IN THE HIGH COURT OF HIMACHAL RADESH SHIMLA Cr. Appeal No. 298/2004 Date of decision: 8.8.2011 State of H.P. …..Appellant Versus Sher Singh ……Respondent Coram: The Hon’ble Mr. Justice Surinder Singh, J. Whether approved for reporting ?1 . yes For the Appellant: Mr. P.M. Negi, Dy. Advocate General. For the respondent : Mr. Ajay Kumar, Advocate. Surinder Singh, Judge. (Oral) The State has challenged the judgment of acquittal passed in criminal appeal No. 22 of 1999 decided on 19.2.2004 by the learned Sessions Judge whereby the judgment of conviction and sentence passed by the learned trial Court was set aside, consequently, the respondent hereinafter referred to as the ‘accused’, stood acquitted of the offence punishable under Section 408 Indian Penal Code. 2. Heard and gone through the evidence on record. 1 Whether the reporters of Local Papers may be allowed to see the judgment ?. yes - 2 - 3. The facts giving rise to the present appeal can be stated thus. Accused was appointed as Salesman of Janali Depot of Swahan Multi-purpose Cooperative Society w.e.f. 23.2.1989 and remained as such till 10.1.1994. He was allegedly entrusted with the goods of the Society. Since some shortage was reported, as such PW3 Siri Ram Bhardwaj, Inspector Cooperative Societies was deputed by the competent authority to inspect the accounts and stock of the depot w.e.f. 19.10.1993 to 21.10.1993. During such inspection, it came to his notice that the goods worth `63,186 of the Society were not in possession of the accused. The management of the Society directed the accused to make good the loss as such he filed an application Ext. PD before the Cooperative Societies with the undertaking to make good the loss and pay `25,000/- on or before 11.12.1993 and balance before the next meeting of the society as he had sold the goods of the Society on credit to the public at large. Since the amount was not deposited, therefore, PW2 Gopal Dass Garg Inspector Cooperative Society was deputed by the competent authority to audit the accounts of the society w.e.f. 10.1.1994 to 12.1.1994. It is he who reported that the accused had misappropriated - 3 - and converted the goods of the society to the value of ` 65764.80- for his own use, the sale of which he has shown vide cash-memos Ext. PW2/L, Ext. PW2/H, Ext. PW2/N and Ext. PW2/O dated 10.1.1994 and he did not count for the value of the goods received by him. Thus he is alleged to have dishonestly misappropriated and converted to his own use the aforesaid amount of the society. Consequently, the resolution Ext. PW4/B was passed by the Executive Committee to lodge the FIR for the offence aforesaid. 4. PW4 Assistant Registrar Shri Pankaj Lalit made a complaint Ext. PW1/A to the police which culminated into FIR Ext. PW4/C. During the investigation, the police took into possession relevant record of the society and recorded the statements of the witnesses under Section 161 of the Code of Criminal Procedure. Ultimately, the police finalized the challan against the accused for the offence aforesaid and presented it in the court for the trial of the accused. 5. At the end of the trial, learned trial court held the accused guilty for the offence punishable under Section 408 Indian Penal Code as such convicted and sentenced the accused to undergo - 4 - rigorous imprisonment for a period of two years and to pay a fine of `4000/- with the default clause which was challenged by him in appeal before the learned Sessions Judge by filing appeal. It was allowed and the judgment of conviction and sentence was set aside resulting into acquittal of the accused on the ground that the prosecution failed to prove the entrustment of the goods of the society to the accused and the alleged cash-memos were filled-in on the same day. Consequently, the entries were made in the cash-book and the ledger to fasten the guilt on the accused. Further, the evidence on record also revealed that one Devi Ram who was a salesman prior to the accused was prosecuted for the misappropriation of the goods of the society during the same period and he was facing trial. The alleged confession made by him was under pressure of the Executive Committee of the Cooperative society thus, simply because the goods were found short with the salesman, did not attract the mischief of the offence charged. 6. In a case under Section 408 Indian Penal Code, prosecution must prove: (i) The accused must be a clerk or servant; - 5 - (ii) He must have been entrusted with property, or with dominion over property; and (iii) He must have committed criminal breach of trust in respect of such property. 7. The burden of proof of entrustment is always on the prosecution. Mere entries in the books of account without any oral evidence as to the nature and business and the mode of keeping account, is not sufficient to prove the entrustment. 8. In the instant case, prosecution has failed to prove the basic ingredient of entrustment consequently criminal breach of trust so as to make the accused liable for the offence aforesaid. Though the prosecution has been able to prove that the accused remained employed as salesman of Janali Depot of Swahan Multi-purpose Cooperative Society w.e.f. 23.2.1989 as is evident from resolution No. 108 Ext. PW6/A, but the other factors are not proved. Therefore, the prosecution case cannot be said to have been proved beyond doubt. 9. PW3 Shri S.R. Bhardwaj, Inspector of the Cooperative Societies had conducted the audit of the said depot in the year 1992-1993 but he did not produce the audit report prepared by him. He - 6 - frankly conceded that the said audit report was not available on the record but he only obtained the figures of the total sum of the alleged amount on a chit which was prepared by him. He even did not say what was the record seen by him to prepare the said chit. Even he was not confronted with the cash- memos, stock and sale register to which he had seen during the audit. 10. The another witness is PW2 Gopal Dass Garg Inspector of the Cooperative Society who is alleged to have audited the accounts of the Society w.e.f. 10.1.1994 to 12.1.1994. During the physical inspection, he is stated to have found shortage of goods which, according to the accused were sold by him on credit but did not accounted for but pertinently he stated that it was thereafter that the cash-memos Ext. PW2/I, Ext. PW2/H, Ext. PW2/J and Ext. PW2/O were got issued from the accused in his presence. His report was further verified by PW7 Rattan Singh Chandel Inspector Audit. Admittedly during the trial, Gopal Dass aforesaid was not shown the Sale and Stock register to point out shortages. Even he failed to point out who maintained the stock register Ext. PW1/A and cash-book Ext. PW2/C. But according to him, these registers are maintained - 7 - and kept by the Secretary of the Society and when these registers were produced, Secretary of the Society was present whereas respondent never worked as Secretary. He also admitted that it was not possible to check the goods purchased and kept in the depot as he was given very short time to inspect and audit the depot aforesaid. He even stated that because of shortage of time he could not check the daily-sale and the cash-memos. Admittedly during his examination in the Court, these documents were also not shown to him. 11. PW7 Rattan Singh Chandel Auditor stated that he had audited the accounts of the Society w.e.f. 23.3.1994 to 25.3.1994 and 27.3.1994 to 1.4.1994 and submitted his detailed report Ext. PA. He stated that he had seen the earlier audit report on the basis of which he verified the accounts of the Society but during the trial, that audit report did not find light of the day thus not exhibited. He took the balance of the items as shown in the report of S.R. Bhardwaj aforesaid. The purchase vouchers Ext. PW7/A1 to Ext. PW7/A8 were produced before him by the Secretary of the Society. He admitted that the cash-memos Ext. PW2/L, Ext. PW2/H, Ext. PW2/N and Ext. PW2/O were shown to have been prepared on the same - 8 - day i.e., on 10.1.1994 during the physical verification and he could not say when these cash-memos were got prepared and signed from the accused. Even these vouchers were having over writings and cuttings. He failed to explain as to who had done it. He also admitted that he did not reflect in his audit report the items by noting shortage and in weightage which normally occur. He also failed to point out which of the items were found short. 12. The audit report Ext. PA prepared by PW Rattan Singh consists of 47 pages refers against item No. 7 on page 2 thereof that Devi Ram was the former salesman of the Society and he had misappropriated the amount of `40,495.25 for which he was facing trial in the Court of the Chief Judicial Magistrate. Further that an Arbitration case was also decided in Society’s favour and its execution was pending. 13. On the critical examination of the aforesaid evidence, it is ostensibly clear that the prosecution has failed to prove the entrustment of the goods of the society with the accused. The preparation of memos Ext. PW2/L to Ext. PW2/O on the same day during audit inspection, in the presence of Auditor was only done for the purpose - 9 - of reconciliation and to fix the responsibility of the accused. The prosecution has failed to prove that the annual audit and inspection of account and the stock of the Society was carried even prior to the year 1993 when said Shri Devi Ram was predecessor- in-office of the accused who was found having misappropriated the goods of the Society as aforesaid and was facing trial. His services were terminated and that was the reason the accused was appointed in his place. Thus there appears to have been accumulation of the shortage when the accused took over on 23.2.1989. The entrustment and the dishonest intention are the main ingredients to prove the offence under Section 408 Indian Penal Code besides others. Ext. PD the alleged confession is not enough to prove the charge against the accused whereby he has undertaken to make good the loss, that too, under pressure. 14. Thus, in the aforesaid circumstances, the shortage could be due to several reasons such as even due to improper storage and also because of the less weightage, as admitted by the auditors themselves. Taking note of all the above facts, the learned first appellate Court rightly came to the conclusion that the offence charged is not made - 10 - out against the accused though civil liability of the accused might be there. 14. The findings of acquittal recorded by the learned first appellate Court are borne out from the record which requires no interference. Consequently, the appeal fails and is accordingly dismissed. 15. The respondent is discharged of his bail bonds entered upon by him at any stage during the trial of this case. August 8, 2011 (Surinder Singh), (cm) Judge