Krishan Kumar vs The Union Of India

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

Court: Supreme Court of India

Case Number: Criminal Appeal No. 114 of 1957

Decision Date: 21 May, 1959

Coram: J.L. Kapur, Syed Jaffer Imam

Krishan Kumar filed a petition against the Union of India and the matter was heard by the Supreme Court of India on 21 May 1959. The judgment was authored by Justice J. L. Kapur, who sat on a bench together with Justice Syed Jaffer Imam. The case is recorded as Krishan Kumar v. Union of India, citation 1959 AIR 1390 and 1960 SCR (1) 452. The dispute concerned an alleged offence under section 5(1)(c) of the Prevention of Corruption Act, 1947, which penalises a servant who receives goods on behalf of his master and then fails to account for them.

The appellant, Krishan Kumar, was employed in the capacity of Assistant Store Keeper by the Central Tractor Organisation, located in Delhi. In the performance of his duties he received a consignment of iron and steel that had arrived by rail for the Organisation. After taking delivery he removed the goods from the railway siding, and the consignment never reached the Organisation’s stores. In the days that followed the appellant was absent from his post. When summoned, he provided a false explanation, claiming that he had not taken receipt of the goods. At trial he asserted that he had merely transferred the goods to an alternative siding, a defence that the trial court rejected and consequently found him guilty of misappropriation under the cited provision of the Act.

The appellant challenged his conviction on the ground that the prosecution had not established that he had converted the goods to his own use or that he had failed to apply them to the purpose for which they were received. The Court held that the conviction was proper. It explained that the offence of misappropriation is complete once the prosecution proves three elements: that the servant received the goods, that he owed a duty to account for them to his master, and that he failed to do so. The Court further observed that when the failure to account stems from an accidental loss, the servant, being aware of the facts, is required to explain the loss; the burden does not shift to the prosecution to disprove every possible defence that might exonerate the servant. Moreover, the Court stated that a false explanation given by the servant can be taken into account when assessing the presence of a guilty intention. In reaching this conclusion, the Court referred to several authorities, including Harakrishna Mehtab v. Emperor (1930) AIR Pat. 209, Larnier v. Rex (1914) AC 221, Emperor v. Santa Singh (1944) AIR Lah. 338, Emperor v. Chattur Bhuj (1935) ILR Pat. 108, Rex v. William (1836) 7 C.& P. 338 and Reg v. Lynch (1854) 6 Cox C.C. 445.

The appeal was filed as Criminal Appeal No. 114 of 1957 and was entertained by special leave. It arose from a judgment dated 6 December 1955 of the Punjab High Court (Circuit Bench) in Delhi, which had upheld the conviction but reduced the sentence to nine months’ rigorous imprisonment. The High Court’s order itself stemmed from a judgment dated 27 August 1953 of the special judge of Delhi in Criminal Case No. 3 of 1953. Counsel for the appellant, identified only as counsel for the appellant, presented the arguments on his behalf, while counsel for the respondent, identified as counsel for the respondent, represented the Union of India.

The judgment was delivered by Justice Kapur on 21 May 1959. This appeal, granted by special leave, was filed against the Punjab High Court’s order that affirmed the conviction of the appellant under section 5(1)(c) of the Prevention of Corruption Act, 1947, and reduced his sentence to nine months of rigorous imprisonment. The appellant was employed as an Assistant Store-keeper in the Central Tractor Organisation at Delhi, and his duties included taking delivery of rail consignment of goods for the organisation. In that capacity he was alleged to have misappropriated a major portion of a wagon load of iron and steel, weighing about five hundred metric tonnes, which had arrived at Delhi Railway Station from Tata Iron & Steel Co., Tatanagar, under Railway Receipt No 039967 dated 12 August 1950. The consignment was taken into the Lahori Gate Depot on 2 October 1950. The goods had remained at the railway depot for a considerable period, and before taking delivery the Central Tractor Organisation had endeavoured to obtain a reduction in wharfage and demurrage charges, succeeding only in a reduction of rupees 100. On 2 October the appellant paid rupees 2,332-4-0 for demurrage by means of credit notes marked P.N. and P.0, and on the following day he paid an additional rupees 57-3-0 by a credit note marked P.Q. The prosecution alleged that the consignment never reached the Central Tractor Organisation, that the appellant removed the goods and misappropriated them. After 4 October 1950 the appellant was absent from work, allegedly due to illness, but he was summoned on 7 October and appeared before the Director of Administration, Mr F.C. Gera. He explained that he had lost the railway receipt together with another receipt and blank credit notes that had been signed by the Petrol and Transport Officer, and he stated that he was unaware that the goods covered by the receipt had been cleared. Following this explanation the appellant was handed over to the police, and a case was registered against him on the information of Mr Gera on 7 October 1950. On the next day, 8 October 1950, the appellant gave a statement to Sub-Inspector Sumer Shah Singh that he had delivered the goods to a person named Gurbachan Singh, who was subsequently traced. In the presence of the Sub-Inspector, who was not in uniform at the time, Gurbachan Singh handed rupees 200 to the appellant, which the Sub-Inspector then took possession of. Afterwards, Gurbachan Singh, accompanied by the Sub-Inspector, Dharam Vir of the Central Tractor Organisation and a witness named Kartar Singh, proceeded to the premises of Amar Singh at Kotia Khan, where the iron and steel goods were seized.

In the proceedings the court noted that recovery memoranda had been prepared and that seven packages from the consignment were later recovered from the Lahori Gate Goods Depot. The appellant asserted that he had taken delivery of the goods on 2 October and 3 October and had moved them to another railway siding, identified as Saloon Siding, a place where the Central Tractor Organisation occasionally stacked goods in order to save on wharfage and demurrage charges. According to his testimony, the removal to Saloon Siding on those dates was effected by a truck belonging to the Central Tractor Organisation and driven by a man named Sukhdev Singh. To support this version the appellant produced Sukhdev Singh together with two chowkidars, who affirmed that the appellant had indeed taken the goods from the Lahori Gate Depot to Saloon Siding using Sukhdev Singh’s truck and, on certain occasions, by means of carts. The High Court, however, did not accept this evidence. Consequently the factual position that emerged was that, although the appellant admitted to removing the goods from the Lahori Gate Depot, the prosecution had not proved that the goods actually reached Saloon Siding or the Central Tractor Organisation. The court further observed that on 7 October 1950 the appellant gave a false explanation regarding the fate of the railway receipt and the credit notes received from the Central Tractor Organisation, and that he had been absent from duty from 4 October to 7 October until he was sent for by Mr F.C. Gera.

The prosecution attempted to demonstrate that the goods were removed by Gurbachan Singh to the premises of Amar Singh, from where certain iron and steel items were recovered. The court found that the iron and steel items seized at Amar Singh’s place did not correspond to the description of the goods listed under Railway Receipt No 039967 that had been received from Tatanagar, and the seized items had not been shown to be manufactured by Tata Iron & Steel Co. Accordingly, the matter reduced to the conclusion that the appellant had taken delivery of the goods and had removed them from the Lahori Gate Railway Depot, but that the goods never reached the Central Tractor Organisation. The prosecution’s effort to link the goods found at Amar Singh’s premises with the goods received, taken delivery of, and removed by the appellant failed because the identity of the goods differed and Gurbachan Singh had not been produced to testify that the appellant had instructed him to move the goods to Amar Singh’s location. The issue for determination therefore became whether the prosecution had proved that the appellant had misappropriated the goods. The evidence of both parties showed that the appellant had received the goods and removed them, and that the goods never reached the Central Tractor Organisation.

It was not contested that the appellant received the entire consignment at the Lahori Gate Depot and that he personally supervised the removal of two substantial portions of that consignment on the second and third days of October. The conviction of the appellant was founded on section 5(1)(c) of the relevant Act, which reads: “A public servant is said to commit the offence of criminal misconduct in the discharge of his duty (c) if he dishonestly or fraudulently misappropriates or otherwise converts for his own use any property entrusted to him or under his control as a public servant, or allows any other person to do so.” The term “dishonestly” is explained in section 24 of the Indian Penal Code as conduct performed with the intention of causing wrongful gain to one person or wrongful loss to another person. The expression “fraudulently” is defined in section 25 of the same Code as an act done with the intention to defraud, and nothing else. The concepts of wrongful gain and wrongful loss respectively cover both the retention of property that belongs to another and the deprivation of that property. Consequently, whenever a servant comes into possession of a thing and displays a malicious intent to deprive the owner, the servant is guilty of misappropriation under all circumstances that demonstrate such intent.

In the judgment of Fazl Ali, J., in Harakrishna Mahtab v Emperor, it was observed that it is neither necessary nor feasible in every case of criminal breach of trust to demonstrate the exact manner in which the accused utilized or appropriated the money, because the law penalises even temporary retention where the conduct is dishonest. The essential element to establish in a criminal breach of trust is whether the accused acted with a dishonest intention. Since intention cannot be proved directly, courts have, over time, formulated broad tests that assist in ascertaining whether the accused possessed the requisite mens reia. One such test considers the failure to render an account of money that has been received by the accused, or the furnishing of a false account of its usage, as strong circumstantial evidence of dishonesty. Section 5(1)(c) thus mirrors the offence of embezzlement under English law, which is complete when a servant, having received property on behalf of his master or employer, fraudulently misappropriates that property. This principle is articulated in Halsbury’s Laws of England, volume 10, third edition, page 787.

In the referenced legal work, the author cited Edition, page 787, and observed that in Larnier v. Rex (2) the offence of embezzlement was identified in the cases (1) A.I.R. (1930) Patna 209 and (2) (1914) A.C. 221 as a wilful appropriation by the accused of the property of another. A court of justice, as reported in that case, stated that “the court cannot reach the conclusion that the crime has been committed unless it be a just result of the evidence that the accused, in what was done or omitted by him, was moved by the guilty mind.” Accordingly, the essential element of the charge against the appellant was that after obtaining possession of property belonging to the Central Tractor Organisation, he dishonestly or fraudulently appropriated that property which had been entrusted to him or was under his control as a public servant, thereby depriving the Central Tractor Organisation of its own property. The court noted that it is neither necessary nor possible in every case to demonstrate precisely how the accused dealt with or appropriated the master’s goods; the critical inquiry is one of intention rather than direct proof. Providing a false account of the use of the goods received may be regarded as a strong circumstance against the accused. In a situation where a servant is charged with misappropriating his master’s goods, the elements of the criminal offence are established when the prosecution proves that the servant received the goods, that he was under a duty to render account to his master, and that he failed to do so. If the failure to account arose from an accidental loss, the facts remain within the servant’s knowledge, and it becomes his responsibility to explain the loss. The prevailing law does not require the prosecution to eliminate every possible defence or circumstance that might exonerate the accused. When such facts are within the accused’s knowledge, the burden shifts to him to prove them. Nevertheless, the prosecution must first establish a prima facie case; it is insufficient merely to produce facts that give rise to suspicion and then, pursuant to section 106 of the Evidence Act, shift the onus onto the accused to prove innocence, as noted by Harries, C.J., in Emperor v. Santa Singh. In the present matter, the appellant received a consignment of goods originating from Tatanagar. It was admitted that he removed those goods, and the High Court, by reference to (1) A.I.R. (1944) Lah. 338 at p. 346, found that the goods never reached the Central Tractor Organisation. The appellant offered an explanation in court that was subsequently determined to be false. Earlier, before Mr F. C. Gera, he had stated that he had lost the railway receipt and therefore had never obtained delivery of the goods, a statement also found to be false. In view of these facts, the court was justified in concluding that the appellant had dishonestly misappropriated the goods of the Central Tractor Organisation, and the act of giving a false explanation was recognised as an element of the offence.

In its analysis, the Court observed that a false explanation given by an accused may be taken into account as evidence of wrongdoing, referring to the principle established in Emperor v. Chattur Bhuj. It then cited the judgment in Rex v. William, where Justice Coleridge instructed the jury that the fact that a prisoner had left her place of employment and travelled to Ireland allowed the jury to infer an intention to appropriate money, and that such an inference, if accepted, would sustain a conviction for embezzlement. Similarly, in Reg v. Lynch, Justice Moore told the jury that the prisoner’s act of absconding after receiving money and remaining at large until apprehended created a permissible inference of intent to appropriate the money, which, if proven, would constitute embezzlement.

The appellant’s counsel relied on observations drawn from several decided cases, contending that the prosecution must establish not only that the accused received the goods but also that he converted the goods to his own use and failed to apply them to the purpose for which they were received. The cases cited by counsel included Ghulam Haider v. Emperor, In re Ramakkal and Others, Bolai Chandra Khara v. Bishnu Bejoy Srimani, Bhikchand v. Emperor, and Pritchard v. Emperor. The Court found that, on a comprehensive reading, none of those authorities supported the narrow proposition advanced by the appellant. Each of the cited authorities arose from distinct factual settings and therefore could not be read as establishing a general rule.

For example, in Ghulam Haider’s case (1935) I.L.R. 15 Patna 108, the court qualified the proposition by stating that proof of receipt and failure to render account is a significant step toward establishing misappropriation but does not by itself complete the proof. In that case the prosecution could not produce the books in which receipts should have been recorded, and there was a lack of clear accounts. In Ramakkal’s case, the accused had received a currency note discovered by a child; the court held that mere intention to misappropriate, or even preparation for such misappropriation, did not constitute an offence. That matter was before the High Court at an intermediate stage for a petition to quash the charge, and the High Court declined to do so. In Bolai Chandra Khara’s case, the judgment emphasized that proof of only one element of criminal breach of trust is insufficient for conviction and that the prosecution must also prove non-payment of money collected by a gomastha. In Bhikchand’s case, the court ruled that a presumption of misappropriation arises only upon proof of non-payment of money received by the accused. Finally, in Pritchard’s case, the prosecution again failed to produce the relevant account books showing non-payment. The Court therefore concluded that all these decisions must be confined to their particular facts and, in their ultimate analysis, do not endorse the appellant’s contention.

The Court observed that the evidence offered by the prosecution failed to support the proposition advanced by the appellant. The prosecution demonstrated that the appellant had taken delivery of the goods on the 2nd and 3rd of October. The appellant’s own sworn statement disclosed that he removed those goods from the railway siding. This removal was corroborated by documentary evidence presented in the form of gate passes. Further proof established that the goods never reached the Central Tractor Organisation as intended. The appellant explained that he had transferred the goods to the Saloon Siding, but the Court did not accept this explanation. The prosecution also proved that, at the initial stage, the appellant gave a false statement that he had not taken delivery of the goods. He had been absent from his duty and had to be summoned by the officer-in-charge, after which he attempted to rely on the defence of removal to the Saloon Siding, which the Court rejected as unsubstantiated. The Court cited earlier authorities, namely (1) A.I.R. 1938 Mad. 172; (2) A.I.R. 1934 Cal. 425; (3) A.I.R. 1934 Sindh 22; and (4) A.I.R. 1928 Lah. 382, in support of its reasoning. The prosecution further alleged that the appellant disposed of the goods by delivering them to a person named Gurbachan Singh. It was claimed that Gurbachan Singh subsequently placed the goods at the premises of Amar Singh, from where some steel goods were recovered. However, the prosecution did not produce Gurbachan Singh nor did it establish that the recovered goods formed part of the consignment taken by the appellant. The Court observed that if the law did not require the prosecution to prove the exact manner of misappropriation, the failure to establish those facts would be of little relevance. Consequently, the decisive issue centered on the appellant’s intention, and the circumstances set out above indicated that the appellant acted with a guilty mind. On that basis, the Court concluded that the conviction was proper and consequently dismissed the appeal.