TaxTMI 
TaxTMI 
1954 (4) TMI 74
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....Ram Vaid were both convicted in respect of 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 b....
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.... that the previous claim and payment of Rs. 47,550/- 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, 194....
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....#39; for the loss incurred". Then again on 17-7-1944, the 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 you....
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....prisingly quickly. It is in the evidence of one Captain P. C. Mitra examined as P. W. 7 that on 1st December, 1945, one Captain Morley brought and 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. Th....
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.... included in the estimate. This sum was allowed to us at the time of requisition vide L.A. Collector Memorandum No. 11-4-46/622 P dated 4th February, 1946. 2. The roof of Godown No. 20 was badly damaged on account of misuse by the 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 ....
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....l sanction. 2. Out of the 24 Godowns and 5 covered Verandahs requisitioned, the owner has claimed damages only for the roofs of Godowns Nos. 19 and 20 which collapsed--in spite of timely warnings by the owner to the Military authorities--on account of storing, loading and unloading of heavy packages and doing carpentry 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 wi....
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.... are substantially true and that there is no question of any misrepresentation, fraud or collusion. 7. In the view of the High Court, the evidence did not disclose that any damage to the roof worth the name was caused by the occupying military and the subsequent conduct of both the appellants was such as to lead to a reasonable and necessary inference that the claim in this respect was fraudulent 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 M....
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.... oral evidence as there is, appears to indicate the contrary. Four persons who are said to have had occasion to see or inspect this roof at some stage or other, have been examined as witnesses, P. Ws. 1, 4, 7 and 10. Of these the evidence of P. Ws. 4 and 7 does not require serious consideration with reference to this portion of the case. P. W. 4's evidence is with reference to an alleged inspection made by 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....
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....uckled on account of the excessive load. I said in my evidence before the Magistrate that the roof should have, but did not, come down. The tee iron and other things support a roof. A particular tee iron supporting a roof if loaded excessively would bend.......I do not remember if any other stanchion was buckled or not. Buckling of a stanchion may be due to overloading or eccentric loading. The brick courses of the wall had developed cracks, 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....
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....March, 1946, marked as Ex. A (16), requesting them to obtain sanction for certain materials necessary for reconstruction of the roof, the firm states as follows within a few months after it was handed over: "The above roof was seriously damaged while in occupation of the military authorities. The condition is so precarious that the roof may give way any time. In the circumstances it has become imperative to demolish it and construct a new roof instead". There 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-exami....
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....f fraud. In our opinion, taking the evidence above noticed by itself and apart from the alleged admission in the discharge certificate, which will be noticed presently, it cannot be said that this is a case of no damage worth the name and indeed there are fair indications, though not positive proof, that the case of the firm that the roof had, during military occupation, undergone substantial damage which rendered it quite unsafe for any further use without reconstruction was presumably 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, ....
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....he footing of the roof standing in need of reconstruction was an unfounded or highly disproportionate claim when there was no damage worth the name and in spite of there being no liability for any such damage. It is right to observe at this stage that once it appears on the evidence that a claim for compensation on the footing of reconstruction of the roof is reasonable, there is nothing to show that the actual details of the estimates for such reconstruction which have been put forward by the firm 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....
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.... introduced H. P. Das as their representative, to whom the delivery of possession might be made. He also says that so far as he remembers, H. P. Das, was introduced to him as the Manager of the company and their representative. But he admits that he did not take any letter of authority from them regarding H. P. Das and also admits that at the time of delivery he was aware that the owners were claiming damage. This evidence is hardly sufficient to make out the authority of H. P. Das not merely to acknowledge 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. N....
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.... wrote only a letter in reply thereto, which does not say that any fresh inspection has been carried out. In the letter it is stated that the godowns were not in the occupation of the military and that the roof of the godowns were not occupied by the military. In it is further stated that on examination, portions of the roofs were found damaged due to inherent defects in the construction of the roof and due to the deterioration thereof and that the military could not be held responsible for damage or repair to these 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 a....
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.... notice of appellant Vaid. Further there is a complete absence of any claim from the firm for over an entire year. These are 'prima facie' circumstances against the claim, which cannot have failed to attract his attention. In this situation, the absence of any specific orders from the higher authorities to justify his taking up this claim for investigation and the fact that these two important circumstances do not appear to have been specifically brought to the notice of the higher authorities, are undoubtedly strong 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 ma....
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.... for serious suspicion. It must be noticed that these two circumstances are matters to be explained primarily by the appellant Vaid. So far as the first out of them is concerned, Vaid may be taken to have been examined about it under Section 342, Cr. P. C., though the examination is not so specific and pointed as might have been desired. His explanation is that he was asked by his immediate superior, Brittain, to take up incomplete and undecided cases in the area and complete them. As pointed out by the learned Judges of the High 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 ....
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....er, 1946, and there is no warrant for the assumption that the higher officers, to whom no dishonesty is imputed, merely trusted appellant Vaid without any sufficient experience of him. Indeed even as regards the apparently untenable claim for two months' rent, the matter was specifically scrutinised by S. D. O., R. B. Mukherjee as appears from his note, Ex. O. It is to be noticed therefrom that his objection was not that an extravagant claim was made for rent in respect of the entire godowns derequisitioned and not merely in respect of the godowns Nos. 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 circumsta....
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....le claim for an extravagant amount of rent and the appellant Vaid lightly recommended it. In our opinion, the first two have not been made out, while the third and fourth, though giving rise to serious suspicion, cannot in the circumstances of this case, be made the basis of conviction. The claim had clearly undergone the scrutiny of the higher officers who had the final responsibility to approve of the recommendation and to sanction payment. The report of one of them has disappeared from the relevant file. There is no explanation for this disappearance or for 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. Taki....
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.... "Regarding damages the godown was visited by me with Major Slater of the O. I. D. and a representative of the landlord. The godowns were found empty and there was no damaged jute anywhere. The O. C., O. I. D. considers that even had there been any leakage in the roof the jute could never have been damaged. Therefore the question of damages cannot arise. Should the landlord desire to use his Go-downs he may be asked to repair his bad roofs and the O. I. D. may be asked to vacate the roof". Arunachalam does not speak to these details in the evidence he has given as P. W. 10. The statement 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 ....
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....ny materials to support the claim as regards the quantum thereof. Thus unlike as in the earlier part of this case concerning the claim for damage to the roof, there is nothing in the evidence relating to this claim indicating the reasonable likelihood of damage to the jute of the extent actually claimed in 1947, except a bare and solitary assertion of heavy damage to the tune of Rs. 50,000. There is thus reason to think, on the evidence in the case (apart from any subsequent circumstances) that the claim has been very much inflated without any basis or foundation, though the occurrence of some damage 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....
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.... the extent of Rs. 1,28,125/-. On receiving this Balakrishnan scrutinised it and put up a note to his superior authority Lt. Col. Bishop, pointing out that since the claim relates to damages in respect of movables consequent on bad maintenance of the roof which was requisitioned by the Defence Department, it should be dealt with by the Claims Commission. In sending up this note to his superior authority, he made a significant observation therein in the following terms: "A casual reading of the report would appear to convey that the concerned A. L. H. O. (referring to the appellant, Vaid) is acting on behalf of the owner for settling 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 ....
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....serious and the third may be easily disposed of. It appears from the record that before the services of the appellant Vaid were terminated and after suspicions against the 'bona fides' became aroused, Col. Augier, Deputy Director, Lands, Hirings and Disposals Services, Eastern Command, sent a letter to the appellant, Vaid, dated the 19th May, 1948, wherein he was called upon to furnish his explanation as regards the various suspicious circumstances against him relating to the claim in respect of damages to the roofs and damages to the jute and the appellant Vaid was given time until the 29th May, 1948, to furnish the explanation. Before the expiry of this date and 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....
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....n that at the very outset the claim was deliberately and grossly exaggerated, without any real basis. 19. The other circumstance which is even more telling is this. As already stated, in the files of Shiva Jute Press there was a statement of claim bearing date 8th August, 1947, which is almost a complete copy of the final statement of claim dated the 20th August, 1947. (The date therein appearing as the 20th September, 1947, is said to be a mistake). The fact that a verbatim duplicate of the statement of the claim ultimately submitted is found in the files of the proprietors of the firm would not by itself be a matter for suspicion or comment because that may have been an office 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....
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....th Bajoria and Vaid on this part of the case, as regards any of these adverse circumstances which form the basis of the conclusion of the Courts below on this claim. There is a complete lack of any reference to these matters in the questions put to either of the appellants under Section 342, Cr. P. C. This undoubtedly is a serious irregularity and cannot be lightly ignored. If prejudice was thereby caused, such art irregularity would entail retrial in the circumstances of a case like this. But before a retrial can be ordered the Court must be clearly satisfied about prejudice having been caused. In the course of the arguments before us when the above mentioned circumstances were relied on, 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 a....