1 PGK IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE Criminal Appeal No.652 of 2001 The State of Maharashtra & & Appellant/Applicant (Orig. Complainant) Versus Deepak R. Shah & anr. & & Respondents Mr.D.R. More with Mrs.R.V. Newton, APP for State-Appellant. Mr.Harshad Bhadbhade for Res.No.1. Mr.S.V. Marwadi with Ms.Malika Ingale for Mr.Ashok Jadhav- Police Inspector. ----- CORAM : SMT.ROSHAN DALVI, J. Date of reserving the judgment : 10th December 2009 Date of pronouncing the judgment : 19th December 2009 JUDGMENT : 1. This Appeal is filed by the State of Maharashtra against the Respondents who are the original accused in Criminal Case No.1710/P/2000 in CR No.75/1992 filed in the Court of the learned Additional Chief Metropolitan Magistrate, 19th Court, Esplanade, Mumbai. That case came to be filed by the State upon the complaint of Citibank, Fort, Bombay, against the accused in that case. The case came to be investigated and the accused came to be charged 2 for having fraudulently induced the said Bank to sanction and allow withdrawal of the amount of Rs. 5733796/- under an overdraft facility, upon the forged and fraudulent share certificates and share transfer forms obtained by accused No.2 and made use by accused No.1 by tendering the same as security against the overdraft facility. The accused were also charged with entering into a criminal conspiracy with common intention of accused No.1 to open three accounts in the Bank. The accused were further charged with having fraudulently obtained shares of Hindustan Ciba Geigy and Hindustan Lever Limited from illegal sources and handing over the said shares to the Bank as and by way of security and accordingly, of having committed forgery in respect of those shares which were previously cancelled. The accused were further charged with having opened an account in the name of bogus Firm to cause wrongful loss to the Bank. Consequently, the accused in the case came to be charged with offences punishable under Sections 465, 467, 468, 471, 411, 414 and 420 read with Section 120B of the Indian Penal Code (IPC). 2. The complainant Bank having compounded these offences, though not-compoundable, the parties filed Consent Terms. After recording the evidence on 3 behalf of the State, the accused came to be acquitted of the aforesaid charges. Their bail- bonds were cancelled. The document pertaining to the flat of accused No.1 was handed over to the owners of the flat being wife and mother of accused No.1. The cash amount, which was seized by the Police, was returned to the Bank as agreed between the parties. The rest of properties seized by the Police were directed to be returned to accused No.1, as agreed between them. 3. Pending the investigation by two Police Officers, certain movable properties of the accused came to be seized under panchanama and kept with the relevant Police Station by the Police Officers who caused the panchanama to be made and the properties seized to be deposited/kept in the Police Station pending the trial. This was certain cash amount, certain ornaments and certain other movables being a car, VCP, Deck, etc. 4. Upon the acquittal, accused No.1 applied for return of the properties. He made an Application before the relevant Police officers. The property was not traced. It was consequently not returned. Hence he made an Application before the learned Magistrate, being Application under No.120/N/01 in CC No. 4 1710/P/2000 in CR No.75/1992 under Section 452 of the Criminal Procedure Code. 5. The Application with regard to the return of the ornaments being gold ornaments, weighing 823 Grams as per the panchanama, was essentially pressed, as it was the case of the Appellant/accused No.1 that the gold was not traceable. It was argued on behalf of the State that a case was registered against the concerned Investigating Officer (IO) for offence of misappropriation of the said gold. The learned Magistrate considering the judgment in the case of B.K.D. Patil vs. State of Mysore, 1977 (4) SCC 358 issued a notice to the State as to why the compensation should not be paid and distress warrant should not be issued against the State. 6. The Joint Commissioner of Police (Crimes), Greater Mumbai, submitted that the gold, which was seized, was not deposited by the concerned IO with the Police Department as per the provisions of Section 102 of the Criminal Procedure Code and hence for the illegal act of the officer, the State could not be held responsible. The reply sets out that the Police Inspector one M.M. Ansari (by then retired) had not deposited the muddemal property in safe custody and consequently, a complaint was filed 5 under CR No.286/2001 under Section 409 of the IPC, registered with the Azad Maidan Police Station, Mumbai for misappropriation of muddemal property against the said M.M. Ansari. 7. After considering the Application of accused No.1 in the aforesaid criminal case and the reply of the Joint Commissioner of Police (Crimes), the learned Magistrate passed his order on 23.7.2001, directing the State to pay compensation to accused No.1 and deliver the gold weighing 823 Grams to him on or before 31st August 2001. 8. The State has challenged the order of compounding of the offences and acquitting the accused dated 4.4.2001 as well as the order of payment of compensation by the State 23.7.2001. The notice has not been issued to the complainant-Bank. The complainant-Bank has not been represented. The State has not pressed the Appeal in respect of the compounding of sentence. The State has, however, essentially pressed the Appeal against the order dated 23.7.2001, directing the State to pay compensation for the offence committed by its servants, who seized the gold of accused No.1 in the aforesaid CC/1710/P/2000 during investigation under CR No.286/2001. The case of the State is made out 6 essentially upon the fact that it has no liability to compensate the accused as the gold was lost due to the negligence of its officers during investigation of the criminal complaint. It is also contended on behalf of the State that a criminal prosecution was lodged against one of the officers. The application for claiming compensation has nothing to do with the said criminal prosecution. It matters not whether the Police Officer, sought to be prosecuted thereunder is convicted or acquitted of the charge levied against him under the criminal law. It may be mentioned that that Police Officer has since expired and the criminal case has abated. 9. Accused No.1, who is the contesting Respondent, has essentially sought to propound the order of payment of compensation by the State. 10. The application for payment of compensation is made under the liability of the State in tort, though made to the relevant Criminal Court. A fine point of law relating to the liability of the master for the acts of its servants during the course of employment of the servant, therefore, comes into play. It is an admitted position that the gold weighing 823 Grams was, inter alia, seized from accused No.1 under the panchanama. Two of the Police Officers 7 seized the gold under the panchanama. One was the IO Mr.M.M. Ansari (since retired and later deceased) and one was PI (the then PSI) Ashok V. Jadhav, who has appeared upon being called by the Court to ascertain the facts. He has been represented by his Advocates and has been heard. He has produced the case papers of the criminal prosecution filed against the IO, M.M. Ansari as also the papers relating to the seizure of gold. 11. It is contended on behalf of Respondent No.1/accused that the relevant officers have been negligent and the State must pay compensation for the negligence of its officers. It is sought to be shown by the accused that the officers had acted within the course of their duties in seizing the gold during investigation of the aforesaid criminal complaint. If that is so, the property, which came to be seized (muddemal) was required to be kept by the Police Officers in trust for the party to whom it is directed to be returned at the end of criminal trial. Since it was directed to be returned to accused No.1, accused No.1 must get the gold or its equivalent value. At the time the Application was made before the learned Magistrate, its equivalent value was shown to be Rs.3 Lakhs. 8 12. It is argued on behalf of the State that the State would not be responsible for the illegal act committed by its officers. Since the concerned IO Mr.M.M. Ansari, who was the PI and his assistant one Ashok Jadhav, who was the PSI had not deposited the muddemal property in safe custody as per rules, by entering in the Safe Deposit Register and had kept the property merely in safe , they had not acted in the course of his employment and, therefore, the State of Maharashtra, as the employer or master, could not be held liable for their act as its servants. 13. It is argued on behalf of the PI Jadhav that the relevant rules relating to the deposit of the seized property as muddemal were breached not by him but by the PI, who was the IO of the case M.M. Ansari and that he being a Junior Officer, who assisted the PI, was not liable. 14. Mr.Marwadi has produced before me the investigation papers in the criminal complaint filed against M.M. Ansari under Section 409 of the IPC, which shall be referred to presently. Mr.Marwadi has also shown me the panchanamas recorded during the investigation of the aforesaid complaint of the Bank under which, inter alia, the gold came to be seized and the 9 relevant entries came to be made by the two Police Officers with respect to the custody and deposit of that valuable property seized during investigation. 15. It would be essential to see at first how the investigation was carried out in the aforesaid complaint. It is common ground that two panchanamas were prepared on 25.11.1992, under which several properties came to be seized. Two officers PI one M.M.Ansari, who was the IO in the case, and PSI A.V. Jadhav were both present at the time of the seizure. The panchanamas show the articles seized with their value and description. Copies of the panchanamas were handed over to accused No.1 at 2 hours on 26.12.1992 when the panchanama procedure came to be completed. The panchanamas show that the panchas were called by the aforesaid two officers. The panchanama is naturally signed by one of the officers. (It is stated to have been signed by the IO Ansari). The station diary entry of the case for 25.12.1992, inter alia, shows that both these officers had left along with the accused who came to be arrested earlier in the day for making the panchama. The station diary entries further show that the properties were seized and taken charge of under the panchanama and entry in the muddemal vide No.119/92 has been made and further that the 10 aforesaid two officers left for investigation in the aforesaid CR No.75/92 at 23 hours and returned at 3.30 hours on the next day. It further shows that the entry in Muddemal Register vide No.120, has been made. 16. The Muddemal Register shows entry No.119 made by PI Ansari as well as PSI Jadhav under No.5580. It shows the various movables deposited in the safe as kept in safe . One television has been shown to be returned to and received by accused No.1 on 12.5.2001. The movables, which were seized, have been enumerated and described on pages 13 to 18 of the Muddemal Register. From pages 15 to 17, the entries show the words safe against the movables, presumably denoting that it was kept in the safe. The last entry being cash of Rs.4,30,000/- is shown deposited in Citibank. 17. These are admittedly the only documents executed by the two officers. Hence it is seen that upon the complaint being filed and accused No.1 being arrested, the investigation commenced. In the course of investigation, the aforesaid two officers visited the residence of accused No.1. They seized various movables under panchanama. They were both present at the time the movables were seized and 11 recorded in the panchanama during the course of the night of 25.12.1992 to the early morning hours of 26.12.1992. They left the Police Station in the late hours on 25.12.1992 and returned in the early hours on 26.12.1992. They made relevant station diary entries. After returning to the Police Station, they made entries in the Muddemal Register to show that the articles were kept in safe. The amount of Rs.4,30,000/-, which was shown to be deposited in Citibank account, has been deposited in a separate savings account opened in the joint names of the Senior PI of General Branch, Crime Branch, CID, Mumbai and the IO Ansari. Rs.10,000/- are shown as the initial deposit therein. Rs.4,30,000/- have been deposited in cash in that account on 27th February 1993. The credit entry is made on 2nd March 1993. On 3rd March 1993, Rs.4,20,000/- have been transferred to a multi-deposit which came to be issued, leaving a balance of Rs.20,000/- in that account. The rest of the account shows the interest that accrued due on the balance amount of Rs. 20,000/- together with interest which came to Rs. 25,258/- as on 9.9.2002. The complaint between the complainant-Bank and accused No.1 came to be settled on 4.4.2001. This account came to be closed on 9.9.2002. The Bank has been returned the cash amount of Rs.4,30,000/- as per the agreement between 12 the Bank and accused No.1 on 4.4.2001, as recorded in the Consent Terms. 18. It is seen that the complaint under CR no.286/01 filed in the Azad Maidan Police Station on 3.7.2001 for offences that have taken place from 25.12.1992 to 25.6.2001 is against the IO M.M. Ansari alone. There is no complaint filed against PI Ashok V. Jadhav (the then PSI). The complainant has stated about the movables being kept against the term safe by the IO. The complaint shows the inquiry made with Jadhav upon the filing of the case in respect of misappropriation of the property. A.V. Jadhav has stated that the procedure cited hereinabove shows that the property was properly kept in safe custody under the aforesaid entries. That has been his contention before this Court also. It has to be seen from the statements recorded in that complaint and the Rules whether the valuable property, being the gold seized under Panchanama, was indeed to be entered in the muddemal register and shown as safe and whether such a procedure is enough or whether there is any other procedure to be followed in such cases. The muddemal recovered by the officers of the General Branch, is entered in the Muddemal Register maintained. The valuable items are required to be entered in the Safe Deposit 13 Register of the Branch and those articles are kept in the safe of the Branch under lock, key and seal. The custody of those valuable articles was to be kept with the PI (Adm.) of the Branch. PI (Adm.) may be the IO himself or another officer. He is supposed to check the valuable items before accepting the same for keeping in safe. There was no entry about the valuable muddemal entered in the Safe Deposit Register, made by either of the officers who seized the gold during investigation, though under entry Nos.119/92 and 110/92 in the Muddemal Register, the word safe is mentioned against those entries. There is no endorsement of the IO himself as PI (Adm.) or of any other officer as PI (Adm.). The entries made in the Muddemal Register are fundamentally incorrect. 19. The valuable articles were to be got verified from the Government Valuer. The valuables are not even shown to have been valued by the jewelers who are the registered valuers of the State. The jeweler has shown no record of weighing any ornaments at the relevant time. No certificate of any such valuation is also obtained. 20. The investigation papers of CR No.286/01 only show the statement of various parties, including A.V. Jadhav recorded. They essentially show the 14 disclaimer of liability at their end, except the statement of one Suresh Kandale, which sets out the required procedure. 21. I have been shown Standing Order No.28, which lays down the rules for custody and disposal of properties seized by the Police. Rule 4 of the Standing Order No.28 shows that all cash and valuables should be kept in the safe in-charge of the Selection Grade Sub Inspector (Administration), pending disposal and the provisions of paragraph 56 of the Bombay City Police Manual should be followed. The aforesaid papers of the investigation in the aforesaid criminal case do not show compliance of Rule 4 by either of the officers who came to be in custody of the valuables being the gold ornaments. Though Ashok Jadhav, one of the officers, who investigated the case and who is still alive has appeared, represented by his Advocates, he has not produced the documents relating to who was the Selection Grade Sub Inspector (Adm.) at the relevant time, or the Bombay City Police Manual to show the procedure regarding entries to be made in the Safe Deposit Register for valuables seized by the Police. 22. A mere entry in the Muddemal Register stating against the seized articles that they were kept in 15 safe , without any entries by the officers in whose charge these articles were kept, is not the sufficient compliance of the procedure required. The entries show the acts of the aforesaid two officers. Obviously one is the Senior Officer and the other is his Assistant. Both the officers are expected to know the rules and follow them. Both the officers have taken charge of the articles. Both the officers have kept them in the safe, but have not brought it to the knowledge of the Selection Grade Sub Inspector (Adm.)or entered them in the Safe Deposit Register. No other officer has counter- signed these entries. 23. It will have to be seen whether under such circumstances the Police Officers can be taken to have acted in and within the course of their employment. The learned Magistrate has directed the State to compensate accused No.1 upon the vicarious liability of the State for the acts of its servants. This vicarious liability is under the law of Torts. The liability is, therefore, necessarily for tortuous acts. No master is liable for the criminal acts of servant if the act does not tantamount to a tort since no master employs the servant to commit crime. There is, therefore, no vicarious criminal liability. To impute vicarious liability on the 16 master, the seminal requirement is to see the liability of the servant in tort. A tort is wrong committed by the servant. Hence for an act which constitutes a wrong, the master would be liable under the maxim Qui facie per alium, facie per se. 24. This liability has to be incurred by the servant in the course of the servant s employment. Whatever liability, even tortuous, that is incurred by the servant outside the course of his duties or the course of employment, cannot hold the master liable. The learned Magistrate has simpliciter considered that the valuables were seized by the officer and entered in the Muddemal Register against the entry kept in safe and safe . The learned Magistrate has not considered whether this act was well within the course of the employment of the two officers who seized the property and made entries. That has been a fundamental error. The rules that the officers were required to follow and the procedure that was to be followed, as set out in the statement of Suresh Kandale, show that what the officers had done was completely outside the scope of their duty. They were not required to enter valuables in the Muddemal Register in the first place. They have not entered the valuables in the Safe Deposit Register at all. Consequently, the control of the superior 17 officer, who was in-charge of the relevant branch at the relevant time, could not be upon the two officers, who seized the property and made the entries. Consequently, their act was completely outside the scope of their duties and the course of employment. It is, in this respect, that the law relating to the vicarious liability of the master for the tortuous acts of its servant within the course of the employment of the servant would have to be seen. 25. In the case of Sitaram Motilal Kalal vs. Santanuprasad Jaishanker Bhatt, AIR 1966 SC 1697, this tortuous liability has been considered by a Bench 3 Judges of the Supreme Court, giving a majority and minority view. It has been held per majority that the master is vicariously liable for the acts of his servant acting in the course of his employment. For the master s liability to arise the act must be a wrongful act authorized by the master or a wrongful, unauthorised mode of doing some act authorised by the master. If the servant is not acting within the course of his employment, but is doing something for himself, the master is not liable. Similarly it is held that the master is not responsible for the negligence or other wrongful acts of the servant simply because it is committed 18 at the time when the servant is engaged in the master s business. It must be committed in the course of that business or has to form part of it. In that case the master s vehicle was being driven not by the driver but by the cleaner who wanted to obtain the RTO s licence. He committed an accident. It was observed that the de facto driver was not the driver or the agent of the owner, but who had obtained the car for his own business not even from the master but from a servant of the master. Hence it was held that the owner would not be liable in such cases. It was further observed that the driver was not even impliedly authorised by the owner to coach the cleaner so that the cleaner might become the driver and drive the taxi. In this case also, the two officers have acted on their own account. They have not followed the requisite procedure. In fact, they have seen to it that though the valuables were seized, they were kept in the Muddemal Register and not the Safe Deposit Register. They have not informed the superior officer and if one of them was the officer in-charge, he has not followed the procedure which he is enjoined to follow and of which he has knowledge. Their act is, therefore, not in the course of their employment. It is outside the 19 employment. It is a wrongful act, not authorised by the master in the course of employment, but done for themselves. It is, therefore, not done on account of the master or as an agent of the master, albeit negligently or unauthorisedly. It was not even done in execution of the master s business of keeping valuables in the Safe Deposit Register. Hence it cannot be taken to be a negligent method of conducting the work of the State of Maharashtra, who was its master. It was an act completely outside the course of their employment since it was against the established rules and procedure. It may be mentioned that it must be present to the minds of both the officers that they should apply more care and caution to the valuables which were seized than to the other muddemal seized. They have applied the same yardstick for all and enumerated all the items together and entered them in a single Register  a Register which was meant for the non-valuable muddemal properties alone. Consequently, they were acting on their own