TaxTMI 
TaxTMI 
1954 (4) TMI 74
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....the charge under Section 120-B of the Indian Penal Code. Kedar Nath Bajoria was, in addition, convicted in respect of the charge under Section 420 of the Indian Penal Code, while Hari Ram Vaid was, also, convicted in respect of the charge under Section 5 (2) read with Clause (1) (d) of the Prevention of Corruption Act, 1947. They were both sentenced to imprisonment and fine. The other two, namely, Madan Lal Bajoria and Inder Sain Bakshi, were acquitted. As against the judgment of the trial Court there were two appeals, one by each, to the High Court. The convictions and sentences were affirmed in a common judgment of the High Court. Against the judgment of the High Court special leave was granted by this Court on two applications. These two appeals first came up for hearing before a Constitution Bench of this Court with reference to certain objections raised under Articles 14 and 20(1) of the Constitution. The objection under Article 14 was decided against the appellants by judgment dated the 22nd May, 1953. The objection under Article 20(1) which related only to the quantum of fine imposed on the appellant Kedar Nath Bajoria was allowed but did not affect his conviction. The judgm....
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....0/- in respect of the repair to the roof were also fraudulent. Investigation followed, which resulted in these proceedings out of which the present appeals arise. 3. In support of the prosecution case, a large volume of correspondence and other documents have been filed, and 15 witnesses have been examined. On behalf of the defence, some documents have been filed, but no witness has been examined. The case of the prosecution relating to cheating, criminal misconduct and criminal conspiracy, is sought to be made out not on any direct evidence but, as noticed by the High Court in its judgment, entirely from circumstances emerging out of the evidence in the case. In order to appreciate the circumstances relied on by the prosecution, it is necessary to have an idea of the evidence in its broad outlines. 4. The evidence relating to the claim for damage to the roof may first be considered. It consists mostly of correspondence between the firm Kedar Nath Mohanlal (hereinafter referred to as the firm) and the military authorities (hereinafter referred to as the military) between March, 1943, when the roof was requisitioned and May, 1947, when the money, allowed in respect of this claim, ....
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....e firm wrote three similar letters to the authorities concerned stating that in spite of repeated complaints asking for repair of the roof nothing had been done yet, and that the position was worsening day by day, and that owing to heavy monsoonish weather, water was coming underneath in the godown where jute was stored, in showers, and that they had suffered heavy losses meantime as informed in their previous letter. After these repeated letters, a reply was received from the Garrison Engineer, dated the 25th July, 1944, in which it was stated as follows: "......the premises known as No. 19, Shiva Jute Press have been inspected by my A. G. E. 1. It is found that this building is not in the occupation of the Military authorities and has not been requisitioned. There would appear to be no reasonable claim on the D. D. for repairs to the roof, incidentally the cost of which is estimated to be approximately Rs. 8,000. The building is occupied by the owner; any liability or decision to repair or otherwise surely rests with him. Copy of the A. G. E.'s report is attached for your information". The A. G. E. 1 referred to therein is one Arunachalam, who has been examined as....
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....d handed over to him a slip, which runs as follows: "Maj. Waters--phoned. He requests the area being given up at 11.00 hours. Shiva Jute Press". Captain Mitra also gave evidence that the said Captain Morley was accompanied by one H. P. Das and two other Marwari gentlemen. In cross-examination he stated that on that very day the owners of the Jute Press came to him in his office, and introduced to him H. P. Das as their representative, to whom delivery of possession might be made. It is also his evidence that on the 8th December, 1945, possession of godowns Nos. 16 and 17 and of roof of godowns Nos. 19 and 20 was handed over to H. P. Das on behalf of the Managing Agents, and that a certificate of delivery of possession, Ex. 55, and a clear discharge certificate, Ex. 54, relating thereto, were obtained from him under his signature. It may be mentioned that thereafter the military seem to have realised that possession was handed over without a formal derequisitioning, and that steps should be taken to regularise it. This appears from two letters, Exs. A(21) and A(22) addressed in December, 1945, by Captain Morley to the Secretary, Requisition Board. But whether any and if so, wh....
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.... military and was not repaired in spite of repeated warnings from us. Subsequently we have to carry out necessary urgent repairs ourselves, after the restoration of the property in order to run the Press immediately. The repairs carried out by us are still apparent and can be verified at sight. 3. Our actual expenses up to date are Rs. 21,500 and a further sum of about Rs. 18,700 is still to be spent to complete the repairs. Relevant documents are enclosed. 4. A separate claim due to leakage for the deterioration of goods stored under this roof is under preparation and will be submitted shortly. Yours faithfully, Kedar Nath Mohan Lall, Managing Agents, Shiva Jute Press Ltd." It may be observed that in the original of this letter the figures appearing in para. 3, appear to have been altered from Rs. 11,500 and Rs. 8,700 into Rs. 21,500 and Rs. 18,700. On receipt of this letter, Vaid along with his assistant made a joint inspection, and prepared a schedule of the repairs to the roofs of godowns Nos. 19 and 20. This consisted of 12 items in respect of repairs to the roof of Godown No. 20 and 4 items in respect of repair to the roof of godown No. 19. He wrote a letter to....
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....work on these roofs. 3. The estimate submitted by the owner has been scrutinised by this office. The rates quoted by the owner were very high and much above the rates prevailing in the market. The rates allowed are reasonable and conform to the current market rates. 4. Shiva Jute Press was one of the best Press Houses that was requisitioned by the Military. Vide report dated 19th September, 1945 by Captain B. W. Fairs, A.H.O. Calcutta on Government File C-761/45 (A copy of para. 1 of the report enclosed). 5. In assessing the value due allowance has been given for depreciation, taking into consideration the value of the salvaged materials, the cost of dismantling and of cleaning and stacking the materials obtained therefrom and that of clearing and cleaning the site. 6. The roofs occupy an area of 17,283 sq. ft. 'and will have to be rebuilt'. Materials, especially iron which forms the main item are very difficult to obtain in these days and it will take sometime before the work of re-construction is taken in hand. Under no circumstances the roofs can be completed before 2 or 3 months. Taking all these facts into consideration the owner has been allowed compensation f....
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....ent and the result of a conspiracy. It is remarkable that in this case there is no specific evidence, in the nature of contemporaneous reports or the like as to the condition of the roof (1) when it was taken over by the military authorities from the firm in 1943; and (2) when it was handed back by them to the firm in 1945; nor is there any direct and stacking the materials kind of use to which it was being put during this period. The conclusions in this behalf have, therefore, to be necessarily formed with reference to the assertions and counter-assertions in the correspondence already noticed and the subsequent con duct of the parties. The offences charged have, therefore, to be brought home to the appellants in the light of the principles laid down by this Court Hanumant v. State of Madhya Pradesh 1953 CriLJ 129 (B), as applicable to such cases. 8. Throughout the correspondence above noticed, the firm had been asserting that the roofs were taken possession of in good condition and this appears to be corroborated to some extent by the report, Ex. D, of one Capt. Fairs dated the 19th September, 1945, relating to the fixation of rent for these roofs. Therein he says that the roof....
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.... him only for 10 or 15 minutes in May, 1948, of which he has kept no record and of whose details, he, as admitted in cross-examination, has no recollection. P. W. 7 is a person connected with the handing back of the possession to the firm in December, 1945. His evidence as to his impressions of what he saw of the roof at the time, which might have been valuable, if he had made a formal note of it and put it on the record, is of no use both because of the absence of any record and also because he has admitted in cross-examination that he has no technical knowledge and took with him at the time a technical person for assistance, whose name he does not remember. The main oral evidence in the case relating to the condition of the roof is that of P. Ws. 1 and 10. P. W. 10 was the Assistant Garrison Engineer of the military unit which was directly concerned with this roof. His evidence taken with his report, Ex. 60, if accepted at its face value, would seem to indicate that the damage complained of was such as would require only an expenditure of Rs. 8,000 for its repair at the time and that the cause of such damage was not the alleged misuse of the military but the original defective ....
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....racks, owing to the tilting of the supporting members of the roof. The roof was unsafe. I cannot give any opinion as to whether the Godown could be safely used without dismantling or reconstructing the roof. I found some patch repairs on the roof". In re-examination he says: "The godown was an old building. I cannot say definitely what was the cause of buckling of the stanchion". This no doubt is not direct evidence as to the condition of the roof either in December, 1945, or when the roof was handed back to the firm or in January, 1947, when the claim for very substantial and heavy compensation on the footing of serious damage was specifically put forward by the firm. There being, however, no evidence that the roof was put to any other kind of use subsequent to the possession thereof having been handed back to the firm, this evidence may well be treated as corroboration of the truth of the complaint, which the firm had been throughout making, that the roof had been rendered extremely unsafe by the use which the military put it to, in spite of repeated warnings. It was hardly fair, as the High Court has done, to treat this evidence as showing that the roof was in fairly good o....
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....e is no reason to think that this statement made in a letter--not to the military--was not honest. It is true that Balakrishnan does give evidence that the roof did not in fact collapse. But it is to be noticed that though Ex. 30 indicates an assertion of collapse of the roof, the firm have not made any such assertion in their letter dated the 14th January, 1947, which is the basis of their claim. All that the firm say therein is that the roof was badly damaged that it was not repaired in spite of repeated warnings and that they themselves had subsequently to carry out certain urgent repairs and that the repairs carried out by them were still apparent and could be verified at sight. Balakrishnan in his cross-examination also says that he found some patch repairs on the roof. It may be observed that the appellant Vaid also in his inter-office note, Ex. 1, dated the 30th October, 1947, (which will be referred to again in connection with the case for the claim for the damage to the jute) shows under heading V, sub-heading (iii) under item No. 2 thereof as follows: "This building has been inspected by me. The 'portion' of the roof where heavy materials were stored etc., has ....
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....ly true. 9. The next question is as to whether such damage was the result of misuse by the military. As already stated, the military consistently repudiated their liability in a number of letters on two grounds. The first was that the original construction of the roof was defective. The only evidence in support of this is of P. W. 10, Arunachalam. That his evidence is not safe to be acted upon as held by the Court itself has already been noticed. The further assertions in the correspondence by the military as regards the original defective condition of the roof appear to be no more than a reassertion of the impression of Arunachalam as per his report, Ex. 60, of July, 1944. On the other hand, as has already been stated, the report of Capt. Fairs is some indication of the likelihood of the truth of the assertion of the firm that the roof was in fairly good condition when the possession was given to the military. At any rate, if the repeated assertions of the firm in their correspondence that the roof was being used for loading heavy articles and was turned into a kind of workshop for carpentry was true, it is reasonable to think, in the light of the report of Capt. Fairs, that th....
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....rm and recommended for sanction by the appellant Vaid are inflated and dishonest. All that can be said is that the evidence is insufficient to come to a positive finding in favour of the appellants as to the existence of damage of the kind or magnitude claimed, if their claim had to be investigated in a Civil Court and there may be room for suspicion that it may have been over-stated. The question, therefore, is whether in this state of evidence which, at the worst for the defence, can only be considered as dubious, the circumstances emerging from subsequent conduct (including within such conduct the giving of a discharge certificate by their agent) are such as to enable the Court to form a positive and satisfactory conclusion that the claim was unfounded or so grossly disproportionate as to prove it to be fraudulent. 10. The circumstances relied on in this behalf may now be noticed. The most important out of them is the clear discharge certificate, Ex. 4, given by an Agent of the firm by name H. P. Das, wherein he acknowledges that possession of the godown was handed over to him in good condition and that he had no further claim in respect thereof against the Government of India.....
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....dge receipt of the delivery when handed back but also to give a clear discharge certificate so as to bind the firm. It is remarkable that P. W. 6 who was an employee of the firm for 15 years and who has given evidence that H. P. Das was an employee of the firm has not been asked whether he is not the Manager of the company and the representative of the firm if according to the evidence of P. W. 7, he was introduced as such by the owners of the firm. It is somewhat surprising how the Courts below have accepted this evidence, which does not stand any scrutiny, as legally sufficient for using the discharge certificate against the appellant Kedar Nath Bajoria in a criminal case. No doubt the handing over of the possession of the roof in December, 1945, has not been repudiated and it does not appear that any rent was claimed by the firm on the footing of ignoring this delivery. It may, therefore, be reasonably assumed that H. P. Das did receive possession on the firm's behalf and to their knowledge. But this certainly is not by itself enough to make out the authority of H. P. Das to give a clear discharge of liability with a binding recital that the roof had been taken back in goo....
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....se private godowns. It is in between these two dates that the handing over of the premises and the obtaining of the clear discharge certificate from H. P. Das took place. That this was brought about in hot haste is quite clear from the very evidence of P. W. 7, who speaks of Capt. Morley coming up to him on the 1st of December, 1945, with a slip containing a phone message from Major Waters requesting that the area -- meaning the roof -- be given up at "eleven hours", presumably that very day. Why the military should have, instead of carrying out the orders of Maj. Mannings to inspect the roof and to send a report, precipitated this handing over without any formalities and on a phone message, when a serious allegation of rafters having fallen down and substantial loss having occurred was made a few days earlier and why in that situation they took a clear discharge certificate not directly from the owners of the firm themselves (who were throughout directly corresponding with them) but only from an alleged representative thereof without a formal written authority in this behalf has not been even attempted to be explained. We are, therefore, quite clear in our mind that while the act....
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....rong circumstances indicating something suspicious about appellant Vaid's acceptance and recommendation of this claim. Again so far as the claim for two months' rent is concerned, it is to be noticed that the rent of the roof whose damage has been complained of was only Rs. 500 per mensem and the claim of Rs. 17,240 is obviously on the footing of two months' rent in respect of the entire premises requisitioned whose rent per mensem was Rs. 8,572. This claim appears wholly without any justification. The claim is statedly in respect of two months loss of rent during the period of repairs and the repairs are in respect of godowns Nos. 19 and 20. It may have been possible to say that the rent to be calculated should be not with reference to the roof but with reference to these godowns themselves for which no rent had ever been fixed. But even so, there appears no justification for the amount claimed. The total area of the roof of the godowns (and hence presumably of the godowns) being 17,283 sq. ft. as-appears from Ex. 40, and the rent at the rate of Rs. 8 per 100 sq. ft. having been fixed in respect of other godowns (vide Ex. D, report of Capt. Fairs dated 19-9-1945), th....
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....h Court, this, is not satisfactory enough to explain why he reopened the claim for the damages to the roof which so far as the papers in the office files were concerned, must have appeared to him to have been closed by the discharge certificate. He, however, further explains that he put up a comprehensive note with the details of the case including the past history to Brittain for orders. He further says that the case was scrutinised by various other officers and that the case was fully scrutinised by Col. Wood, Deputy Assistant Director, who also dealt with it after investigation and after a personal discussion with Major Mannings who was responsible for the release of the godowns. He further says in his explanation that all the facts were recorded by Col. Wood in the file and that the same was found missing from the papers when he inspected them on the 28th May, 1948, for the purpose of furnishing his departmental explanation. That the claim did go up for the scrutiny of number of higher officers is indisputable. The letter Ex. 40, bears the endorsement of J. K. Brittain in the following terms: "Recommended and forwarded for approval and onward transmission". Again the matter....
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..... 19 and 20 or the roof thereof, but that two months' rent had been claimed as against one month's rent. It is also to be noticed that there has been no misrepresentation made in respect of this claim for rent since this item as set out both in Ex. 26/3 and in the letter Ex. 40, shows that it is based only on the time required for repairs of the roof of godowns Nos. 19 and 20 and not of all the godowns. It cannot be, therefore, said to be clearly established that the higher authorities were misled by any false representation so far as this claim in respect of rent was concerned. 13. In addition to the above two circumstances a number of other circumstances, such as, the apparent alteration in the figures in the letter of the firm dated the 14th January, 1947, the passing of an advance receipt by the firm in February, 1947, for the very amount which appears to have been worked out and recommended by Vaid about six weeks later, the appearance which the sequence of the correspondence in this behalf at the material period between December, 1946 and May 1947, bears and the fact that so late as on the 19th May, 1947, in a formal document, Ex. 31, the schedule of damages for whic....
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.... the non-examination of any of the officers concerned particularly of Col. Wood and Mukherjee. There is nothing to show that none was available for examination in person or even on Commission. These features in the case cannot be lightly ignored as the learned Judges of the High Court appear to have done. One other feature is important and has to be noticed at this stage. In the entire evidence there is nothing to indicate that the appellant Vaid had in fact received any illegal gratification in respect of this transaction. Nor is there any suggestion that he was found in possession of resources beyond his means. Taking all these features together, the circumstances actually made out fall far short, in our opinion, of establishing any dishonesty or fraud in respect of the claim for compensation due in respect of damage to the roof. There may be room for suspicion that the claim was rather over-rated and that the appellant Vaid was accommodating. But this is no substitute for proof of dishonesty and fraud. In our opinion both the appellants are entitled to the benefit of doubt in so far as the charges in respect of this claim are concerned. 15. The portion of the prosecution case....
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....atement in the above report that the godowns were found empty and that there, was no damaged jute any where cannot be taken to negative the appellant's assertion of actual damage having occurred, because there is no clear evidence as to the date on which this inspection was made. It may well have been that the inspection was after the alleged damaged jute was removed from the premises, as the firm in its letter claiming compensation in this behalf asserted. Nor is there any evidence of any serious enquiry having been made at the time as to the truth of this allegation of heavy damage. The position, therefore, on the evidence, so far, is that the firm was throughout complaining of the possibility of serious damage to the jute as a result of leakage through the roofs and it did in fact assert such damage to the extent of over Rs. 50,000 having occurred as a result of heavy rains on the 12th July, 1944, and there has been no fair scrutiny of it but only a repudiation of liability. It may, therefore, be taken as probable that some damage to jute did occur at the time. But there is nothing fairly to indicate the extent or quantum thereof except the bare assertion in the letter of t....
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....ge may be true. The question then is whether the circumstances brought forward relating to this portion of the case are such as to lead to a clear inference that this claim is fraudulent and the result of a conspiracy. 16. The circumstances under which the claim was actually put forward and the evidence relating to the steps that followed, therefore, require careful consideration. In the letter dated the 14th January, 1947, addressed by the firm to the military, which was concerned mainly with the claim for compensation as regards the alleged damage to the roof, it was noted at the end thereof as follows: "A separate claim due to the leakage for the deterioration of goods stored under this roof is under preparation and will be submitted shortly". There is no further mention of this during the entire period when the claim in respect of the roof was being considered and settled and finally paid. It is only after the compensation in respect of that claim was drawn in May, 1947, that the firm wrote a letter to the military dated the 7th August, 1947, wherein the specific claim relating to the damage in respect of jute purports to have been put forward. This is after the lapse of fu....
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....ettling the claim in the latter's favour". There can be no doubt that a perusal of the inter-office note, Ex. 1, sent up by Vaid to Balakrishnan fully justified this remark. When the claim was received by Lt.-Col. Bishop, he agreed with Balakrishnan's view that this claim was to be investigated by the Claims Commission. The claim was accordingly transferred to be dealt with by the Claims Commission by letter dated the 19th January, 1948, and it is while the matter was thus pending with them, that further suspicions against Vaid appear to have been aroused. His services were meanwhile terminated and the present prosecution started. Now, apart from the extraordinary delay of over three years from July, 1944 to August, 1947, in putting forward this claim and the apparently hesitant manner in which this claim was first merely indicated in the letter of the firm dated the 14th January, 1947, and thereafter formally presented in detail after a further delay of over seven months and apart from the clear appearance of special pleading by the appellant Vaid in recommending this huge claim to a very substantial extent, which rightly attracted the attention of Balakrishnan, there a....
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....before he furnished his explanation, the matter was reported to the police and Vaid was arrested. Vaid, in his answers to questioning under Section 342 of the Criminal Procedure Code (and this was supported by the suggestion in cross-examination to the witness P. W. 4,) said that he had obtained from the proprietors of the firm of Managing Agents of Shiva Jute Press their files relating to this subject with a view to framing his explanation and made some notes thereon and that he was suddenly arrested before he could send up his explanation. This explanation appears plausible and accordingly this circumstance may be left out of account. But the other two circumstances above noted, viz. 1 and 4 are of a more serious nature. 18. There is considerable force in the suggestion made on behalf of the prosecution that Ex. 41 was the basis of the claim made in the firm's letter dated the 7th August, 1947. Ex. 41 is couched in the language of the draft of a letter of claim to be sent up by the firm. Not only does the matter therein appear to have been substantially comprised in and taken into the letter dated the 7th August, 1947, but Ex. 41 itself uses the first person in its language....
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.... copy kept in their file for purpose of future reference. But what is telling and almost crucial is that a comparison of the two statements discloses that in respect of quite a number of items, the amounts in Ex. 37 have been simply doubled from what appear in Ex. 9, by the simple process of doubling the rate in respect of these items. Thus for instance loading charges of Rs. 600 in respect of bales of jute which in Ex. 9 is shown at three annas per bale, has been shown in Ex. 37 as Rs. 1,200 at six annas per bale. Similarly the item of cartage shown as Rs. 1,600 in Ex. 9 at the rate of eight annas per bale has been shown as Rs. 3,200 at Re. 1 per bale. Like this, in respect of more than 10 items this process has been adopted and the net result is that a claim of Rs. 1,29,795 in Ex. 9 dated the 8th August, 1947, has been worked out as a claim for Rs. 1,62,175 in Ex. 37, dated the 20th August, 1947. Thus there appears to have been a deliberate pushing up of the claim by over Rs. 30,000. The find of this paper, Ex. 9, in the files belonging to the Shiva Jute Press, seems to indicate that this was the original statement of claim which was sent as an enclosure to the letter of the fi....
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....against the appellants, their learned counsel has not been able to indicate to us the likelihood of any plausible and reasonable explanations which the appellants may have furnished about them on questioning. The appellants have been defended throughout and the unavailability of any likely and reasonable explanation even at this stage is a relevant consideration to determine the course to be adopted by an appellate Court when such a procedural lacuna is found. On the facts of this case we are not satisfied that any serious prejudice has been caused and that a retrial at this stage is likely to be productive of any fruitful purpose. After giving our most careful and anxious consideration to all the circumstances of this case, and having regard to the fact that we are exercising our jurisdiction in an appeal by special leave, we do not feel called upon to interfere with the finding of the Courts below relating to this portion of the case namely the claim in respect of damage to jute. 21. It follows, therefore, that in our view the convictions and sentences of the two appellants respectively as regards the charges under Section 420 of the Indian Penal Code and Section 5(2) read with....