Debabrata Gupta Vs. S. K. Ghosh 
INSC 33 (23 February 1970)
Indian Penal Code Section 406-Criminal breach
of trust Ingredients necessary-Proof of entrustment.
Certain disputes arose between the appellant
and the respondent who were partners in a firm. After the respondent had sent
to the appellant a notice for dissolution of the partnership, the appellant
withdrew certain funds from the firm account. The respondent thereafter lodged
a complaint against the appellant alleging criminal breach of trust within the
meaning of Section 406 I.P.C. He also instituted a suit for the, dissolution of
the partnership and for accounts. The. Additional Chief Presidency Magistrate
issued summons to the appellant under Section 406. The appellant instituted
proceedings in the High Court for quashing the criminal proceedings but the
High Court rejected his prayer.
On appeal to this Court, HELD: Dismissing the
The offence of criminal breach of 'trust
under section 406 of the Indian Penal Code is not in respect of property
belonging to the partnership but is an offence committed by the person in
respect of property which has been specially entrusted to such 'a person and
which be holds in -a fiduciary capacity. [768 F] In the present case the
appellant denied that there was any special entrustment of any property or that
he was holding any. Property in 'a fiduciary capacity. It was neither possible
nor desirable to express any opinion on the merits of such a plea. It was not
possible to do so because the facts were not in possession of the court and
furthermore the facts could not be before the court without proper
investigation and enquiry. It was not desirable to do so because if any such
opinion be expressed it might prejudice or embarrass either party. [768 G] R.
P. Kapur v. State of Punjab,  3 S.C.R. 388;
Velji Raghavji Patel v. State of Maharashtra,
 2 S.C.R. 429, Bhuban Mohan Ran(,v.Surendra Mohan Das, I.L.R.
 2 Cal. 23, referred to.
CRIMINAL APPELLATE JURISDICTION: Criminal
Appeal No. 134 of 1967.
Appeal by special leave from the judgment and
order dated June 7, 1967 of the Calcutta High Court in Criminal Revision No.
1100 of 1965.
Debabrata Mukherjee and Sukumar Ghose, for
Sadhu Singh, for the respondent.
766 The Judgment of the Court was delivered
by Ray, J. This is an appeal by special leave against the judgment of the
Calcutta High Court dated 7 June, 1967 refusing to quash the process issued and
the proceedings pending before the Additional Chief Presidency Magistrate,
Calcutta under section 406 of the Indian Penal Code.
The appellant and the respondent entered into
a registered deed of partnership on 27 March, 1963. The name of the partnership
business was "Allied Engineers". The nature of the business was that
if the tender submitted by the respondent to the Eastern Railways for extension
of bridge No., 2 at the west and of Howrah yard, West Bengal was accepted by
the Eastern Railways the said work would be deemed to be included within the partnership.
Under the terms of partnership agreement the capital was Rs. 20,000 to be
contributed equally by the partners within six months from the date of the
agreement. The main office of the partnership was at 12/1/5 Manohar Pukur Road,
Kalighat, Calcutta. Another term of the partnership was that if the tender was
accepted the appellant would advance or lend from time to time a total sum of
Rs. 20,000 towards the work represented by the tender as and when necessary.
The amount so advanced would be repayable to the appellant with interest at six
per cent per annum and 50% of the profit to be earned. The respondent was,
under the terms of partnership agreement, to execute an irrevocable power of
attorney in the manner and with powers as provided in the draft approved by the
partners. The bankers of the firm would be United Bank of India Limited and all
cheques on the said bank would be signed by both the partners. The agreement
further provided that all cheques in respect of the work in the name of the
respondent, S. K. Ghosh, in Eastern Railways would be drawn on the banking
account operated by the partner Debabrata Gupta, namely, the appellant for
which the respondent would execute an irrevocable power of attorney.
The case of the appellant is that he advanced
to the partnership from time to time an, aggregate sum of Rs. 50,000 for
completion of the work. The respondent executed the power of attorney in favour
of the appellant on 27 March, 1963 and authorised the appellant to submit all
bills, interim as well as final, to receive cheques and to do necessary things
on behalf of the respondent in connection with the said work for extension of
bridge under the partnership agreement.
On 18 April, 1964 a second deed of
partnership was made between the appellant and the respondent in modification
of the earlier deed dated 27 March, 1963. It was recited there that the
appellant had invested to the extent of Rs. 50,000 for the 767 aforesaid work
of construction of the bridge. It was also recited in the agreement that the
respondent was not in a position to contribute to his share of the capital. The
second deed further provided that the amount contributed by the appellant
"shall be repaid immediately after the collection of the bills from the
Eastern Railways". The banking account was to be operated by the appellant
and all bills collected and security refunded by the Eastern Railways in of the
first agreement was to be deposited by the parties with the bank forthwith.
It appears that disputes arose between the
appellant and the respondent whereupon the respondent wrote to the bank to
stop. all payments to the appellant. The respondent sent to the appellant a
notice for dissolution of the partnership. The appellant in accordance with the
partnership agreement instituted proceedings in the High Court at Calcutta on
or about 8 September, 1965 for filing an arbitration agreement under section 20
of the Arbitration Act. The High Court appointed an arbitrator for adjudication
of disputes between the parties.
Meanwhile, summons was issued by the Chief
Presidency Magistrate, Calcutta under sections 406 and 424/34 of the Indian
Penal Code against the appellant. The respondent on 19 June, 1965 had lodged a
complaint against the appellant for process under sections 406 and 424/34 of
the Indian Penal Code against the appellant and against two other persons
alleging that the appellant had dishonestly withdrawn sums totaling about Rs.
92,000 from the account of the partnership firm and further that in collusion
with other persons had removed the books of accounts.
The respondent also filed a suit being Title
Suit No. 15 of 1966 in the Third Court of the Subordinate Judge, Alipore west
Bengal against the appellant for dissolution of partnership and for accounts.
In that suit the respondent obtained a temporary injunction against the
appellant restraining him from receiving payment from the Eastern Railways and
from operating the bank account of the partnership.
The appellant and the accused No. 2
instituted proceedings in the High Court at Calcutta for quashing the criminal
proceedings. The High Court at Calcutta quashed the process issued under
sections 424/34 of the Indian Penal Code against accused No. 2 on the ground of
want of territorial jurisdiction, but refused to quash the process under
section 406 of the Indian Penal Code, against the appellant.
Counsel on behalf of the appellant contended
first that there could be no issue of process in disputes between the partners
and 768 secondly the Additional Chief Presidency Magistrate had no jurisdiction
to issue process because the alleged offence had taken place outside the
jurisdiction of that court.
Counsel for the appellant relying on the
decision of this Court in R. P. Kapur v. The State of Punjab(') contended that
the High Court could ,exercise inherent jurisdiction to quash proceedings where
the allegations in the complaint did not make out a case. It is true that the
Court can in some cases do so. The question is whether the present case is one
of that type.
Counsel for the appellant relied on the
decision of this Court in Velji Raghavji Patel v. State of Maharashtra (2)
where one of the partners was convicted of an offence of criminal breach of
trust under section 409 of the Indian Penal Code and this Court held that where
a partner realised the sum in his capacity as partner and utilised them for the
business of the partnership, he was only liable to render accounts to his
partners and his failure to do so would not amount to criminal breach of trust.
Counsel for the appellant invoked the application of the same doctrine to the
In order to accede to the contention it has
to be established first that the dispute is only between the partners and
secondly it does not relate to any special entrustment of property which constitutes
one of the basic ingredients of an offence under section 406 of the Indian
Penal Code. This Court in Patel's case(') approved the decision of the Calcutta
High Court in Bhuban Mohan Rana v. Surendra Mohan Das(3) and said that before
criminal breach of trust is established it must be shown that the person
charged has been entrusted with property or with dominion over the property. In
other words, the offence of criminal breach of trust under section 406 of the
Indian Penal Code is not in respect of property belonging to, the partnership
but is an offence committed by the person in respect of property which has been
specially entrusted to such a person and which be holds in a fiduciary
In the present case, the appellant denies
that there was any special entrustment of any property or that he was holding
any property in a fiduciary capacity. It is neither possible nor desirable to
express any opinion on the merits of such a plea. If is not possible to do so
because the facts are not in possession of the court and furthermore the facts
cannot be before the court without proper investigation -and enquiry. It is not
desirable to do so because if any such opinion be expressed it may prejudice ox
embarrass either party.
(1)  3 S.C.R. 388.
(2)  2 S.C.R. 429.
(3) I.L.R.  2 Cal. 23.
769 The plea as to lack of territorial
jurisdiction cannot also be decided on the materials nor can an opinion be
expressed on that question.
It is made clear that all pleas and defenses
are left open to the appellant including the question whether there was any
special entrustment of any property to the appellant and the territorial
jurisdiction of the Court.
For these reasons, the appeal fails and is
R.K.P.S. Appeal dismissed.