paid the same towards the purchase of the said Empire shares. Out of the said shares ....
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....risonment for a period of 5 ears and also to pay a fine of Rs. 2,000/- and in default to suffer rigorous imprisonment for a further period of six months. He acquitted accused 3, 7, 8 and 9. The State preferred an appeal to the High Court against that part of the-'..judgment of the learned Sessions judge acquitting some of the accused; and the convicted accused filed appeals against their convictions. The appeal filed by Caveeshar, Accused-6, was dismissed in limine by the High Court. The appeals filed by 'the other convicted accused against their convictions were dismissed and the appeal by the State against the acquittal of some of the accused was allowed by the High Court. Accused-7 was sentenced to 5 years' rigorous imprisonment, accused-8 to 3 years' rigorous imprisonment and accused 9 to 3 years rigorous imprisonment. Accused 6, 7, 8, 9 and 10 have, by special leave, preferred these appeals against their convictions and sentences. We are not concerned with the other accused as some of them died and others did not choose to file appeals. At the outset it may b....
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....,30,000/- to Misri Devi on December 12, 1949; (3) a fresh loan of Rs. 5,30,000/- to Caveeshar, Accused-6 on November 5, 1949; and (4) a transactions of purchase of 54,000 shares of the Tropical for Rs. 14,00,000/- on May 25, 1949 and December 20, 1949. These four ficticious transaction were brought about to show the discharge of the loan advanced to Caveeshar, Accused-6. Further manipulations were made in the accounts showing that parts of the loans due from Raghavji, Misri Devi and Caveeshar and also the price of the Tropical shares were paid by Caveeshar. These paper entries did not satisfy the auditors and they insisted upon further scrutiny. It is the case of the prosecution that Shankarlal and his co-conspirators following their usual pattern conceived the idea of getting the controlling interest of the Empire, which had a reserve of Rs. 9 crores. Jupiter securities worth about Rs. 45,00,000/- were endorsed in favour of Accused-7, who in his turn endorsed them in favour of the Punjab National Bank Ltd., for the purpose of opening a cash-credit account therein. On October 5, 1950, under Ex. Z-9, the controlling shares of the Empire were purchased from Ramsharan Group and the co....
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....whoever they may be, had conspired together and lifted large amounts of the Empire and put them into the Jupiter coffers to cover up the loss caused to it by their fraud. Therefore in these appeals we proceed on the basis that there was a conspiracy as aforesaid and the only question for consideration is whether all or some of the appellants were parties to it. Before dealing with the individual cases, as some argument was made in regard to the nature of the evidence that should be adduced to sustain the case of conspiracy, it will be convenient to make at this stage some observations thereon. Section 120-A of the Indian Penal Code defines the offence of criminal conspiracy thus "When two or more persons agree to do, or cause to be done an illegal act, or an act which is not illegal by illegal means, such an agreement is designated a criminal conspiracy." The essence of conspiracy is, therefore, that there should be an agreement between persons to do one or other of the acts described in the section. The said agreement may be proved by direct evidence or may be inferred from acts and conduct of the parties. There is no difference between the mode of proof of the offence of....
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....nst each of the persons believed to be so conspiring as well for the purpose of proving the existence of the conspiracy as for the purpose of showing that any such person was a party to it. It can only be used for the purpose of proving the existence of the conspiracy or that the other person was a party to it. It cannot be used in favour of the other party or for the purpose of showing that such a person was not a party to the conspiracy. In short, the section can be analysed as follows: (1) There shall be a prima facie evidence affording a reasonable ground for a Court to believe that two or more persons are members of a conspiracy; (2) if the said condition is fulfilled, anything said, done or written by any one of them in reference to their common intention will be evidence against the other; (3) anything said, done or written by him should have been said, done or written by him after the intention was formed by any one of them; (4) it would also be relevant for the said purpose against another who entered the conspiracy whether it was said, done or written before he entered the conspiracy or after he left it ; and (5) it can only be used against a co-conspira....
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....gether. The conspiracy in question was to lift the funds of the Empire, though its object was to cover up the fraud committed in respect of the Jupiter. Therefore., it may be that the defalcations made in Jupiter may afford a motive for the new conspiracy, but the two offences are distinct ones. Some accused may be common to both of them some of the facts proved to establish the Jupiter conspiracy may also have to be proved to support the motive for the second conspiracy. The question is whether that in itself would be sufficient to make the two conspiracies the one and the same offence. Learned counsel suggests that the question raised involves the interpretation of a provision of the Constitution and therefore the appeal of this accused will have to be referred to a Bench consisting of not less than 5 judges. Under Art. 145 (3) of the Constitution only a case involving a substantial question of law as to the interpretation of the Constitution shall be heard by a Bench comprising not less than 5 Judges. This Court held in State of Jammu & Kashmir v. Thakur Ganga Singh [1960] 2 S.C.R.346., that a substantial question of interpretation of a provision of the Constitution cannot ar....
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....he said decisions of this Court, the American decisions cited at the Bar do not call for consideration. As the question raised has already been decided by this Court, what remains is only the application of the principle laid down to the facts of the present case. cannot, therefore, hold that the question raised involves a substantial question of law as to the interpretation of the Constitution within the meaning of Art. 145 (3) of the Constitution. In the present case, applying the test laid down by this Court, the two conspiracies are not the same offence: the Jupiter conspiracy came to an' end when its funds were misappropriated. The Empire conspiracy was hatched subsequently, though its Object had an intimate connection with the Jupiter in that the fraud of the Empire was conceived and executed to cover up the fraud of the Jupiter. The two conspiracies are distinct offences. It cannot even be said that some of the ingredients of both the conspiracies are the same. The facts constituting the Jupiter conspiracy are not the ingredients of the offence of the Empire conspiracy,, but only afford a motive for the latter offence. Motive is not an ingredient of an offence. The pro....
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....tenced Accused 7, 8 and 9 to undergo rigorous imprisonment for a period of 3 years only. We do not see any justification for this distinction between the said accused in the matter of punishment. Accused6 had already been convicted and sentenced in the Jupiter case; and on the evidence it does not appear that he had taken a major part in the Empire conspiracy, though he was certainly in it. In the circumstances, we think that a sentence of 3 years' rigorous imprisonment would equally suffice in his case. We, therefore, modify the sentence passed on him and sentence him to undergo rigorous imprisonment for 3 years. Subject to the aforesaid modification, the appeal preferred by Caveeshar, Accused-6, is dismissed. We shall now proceed to consider the appeal preferred by Damodar Swarup, Accused-7 i. e., Criminal Appeal No. 83 of 1962. Accused-7 was the Managing Director and Chairman of the Empire during the period of the conspiracy. On October 17, 1950 he was elected the Chairman of the Board of Directors of the Empire and appointed as Managing Director on a salary of Rs. 2,000/per month for a period of one year. He was removed from the post of Managing Director at the meeting of th....
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....s 52, 53, 54 and 55, the word "character" includes both reputation and disposition; but except as provided in section 54, evidence may be given only of general reputation and general disposition, and not of particular acts by which reputation, or disposition were shown. It is clear from the said provisions that the evidence of general reputation and general disposition is relevant in a criminal proceeding. Under the Indian Evidence Act, unlike in England, evidence can be given both of general character and general disposition. Disposition means the inherent qualities of a person; reputation means the general credit of the person amongst the public. There is a real distinction between reputation and disposition. A man may be reputed to be a good man, but in reality he may have a bad disposition. The value of evidence as regards disposition of a person depends not only upon the witness's perspicacity but also on his opportunities to observe the person as well as the said person's cleverness to hide his real traits. But a disposition of a man may be made up of many traits, some good and some bad, and only evidence in regard to a particular trait with which the witness is familiar w....
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....esaid modification, we dismiss the appeal preferred by him. Next we come to Criminal Appeal No. 136 of 1959 preferred by Subhedar, Accused-8. The defence of this accused is that he acted throughout in good faith and under the guidance of Accused-7, the Managing Director of the Empire, and that he did not know that any fraud was perpetrated in the Empire. Before joining the Empire he was an insurance agent and, therefore, it cannot be said that he was a stranger to the insurance business and he may be assumed to know how it would be conducted. On October 16, 1950 twenty qualifying shares of the Empire from among the shares purchased in the name of Accused-7 were transferred in his favour and thereafter at the meeting held on that day he was co-opted as a Director. He is also, therefore, one of the persons brought in by Shankarlal and made a Director for his own purpose. [His Lordship then proceeded to consider the evidence] x x x x x x We have no doubt that the aforesaid circumstances lead to only one reasonable conclusion that this accused became a Director of the Empire as a member of the conspiracy and helped to put through all the transactions necessary to transfer fund....
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....ud. In this context another argument of learned counsel for Accused 8 and 9 may be noticed. It is said that the High Court treated the Directors as trustees and proceeded to approach the case from that standpoint inferring criminality from their inaction. Even assuming that they were not trustees in the technical sense of the term, they certainly stood in a fiduciary relationship with the shareholders. The High Court's finding is not based upon any technical relationship between the parties, but on the facts found. On the facts, including those relating to the conduct of the accused, the High Court drew a reasonable inference of guilt of the accused. There is sufficient evidence on which the High Court could have reasonably convicted Accused 8 and 9 and in the circumstances, we do not see any case had been made out in an appeal under Art. 136 of the Constitution to merit our interference. In the result Criminal Appeal No. 172 of 1959 is dismissed. Finally we come to Criminal Appeal No. 67 of 1959 preferred by Bhagwan Swarup, Accused-10. The defence of this accused is that he acted throughout on the directions of Accused 7, 8 and 9, and that as Secretary of the Company, he ....