Prakash G. Dudani vs State & Others
2010 Latest Caselaw 4436 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI
+      CRL.M.C. 2562/2007
       PRAKASH G.DUDANI                ..... Petitioner
                        Through Mr. Pramod Kumar, Advocate.

                  versus
       STATE & ORS                          ..... Respondent
                        Through       Mr. Arvind Kumar Gupta, APP.
                                      Mr. V.K. Tandon, Adv. for R-2 to 4.

       CORAM:
       HON'BLE MR. JUSTICE SANJIV KHANNA

                         ORDER

% 21.09.2010

1. Jay Pee Exports Limited had availed of credit facilities under a

consortium agreement with Canara Bank and Bank of Baroda. They had

executed documents, furnished guarantee bonds, deposited title deeds,

securities etc. The two consortium banks initiated proceedings for

recovery Rs. 15,47,06,412.7/- before the Debt Recovery tribunal (DRT).

Pursuant to One Time Settlement (OTS) and on payment of Rs.550 lacs

towards full and final settlement, the claims of the banks were settled

and the recovery proceedings before the DRT were withdrawn.

2. On 18.10.2005 the Petitioner wrote a letter to the Canara Bank for

return of the collateral security in the form of seven Kamdhenu receipts

or FDRs for Rs. 3,52,132/- . It was stated that as per the terms of the

Crl.M.C. 2562/2007 Page 1 settlement, these FDRs should be returned or the amount be paid. As

there was no response, a legal notice dated 11.11.2005 was issued. By

their letter dated 7.12.2005, Canara Bank disputed the claim of the

petitioner and denied their liability to pay Rs. 3,52,132/- or release the

FDRs in terms of the OTS.

3. The petitioner, relying upon their proposal for OTS and the terms

thereof as stated in their letter dated 24.11.2004 and the acceptance by

the Canara Bank by their letter dated 7.1.2005 filed a criminal complaint.

It was alleged that the respondent bank have committed breach of trust

under section 409 of the Indian Penal Code, 1860 (IPC for short) by not

returning the collateral security i.e. seven Kamdhenu receipts/FDRs.

4. The trial court and the Additional Sessions Judge have held that

the complaint does not disclose commission of a criminal offence and

the dispute between the parties is a civil dispute.

5. Learned counsel for the Petitioner relies upon the term of the OTS

agreement in the correspondence/letters dated 29.11.2004 and 7.1.2005

written by Jay Pee Exports Ltd and Canara Bank respectively. It is stated

that on payment of OTS amount the bank was/is under obligation to

release all charges, liens and documents which were available with them

Crl.M.C. 2562/2007 Page 2 as collateral security. On the other hand the stand of Canara Bank, as is

apparent from their letter dated 7.12.2005, is that by mistake and due to

error the FDRs/Kamdhenu receipts were not appropriated against the

outstanding liabilities. The respondent bank was in dark and not aware

about their failure and error to make the said adjustment. If the bank

was aware of the Kamdhenu receipts/FDRs they would have adjusted the

same. It is stated that it was not the intention and agreed upon that on

payment of the OTS amount, the FDR/Kamdhenu receipts will be

released. This was not disclosed in the proposal and not discussed in the

negotiations. The bank had written off liability and interest of Rs. 432.06

lacs in the OTS.

6. The petitioner had filed W.P.(C) No. 1689/09 for release of

Kamdhenu receipts on similar grounds. The writ petition was dismissed

leaving it open for the petitioner to approach civil court or consumer

forum. It was observed that it was not appropriate to exercise discretion

under Article 226 of the Constitution.

7. Criminal Breach of Trust requires dishonest intention by a person

who misappropriates or converts property to his own use or uses or

disposes of the property. Mere breach of a contract or violation of a duty

Crl.M.C. 2562/2007 Page 3 under a contract is not criminal breach of trust unless the act is dishonest

and manifests itself in some overt act. Similarly mere violation of law

without dishonesty even when other ingredients of Section 405 IPC are

satisfied does not amount criminal breach of trust. The essence of

criminal misappropriation is that the property comes in possession of the

accused in some neutral manner and he misappropriates or coverts it to

his own use dishonestly. Dishonesty is defined in Section 24 IPC. It

implies intention of causing unlawful gain or loss of property to which

person gaining or losing is not or is entitled. Dishonesty must relate to

appropriation or wrongful conversion. The test to be applied is the

intention of the accused at the time of the act complained of. A bonafide

mistake, belief, or claim of right does not imply dishonesty. Without

dishonest intention no offence under Section 405 read with Section 409

IPC can be made out.

8. The averments made in the complaint relate to interpretation of

the clauses of the OTS. This is a civil matter. Contention and the stand of

the respondent bank is that the Kamdhenu receipts/FDRs were not to be

refunded. There was no consensus ad idem. The relevant portion of the

letter dated 7th December, 2005 written on behalf of the respondent

Crl.M.C. 2562/2007 Page 4 Canara Bank reads:-

"Had the said Fixed Deposit been brought by you to the notice of my client, my client would have certainly appropriated the amount lying under the said deposit to the liability of your client before settling the liability of your client by way of OTS. The said amount could not be appropriated as aforesaid on account of suppression of material facts by your client. It was a bonafide mistake of my client that the aforesaid deposit was not noticed by the bank and thus the same remained unappropriated. The said mistake could not be noticed despite reasonable diligence and the said fact came to the knowledge of my client only when your client after entering the OTS settlement claimed the amount lying under the fixed deposit. It is reiterated that before making a huge sacrifice by way of writeoff the liability and unapplied interest under the OTS amounting to Rs. 432.06 lacs, the amount of the deposit was certainly required to be appropriated against the pre-OTS liability. Notwithstanding the bonafide mistake of my client which could not be known to my client despite due diligence, your client cannot take advantage of its own wrong. "

9. The petitioner herein had filed before the trial court a copy of the

claim petition that had been filed by the consortium banks before the

Debt Recovery Tribunal. The claim petition includes list of current

securities available with the banks for adjustments/payment of the dues.

The Kamdhenu receipts/FDRs are not mentioned in the said list. This

Crl.M.C. 2562/2007 Page 5 clearly supports the stand of the respondent Canara Bank taken in the

letter dated 7.12.2005.

10. Learned counsel for the petitioner has relied upon decisions in the

case of N. Bhargavan Pillai and Another Vs. State of Kerala 2005

Supreme Court Cases (Cri)135 and Mustafikhan Vs. State of

Maharashtra 2007 (1) Crimes 248 (SC). In N. Bhargavan Pillai (Supra), it

was observed that once the entrustment of property is proved, then it is

for the accused to prove as to how the property entrusted was dealt

with. In the present case the respondent Canara Bank by their letter

dated 7th December, 2005 had explained and given their stand on the

question how the Kamdhenu Receipts were dealt with. In Mustafikhan

(Supra) again it has been observed that once entrustment is admitted by

the accused, it is for the accused to discharge burden that entrustment

had been carried out as accepted and the obligation had been

discharged. In the said case investigation had revealed that the payments

were made by the accused to fictitious persons, who were never

engaged in work. In the present case as noticed above, the respondent

bank has already given their explanation vide their letter dated 7th

December, 2005. There is a dispute about the obligations under the OTS,

Crl.M.C. 2562/2007 Page 6 whether or not the Kamdhenu receipts were to be refunded or paid.

Explanation by the respondent bank is available. This is a civil dispute. In

any case dishonest intention is missing.

10. Keeping in view the aforesaid facts, I do not find any merit in the

present petition and the same is dismissed.

                                                     SANJIV KHANNA, J
       SEPTEMBER 21, 2010
       NA




Crl.M.C. 2562/2007                                                    Page 7