Dharamdas Hukamatrai Dorwani vs State Of Bombay

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Not extracted

Decision Date: 4 November, 1959

Coram: P.B. Gajendragadkar, K. Subba Rao, J.C. Shah

In this matter the appellant, Dharamdas Hukamatrai Dorwani, was indicted for an offense punishable under Section 420 of the Indian Penal Code. The prosecution alleged that on or about 22 March 1953 the appellant had deliberately deceived Chhotubhai Nagarji Desai by persuading him to enter into and sign an agreement dated the same day, and by obtaining from him a payment of Rs 2,875. The prosecution further contended that the appellant had induced the complainant to agree that earlier sums of Rs 9,875, which had been paid by the complainant between 9 March 1952 and 14 July 1952, would be applied toward the amount due under that agreement. The earlier payments were said to have been made for Flat No 15 in the Dorwani Mansion and for a shop, on the representation that the building, the shop and the land on which they stood were owned by the appellant and were free of any mortgage. The learned trial magistrate who tried the case held that the evidence did not establish the appellant’s guilt beyond a reasonable doubt, and consequently the appellant was acquitted. The State of Bombay then challenged the acquittal by filing an appeal in the High Court at Bombay. The High Court examined the record and concluded that the trial magistrate’s order of acquittal was wholly improper, finding that the charge had indeed been proved beyond reasonable doubt. Accordingly, the High Court set aside the acquittal, convicted the appellant under Section 420, imposed a sentence of six months’ rigorous imprisonment and directed the payment of a fine of Rs 1,000, with a default provision that failure to pay the fine would result in a further two months’ rigorous imprisonment. The appellant subsequently sought leave to appeal to this Court, but his application was dismissed by the High Court. He then applied for and was granted special leave by this Court to file the present appeal. Counsel for the appellant argued that the High Court was not justified in overturning the trial magistrate’s acquittal when exercising its appellate jurisdiction, and on the merits contended that the findings of the High Court were entirely inconsistent with the evidence placed before the trial courts.

The factual background on which the prosecution’s case rests can be summarised as follows. On 18 December 1951 an agreement of sale was concluded in favour of the appellant for a plot of land located on Tulsi Pipe Road. Pursuant to that agreement the appellant purchased the plot on 19 March 1952 for the sum of Rs 4,03,245. In the third week of February 1952 the appellant placed an advertisement in a Bombay newspaper offering certain flats for sale. The complainant happened to see this advertisement and consequently wrote to the appellant expressing his interest. In the third week of March 1952 the complainant, accompanied by his father-in-law, Mr T.B. Desai, met the appellant. They were introduced to the appellant by an advocate. During this meeting the appellant informed the complainant and Mr Desai that he had acquired plots of land and was constructing flats and shops which he intended to sell on a free-hold basis. He further represented that possession of the units could be given within four months. On 9 March 1952 the complainant and Mr Desai returned to the appellant for further discussions, after which the complainant selected Flat No 15 on the ground floor of the Dorwani Mansion, fixing its price at Rs 12,750, and also selected Shop No 9 on the ground floor of the adjoining building for use as a dispensary, fixing its price at Rs 7,000. Upon enquiry, the appellant assured the complainant that the property was neither mortgaged nor transferred to any other party. The complainant then signed two separate agreements, which are reproduced as exhibits S-1 and S-2. In accordance with those agreements, Mr Desai, on behalf of the complainant, made a series of payments to the appellant by cheque, the total amount paid being Rs 9,875. These payments formed the basis of the prosecution’s allegation that the appellant subsequently obtained further sums by misrepresentation, leading to the charge under Section 420.

In this case, the complainant was introduced to the appellant by an advocate during a preliminary meeting in the city. The appellant told the complainant and Mr. Desai that he had bought plots of land and was constructing flats and shops for sale and said possession would be given within four months. On March ninth, 1952, after a further discussion, the complainant chose flat number fifteen on the ground floor of Dorwani Mansion, fixed at a price of twelve thousand seven hundred fifty rupees. He also selected shop number nine on the ground floor of the adjoining building for his dispensary, and the price of that shop was set at seven thousand rupees. Upon inquiry, the appellant assured the complainant that the property had neither been mortgaged nor transferred, after which the complainant executed two agreements, identified as exhibits S-1 and S-2. In accordance with those agreements, the complainant’s father-in-law, Mr. Desai, made periodic payments to the appellant by cheque, amounting in total to nine thousand eight hundred seventy-five rupees. On March twenty-second, 1953, the complainant and Mr. Desai returned to the appellant and complained that construction of the promised flat had not even begun. They also said that certain alterations they had requested for flat fifteen had not been effected, and therefore they asked for cancellation of the agreement. By mutual consent, the complainant agreed to accept flat number thirteen instead and asked for cancellation of the shop contract. The appellant replied that the shop could be cancelled only if the full price for flat thirteen was paid. Accordingly, Mr. Desai issued a cheque for two thousand eight hundred seventy-five rupees in favour of the appellant, thereby satisfying the entire price for flat thirteen, and a fresh agreement, labeled exhibit F, was executed. In June 1953 the appellant finally delivered possession of flat thirteen to the complainant, completing the transfer of occupancy. Subsequently, Mr. Desai issued a cheque for four hundred rupees as a deposit for taxes and electricity charges and also paid ground rent of fourteen rupees for each of June, July, and August 1953.

Around October 1953 the complainant learned that the appellant had mortgaged the property to the vendors on March 19, 1952, and he subsequently approached the appellant to complain about this discovery. The appellant assured the complainant that the mortgage would be repaid and that the complainant’s title would be cleared. The complainant then wrote to the Police Commissioner alleging that the appellant had committed the offence of cheating, which prompted the police to open an investigation. Following the investigation, the authorities formally charged the appellant under Section 420 of the Indian Penal Code for alleged cheating. The appellant denied the charge, admitting only that the property had been mortgaged as alleged by the complainant. He further contended that the complainant and all other allottees knew about the mortgage at the time of their respective transactions, and therefore no cheating had occurred. To support his defence, the complainant called himself as a witness and also examined his father-in-law, Mr. Desai, in testimony. For the defence, witnesses Amarlal and Asrani gave evidence, and the two lawyers Mulchandanis, a father and son, were also examined by the defence. The learned magistrate concluded after hearing the evidence that the complainant’s version of events was not established beyond reasonable doubt. He reasoned that if an enquiry had been made as alleged by the complainant, the representation made by the appellant would have been reflected in the formally drawn documents. He was also persuaded by the fact that although the complainant became aware of the mortgage in October 1953, he neither gave any notice to the appellant alleging misrepresentation nor lodged an immediate police complaint. The magistrate noted that Mr. Desai held a responsible judicial position and therefore his evidence was entitled to weight; but he

The appellant asserted that the complainant, as well as all other allottees, had been aware of the mortgage at the time they entered into their respective agreements. Accordingly, he argued that because the complainant had proceeded with the transaction with full knowledge of the encumbrance, there was no basis for a charge of cheating. To support his case, the complainant gave evidence along with his father-in-law, Mr Desai. For the defence, witnesses named Amarlal and Asrani testified, and the two Mulchandanis, a father and son who were lawyers, were also examined by the defence. After considering the testimony, the learned magistrate concluded that the complainant’s version had not been proved beyond a reasonable doubt. He reasoned that, had an enquiry as alleged by the complainant been conducted, the appellant’s representation would have been reflected in the formal documents. The magistrate was further persuaded by the observation that, although the complainant became aware of the mortgage in October 1953, he neither gave immediate notice to the appellant alleging misrepresentation nor lodged a police complaint at once. While noting that Mr Desai occupied a responsible judicial position and that his evidence deserved weight, the magistrate was convinced that if Mr Desai had indeed made the enquiries he claimed, he would have insisted on an explicit recital in the documents stating that the property was free of any encumbrance. Consequently, the magistrate was not satisfied that the charge of cheating had been established beyond a reasonable doubt.

The High Court, however, adopted a contrary stance. It held that the evidence offered by Mr Desai and the complainant was reliable, whereas the statements made by Amarlal and Asrani could not be trusted. Relying on the probabilities, the High Court found that the complainant’s narrative appeared to be true. In reaching this conclusion, the Court was guided by two important considerations. First, it observed that the assertions concerning the enquiry, advanced by the complainant and Mr Desai, had not been challenged during cross-examination. Second, the Court noted that the learned magistrate had completely overlooked the positive case advanced by the appellant in his written statement when he assessed the evidence presented by the parties. The High Court’s findings therefore reflected its view that the trial magistrate had erred in disregarding the appellant’s written averments and in giving insufficient credence to the complainant’s and Mr Desai’s testimony.

The Court further explained that, while exercising appellate powers to review orders of acquittal, the High Court should not interfere unless there are sufficient grounds. If the trial court’s determinations are pure questions of fact that depend solely on the appreciation of oral evidence, the appellate court is generally not justified in disturbing the acquittal. However, the position changes when the trial court’s assessment of evidence is tainted by a failure to consider a crucial fact. In this case, the trial magistrate had not expressed a definite opinion on the evidence of Mr Desai or even on the defence witnesses. He had also omitted any statement indicating whether he believed the testimony of the two lawyers, the Mulchandanis, or not. The magistrate’s judgment demonstrated a hesitant appraisal of the credibility of most witnesses, and he seemed inclined to conclude that no representation had been made by the appellant as alleged by the complainant. The Court therefore examined whether such a conclusion was reasonably possible in light of the specific case presented by the appellant in his written statement. In that written statement, the appellant had unequivocally asserted that he had made it clear to everyone that the property was mortgaged at the time of their agreements and that the allottees, including the complainant, knew of the mortgage. These averments, contained in paragraph 8, were clear and unambiguous, though the appellant later sought to read them together with the denials made in paragraph 6 of his statement. The Court considered these submissions carefully before reaching its final determination.

The magistrate’s judgment indicated that his assessment of the testimony of all the witnesses was somewhat indecisive, and he appeared reluctant to reach a firm conclusion about the credibility of most of them. Nevertheless, the magistrate seemed inclined to adopt the view that the appellant had not made any representation of the kind alleged by the complainant. The crucial issue, therefore, was whether such a conclusion could be regarded as reasonable in light of the specific case that the appellant had set out in his written statement. In the written statement identified as Exhibit sixteen, the appellant expressly asserted that he had made it clear to everyone that the property was already mortgaged at the time the agreements were executed, and that the allottees, including the complainant, were aware of the existence of that mortgage. The statements contained in paragraph eight of the written statement are unequivocal and plain. Mr. Sethi, however, argued that these assertions must be read together with the remarks in paragraph six, where the appellant specifically denied the prosecution’s case. The Court examined this argument carefully and read the two paragraphs in conjunction. In paragraph six the appellant repudiated the prosecution’s claim that he had represented that there was no mortgage; he was not denying that an enquiry had taken place, but rather denying the specific representation that the prosecution said he had made at the enquiry. Paragraph six also indicates that the allottees knew about the mortgage, a knowledge that logically stems from the positive statement made by the appellant in paragraph eight. Consequently, there can be no doubt that the appellant’s written statement establishes that he told the complainant and the other allottees, at the time of entering into the agreements, that the property was mortgaged. If this is the case presented by the appellant, it becomes impossible to accept his evidence that no enquiry was conducted, while the magistrate, in substance, accepted the defence evidence and concluded that no enquiry had been held and therefore no representation could have been made. In the Court’s view, this defect in the magistrate’s judgment undermines his conclusion, and therefore the High Court was rightly justified in reviewing the evidence for itself.

The second point on which the High Court based its assessment was the observation that neither the complainant nor Mr. Desai had been directly cross-examined about the alleged enquiry. Mr. Sethi contended that this criticism was entirely unwarranted, citing several questions that had been put to the two witnesses during cross-examination, and maintaining that those questions bore materially on the alleged enquiry. While there is some merit in that contention, the High Court’s criticism centred on the fact that the witnesses had not been explicitly asked whether no enquiry had been made, as alleged by them. Had the defence intended to challenge that particular aspect of the case, it could have asked direct questions to dispute the truthfulness of the statement concerning the absence of an enquiry. Although cross-examination did include questions suggesting the improbability of the alleged enquiry, those questions constituted only an indirect method of attacking the narrative. This indirect approach appears to be the essence of the High Court’s criticism of the cross-examination of the complainant and Mr. Desai. Even if that criticism were set aside, the written statement of the appellant establishes a common ground between the prosecution and the defence that a representation was indeed made. The sole question for determination was the nature of the representation made by the appellant, and the probabilities inexorably point to a single answer. It is highly unlikely, if not impossible, that the complainant would have part-paid the sum of twelve thousand rupees and a little more had he been aware that the title of the property was likely to become the subject of litigation, as the appellant had herself executed.

It was noted that, to challenge the specific allegation concerning an enquiry, the defence could have asked several direct questions about the truth of that allegation. Although questions had indeed been asked during cross-examination that suggested the alleged enquiry was improbable, those questions addressed the issue only indirectly. The High Court’s criticism therefore related to the manner in which the cross-examination of the complainant and Mr Desai was conducted. Nevertheless, even if that criticism were disregarded, the record showed that both the prosecution and the defence agreed, on the appellant’s written statement, that a representation had been made. The sole issue for determination was the nature of that representation, and the surrounding facts led the Court to conclude that only one conclusion was logically possible. It was extremely unlikely, if not impossible, that the complainant would have paid a sum of Rs 12,000-odd had he known that the title of the property was likely to become the subject of litigation, because the appellant had already executed a mortgage over the property. The purchase price of the plot was Rs 4,00,000-odd, and the mortgage amount exceeded Rs 3,50,000, which clearly demonstrated the extent of the charge on the property. Counsel for the appellant attempted to argue that, even with knowledge of the existing agreement, the complainant would still have paid the money and taken possession of the flat. In the Court’s opinion, that suggestion was unreasonable.

Paragraph eleven recorded that the appellant’s counsel also contended that the complainant had not expressly sworn that the contract and the request to Mr Desai to pay the amount were executed because of any misrepresentation. The Court found no substance in that contention. If it were established that a false representation had been made dishonestly with the intention of exploiting the widespread need for flats in Bombay, the existence of that misrepresentation would necessarily imply that the complainant and other allottees had part-ed with money as a result. The argument presented by the appellant’s counsel ignored the significance of the repeated enquiries made by both Mr Desai and the complainant. In paragraph twelve, the counsel further asserted that it was highly unlikely that the enquiry into the appellant’s title could have been repeatedly made as alleged by Mr Desai, and relied on the fact that the complaint was filed after a long delay, that no notice had been given to the appellant after the complainant learned of the mortgage, and that the dispute was essentially civil in nature. The Court concluded that these arguments could not assist the appellant, because it had already held that the High Court was justified in examining the merits of the prosecution’s case independently, given the serious infirmity in the trial court’s judgment.

The Court observed that once the trial court had been satisfied with the prosecution’s evidence, it was the High Court’s duty to examine the facts independently and to form its own conclusions. Accordingly, the Court held that if the prosecution’s evidence was accepted, as the High Court had done, the arguments presented by the appellant lost any relevance. Moreover, the Court noted that the factual position and the probabilities, as assessed by the High Court, were strongly in favour of the prosecution’s case. It further stated that the reasons provided by the High Court to support its findings did not invite any serious objection. On the basis of this assessment, the Court found no justification for disturbing the final order issued by the High Court. Consequently, the appeal was dismissed and the conviction recorded against the appellant was upheld.

Subsequently, counsel for the appellant sought a modification of the sentence insofar as it involved rigorous imprisonment. The counsel argued that the appellant was an elderly person and offered to repay the entire amount received from the complainant, provided the complainant would relinquish his flat to the appellant. The counsel also contended that the mortgage creating a cloud over the appellant’s title could no longer threaten the rights of the allottees because later developments would demonstrate that the mortgagee’s claim could be satisfied without difficulty. The Court did not permit the counsel to refer to any documents supporting this plea. In the Court’s opinion, it would be difficult to accept the contention that the sentence imposed by the High Court was excessively harsh. The Court emphasized that sentencing is a matter of discretion and that an appellate court may intervene only when it is convinced that the discretion was exercised improperly. Since no such impropriety was found, the Court saw no reason to set aside the rigorous imprisonment component of the sentence. Accordingly, the appeal was again dismissed, the conviction and sentence imposed by the High Court were confirmed, and the appellant was directed to surrender.