[-1-] IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL REVN.APPLN.NO.201 OF 2008 Paresh Kothari ..Applicant Vs. State of Maharashtra & Anr. ..Respondents ... Mr.Mahesh Jethmalani counsel with Ms.Sheetal Shah advocate i/b M/s.Mehta and Girdharilal for the Applicant Mr.Ganesh Gole Advocate along with Ms.Rashmi Gagwani Advocate for Respondent no.2 Mr.K.V.Saste APP for the State ... CORAM: SMT.V.K.TAHILRAMANI,J. CORAM: SMT.V.K.TAHILRAMANI,J. CORAM: SMT.V.K.TAHILRAMANI,J. DATE OF RESERVING DATE OF RESERVING DATE OF RESERVING ORDER: SEPTEMBER 18, 2008 ORDER: SEPTEMBER 18, 2008 ORDER: SEPTEMBER 18, 2008 DATE OF PRONOUNCING DATE OF PRONOUNCING DATE OF PRONOUNCING ORDER: DECEMBER 10, 2008 ORDER: DECEMBER 10, 2008 ORDER: DECEMBER 10, 2008 ORAL ORDER: ORAL ORDER: ORAL ORDER: 1. Heard Mr.Mahesh Jethmalani, the learned senior counsel for the applicant-original complainant, Mr.Gole, the learned advocate for the respondents-original accused and the learned A.P.P. for the State. 2. Private complaint came to be filed by the [-2-] applicant against the respondents-accused under Section 420 r.w. Section 120-B of IPC before the learned Addl. Chief Metropolitan Magistrate, 38th Court, Ballard Pier, Mumbai. The said case is numbered as CC.No. 155/Misc./2006. In the said cases, process came to be issued under Section 406 of IPC by the learned Magistrate by order dated 14.2.2007. Being aggrieved by the said order, the Respondent-accused preferred revision before the Sessions Court. By order dated 13.2.2008, the learned Sessions Judge allowed the revision and the order of issuance of process under Section 406 of IPC came to be set aside. Being aggrieved by the said order, this revision application has been preferred by the complainant. 3. Brief facts of the case are that the complainant and the respondents-accused are partners of M/s.Vifor Enterprises which is a registered partnership firm. The firm purchased premises being Unit No.10 on the first floor of Dev Ashish Services Industrial Estate situated at Dahisar (East), Mumbai. The said property was being developed by M/s. Bonny Enterprises. The complainant alleges that as the Respondent no.2 was [-3-] residing at Kandivali and as the complainant was residing far away, the development of the property was expressly entrusted to respondents-accused for the purpose of development and the Respondent was fully in charge thereof. Thereafter, Bonny Enterprises sold the premises admeasuring 3246 sq. ft. carpet area on the first floor of the said building to M/s. Vifor Enterprises and thereafter lease-deed came to be executed in favour of State Bank of India. As there was dispute between M/s. Vifor Enterprises and State Bank of India, suit was filed in Small Causes Court against State Bank of India by M/s.Vifor Enterprises. The said suit was decreed in favour of M/s.Vifor Enterprises and appeal filed by State Bank of India was also dismissed. Against that, State Bank of India preferred Writ Petition which also came to be dismissed. In the said Writ Petition, State Bank of India undertook to vacate the premises and hand over vacant possession. According to the complainant, the respondents-accused without informing the complainant took vacant possession of the premises in the month of May/June, 2006. Thereafter, he sold the said premises to unknown persons for small consideration of Rs.45 lakhs [-4-] though the property was worth about Rs.2.50 crores and thus, the respondents-accused committed criminal breach of trust. The complainant has further stated that said amount of Rs.45 lakhs received as consideration for whole of the said premises, was deposited in the account of the firm and out of the said amount of Rs.45 lakhs, a sum of Rs.36 lakhs was withdrawn by the accused without consent of the complainant, hence, complaint came to be filed. 4. The learned Sessions Judge quashed the process on the ground that the property in question belonged to the partnership firm of which the accused as well as the complainant both were the only partners and hence, there could be no misappropriation in the absence of any express entrustment to the Respondents-partners. The learned Sessions Judge has observed that there are no averments in the complaint to show that there is a specific agreement between the parties for handing over charge of development of the property to the accused. The learned Sessions Judge has further observed that there is nothing in the complaint to show that there was any entrustment of [-5-] the property by the complainant to the accused. 5. It is a fact that there was partnership between complainant and the accused by name "M/s. Vifor Enterprises" and later on in the partnership, the complainant and the accused got 50% share each. At the relevant time, they were the only two partners in the said firm. It is the contention of the complainant that the accused was in complete charge of the said property and he was looking after the development of the said property which was done by M/s.Bonny Enterprises under the agreement which was finalised by the accused. However, the documents which are produced on record show that whatever was done by the respondents-accused is done on behalf of the partnership firm. 6. It is pertinent to note that the complaint is under Sections 420 r.w. 120-B of IPC, however, process was issued by the learned Magistrate under Section 406 of IPC. The process was not issued by the trial Court under Section 420 of IPC. Though the process was not issued by the trial Court under Section 420 of IPC, the complainant has not [-6-] challenged the said order of non-issuance of process under Section 420 of IPC. So whether there was cheating or not or a case for issuance of process under Section 420 of IPC is made out, cannot be gone into by this Court at this stage in the absence of challenge of the order of the trial Court by the complainant for non-issuance of process under Section 420 of IPC. It is well settled that scope of the Court in revision is very limited. The Court can only see the legality propriety and correctness of the order impugned. Therefore, I can only look into the order of the Sessions Court whereby process under Section 406 of IPC, came to be set aside and decide whether the process was rightly recalled. 7. For invoking offence under Section 406 of IPC, the essential ingredients would be entrustment of the property with the accused. No doubt, in para 4 of the complaint, the complainant has mentioned that the accused was entrusted with the property for the purpose of development and he was given full charge thereof. However, except the bare words of the complainant in the complaint about entrustment of the said premises, there is no [-7-] document to show that there was any entrustment of the said property with the accused. In fact, the documents on record show that the complainant and the accused both had equal rights over the property and the partners also had the right to sell the property. In clause 9 of the Agreement dated 14.2.2000 and clause nos.9 and 10 of the Agreement dated 23.4.2000, reference is made to the right of the continuing partner to mortgage, sell, lease or to alienate assets of the partnership. 8. The amount which was obtained by the accused in respect of sale of the premises which is entered into by the accused as a partner of the firm was deposited by him in the Bank account of the partnership firm. The case of the accused is that out of Rs.45 lakhs, Rs.36 lakhs was withdrawn by the accused and the said amount has been misappropriated by the accused. The case of the accused is that amount from the said account was paid towards dues of the firm. Even otherwise, as far as the authority of the accused is concerned, he is entitled to operate Bank account as per mutual agreement between the partners. It is seen that out of the sale proceeds, the complainant has [-8-] also withdrawn about Rs.8 lakhs from the very same account, this clearly shows that each of the partners including the applicants had authority/power to withdraw the amounts from the account of partnership firm, hence, this supports the case of the accused that he as the partner could withdraw the amount from the account of partnership firm. 9. Useful reference may be made to the decision of the Supreme Court in the case of Velji Raghavji Velji Raghavji Velji Raghavji Patel Vs. The State of Maharashtra, Patel Vs. The State of Maharashtra, Patel Vs. The State of Maharashtra, reported in AIR 1965 SC 1433. AIR 1965 SC 1433. AIR 1965 SC 1433. In the said decision, it has been held that unless there is a special agreement authorising the working partner to recover money and to utilise recoveries for partnership business, the offence of criminal breach of trust, is not made out. In the present case, no special agreement in writing between the parties has been produced. In that case, the appellant had withdrawn the amount in contravention of terms of written Agreement in clause 8. However, in the present case the complainant has not been able to show that respondent-accused has acted in contravention of any terms of any agreement between [-9-] him and the respondent. In such case, in the absence of such special agreement, if the partner receives money belonging to the partnership firm, he cannot be said have been entrusted with dominion over the partnership properties. 10. In para 8 of the decision of Velji Raghavji Velji Raghavji Velji Raghavji Patel (supra) Patel (supra) Patel (supra) the Apex Court has held that an owner of the property in whichever way, he uses his property and with whatever intention, will not be liable for misappropriation and that would be so even if he is not the exclusive owner thereof. A partner has undefined ownership along with the other partners over all the assets of the partnership. If he chooses to use any of them for his own purposes, he may be accountable civilly to the other partners. But he does not thereby commit any misappropriation. In that case, there was a special written agreement between the parties and clause 8 of that agreement specifically mentions about the power of withdrawal of amount which the appellant in that case withdrew and used in contravention of specific terms of that clause. In the case before me, there is no express agreement which is contemplated in view of the decision of [-10-] the Apex Court. Therefore, the present case before me does not fall in the category of express agreement between the parties so as to hold that the accused had dominion over the property or the amount of the firm which was lying in the account of the firm so as to hold him liable for the offence under Section 406 of IPC. 11. The decision of the Apex Court in Velji Patel’s case (supra), no doubt, is on the merits of that case but it has laid down the ratio that in order to attract the provision under Section 406 of IPC, there has to be an express agreement and even if there is an express agreement, the breach of such agreement would not expose the party to any criminal liability of misappropriation but at the most it may lend to civil consequences. In the present case, there is no such express agreement, hence, the ratio laid down by the Apex Court would apply and it can be said that no criminal liability arises including liability under section 406 of IPC. 12. The fact that the accused was looking after the premises and its development is a fact not [-11-] disputed. The only question whether by this mere fact whether it can be said that there is legal entrustment to give rise to criminal liability under Section 406 of IPC is to be seen. In my opinion, in view of the decision of the Apex Court in Velji Patel’s case, it is not sufficient and there must be express intention and express agreement which is not there in the present case. In view of the above facts and case law, the learned Sessions Judge set aside the order issuing process under Section 406 of IPC. 13. Mr.Jethmalani, the learned senior counsel for the applicant contended that at the stage of quashing of process, the learned Sessions Judge has to see whether the allegations in the complaint disclose "any offence" and apart from Section 406 of IPC, the learned Judge ought to have determined whether the complaint discloses any other offence. He submitted that in case of quashing of complaint, the Court has to ascertain whether the contents of the complaint disclose any offence. In support of his contention, he has placed reliance on the decision of the Apex Court in the case of State of State of State of Haryana Vs. Bhajanlal reported in 1992 S.C. 604 Haryana Vs. Bhajanlal reported in 1992 S.C. 604 Haryana Vs. Bhajanlal reported in 1992 S.C. 604 [-12-] and A.K.Subbaiah and others Vs. State of Karnataka and A.K.Subbaiah and others Vs. State of Karnataka and A.K.Subbaiah and others Vs. State of Karnataka and others, and others, and others, reported in (1987) 4 S.C.C. 557. (1987) 4 S.C.C. 557. (1987) 4 S.C.C. 557. He submitted that in both the said cases, the Supreme Court has held that the Court is expected to see whether the complaint and papers accompanying the complaint, indicate that an offence is made out and only if the papers do not prima facie disclose any offence, it would be open to the Court to entertain revision and quash the proceedings. However, it is also pertinent to note the observation of the Supreme Court in the case of Bhajanlal (supra) wherein it is observed that in the backdrop of interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by the Supreme Court in a series of decisions relating to the exercise of the extra-ordinary power under Article 226 or the inherent powers under Section 482 of the Code, the following categories were given by way of illustration where power in respect of quashing an FIR or complaint, could be exercised either to prevent abuse of process of any Court or otherwise to secure the ends of justice: (1) Where the allegations made in the First [-13-] Information Report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused. (2) Where the allegations in the First Information Report and other materials, if any, accompanying the F.I.R. do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code. (3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused. (4) Where, the allegations in the F.I.R. do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code. [-14-] (5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused. (6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party. (7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge. 14. It is pertinent to note that in Bhajanlal’s case, the Supreme Court was considering the case [-15-] when an FIR or complaint can be quashed. Here I only have to consider whether the order of the Sessions Court is correct, legal and proper. This Court in revision can only consider this limited aspect and cannot go beyond this aspect. Hence, the decision in the case of Bhajanlal can have no application to the facts of the present case. The plain reading of para 108 of Bhajanlal’s case which is reproduced above, clearly states about the power under Article 226 of the Constitution of India and under Section 482 of Cr.P.C. but, does not say that the same power can be exercised under Section 401 of the Code. The learned counsel for the applicant made a submission that it is settled law by the Supreme Court that in proceedings both under Section 482 and Section 401 for quashing of complaint, what the Court has to ascertain is that the complaint discloses any offence. So far as the judgment of A.K.Subbaiah (supra) A.K.Subbaiah (supra) A.K.Subbaiah (supra) is concerned, the judgment squarely covers the case of the present Respondent no.2 as the Court of Sessions has rightly gone into the entire material and thereafter had come to the conclusion that there is no prima facie offence made out and had therefore, quashed the process under Section 406 of IPC. [-16-] 15. The learned counsel for the applicant for the very first time before this Court made a submission that the complaint discloses commission of offence under Section 423 of IPC. It is pertinent to note that when the learned Magistrate had passed the order dated 12.10.2006 for enquiry under Section 202 of Cr.P.C. the present applicant had preferred a Criminal Revision Application No.1211 of 2006 and had prayed before the Court of Sessions to set aside the order dated 12.10.2006 and to issue process against Respondent no.2 under Section 420 of IPC. Thereafter, the said Criminal Revision Application was withdrawn and the learned Magistrate after perusing the police report along with the documents, had issued process under Section 406 of IPC. The said order was never challenged by the present applicant. The Respondent no.2 had challenged the impugned order of issuance of process under Section 406 of IPC and the learned Sessions Judge after perusing the complaint and other material by order dated 13.2.2008 had set aside the order of the learned Magistrate dated 14.2.2007. It is the order of the learned Sessions Judge dated 13.2.2008 which is [-17-] challenged by the present applicant before me by filing present Criminal Revision Application under Section 401 of Cr.P.C. It is pertinent to note that this submission that offence is made out under Section 423 of IPC has not been stated in the complaint nor was it raised or argued before the learned Magistrate or learned Sessions Judge. This point has also not been raised in the memo of this Revision Application, in such case, this contention cannot be allowed to be raised for the first time in oral arguments before the High Court. It is pertinent to note that in the present case, no contention that offence under Section 423 of IPC is made out, was ever raised or argued before the learned Magistrate or before the Court of Sessions nor is there any averment in the present Criminal Revision Application filed before this Court regarding the same nor there is any prayer in this Criminal Revision in respect thereof. In this revision also there is no challenge to the order passed by the Magistrate of issuing process only under Section 406 of IPC. On the other hand, ground 6 (a) states that the order of issuance of process was rightly done on the basis of the material gathered and on the basis of the [-18-] complaint. Moreover, I am considering a revision application. In revision, I can only consider whether the order of the learned Sessions Judge setting aside process under section 406 of IPC is correct, legal and proper. This court cannot travel beyond this aspect. 16. The counsel for the applicant laid great emphasis on the words "continuing Partners" "continuing Partners" "continuing Partners" in clause 9 of Deed of Retirement dated 23.4.2005. The said clause appears in the Deed of Retirement where two out of four partners had retired and therefore, the words used are "continuing partners" as there were two remaining partners i.e. applicant and Respondent. The said clause states that "the continuing partners shall and also be the continuing partners shall and also be the continuing partners shall and also be entitled to mortgage, sell, lease or otherwise entitled to mortgage, sell, lease or otherwise entitled to mortgage, sell, lease or otherwise alienate any or all assets of the firm" alienate any or all assets of the firm" alienate any or all assets of the firm" Mr.Jethmalani submitted that this shows that both the partners together could sell or alienate the property and any one partner could not do the same singly all by himself. If this contention is to be accepted then in clause 9 after the words ‘the ‘the ‘the continuing partners continuing partners continuing partners’ the word ‘jointly jointly jointly’ would have been added. Not adding the word ‘jointly’ clearly [-19-] shows that any one of the continuing partners was also entitled to mortgage, sell, lease or otherwise alienate any or all assets of the firm. 17. Mr.Jethalamani further submitted that the averments in the complaint also make out an offence under Section 467 of IPC. He submitted that when one partner sells out the property of the partnership firm without authority of others, he commits forgery. Reliance is placed on a decision in the case of Emperor Vs.Lallo Ghella [VI BLR 553] supra, wherein it is observed that when a partner has been appointed to manage the business of the firm and if he falsifies the account, he would be liable for forgery, because the fraud is not only against him but against other partners. However, as far as this aspect is concerned, I have already observed that there is no material to show that the accused was appointed to manage the business of the firm nor is there any reliable material to show entrustment of property. 18. In the case of Velji Patel (supra), it is held that "for offence of criminal breach of trust-Entrustment of dominion over property is [-20-] essential and it cannot be said in a partnership firm that there is any entrustment to any partner over partnership asset unless there is special agreement to that effect. 19. Thus, the decision in the case of Emperor Vs Lallo Ghella (supra) does not help the present applicant to make out a case against Respondent No.2 under Section 467 of IPC or 406 of IPC. Moreover, the same reasoning would apply in respect of Section 467 of IPC which is reflected in respect of Section 423 of IPC in the paragraph No.15 above. There is no reference to this offence in the complaint nor any submission regarding the same was advanced before the Magistrate or Sessions Court. Hence, at this belated stage any oral submission in respect thereof cannot be considered. 20. In the case of a partnership every partner has dominion over the partnership property by reason of the fact that he is a partner. This is a kind of dominion which every owner of property has over his property. But, it is not dominion of this kind which satisfies the requirement of Section 406. The prosecution must further establish that [-21-] dominion over the assets or a particular asset of the partnership was by a Special Agreement between the parties, entrusted to the accused persons. If in the absence of such a special agreement a partner receives money belonging to the partnership,