Introduction

This case is an important case on criminal breach of trust and its implications.

Facts

• In the case before the High Court of Bombay, regarding the tender invited by the Textile Commissioner for dyeing Pugree Cloth, the appellants, comprising the managing director and Director cum technical expert of a textile company, were involved.
• The tender, accepted by the company, necessitated dyeing cloth.
• However, only a few yards were successfully dyed, prompting the company to cancel the contract due to financial crisis and impending insolvency.
• Efforts by the Textile Commissioner to recover the undelivered cloth proved futile, leading to criminal charges against the appellants for breach of trust regarding a few yards of government-owned cloth.
• Convicted under Section 409 read with Section 34 of the Indian Penal Code, 1860 (IPC), the appellants faced imprisonment.
• Upon appeal, the HC upheld the conviction, deeming the appellants responsible for the undelivered cloth, thus affirming the breach of trust.
• While acknowledging misdirection, the Court reduced the sentences but maintained the essence of the judgment, highlighting the appellants' continuous involvement and responsibility throughout the contract, constituting a breach of trust.
• Hence, the appellant preferred an appeal before the Supreme Court.

Issues Involved

• Whether the appellants should be acquitted and not tried for criminal breach of trust?

Observations

• The SC noted a dispute regarding a certain yards of cloth entrusted to a company by the Textile Commissioner for dyeing, which had not been returned despite admission of liability.
  • The plea of other directors' dominion over the cloth was rejected.
• While direct evidence of misappropriation was lacking, criminal breach of trust charges were not contingent upon precise proof of conversion.
• The appellants attributed the cloth's disappearance to pest damage but failed to inform or provide evidence to the Textile Commissioner.
• The appellant's claim of absence in Bombay was refuted by his own admissions of frequent visits to the mill.
• The absence of produced books of account further cast suspicion.
• The HC found the appellants' defense false and established misappropriation.
• Referring to legal precedent, the SC affirmed the charges and sentencing, considering the appellant's pivotal role and the substantial misappropriated value.
• The sentence was not deemed excessive given his position and responsibility over the entrusted property.

Conclusion

• The SC dismissed the appeal and affirmed the conviction of both the appellants for criminal breach of trust read with Section 34 of the IPC.

Note

• Section 409 of IPC- Criminal breach of trust by public servant, or by banker, merchant or agent:
  • 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, 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 extend to ten years, and shall also be liable to fine.
• Section 34 of IPC- Acts done by several persons in furtherance of common intention:
  • When a criminal act is done by several persons in furtherance of the common intention of all, each of such persons is liable for that act in the same manner as if it were done by him alone.