R. K. Dalmia Vs. Delhi Administration [1962] INSC 124 (5 April 1962)
1962 Latest Caselaw 124 SC

R. K. Dalmia Vs. Delhi Administration [1962] INSC 124 (5 April 1962)

05/04/1962 DAYAL, RAGHUBAR DAYAL, RAGHUBAR DAS, S.K.

SUBBARAO, K.

CITATION: 1962 AIR 1821 1963 SCR (1) 253

CITATOR INFO:

R 1973 SC 330 (10) R 1980 SC 439 (5,12)

ACT:

Criminal Trial-Transactions to divert money of Insurance Company to losses incurred by Chairman in share speculationChairman and Agent, if guilty of criminal breach of trustCharge, if legal-Confession before Investigator, if voluntary-'Agent' --"In the way of his business"--Meaning-Falsification of account-ConspiracyAccomplice-Corroboration-Indian Penal Code 1860 (XLV of 1860), ss. 120B, 409, 405, 477 A --Code of Criminal Procedure, 1898 (Act 5 of 1898), s. 233--Insurance Act, 1938 (4 of 1938), 8. 33.

HEADNOTE:

Appellant Dalmia was the Chairman of the Board of Directors and Principal Officer of the Bharat Insurance company and appellant Chokhani its agent in Bombay. Appellant Vishnu Prasad, nephew of Chokhani, was the nominal owner of Bhagwati Trading Company but its business was entirely conducted by Chokhani. Gurha, the other appellant, was a Director of Bharat Union Agencies, a company dealing in forward transactions of speculation in shares, and owned for all practical purposes by Dalmia. This Company suffered heavy losses in its business during the period August, 1954, to September, 1955. The prosecution case against the appellants in substance was that in order to provide funds for the payment of those losses in due time, they entered into a conspiracy, along with five others, to divert the funds of the Insurance company to the Union Agencies through the Bhagwati Trading Company and to cover up such unauthorised transfer of funds, the various steps for such transfer and the falsification of accounts of the Insurance Company and the Union Agencies and its allied concern and committed offences under s. 120B read with s. 409 of the Indian Penal Code . Dalmia made a confession before Mr. Annadhanam, a Chartered Accountant, who was appointed Investigator under s.33(1) of the Insurance Act, 1938, which was as follows:"I have misappropriated securities of the order of Rs. 2,20,00,000 of the Bharat Instirance Company Ltd. I have lost this money in speculation." 254 "At any cost, I want to pay full amount by requesting by relatives or myself in the interest of the policy holders".

The prosecution primarily depended upon the evidence of Raghunath Rai, the Secretary-cum-Accountant of the Insurance Company, and it was contended on behalf of the appellants that he was an accomplice.

The Sessions judge convicted all the appellants under s. 120B read with s. 409 of the Indian Penal Code , and further convicted Dalmia and Chokhani for substantive offences under s. 409, Chokhani under s. 477A read with s. 110 and Gurha under s. 477A of the Indian Penal Code . He however acquitted the others.

The High Court in substance agreed with the findings of the Sessions judge, except that it did not rely on the confession of Dalmia.

Held, that the Delhi Court had jurisdiction to try Chokhani for the offence under s. 409 of the Indian Penal Code , committed beyond its jurisdiction in pursuance of the alleged conspiracy with which he and the other co-accused were charged.

Purushottam Das Dalmia v. State of West Bengal, [1962] 2 S. C. R. 101, followed.

The charge against Dalmia under s. 409 of the Indian Penal Code was not hit by s. 233 of the Code of Criminal Procedure . The charge framed was not for four distinct offences. It was really with respect to one offence though the mode of committing it was not precisely stated. Any objection as to the vagueness of the charge on the score could not invalidate the trial since no prejudice had been caused to the accused nor any contention raised to that effect.

The word property used in s. 405 of the Indian Penal Code could not be confined to movable property since the section itself did not so qualify it. The word 'property' was much wider than the expression In-lovable property' defined in s. 22 of the Code. The question whether a particular offence could be committed in respect of any property depended not on the meaning of the word 'property' but on whether that property could be subjected to that offence. 'Property' in a particular section could, therefore, mean only such kind of property with respect to which that offence could be committed, The funds of the Bharat Insurance Company referred to in the charge amounted to property within the meaning of s. 405 of the Indian Penal Code .

255 Reg. Girdhar Dharamdas (1869) 6 Bom. High Ct. Rep. (Crown Cases) 33, and Jugdown Sinha v. Queen Empress (1895) 1. L. R. 23 Cal. 372, disapproved.

Emperor v. Bishan Prasad, (1914' I.L.R. 37 All. 128, Ram Chand Gurvala v. King Emperor A. 1. R. 1926 Lah. 385, Manchersha Ardeshir v. Ismail Ibrahim, (1935) I.L.R. 60 Bom.

706, Daud Khan v. Emperor A. I. R. 1925 All. 672 and The Delhi Cloth and General Mills Co. Ltd. v. Harnam Singh, [1955] 2 S. C. R. 402, referred to.

The relevant articles and bye-laws of the Insurance Company and the resolutions passed by its Board of Directors established that both Dalmia and Chokhani were entrusted with dominion over the funds of the company in the Banks within the meaning of s. 409 of the Indian Penal Code .

Peoples Bank v. Harkishan Lal, A. I. R. 1936 Lah. 408, G. E, Ry. Co. v. Turner, L. R. (1872) 8 Ch. App. 149 and Re.

Forest of Dean Etc. Co., L. R. (1878) 10 Ch. D. 450 referred to.

The offence of Criminal breach of trust could be committed by Chokhani even though he alone could not operate the Bank account and could do so jointly with another. Bindeshwari v. King Emperor (1947) I.L.R. 26 Pat. 703, held inapplicable.

Nrigendro Lall Chatterjee v. Okhoy Coomar Shaw, (1874) (Cr.

Rulings) 59 and Emperor v. Jagannath Ragunathdas, (1931) 33 Bom. L. R. 1518, referred to.

The expression 'in the way of business as agent' occurring in s. 409 of the Indian Penal Code meant that the property must have been entrusted to such agent in the ordinary course of his duty or habitual occupation or profession or trade. He should get the entrustment or dominion in his capacity as agent and the requirements of the section would be satisfied if the person was an agent of another and that person entrusted him with the property or with dominion over the property in the course of his duties as an agent. A person might be an agent of another for some purpose and if he was entrusted with property not in connection with that purpose but for another purpose, that would not be entrustment within the meaning of s. 409 of the Code.

Mahumarakalage Edward Andrew Cooray v. Queen. [1953] A. C. 407 and Reg. v. Portugal, [1885] 16 Q. B. D 487, considered.

256 Both Dalmia and Chokhani were agents of the Bharat Insurance Company within the meaning of s. 409 of the Code.

Gulab Singh v. Punjab Zamindara Bank, A. I. R. 1942 Lah. 47, referred to.

Raghunath Rai was not an accomplice as he did not participate in the commission of tile actual crime charged against the accused. An accomplice must be a particeps criminal, except where he was a receiver of stolen property or an accomplice in a previous similar offence committed by the accused when evidence of the accused having committed crimes of identical type on other occasions was admissible to prove the system and intent of the accused committing the offence charged.

Davies v. Director of Public Prosecutions, [1954] A.C. 378 referred to.

Chokhani was a servant of the Insurance Company within the meaning of s. 477A of the Indian Penal Code . He was a paid Agent of the company and as such was its servant even though he was a full-time servant of the Bharat Union Agencies.

Each transaction to meet the losses of the United Agencies, was not an independent conspiracy by itself. There was identity of method in all the transactions and they must be held to originate from the one and same conspiracy.

Since the confession made by Dalmia had not been shown to have been made under any threat or inducement or promise from a person in authority, it could not be anything but voluntary even though it might have been made for the purpose of screening the scheme of the conspiracy and the High Court was in error in holding that it was otherwise.

A person appointed an Investigator under s. 33(1) of the Insurance Act did not ipso facto become a public servant within the meaning of s. 21, Ninth, of the Indian Penal Code and s. 176 of the Indian Penal Code could have no application to an examination held under s. 33(3) of the Act.

The confession of Dalmia was not hit by Art. 20(3) of the Constitution since it was not made by him at a time when he was accused of an offence.

State of Bombay v. Kathi Kalu Oghad, R. [1962] 3 S.C.R. 10, referred to.

The expression 'with intent to defraud' in s. 477A of the Indian Penal Code did not mean intention to defraud someone in the future and could relate to an attempt to cover up what had already happened.

257 Emperor v. Ragho Ram, I. L. R. (1933) 55 All. 783, approved,

CRIMINAL APPELLATE JURISDICTION: Criminal Delhi Appeal Nos.

7 to 9 of 1961.

Appeals by special leave from the judgment and order dated January 2, 1961, of the Punjab High Court (Circuit Bench) at Delhi in Criminal Appeals Nos. 464-C, 465-C and 463--D of 1959.

Dingle Foot, D. R. Prem, S. M. Sikri, G. H.Jauhari and A. N. Goyal, for the appellant (in Cr. A. No. 7 of 61).

R. L. Kohli and A. N. Goyal, for the appellant (in Cr. A. No. 8 of 1961).

Prem Nath Chadha, Madan Gopal Gupta and R. Choudhri, for appellant No. 2 (in Cr. A. No. 9 of 1961).

C. K. Daphtary, Solicitor General of India, R. L. Mehta and R. H. Dhebar, for the respondents.

1962. April 5. The Judgment of the Court was delivered by RAGHUBAR DAYAL, J.-These three appeals are by special leave. Appeal No. 7 of 1961 is by R. K. Dalmia. Appeal No. 8 of 1961 is by R.P.Gurha. Appeal No. 9 of 1961 is by G.L.Chokhani and Vishnu Prasad. All the appellants were convicted of the offence under s. 120 read with s.409 I.P.C., and all of them, except Vishnu Prasad, were also convicted of certain offences arising out of the overt acts committed by them. Dalmia and Chokhani were convicted under s. 409 I.P.C. Chokhani was also convicted under s. 477A read with s. 110, I. P. C. Gurha was convicted under s. 477A I. P. C.

To appreciate the case against the appellants, we may first state generally the facts leading to the case. Bharat Insuirance Company was incorporated 258 in 1896. In 1936, Dalmia purchased certain shares of the company and became a Director and Chairman of the company.

He resigned from these offices in 1942 and was succeeded by his brother J. Dalmia. The head office of the Bharat Insurance Company was shifted from Lahore to 10, Daryaganj, Delhi. in 1947. Dalmia was co-opted a Director on March 1.0, 1949 and was again elected Chairman of the company on March 19, 1949 when his brother J. Dalmia resigned.

R. L. Chordia, a relation of Dalmia and principal Officer of the Insurance Company, was appointed Managing Director on February 27, 1950. Dalmia was appointed Principal Officer of the company with effect from August 20, 1954. He remained the Chairman and Principal Officer of the Company till September 22, 1955. The period of criminal conspiracy charged against the appellant is from August 1954 to September 1955. Dalmia was therefore, during the relevant period, both Chairman and Principal Officer of the Insurance Company.

During this relevant period, this company had its current account in the Chartered Bank of India, Australia and China Ltd. (hereinafter called the Chartered Bank) at Bombay. The Company also had an account with this bank for the safe custody of its securities the company also had a separate current account with the Punjab National Bank, Bombay.

At Delhi, where the head office was, the company had an account for the safe custody of securities with the Imperial Bank of India, New Delhi.

Exhibit P-785 consists of the Memorandum of Association and the Articles of Association of the Bharat Insurance Company.

Articles 116 and 117 deal with the powers of the Directors.

Exhibit P-786 is said to be the original Byelaws passed by the Directors on September 8, 1951.

259 The pages are signed by K.L. Gupta, who was the General Manager of the company during, the relevant period, and not by Dalmia the Chairman, as De should have been the case in view of the resolution dated May 8, 1951. The genuineness of this document is not, however, admitted.

Exhibits P-15 and P-897 are said to be copies of these Byelaws which were sent to Shri K. Annadhanam (Chartered Accountant, appointed by the Government of India on September 19, 1955, to investigate into the affairs of the Bharat Insurance Company under s. 33(1) of the Insurance Act) and to the Imperial Bank of India, Now Delhi, respectively, and the evidence about their genuineness is questioned.

Bye-law 12 deals with the powers of the Chairman. Clause (b)) thereof empowers the Chairman to grant loans to persons with or without security, but from August 30, 1954, the power was restricted to grant of loans on mortgages. Clause (e) empowers the Chairman to negotiate transfer buy and sell Government Securities and to pledge, indorse, withdraw or otherwise deal with them.

On January 31, 1951, the Board of Directors of the Insurance Company passed resolutions to the following effect : (1) To open an account in the Chartered Bank at Bombay. (2) To authorise Chokhani to operate on the account of the Insurance Company. (3) To for the keeping of the Government securities had by the company, in safe custody, with the Chartered Bank. (4) To instruct the Bank to accept institutions with regard to withdrawal from Chokhani and Chordia.

On the same day, Dalmia and Chordia made an application for the opening of the account at Bombay with the result that Current Account No. 1120 was opened. On the same day Chokhani was appointed Agent of the company at Bombay.

260 He was its agent during the relevant period. From 1951 to 1953, Chokhani alone operated' on that account. On October 1, 1953, the Board of Directors directed that the current account of the company with the Chartered Bank, Bombay, be operated jointly by Chokhani and Raghunath Rai, P.W. 4.

Ragbunath Rai, joined the company in 1921 as a Clerk, became Chief Accountant in 1940 and Secretary-cum-Chief Accountant of the company from August 17, 1954.

The modus operandi of the joint operation of the bank account by Chokhani and Raghunath Rai amounted, in practice to Chokbani's operating that account alone. Chokbani used to get a number of blank cheques signed by Raghunath Rai, who worked at Delhi. Chokhani signed those cheques when actually issued. In order to have signed cheques in possession whenever needed, two cheque books were used.

When the signed cheques were nearing depletion in one cheque book, Chokhani would send the other cheque book to Raghunath Rai for signing again a number of cheques. Thus Raghunath Rai did not actually know when and to whom and for what amount the cheques would be actually issued and therefore, so far as the company was concerned, the real operation of its banking account was done by Chokhani alone. This system led to the use of the company's funds for unauthorized purposes.

Chokhani used to purchase and sell securities on behalf of the company at Bombay. Most of the securities were sent to Delhi and kept with the Imperial Bank of India there. The other securities remained at Bombay and were kept with the Chartered Bank. Sometimes securities were kept with the Reserve Bank of India and inscribed stock was obtained instead. The presence, of the inscribed stock was a guarantee that the securities were, in the Bank.

261 Chokhani was not empowered by any resolution of the Board of Directors to purchase and sell securities. According to the prosecution, he purchased and sold securities under the instructions of Dalmia. Dalmia and Chokhani state that Dalmia had authorised Chokhani in general to purchase and sell securities and that it was in pursuance of such authorisation that Chokhani on his own purchased and sold securities without any further reference to Dalmia or further instructions from Dalmia.

The transactions which have given rise to the present proceedings against the appellants consisted of purchase of securities for this company and sale of' the securities which the company held. The transactions were conducted through recognised brokers and ostensibly were normal transactions. The misappropriation of funds of the company arose in this way. Chokhani entered into a transaction of purchase of securities with a broker. The broker entered into a transaction of purchase of the same securities from a company named Bhagwati Trading Company which was owned by Vishnu Prasad, appellant, nephew of Chokhani and aged about 19 years in 1954. The entire business for Bhagwati Trading Company was really conducted by Chokhani. The securities purchased were not delivered by the brokers to Chokhani. It is said that Chokhani instructed the brokers that he would have the securities from Bhagwati Trading, Company. The fact, however, Chokhani however was that Bhagwati Trading Company did not deliver the securities. Chokhani however issued cheques in payment of the purchase price of the securities to Bhagwati Trading Company. Thus, the amount of the cheques was paid out of the company's funds without any gain to it.

The sale transactions consisted in the sale of the securities held or supposed to be held by the company to a broker and the price obtained from 262 the sale was unutilised in purchasing formally further securities which were not received: The purchase transaction followed the same pattern, viz., Chokhani purchased for the company from a broker, the broker purchased the same securities from Bhagwati Trading Company and the delivery of the securities was agreed to be given by Bhagwati Trading Company to Chokhani. Bhagwati Trading Company did not deliver the securities but received the price from the Insurance Company. In a few cases, securities so purchased and not received were received later when fresh genuine purchase of similar securities took place from the funds of the Bharat Union Agencies or Bhagwati Trading Company.

These securities were got endorsed in favour of the Insurance Company.

The funds of the company, ostensibly spent on the purchase of securities, ultimately reached another company the Bharat Union Agencies.

Bharat Union Agencies ( hereinafter referred to as the Union Agencies) was a company which dealt in speculation in shares and, according to the prosecution was practically owned by Dalmia who held its shares either in his own names or in the names of persons or firms connected with him. The Union Agencies suffered Icsses in the relevant period from August 1954 to September, 1955. The prosecution case is that to provide funds for the payment of these losses at the due time, the accused persons entered into the conspiracy for the diversion of the funds of the Insurance Company to the Union Agencies. To cover up this unauthorised transfer of funds, the various steps for the transfer of funds from one company to the other and the falsification of accounts of the Insurance Company and the Union Agencies took place and this conduct of the accused gave rise to the various offences they were charged With and convicted of.

263 The real nature of the sale and' purchase transactions of the securities did not come to the notice of the head office of the Insurance Company at Delhi as Chokhani communicated to the head office the contracts of sale and purchase with the brokers' statements of accounts, with a covering letter stating the purchase of securities from the brokers, without mentioning that the securities had not been actually received or that the cheques in payment of the purchase price were issued to Bhagwati Trading Company and not to the brokers.

Raghunath Rai, the Secretary-cum-Accountant of the Insurance Company, on getting the advice about the purchase of securities used to inquire from Dalmia about the transaction and used to get the reply that Chokhani had purchased them under Dalmia's instructions. Thereafter, the usual procedure in making the entries with respect to the purchase of securities was followed in the office and ultimately the purchase of securities used to be confirmed at the meeting of the Board of Directors. It is said that the matter was put up in the meeting with an office note which recorded that the purchase was under the instructions of the Chairman. Dalmia however, denies that Raghunath Rai ever approached him for the confirmation or approval of the purchase transaction and that he told him that the purchase transaction was entered into under his instructions.

The firm of Khanna and Annadhanam, Chartered Accountants, was appointed by the Bharat Insurance Company, its auditors for the year 1954. Shri Khanna carried out the audit and was not satisfied with respect to certain matters and that made him ask for the counterfoils of the cheques and for the production of securities and for a satisfactory explanation of the securities not with the company at Delhi.

264 The matter, however, came to a head not on account of the auditors' report, but on account of Shri Kaul, Deputy Secretary , Ministry of Finance, Government of India, hearing at Bombay in September 1955 a rumour about the unsatisfactory position of the securities of the Insurance Company. He contacted Dalmia and learnt on September 16, 1955 from Dalmia's relatives that there was a short-fall securities. He pursued the matter Departmentally and, eventually, the Government of India appointed Shri Annadhanam under a. 33 (1) of the Insurance Act to investigate into the affairs of the company. This was done on September 19, 1955. Dalmia is said to have made a confessional statement to Annadhanam on September 20.

Attempt was made to reimburse the Insurance Company with respect to the short-fall in securities. The matter was, however, made over to the Police and the appellants and a few other persons, acquitted by the Sessions Judge, were proceeded against as a result of the investigation.

Dalmia's defence, in brief, is that be had nothing to do with the details of the working of the company, that he had authorised Chokhani, in 1953, to purchase and sell securities and that thereafter Chokbani on his own purchased and sold securities. He had no knowledge of the actual modus operandi of Chokhani which led to the diversion of the funds of the company to the Union Agencies. He admits knowledge of the losses incurred by the Union Agencies and being told by Chokhani that he would arrange funds to meet them. He denies that he was a party to what Chokhani did.

Chokhani admits that he carried out the transactions in the form alleged in order to meet the losses of the Union Agencies of which he was an employee. He states that be did so as he expected that the Union Agencies would, in due course, 265 make tip the losses and the money would be returned to the Insurance Company. According to, him, he was under the impression that what he did amounted to giving of a loan by the Insurance Company to the Union Agencies and that there was nothing wrong in it. He asserts emphatically that if he bid known that he was doing, was wrongful, he would have never done it and would have utilised other means to raise the money to meet the losses of the Union Agencies as he had large credit in the business circle at Bombay and as the Union Agencies possessed shares which would be sold to meet the losses.

Vishnu Prasad expresses his absolute ignorance about the transactions which were entered into on behalf of Bbagwati Trading Company and states that what he did himself was under the instructions of Chokhani, but in ignorance of the real nature of the transactions.

Gurha denies that he was a party to the fabrication of false accounts and vouchers in the furtherance of the interests of the conspiracy.

The learned Sessions Judge found the offences charged against the appellants proved on the basis of the circumstances established in the case and, accordingly, convicted them as stated above. The High Court substantially agreed with the findings of the Sessions Judge except that it did not rely on the confession of Dalmia.

Mr. Dingle Foot, counsel for Dalmia, has raised a number of contentions, both of law and of facts. We propose to deal with the points of law first.

In order to appreciate the points of law raised by Mr. Dingle Foot, we may now state the charges which were framed against the various appellants.

266 The charge under s. 120-B read with s. 409, I.P.C., was against the appellants and five other persons and read:

"I, Din Dayal Sharma, Magistrate I Class, Delhi, do hereby charge you, R. Dalmia (Ram Krishna Dalmia) s/o etc.

2. G. L. Chokhani s/o etc.

3. Bajranglal Chokhani s/o etc.

4. Vishnu Pershad Bajranglal s/oetc.

5. R. P. Gurha (Ragbubir Pershad Gurba) s/o etc.

6. J. S. Mittal (Jyoti Swarup Mittal) s/o etc.

7. S. N. Dudani (Shri Niwas Dudani) s/o etc.

8. G. S. Lakhotia (Gauri Sbadker Lakbotia) s/o etc.

9. V. G. Kannan Vellore Govindaraj Kannan S/o etc. accused as under :That you, R. Dalmia, G. L. Chokhani, Bajrang Lal Chokhani, Vishnu Pershad Bajranglal, R. P. Gurha, J. S. Mittal, S. N. Dudani, G. S. Lakhotia and V. G. Karinan, during the period between August 1954 and September 1955 at Delhi, Bombay and other places in India.

were parties to a criminal conspiracy to do and cause to be done illegal acts ; viz., criminal breach of trust of the funds of the Bharat Insurance Company Ltd., by agreeing amongst yourselves and with others that criminal breach of trust be Committed by you R. Dalmia and G. L. Chokhani 267 in respect of the funds of the said Insurance Company in current account No. 1120 of the said Insurance Company with the Chartered Bank of India, Australia and China, Ltd., Bombay, the dominion over which funds was entrusted to you R. Dalmia in your capacity as Chairman and the Principal Officer of the said Insurance Company, and to you G. L. Chokhani, in your capacity as Agent of the said Insurance Company, for the purpose of meeting losses suffered by you R. Dalmia in forward transaction (of speculation) in shares ; which transactions were carried on in the name of the Bharat Union Agencies Ltd., under the directions and over all control of R. Dalmia, by you, G. L. Chokhani, at Bombay, and by you, R. P. Gurha, J. S. Mittal and S. N. Dudani at Calcutta; and for other purposes not connected with the affairs of the said Insurance Company, by further agreeing that current account No. R1763 be opened with the Bank of India, Ltd., Bombay and current account No. 1646 with the United Bank of India Ltd., Bombay, in the name of M/s. Bhagwati Trading Company, by you Vishnu Pershed accused with the assistance of you G. L. Chokhani, and Bajranglal Chokhani accused for the illegal purpose of divertin g the funds of the said Insurance Company to the said Bharat Union Agencies, Ltd., by further agreeing that false entries showing that the defalcated funds were invested in Government Securities by the said Insurance Company be got made in the books of 268 accounts of the said Insurance Company at Delhi, and by further agreeing to the making of false and fraudulent entries by you R. P. Gurha, J. S. Mittal, G. S. Lakhotia, V. G. Kannan, and others, relating to the diversion of funds of the Bharat Insurance Company to the Bharat Union Agencies Ltd., through M/s. Bhagwati Trading Company, in the books of account of the said Bharat Union Agencies, Ltd., and its allied concern known as Asia Udyog Ltd., and that the same acts were committed in pursuance of the said agreement and thereby you committed an offence punishable under section 120-B read with section 409 I.P.C., and within the cognizance of the Court of Sessions." Dalmia was further charged on two counts for an offence under s. 409 I. P. C. These charges were as follows :

"I Din Dayal Sharma, Magistrate I Class, Delhi charge you, R. Dalmia accused as under :FIRSTLY, that yon R. Dalmia, in Pursuance of the said conspiracy between the 9th day of August 1954 and the 8th day of August 1955, at Delhi.

Being the Agent, in your capacity as Chairman of the Board of Directors and the Principal Officer of the Bharat Insurance Company Ltd., and as such being entrusted with dominion over the funds of the said Bharat Insurance Company, committed criminal breach of trust of the 269 funds of the Bharat Insurance Company Ltd., amounting to Rs. 2,37,483-9-0, by wilfully suffering your co-accused G. L. Chokhani to dishonestly misappropriate the said funds and dishonestly use or dispose of the said funds in violation of the directions of law and the implied contract existing between you and the said Bharat Insurance Company, prescribing the mode in which such trust was to be discharged, by withdrawing the said funds from current account No. 1120 of the said Bharat Insurance Company with the Chartered Bank of India, Australia & China, Ltd., Bombay, by means of cheque Nos. B-540329 etc., issued in favour of M/s. Bhagwati Trading Company, Bombay, and cheque No. B-540360 in favour of F. C. Podder, and by dishonestly utilising the said funds for meeting losses suffered by you in forward transactions in shares carried on in the name of Bharat Union Agencies, Ltd., and for other purposes not connected with the affairs of the said Bharat Insurance Company ; and thereby committed an offence punishable under section 409,

1. P. C., and within the cognizance of the Court of Sessions;

,SECONDLY, that you R. Dalmia, in pursuance of the said conspiracy between the 9th day of August 1955 and the 30th day of September 1955, at Delhi, Being the Agent in your capacity as Chairman of the Board of Directors and the Principal Officer of the Bharat Insurance Company, Ltd., and as such being entrusted with dominion over the funds of the said Bharat Insurance Company, 270 committed criminal breach of trust of the funds of the Bharat Insurance Company Ltd., amounting to Rs. 55,43,220-12-0, by wilfully suffering your co-accused G.L.

Chokhani to dishonestly misappropriate the said funds and dishonestly use or dispose of the said funds in violation of the directions of law and the implied contract existing between you and the said Bharat Insurance Company prescribing the mode in which such trust was to be discharged, by withdrawing the said funds from current account No. 1120 of the said Bharat Insurance Company with the Chartered Bank of India, Australia & China, Ltd., Bombay by means of Cheque Nos. B-564835...... issued in favour of M/s. Bhagwati Trading Company Bombay, and, by dishonestly utilising the said funds for meeting losses suffered by you in forward transactions in shares carried on in the name of the Bharat Union Agencies Ltd., and for other purposes not connected with the affairs of the said Bharat Insurance Company, and thereby committed an offence punishable under section 409 1. P. C., and within the cognizance of the Court of Sessions." Mr. Dingle Foot has raised the following contentions (1) The Delhi Court had no territorial jurisdiction to try offences of criminal breach of trust committed by Chokhani at Bombay.

(2) Therefore, there had been misjoinder of charges.

(3) The defect of misjoinder of charges was 271 fatal to the validity of the trial and was not curable under a. 531-s. 537 of the Code.

(4) The substantive charge of the offence under s. 409, 1.

P. C., against Dalmia offended against the provisions of a. 233 of the Code; therefore the whole trial was bad.

(5) The funds of the Bharat Insurance Company in the Chartered Bank, Bombay, which were alleged to have been misappropriated were not "property' within the meaning of ss. 405 and 409, I. P. C.

(6) If they were, Dalmia did not have dominion over them.

(7) Dalmia was not an agent' within the meaning of s. 409 I. P. C., as only that person could be such agent who professionally carried on the business of agency.

(8) If Dalmia's conviction for an offence under s. 409 I. P. C., fails, the conviction for conspiracy must also fail as conspiracy must be proved as laid.

(9) The confessional statement Exhibit P-10 made by Dalmia on September 20, 1955, was not admissible in evidence.

(10) If the confessional statement was not inadmissible in evidence in view of s. 24 of the Indian Evidence Act, it was inadmissible in view of the provisions of cl. (3) of Art. 20 of the Constitution.

(11) The prosecution has failed to establish that Dalmia was synonymous with Bharat Union Agencies Ltd.

(12) Both the Sessions Judge and the High Court failed to consider the question of onus of proof i.e., failed to consider whether the evidence on record really proved or established the conclusion arrived at by the Courts.

272 (13) Both the Courts below erred in their approach to the evidence of Raghunath Rai.

(14) Both the Courts below were wrong in holding that there was adequate corroboration of the evidence of Reounath Rai who was an accomplice or at least such a witness whose testimony required corroboration.

(15) It is not established with the certainty required by law that Dalmia had knowledge of the impugned transactions at the time they were entered into.

We have heared the learned counsel for the parties on facts, even though there are concurrent findings of fact, as Mr.

Dingle Foot has referred us to a large number of inaccuracies, most of them not of much importance, in the narration of facts in the judgment of the High Court and has also complained of the omission from discussion of certain matters which were admittedly urged before the High Court and also of misapprehension of certain arguments presented by him.

We need not, however, specifically consider points No. 12 to 15 as questions urged in that form. In discussing the evidence of Ragbunath Rai, we would discuss the relevant contentions of Mr. Dingle Foot, having a bearing on Raghunath Rai's reliability. Our view of the facts will naturally dispose of the last point raised by him.

Mr. Dingle Foot's first four contentions relating to the illegalities in procedure may now be deal ,with. The two charges under s. 409, I.P.C., against Chokbani mentioned that he committed criminal breach of trust in pursuance of the said conspiracy. One of the charges related to the period from August 9, 1954 to August 8, 1955 and the other related to the period from August 9, 1955 to September 30, 1955.

273 This Court held in Purushotam Das Dalmia v. State of West Bengal (1) that the Court having jurisdiction to try the offence of conspiracy has also jurisdiction to try an offence constituted by the overt acts which are committed, in pursuance of the conspiracy, beyond its jurisdiction. M. Dingle Foot submitted that this decision required reconsideration and we heard him and the learned Solicitor General on the point and, having considered their submissions, came to the conclusion that no case for reconsideration was made out and accordingly expressed our view during the hearing of these appeals. We need not, therefore, discuss the first contention of Mr. Dingle Foot and following the decision in Purushottam Das Dalmia's case(1) hold that the Delhi Court had jurisdiction to try Chokhani of the offence under s. 409 I.P.C. as the offence was alleged to have been committed in pursuance of the criminal conspiracy with which he and the other co-accused were charged.

In view of this opinion, the second and third contentions do not arise for consideration.

The fourth contention is developed by Mr.Dingle Foot thus.

The relevant portion of the charge under s. 409 I. P. C., against Dalmia reads:

"Firstly, that you Dalmia, in pursuance of the said conspiracy between... being the Agent, in your capacity as Chairman of Board of Directors and as Principal Officer of the Bharat Insurance Company Ltd., and as such being entrusted with dominion over the. funds of the said Bharat Insurance Company, committed criminal breach of trust of the fund,-...by wilfully suffering your co-accused G. L. Chokhani to dishonestly misappropriate the said funds and dishonestly use or dispose of the said funds in violations of the directions of law and the implied contract existing between you and the said Bharat Insurance (1) [1962]2S.C.R101.

274 Company prescribing the mode in which such trust was to be discharged..." This charge can be split up into four charges, each of the charges being restricted to one particular mode of committing the offence of criminal breach of trust. These four offences of criminal breach of trust were charged in one count, each of these four amounting to the offence of criminal breach of trust by wilfully suffering Chokhani (i) to dishonestly misappropriate the said funds; (ii) to dishonestly use the said funds in violation of the directions of law; (iii) to dishonestly dispose of the said funds in violation of the directions of law; (iv) to dishonestly use the said funds in violation of the implied contract existing between Dalmia and the Bharat Insurance Company'.

Section 233 of the Code or Criminal Procedure permits one charge for every distinct offence and directs that every charge shall be tried separately except in the cases mentioned in ss. 234, 235, 236 and 239. Section 234 allows the trial, together, of offences up to three in number, when they be of the same kind and be committed within the space of twelve months. The contention, in this case is that the four offences into which the charge under s. 409 I.P.C.

against Dalmia can be split up were distinct offences and therefore could not be tried together. We do not agree with this contention. The charge is with respect to one offence, though the mode of committing it is not stated precisely.

If it be complained that the charge framed under s.409 1. P. C. is vague because it does not specifically state one particular mode in which the offence was committed, the vagueness of the charge will not make the trial illegal, especially when no prejudice is caused to the accused and no contention has been raised that Dalmia was prejudiced by the form of the charge.

275 We may now pass on to the other points raised by Mr. Dingle Foot.

Section 405 I.P.C. defines what amounts to criminal breach of trust. It reads "Whoever, being in any manner entrusted with property, or with, any dominion over property, dishonestly misappropriates or converts to his own use that propertly, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which be has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits 'criminal breach of trust'." Section 406 provides for punishment for criminal breach of trust. Section 407 provides for punishment for criminal breach of trust committed by a carrier, wharfinger or warehouse-keeper, with respect to property entrusted to them as such and makes their offence more severe than the offence under s. 406. Similarly, s. 408 makes the criminal breach of trust committed by a clerk or servant entrusted in any manner, in such capacity, with property or with any dominion over property, more severely punishable than the offence of criminal breach of trust under s. 406. Offences under ss.407 and 108 are similarly punishable. The last section in the series is s. 409 which provides for a still heavier punishment when criminal breach of trust is committed by persons mentioned in that section. The section reads :

"Whoever, being in any manner entrusted with property, or with any dominion over property in his capacity of a public servant or in the way of his business as a banker, merchant, factor, broker, attorney or agent, 276 commits criminal breach of trust in respect of that property, shall be punished with imprisonment for life, or with imprisonment of either description for a term which may ex tended to ten years, and shall also be liable to fine." Both Dalmia and Chokhani have been convicted of the offence under s. 409 I.P.C.

Mr. Dingle Foot contends that no offence of criminal breach of trust has been committed as the funds of the Bharat Insurance Company in the Bank do not come with the expression 'property' in s. 405 I.P.C. It is urged that the word 'property' is used in the Indian Penal Code in different senses, according to the context, and that in s.

405 it refers to movable property and not to immovable property or to a chose in action.

It is then contended that the funds which a customer has in a bank represent closes in action, as the relationship between the customer and the banker is that of a creditor and a debtor, as held in Attorney General for Canada v. Attorney General for Province of Quebec & Attorneys General for Saskatchewan, Alberta & Manitoba (1) and in Foley v. Hill (2).

Reliance is also placed for the suggested restricted meaning of property in s. 405 I.P.C. on the cases Reg. v. Girdhar Dharamdas (3); Jugdown Sinha v. Queen Empress( 4) and Ram Chand Gurvala v. King Emperor (5) and also on the scheme of the Indian Penal Code with respect to the use of the expressions 'property' and 'movable property' in its various provisions.

The learned Solicitor General has, on the other hand, urged that the word 'property' should (1) [1947] A.C. 33. (2) [1848] 2 H.L.C. 28 9 E. R. 100.

(3) [1869] 6 Bom. High Ct. Rep. (Crown Cases) 33.

(4) (1895)1.L.R.23Cal.372. (5) A.I.R.1926Lah 385.

277 be given its widest meaning and that the provisions of the various sections can apply to property other than movable property. It is not to be restricted to movable property only but includes chose in De. action and the funds of a company in Bank. R. We are of opinion that there is no good reason to restrict the meaning of the word 'property' to movable property only when it is used without any qualification in s. 405 or in other sections of the Indian Penal Code Whether the offence defined in a particular section of the Indian Penal Code can be committed in respect of any particular kind of property will depend not on the interpretation of the word 'property' but on the fact whether that particular kind of property can be subject to the acts covered by that section. It is in this sense that it may be said that the, word property in a particular section covers only that type of property with respect to which the offence contemplated in that section can be committed.

Section 22 I.P.C. defines 'movable property'. The definition is not exhaustive. According to the section the words 'movable property' are intended to include corporeal property of every description, except land and things attached to the earth or permanently fastened to anything which is attached to the earth. The definition is of the expression ,movable property' and not of 'property' and can apply to all corporeal property except property excluded from the definition. It is thus clear that the word 'property' is used in the Code in a much wider sense than the expression movable property'. It is not therefore necessary to consider in detail what type of property will be included in the various sections of the Indian Penal Code.

In Reg. v. Girdhar Dharamdas (1) it was held that reading ss. 403 and 404 I.P.C. together, s. 404 (1) (1869) 6 Bom. High Ct. Rep. (Crown Cases) 278 applied only to movable property. No reasons are given in the judgment.

It is to be noticed that though s. 403 I.P.C. speaks of dishonestly misappropriating or converting to one's own use any movable property, s. 404 speaks of only dishonestly misappropriating or converting to one's own use property.

If the Legislature had intended to restrict the operation of s. 404 to movable property only, there war, no reason why the general word was used without the qualifying word ,movable'. We therefore do not see any reason to I restrict the word 'property' to ,'movable property only. We need not express any opinion whether immovable property could be the subject of the offence under s. 404 I.P.C.

Similarly, we do not see any reason to restrict the word 'property' in s. 405 to movable property' as held in Jugdown Sinha v. Queen Empress (1). In that case also the learned Judges gave no reason for their view and just referred to the Bombay Case (2). Further, the learned Judges observed at page 374 :

"In this case the appellant was not at most entrusted with the supervision or management of the factory lands, and the fact that he mismanaged the land does not in our opinion amount to a criminal offence under section 408." A different view has been expressed with respect to the content of the word property' in certain sections of the Indian Penal Code, including s. 405.

In Emperor v. Bishan Prasad (3) the right to sell drugs was held to come within the definition of the word 'property' in s. 185, I.P.C. which makes certain conduct at any sale of property an offence.

(1) (1895) I.L.R. 23 Col. 372.

(2) (1869) 6 Boni. High Ct. Rep. (Crown Cases) 33, 3) [1914] I.L.R. 37 All. 128.

279 In Ram Chand Gurwala v. King Emperor (1) the contention that mere transfer of amount from the bank account to his own account by the accused did not amount to misappropriation was repelled, it being held that in order to establish a charge of dishonest misappropriation or criminal breach of trust, it was not necessary that the accused should have actually taken tangible property such as cash from the possession of the bank and transferred it to his own possession, as on the transfer of the amount from the account of the Bank to his own account, the accused removed it from the control of the bank and placed it at his own disposal. The conviction of the accused for criminal breach of trust was confirmed.

In Manchersha Ardeshir v. Ismail Ibrahim it was held that the word 'property' in s. 421 is wide enough to include a chose in action.

In Daud Khan v. Emperor (3) it was said at page 674 :

"Like s. 378, s. 403 refers to movable property. Section 404 and some of the other sections following it refer to property without any such qualifying description; and in each case the context must determine whether the property there referred to is intended to be property movable or immoveable." The case law, therefore, is more in favour of the wider meaning being given to the word 'property' in sections where the word is not qualified by any other expression like movable'.

In The Delhi Cloth and General Mills Co. Ltd. V. Harnam Singh (4) this court said "That a debt is property is, we think, clear.

It is a chose in action and is heritable (1) A.I.R. 1926 Lah. 385.

(3) A.I.R. 1925 All. 673.

(2) (1935) I.L.R. 60 Bom. 706.

(4) [1955] 2. S.C.R. 402,417.

280 and assignable and it is treated as property in India under the Transfer of Property Act which calls it an actionable claim'." In Allchin v. Coulthard (1) the meaning of the expression fund' has been discussed it is said:

"Much of the obscurity which surrounds this matter is due to a failure to distinguish the two senses in which the phrase 'payment out of a fund' may be used. The word fund' may mean actual cash resources of a particular kind (e.

g., money in a drawer or a bank), or it may be a mere accountancy expression used to describe a particular category which a person uses in making up his accounts. The words 'payment out of when used in connection with the word fund' in its first meaning connote actual payment, e. g., by taking the money out of the drawer or drawing a cheque on the bank. When used in connection with the word 'fund' in its second meaning they connote that, for the purposes of the account in which the fund finds a place, the payment is debited to that fund, an operation which, of course, has no relation to the actual method of payment or the particular cash resources out of which the payment is made. Thus, if a company makes a payment out of its reserved fundan example of the second meaning of the word fund'-the actual payment is made by cheque drawn on the company's banking account, the money in which may have been derived from a number of sources".

The expression funds' in the charge is used in the first sense meaning thereby that Dalmia and Chokhani had dominion over the amount credited to the Bharat Insurance Company in the account (1) [1942] 2 K.B. 228, 234, 281 of the Bank, inasmuch as they could draw cheques on that account.

We are therefore of opinion that the funds referred to in the charge did amount to 'property' within the meaning of that term in s. 405 I.P.C.

It is further contended for Dalmia that he had not been entrusted with dominion over the funds in the Banks at Bombay and had no control over them as the Banks had not been informed that Dalmia was empowered to operate on the company's accounts in the Banks and no specimen signatures of his had been supplied to the Bank. The omission to inform the Banks that Dalmia was entitled to operate on the account may disable Dalmia to actually issue the cheques on the company's accounts, but that position does not mean that he did not have any dominion over those accounts. As Chairman and Principal Officer of the Bharat Insurance Company, he had the power, on behalf of the company, to operate on those accounts. If no further steps are taken on the execution of the plan, that does not mean that the power which the company had entrusted to him is nullified. One may have dominion over property but may not exercise any power which he could exercise with respect to it. Non exercise of the power will not make the dominion entrusted to him, nugatory.

Article 116 of the Articles of Association of the Bharat Insurance Company provides that the business of the company shall be managed by the Directors, who may exercise all such powers of the company as are not, under any particular law or regulation, not to be exercised by them. Article 117 declares certain powers of the Directors. Clause (7) of this Article authorises them to draw, make, give, accept, endorse, transfer, discount and negotiate 'such bill of exchange, promissory notes and other similar obligations as may be desirable for carrying on the business of the 282 company. Clause (10) authorizes them to let, mortgage, sell, or otherwise dispose of any property of the company either absolutely. Clause (12) authorises them to invest such parts of the fund of the company as shall not be required to satisfy or provide for immediate demands, upon such securities or investments as they may think advisable.

It also provides that the funds of the company shall not be applied in making any loan or guaranteeing any loan made to a Director of the company or to a firm of which such Director is a partner or to a private company of which such Director is a Director. Clause (23) empowers the Director to deal with and invest any Moneys of the company not immediately required for the purposes thereof, in Government Promissory Notes, Treasury Bills, Bank Deposits, etc.

The bye-laws of the company entrusting the Chairman with dominion over its property, were revised in 1951. The Board of Directors, at their meeting held on September 8, 1951, resolved:

"The bye-laws as per draft signed by the Chairman for identification be and are hereby approved, in substitution and to the exclusion of the existing bye-laws of the company." No such draft as signed by the Chairman has been produced in this case. Instead, K. L. Gupta, P. W. 112, who was the Manager of the Bharat Insurance Company in 1951 and its General Manager from 1952 to August, 1956, has proved the bye-laws, Exhibit P. 786, to be the draft revised bye-laws approved by the Board of Directors at that meeting. He states that he was present at that meeting and had put up these draft bye-laws before the Board of Directors and that the Directors, while passing these bye-laws, issued a directive that they should come into force on January 1, 1952, and that, accordingly, be added in ink in the opening words of 283 the bye-laws that they would be effective from January 1, 1952. When cross-examined by Dalmia himself, he stated that he did not attend any other meeting of the Board of Directors and his presence was Dot noted in the minutes of the meeting. He further stated emphatically:

"I am definite that I put up the bye-laws P786 in the meeting of the Board of Directors.

I did not see any bye-laws signed by the Chairman." There is no reason why Gupta should depose falsely. His statement finds corroboration from other facts. It may be that, as noted in the resolution, it was contemplated that the revised bye-laws be signed by the Chairman for the purposes of their identity in future, but by over-sight such signatures were not obtained. There is no evidence that the bye-laws approved by the Board of Directors were actually signed by the Chairman Dalmia. Dalmia has stated so. It is not necessary for the proof of the bye-laws of the company that the original copy of the bye laws bearing any mark of approval of the Committee be produced. The bye-laws of the company can be proved from other evidence. K. L. Gupta was present at the meeting when the bylaws were passed. It seems that it was not his duty to attend meetings of the Board of Directors. He probably attended that meeting because he had prepared the draft of the revised bye-laws.

His presence was necessary or at least desirable for explaining the necessary changes in the pre-existing byelaws. He must have got his own copy of the revised bye-laws put up before the meeting and it is expected that he would make necessary corrections in his copy in accordance with the form of the bye-laws as finally approved at the meeting.

The absence of the copy signed by the Chairman. if ever one existed, does not therefore make the other evidence about the bye-laws of the 284 company in admissible. The fact that Gupta signed each page of Exhibit P. 786 supports his statement. There was no reason to sign every page of the copy if it was merely a draft office-copy that was with him. He must have signed each page on account of the importance attached to that copy and that could only be if that copy was to be the basis of the future bye-laws of the company.

Copies of the bye-laws were supplied to '.he Imperial Bank, New Delhi, and to the auditor. They are Exhibits P. 897 and P. 15. Raghunath Rai deposed about sending the bye-laws Exhibits P. 897 to the Imperial Bank, New Delhi, with a covering letter signed by Dalmia on September 4, 1954.

Mehra, P. W. 15, Sub-Accountant of the State Bank of India (which took over the under taking of the Imperial Bank of India on July 1, 1955) at the time of his deposition, stated that the State Bank of India was the successor of the Imperial Bank of India. Notice was issued by the Court to the State Bank of India to produce latter dated September 4, 1954, addressed by Dalmia to the Agent, Imperial Bank of India, and other documents. Mehra deposed that in spite of the best search made by the Bank officials that letter could not be found and that Exhibit P. 897 was the copy of the bye-laws of the Bharat Insurance Company which he was producing in pursuance of the notice issued by the Court.

It appears from his statement in cross-examination that the words received 15th September 1954 meant that copy of the byelaws was received by the Bank on that date. Mehra could not personally speak about it. Only such bye-laws would have been supplied to the Bank as would have been the corrected bye-laws. These bye-law Exhibit P. 897 tally with the bye-laws Exhibit P. 786. Raghunath Rai proves the letter Exhibit P. 896 to be a copy of the letter sent along with these bye-laws to the Bank and states that 285 both the original and P. 896 were signed by Dalmia. He deposed:

"Ex. P. 786 are the bye-laws of the Bharat Insurance Company which came into operation on 1-1-52 I supplied copy of Ex. p. 786 as the copy of the bye-laws of the Bharat Insurance Company to the State Bank of India, New Delhi Shri Dalmia thereupon certified as true copies of the resolutions which were sent along with the copy of the bye-laws. He also signed the covering letter which was sent to the State Bank of India along with the copy of the byelaws Ex. p.786 and the copies of the resolutions.

I produce the carbon copy of the letter dated 4-9-54 which was sent as a covering letter with the bye-laws of the Bharat Insurance Company to the Imperial Bank of India, New Delhi. It is Ex. p. 896. The carbon copy bears the signatures of R. Dalmia accused, which signatures I identify The aforesaid Bank (Imperial Bank) put a stamp over Ex. p. 896 with regard to the receipt of its original.

The certified copy of the byelaws of the Bharat Insurance Company which was sent for registration to the Imperial Bank along with the original letter of which Ex. p. 896 is a carbon copy is Ex.p. 897 (heretofore marked C). The copy of the bye-laws has been certified to be true by me under my signatures." Dalmia states in answer to question No. 15 (put to him under s. 342, Cr. P. C.) that the signature,,, on Ex. p. 896 appear to be his.

286 Letter Exhibit P. 896 may be usefully quoted here "SEC The Agent, 4-9-54 Imperial Bank of India, New Delhi:

Dear Sir, Re : Safe Custody of Govt. Securities.

We are sending herewith true copies of Resolution No. 4 dated 10th March, 1949, Resolution No. 3 dated 10th March, 1949, and Resolution No. 8 dated 8th September, 1951, along with a certified copy of the Bye-laws of the Company for registration at your end.

By virtue of Art. 12 clause (e) of the Byelaws of the Company I am empowered to deal in Government Securities etc. The specimen signatures Card of the undersigned is also sent herewith.

Yours faithfully, Encls. 5 Sd/R. Dalmia Chairman." By Resolution No. 4 dated March 10, 1949, Dalmia was coopted Director of the Company. By Resolution No. 'a dated March 19, 1949, Dalmia was elected Chairman of the Board of Directors. Resolution No. 8 dated September 8, 1951 was :

"Considered the draft bye-laws of the Company and Resolved that the Bye-laws as per draft signed by the Chairman for identification be and are hereby approved in substitution and to the exclusion of the existing bye-laws of the Company." 287 The letter Exhibit P. 896 not only supports the statement of Raghunath Rai about the copy of the bye-laws supplied to the Bank to be a certified copy but also the admission of Dalmia that he was empowered to deal in Government Securities etc., by virtue of article 12, clause (e), of the bye-laws of the company. There therefore remains no room for doubt that bye-laws Exhibit P. 897 are the certified copies of the byelaws of the company passed on September 8, 1951 and in force on September 4, 1954.

We are therefore of opinion that either due to oversight the draft bye-laws said to be signed by the Chairman Dalmia were not signed by him or that such signed copy is no more available and that bye-laws Exhibits P. 786 and P. 897 are the correct bye-laws of the company.

Article 12 of the company's bye-laws provides that the Chairman shall exercise the powers enumerated in that article in addition to all the powers delegated to the Managing Director. Clause (e) of this article authorises him to negotiate, transfer, buy and sell Government Securities etc., and to pledge, endorse, withdraw or otherwise deal with them. Article 13 of the bye-laws mentions the powers of the Managing Director. Clause (12) of this article empowers the Managing Director to make, draw, sign or endorse, purchase, sell, discount or accept cheques, drafts, hundies, bills of exchange and other negotiable instruments in the name and on behalf of the company.

Article 14 of the bye-laws originally mentioned the powers of the Manager. The Board of Directors, by resolution No. 4 dated October 6,1952 resolved that these powers be exercised by. K. L. Gupta as General Manager and the necessary corrections be made.

288 By resolution No. 4 dated August 30, 1954, of the Board of Directors, the General Manager was empowered to make, draw, sign or endorse, purchase, sell, discount or accept cheques, drafts, hundies, bills of exchange and other negotiable instruments in the name and on behalf of the company and to exercise all such powers from time to time incidental to the post of the General Manager of the Company and not otherwise excepted. By the same resolution, the words 'Managing Director' in Article 12 of the Bye-laws stating the powers of the Chairman, were substituted by the words 'General Manager.' Thereafter, the Chairman could exercise the powers of the General Manager conferred under the byelaws or other resolutions of the Board.

It is clear therefore from these provisions of the articles and bye-laws of the company and the resolutions of the Board of Directors, that the Chairman and the General Manager had the power to draw on the funds of the company.

Chokhani had authority to operate on the account of the Bharat Insurance Company at Bombay under the resolution of the Board of Directors dated January 31, 1951.

Both Dalmia and Chokhani therefore had dominion over the funds of the Insurance Company.

In Peoples Bank v. Harkishen Lal (1) it was ,stated "Lala Harkishen Lal as Chairman is a trustee of all the moneys of the Bank." In Palmer's Company Law, 20th Edition, is stated at page 517 "Directors are not only agents but they are in some sense and to some extent trustees or in the position of trustees." (1) A.I.R. 1936 Lah. 468, 409.

289 In G. E. Ry. Co. v. Turner (1) Lord Selborne said :

"The directors are the mere trustees or agents of the company-trustees of the company's money and property-agents in the transactions which they enter into on behalf of the company.

In Re. Forest of Dean etc., Co. (2) Sir George Jessel said:

"Directors are called trustees. They are no doubt trustees of assets which have come into their hands, or which are under their control." We are therefore of opinion