Criminal Miscellaneous No.9982 of 1999 ------------ In the matter of an application under section 482 of the Code of Criminal Procedure -------------- Hanuman Mal Sharma, son of Late Panna Lal Sharma, resident of City Road, Hansda, Gulab Bagh, P.S. Sadar, District Purnea ..... .... Petitioner Versus 1. The State Of Bihar 2. Sri Rakesh Prasad, Assistant Manager, B.S.F.C. N.H. 31 Purnea.. ... .. Opposite Parties ---- ------- For the petitioner: Mr. N. K. Agrawal, Sr. Advocate Mr. Vijay Anand, Advocate For the State: Lal Kailash Bihari Prasad, Sr. Advocate For the O. P. No.2: Mr. Mukesh Kumar Thakur, Advocate -------------------- P R E S E N T THE HON'BLE MR. JUSTICE SHIVA KIRTI SINGH Shiva Kirti Singh, J. Heard learned counsel for the petitioner, learned counsel for the State and learned counsel for the Bihar State Financial Corporation. 2. Petitioner has preferred this application under section 482 of the Code of Criminal Procedure (referred to as `Cr. P.C’ for the sake of brevity) for quashing of order dated 12-8-1998 passed by Judicial Magistrate, 1st class, Purnea whereby he has rejected the prayer of petitioner for discharge from Purnea Sadar PS case no. 54/95 leading to G.R. case no. 409/95 under 2 section 409 of the Indian Penal Code. 3. For the purpose of deciding the issue arising in this case it is not necessary to go into details except the fact that the aforesaid criminal case was lodged by the Assistant Manager of Bihar State Financial Corporation, Purnea office with an allegation that for taking loan the petitioner as a promoter of M/s Boring Material Supply Agency and Engineering Works had mortgaged the entire land and building as well as plant and machineries with the Corporation which had entrusted the plant with machineries and building to the petitioner with a direction to run the industrial unit and to refund the amount of loan along with interest to keep proper control upon the plant, machineries, land and building which have been hypothecated. Further allegation is that on enquiry three machines worth Rs 36, 890/- were found to have been removed from the mortgaged premises without intimation and the petitioner on being asked failed to give any explanation for the machines not found at the premises. On such allegation a case for criminal misappropriation and breach of trust 3 under 409 of the Indian Penal Code was lodged and investigated by the police. Upon submission of charge sheet cognizance was taken and thereafter the petitioner, for the purpose of anticipatory bail offered to pay the value of removed machines. On such undertaking he was granted privilege of anticipatory bail and it is his case that he deposited the amount of Rs. 36,890/- and was then released on anticipatory bail. Thereafter in course of trial an application was filed on behalf of the petitioner for discharge on the ground that no offence is made out u/s 409 of the IPC. Such prayer has been rejected by the impugned order dated 12-8-98. 4. Learned counsel for the petitioner placed reliance upon a judgement of a learned Single Judge in the case of Hari Prasad Nathani Vs the State of Bihar reported in 1987 PLJR 545 in support of his contention that for the purpose of sections 405 and 406 which are relevant in this case also, the legal position was examined in that case and it was held that hypothecation of goods does not have the effect of transferring any interest in the property in favour of hypothecatee and 4 possession also remains with the hypothecator hence, Section 406 of the IPC which provides for punishment for criminal breach of trust cannot apply in the case of removal or sale of hypothecated goods by the hypothecator without obtaining consent of the hypothecatee. 5. Learned counsel appearing for the Bihar State Financial Corporation, on the other hand submitted that the aforesaid view was erroneous and incorrect and when a similar view was taken by another learned Single Judge in the case of Ranjit Prasad Singh Vs. the State of Bihar reported in 1998 (2) PLJR 401, the Corporation challenged the decision of this court quashing the criminal prosecution before the Supreme Court by preferring Cr. Appeal No. 379/99 which was decided in favour of the Corporation. The Apex Court set aside the order of this court interfering with the prosecution in that case under sections 420, 406 and 408 of the IPC. A copy of that order has been produced before this court and the same supports the contention of learned counsel for the Corporation. The date of that order is not very legible but 5 appears to be 5-4-1999. 6. Learned counsel for the Corporation has also placed subsequent judgements of this court dated 13-2-1998 passed in Cr. Misc. No. 3132/1996 (Most. Shyam Kuar Vs the State of Bihar & Ors) and dated 23-3-1999 in Cr. Misc. No. 24215/1998 (Mahesh Prasad Manjhi vs the State of Bihar & anr.) in support of his contention that the word entrusted used in the relevant sections of the Indian Penal Code has to be understood in a wider sense. For making out an offence of breach of trust under the Indian Penal Code, all that is necessary is that ownership or beneficial interest in the property which is subject matter of the offence should be in some person other than the accused. A perusal of those judgements show that on considering the views of the Supreme Court in the case of Central Bureau of Investigation vs. Duncans Agro Industries Ltd., (1996) 5 SCC 591 it has been held that in the case of mortgage or hypothecation the ownership does not pass to the person in whose favour the mortgage or hypothecation is created, but it does create beneficial interest in his 6 favour. Hence, if the property is removed without the consent and in violation of the terms of the agreement in that regard, prima facie, the offence of criminal breach of trust can be said to be made out. It is relevant to note that the judgement and order dated 23-3-1999 in the case of Mahesh Prasad Manjhi Vs State of Bihar (Supra) was by the same learned Single Judge who had earlier taken a different view in the case of Hari Prasad Nathani Vs State of Bihar (Supra). The subsequent views in favour of the Corporation have been followed in yet another recent judgement dated 5-4-2010 passed in Cr. Misc. No. 21122/98 (Dinesh Prasad Singh & anr. Vs the State of Bihar and Others). 7. Thus, on consideration of relevant facts it is clear that the contention advanced on behalf of the petitioner that there was no entrustment so as to constitute the offence of breach of trust in the facts of the case cannot be accepted so as to interfere with the criminal prosecution. 8. Since the value of the machines removed without information or consent is much higher than Rs. 7 2,000/-, the offence is not compoundable and hence, on account of payment and acceptance of Rs. 36,000/- and odd also it is not possible to hold that there has been deemed compounding of the offence. Hence, this court is unable to grant any relief to the petitioner. This application is, accordingly, dismissed. 9. It is made clear that the petitioner has paid the value of the machines, if the occasion arises, it may be kept in mind by the court below for the sake of justice and equity. Patna High Court The 22nd April, 2010 AFR/BKS (Shiva Kirti Singh, J.)