Criminal Rev. No.2128 of 2007 1 In the High Court of Punjab and Haryana at Chandigarh Criminal Rev. No.2128 of 2007 Date of decision: 5.10.2010 The Punjab State Civil Supplies Corp.Ltd. and another ......Petitioners Versus Ramdarshan and another .......Respondents CORAM: HON'BLE MRS. JUSTICE SABINA Present: Mr. Deepak Sabharwal, Advocate, for the petitioners. None for the respondents. **** SABINA, J. Respondents were tried for an offence under Section 406/420 of the Indian Penal Code in FIR No.7 dated 10.1.2002 registered at Police Station Khanauri. However, they were acquitted of the charge framed against them vide judgment dated 12.4.2007 passed by the Judicial Magistrate, Ist Class, Moonak. Aggrieved by the same, petitioners-complainant have filed the present revision Criminal Rev. No.2128 of 2007 2 petition. The case of the prosecution, as noticed by the trial Court in para No.2 of its judgment, is reproduced herein below:- “On 11.12.2003, a letter bearing No.32325-C dated 27.12.2001 was received from DM PUNSUP in the office of SSP Sangrur. The inquiry of the same was marked by SSP vide order No.53/R/DSP/M of 10.1.2002 and the FIR was registered. The subject of the letter No.3/2201/5361 dated 30.12.2001 was the embezzlement of paddy for the year 1999-2K by Hanuman Trading Co. belonging to PUNSUP. The letter was addressed to SSP, Sangrur. It is written in the application that it is brought to your notice that for the year Kharif 1999 to 2000, PUNSUP has stored 35689 bags of paddy, having the weight of 23,197.85 qtls for milling. As per the agreement of the milling, the above said mil is to deliver to FCI in the account of PUNSUP rice weighing 15387-13-390 qtls by 29.2.2K or any other date extended by the Govt. But, this mill has only delivered 11,060-65 qtls of rice. Remaining 4326-48-390 qtls rice has been embezzled. A total, 10035 bags of paddy, weighing 6522.75 qtls are remaining balance with the above said company. It is further alleged that the total Criminal Rev. No.2128 of 2007 3 value of the rice/ paddy is Rs.13,79,477/- and interest is Rs.12,26,253/-. The above said Hanuman Trading Company was asked in writing several times to deposit the value of the rice or deliver the rice, but they have neither deposited the value of the rice, not delivered the rice. It is further alleged that Ramdarshan son of Arjan Dass is the sole proprietor of the mill. It is therefore, requested that FIR be registered against the accused and necessary action be taken. This application was marked by SSP, Sangrur to DSP Monak for inquiry and taking action, on which on 10.1.2002, the First Information Report U/s 406/ 420 IPC was registered against Ramdarshan son of Arjan Dass.” Learned counsel for the petitioner has submitted that the trial Court had erred in acquitting the respondents of the charge framed against them. It was duly established before the trial Court that the paddy had been entrusted to the accused for milling but the same had been misappropriated. In support of his arguments, learned counsel has placed reliance on State of Punjab vs. Pritam Chand and others 2009 (3) RCR (Criminal) 376. After hearing learned counsel for the parties, I am of the opinion that the present petition deserves to be allowed. In the present case, the case of the prosecution was that Criminal Rev. No.2128 of 2007 4 paddy had been entrusted for milling to the accused but the mill had only delivered 11060-65 qtls of rice, whereas, 4326-48-390 qtls of rice was embezzled . 10035 bags of paddy weighing 6522.75 qtls still remained with the mill. Thus, the embezzlement which had been committed by the mill was to the tune of Rs.43,79,477/- and interest was Rs. 12,26,253/-. Learned trial Court, while acquitting the accused, in paras Nos. 14 to 16 of the impugned judgment , has held as under:- “Now come to the question, whether any misappropriation was committed by the accused of the paddy. As per the allegations of prosecution, a total 35659 bags of paddy were given to the accused and he has not returned the total paddy and misappropriated 10035 bags, weighing 6522.75 qtls. Mr. Tarsem Lal has conducted the physical verification and given his report that 10035 bags of paddy weighing 6522.75 qtls has been misappropriated. As per the agreement, as executed between the accused, the paddy is to remain in the joint custody, which is clear from the agreement Ex.PW3/A and PW1 Sher Singh has admitted that Inder Dass was the Supervisor appointed by the department. PW3 Bimal Kumar has also stated that Inder Dass was the Supervisor. So, the paddy was in joint possession of the Criminal Rev. No.2128 of 2007 5 PUNSUP through Inder Dass and Hanuman Trading Co. In this case, PW5 Tarsem Lal is the material witness to prove whether in the physical verification, shortage was found. When this witness was cross- examined, then he has categorically stated that when he has conducted the physical verification, the accused was not present. He has also stated that Inder Dass Inspector was present. He has also stated in the cross-examination that before the physical verification, no letter was written to the accused to remain present there. Meaning thereby, the physical verification, if any was done by the Department in the absence of the accused. Had the property in exclusive possession of the accused, then the department could not have any assess to paddy and they cannot conduct the physical verification in the absence of the accused. This also shows that the paddy was in joint custody of the accused and the PUNSUP. So, when the accused was not present and no information was given to him that PUNSUP department has appointed PW5 Tarsem Lal as the competent officer to conduct the physical verification, then the act of the department is unilateral and it cannot be said Criminal Rev. No.2128 of 2007 6 that the physical verification has been conducted, was in the knowledge of the accused or not. When the physical verification was conducted in the absence of the accused, then such verification cannot be considered against the accused that he has misappropriated 10035 bags of paddy. 15. Lastly in the present case, as per the averments of the prosecution story, FIR Ex.PA/1 against the accused was registered on the basis of letter written by District Manager Ex.PA. Perusal of Ex.PA reveals that the dispute with regard to the entrustment of the paddy for shelling by the PUNSUP to the accused and accused has not returned paddy and misappropriated this. The question comes whether this entrustment and not returning of the paddy as per the agreement by the accused, the offence U/s 406 IPC is made out against the accused. This question has arisen before the Hon'ble Supreme Court of India in a case titled as Kailash Verma vs. Punjab State Civil Supplies Corporation and another 2005(1) RCR (Criminal) 727, in which it is held that: “Indian Penal Code, Section 406-Criminal and Civil proceedings. Govt. department Criminal Rev. No.2128 of 2007 7 entrusting paddy to accused for dehusking. Accused did not return the rice as per agreement. It is dispute of civil nature. No offence under Section 406 IPC made out. 16. The Hon'ble Apex Court, after going through the case has made the above observations. So, even if the allegations of the prosecution, are taken as a gospel truth that 35,689 bags of paddy were entrusted to the accused and he has misappropriated 10035 out of the same and has not returned the same even then, it is a case of civil nature and no offence U/s 406 IPC is made out.” In Pawan Kumar vs. State of Haryana, 2006(2) RCR (Criminal) 162, this Court has held as under:- “The last contention raised by the counsel for the petitioner that as pursuant to the arbitration clause, in the agreement, arbitration proceedings are pending, the present FIR should be quashed, in my considered opinion, lacks merit. It is no doubt true that an arbitration clause exists and binds parties to seek adjudication of their disputes, before an Arbitrator. The existence of an arbitration clause, in my considered opinion, cannot, in the facts and circumstances of the present case, be construed to Criminal Rev. No.2128 of 2007 8 be a bar to criminal proceedings. As already held hereinbefore, a given set of facts may give rise to both civil and/or criminal consequences. The existence of one would not necessarily rule out the other. An arbitration clause enables parties to seek adjudication of the civil consequences of the violation of a contract. An arbitration clause does not envisages adjudication of criminal consequences of an alleged breach of contract. The Arbitrator, would obviously adjudicate the civil consequences of the violation of the the contract and if this violation leads to the commission of a criminal offence, the Arbitrator would have no jurisdiction to investigate or launch prosecution, in respect thereof. The mere existence of an arbitration clause or the pendency of arbitration proceedings would, in my considered not opinion, not oust the jurisdiction of criminal Courts, to consider whether on the facts narrated in the FIR, a criminal offence has been committed. The judgments relied upon by learned counsel for the petitioner namely; Bal Kishan Das vs. P.C.Nayar (Supra), and Kailash Verma Vs. Punsup and another, (supra), in my considered opinion, do not Criminal Rev. No.2128 of 2007 9 aid the petitioner in any manner. In the aforementioned judgments the Hon'ble Supreme Court has not laid down any absolute proposition of law that the existence of an arbitration clause or the pendency of arbitration proceedings would entail an automatic quashing of an FIR. In Bal Kishan Das (supra), after examining the facts of the case and specifically taking note of the fact that after registration of a case under Section 409 of the IPC, the Vigilance Department dropped the case and that arbitration proceedings were pending for more than 17 years, the Hon'ble Supreme Court quashed criminal proceedings. This judgment, in my considered opinion, cannot be construed to be a precedent for the proposition that the existence of an arbitration clause bars the filing of a complaint or any FIR for an offence under Sections 406/409 of the IPC etc. The next judgment namely: Kailash Verma's case (supra) also does not set down any absolute proposition that the existence of an arbitration clause would necessarily oust the right of an aggrieved party to lodge an FIR nor does the aforementioned judgment lay down any absolute rule of law that the Criminal Rev. No.2128 of 2007 10 existence of an arbitration clause would bar criminal proceedings. In Kailash Verm's case (supra), the appellant was discharged by the trial Court. The said order was reversed and the matter remitted to the trial Court. The Supreme Court held that as there was no prima facie evidence of entrustment of paddy or shortage of rice supplied to the Corporation, and the dispute disclosed being civil in nature, the petitioner could not be prosecuted.” In Trisuns Chemical Industry vs. Rajesh Agarwal and others, JT 1999 (6) SC 618, it was held as under:- “We are unable to appreciate the reasoning that the provision incorporated in the agreement for referring the disputes to arrbitration is an effective substitute for a criminal prosecution when the disputed act is an offence. Arbitration is a remedy for affording reliefs to the party affected by breach of the agreement but the arbitrator cannot conduct a trial of any act which amounted to an offence albeit the same act may be connected with the discharge of any function under the agreement. Hence, those are not good reasons for the High Court to axe down the complaint at the threshold itself. The investigating agency should have had the freedom Criminal Rev. No.2128 of 2007 11 to go into the whole gamut of the allegations and to reach a conclusion of its own. Pre-emption of such investigation would be justified only in very extreme cases as indicated in Bhajan Lal v. State of Haryana (supra)” Thus merely because the bags enjoyed custody of the mill as well as PUNSUP does not entitle the accused to be acquitted of the charge framed against them. The trial Court was required to examine the evidence led by the prosecution to come to a finding as to whether any embezzlement had been done by the accused or not. The fact that there was an arbitration clause also does not lead to the inference that no criminal proceedings could be initiated against the accused. The arbitration clause is only to the effect that all the dispute and differences arising out of or in any manner touching or concerning the agreement shall be referred to the arbitrator but the said clause is not to the effect that any misappropriation or embezzlement committed by the accused is also to be referred to arbitration. In case any misappropriation is committed then the accused are liable to be criminally prosecuted. The trial Court has proceeded to acquit the accused on irrelevant considerations. It has been held by the Apex Court in Satyajit Banerjee vs. State of West Bengal (ST), 2004 (10) JT 27 that direction for de novo trial could be given in extraordinary case where Court was Criminal Rev. No.2128 of 2007 12 convinced that entire trial was farce. Revisional jurisdiction against the order of acquittal at the instance of the complainant, has to be exercised by the High Court only in very exceptional cases where the High Court finds defect of procedure or manifest error of law resulting in flagrant miscarriage of justice. The State has chosen not to prefer an appeal against acquittal of the accused. Present case is a fit case which is liable to be remanded back to the trial Court for a fresh decision in accordance with law after taking into account all the material/ evidence available on record in consideration, as there is apparent flagrant miscarriage of justice. Accordingly, this petition is allowed. The impugned judgment dated 12.4.2007 is set aside and the case is remanded back to the trial Court for a fresh decision on merits in accordance with law. (SABINA) JUDGE October 05, 2010 anita