judgement:
Appeal No. 56 of 1962.
Appeal by special leave from the judgment and decree dated March 3, 4, 1958 of the Bombay High Court in Appeal No. 27 of 1957.
Purshattam Tricumdas, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellant.
H.N. Sanyal, Solicitor General, N. P. Nathwani, AtiqurRehman and K. L. Hathi, for respondents Nos. 1 3, 5, 6, 8 17, 19 and 20.
The Judgment of the Court was delivered by Ayyangar, J.
This appeal, by special leave, raises for con sideration a very short point regarding the proper construction of bye law 137 B of the Bombay Bullion Association Ltd., which will hereafter be referred to as the 'Association ' and in particular whether on the facts established in this case the requirements of the said bye law has been satisfied.
The appellant is a member of the first respondent the Association and carries on business as a bullion merchant.
By a notification dated March 14, 1949, the Government of Bombay in exercise of the powers conferred by section 6 of the Bombay Forward Contracts Control Act, 1947 (Bombay Act LXIV of 1947) sanctioned by the bye laws framed by the Association.
Under the said Act the members of the Association were permitted to carry on forward dealings in bullion subject to the said bye laws.
The appeal is concerned with the regularity of a purchase effected by the Association purporting to act under its bye laws, of a quantity of silver at the risk of the appellant, on the footing that he had defaulted in performing his contract as a seller on February 3, 1953 which was a settlement day.
The Association made this purchase treating the appellant as a defaulter and claimed from him the difference which amounted to Rs. 1,37,880 12 0.
The appellant paid this sum when demanded on the 5th February under protest but on the next day he filed the suit out of which the present appeal arises against the Association and its Directors for its refund on the ground that the purchase at his risk by the Association was invalid as contrary to the bye laws and was, therefore, not binding on him.
The appellant did not dispute that he defaulted in performing his obligation to tender the bullion of which he was the forward seller on the settlement day as he was bound to do under the relevant bye laws but the point on which he attacked the purchase was that no purchase could be made unless the forward purchasers for that settlement had fulfilled the terms of their 251 obligations under the bye laws and that as they had failed to do so, the Association had no right to effect a purchase on behalf and for the benefit of such defaulting purchasers.
The suit was tried before Coyajee J. on the Original Side of the Bombay High Court.
The learned Judge recorded a finding that there had been no default on the part of the purchasers and he, therefore, dismissed the suit.
An appeal preferred by the appellant to a Division Bench also failed and it is the correctness of this decision of the High Court that is challenged in this appeal.
Though the evidence went into minute details as to the things that happened on the Vaida day February 3, 1953 and in particular whether the several parties who figured as purchasers on the Vaida day had or had not paid in their cheques into the Clearing House of the Association on February 3, 1953 as they were bound to do under the bye laws, it is not necessary for us to go into this matter because there is a concurrent finding of fact of both the Courts that each one of the cheques of the several purchasers was, paid into the Clearing House on February 3, 1953, though it is now clear from the evidence that entries in regard to some of these transactions which took place on February 3, 1953 were made by the receiving bank or by the Clearing House only on the 4th.
It is on the basis of this finding which could not be and was not challenged before us that we propose to deal with the points urged before us in this appeal.
There is also one other matter which is referred to in the pleadings as well as in the judgments of the High Court which also we are putting aside.
This relates to a plea by the appellant that the Director , of the Association had acted mala fide in permitting certain infractions of bye laws on the 3rd February by purchasers who would otherwise be in default and treating them is if they had fulfilled their obligations.
The suggestion was that some of the members of Board of Directors had, in their individual capa city, figured as purchasers at the said settlement and that it was this personal interest of theirs that led to their favouring the group of purchasers as against the sellers at this Vaida.
There was nothing in the evidence in support of this plea and Coyajee, J. having negatived it, the same does not appear to have been pressed before the Division Bench.
Mr. Purshotam learned Counsel for the appellant did not seek to reagitate this matter, as indeed he could not, and hence this aspect also might be excluded from consideration.
This leads us to the main question which it would be apparent from the above narrative is whether those who made forward 252 purchases for this Vaida had fulfilled their obligations under the bye laws.
Now, the first matter that requires to be noticed is that the settlement for the Maha Vaida was originally fixed to February 2, 1953.
Bye law 32 of the Association empowers the Board to fix the days of settlement in these terms : "32.
(1) The settlement days shall be fixed by the Board or the Sub Committee appointed by it keeping in mind the provisions or these Rules and bye laws." but el.
(3) of the same bye law empowers the Board : "if of opinion that circumstances exist which require an alteration of days so fixed [by cl.
(1)] the Board may postpone such settlement day for a period not exceeding 5 days.
" It was in exercise of this power that the Vaida day was postponed from February 2, 1953 to February 3, 1953.
No dispute was raised by the appellant regarding the competence of the Board to effect this change of date or to the validity of the change effected thereby.
Bye law 120 makes provision for the establishment of a Clearing House for effecting a settlement on the Vaida days.
This bye law reads : " 120.
Clearing House : A Clearing House shall be established under the jurisdiction of the Board to act as an ordinary agent of the members for settling forward transactions effected between members in gold, silver and sovereigns by exchanging delivery orders as also for making payment of the amounts of difference through the Clearing House.
" Under the powers thus conferred the Bank of Baroda which opened a branch at the premises of the Association were appointed as the Clearing House.
Bye law 125 provides for the appointment of a Clearing House Committee by the Board of Directors of the Association.
Bye law 127 specifies the powers and duties of the Clearing House Committee and this runs : "127.
Powers and duties of the Clearing House Committee : (1) The Clearing House Committee shall settle forms of clearing sheets, delivery forms, "Kaplis" (slips) relating to payment of differences and delivery of goods and other necessary documents for being used for the work relating to the Clearing House and every member shall have to use the said forms or other forms of the same size and with 253 similar writing.
The said Committee shall from time to time fix charges for the said forms.
(2) It shall issue instructions with regard to the work of the Clearing House and every member shall act according to the same.
(3) If any member does not act according to any such instructions or commits any error or mistake in filing in any form or other document or writes so illegibly that it cannot be deciphered or makes delay in submitting, any such form or document to the Clearing House, then in every such case, the Clearing House Committee can impose on any member a penalty not exceeding Rs. 500.
Sub Committee can be appointed for attending to the work relating to this sub clause.
(4) It shall fix Havala rates in respect of outstanding transactions (transactions, which are not squared up) between two members and all members shall enter Havalas in respect of such outstanding transactions (which are not squared up) at these rates and also prepare statement of differences at those rates.
Delivery orders also shall be issued at these very rates.
The Havala rates in respect of transactions are given to facilitate the settlement.
That does not in any way reduce the liability in respect of transactions.
(5) The Clearing House Committee may declare any member as a defaulter and for that purpose, it shall have power to pass such resolutions and orders as it deems proper and necessary.
(6) If, in connection with any forward settlement, the Clearing House finds, it difficult to make settlement on the days fixed for settlement, then the Clearing House Committee shall have power to make a change` of 48 hours at the maximum in all or any settlement days relating to that forward settlement.
" Bye law 134(1) reads "134.
(1) The member who wants to have his transactions settled through the Clearing House shall have to send to the Clearing House a clearing sheet in the settled form (form No. 1) on the days fixed for that purpose (which day will hereafter be known as he Clearance Day).
254 Bye law 137 specifies the obligations of members of the Association who give delivery and it reads: "137.
The member who has to give delivery shall have to submit to the clearing house as many delivery orders signed by him as there would be, upon a calculation on the basis of every delivery order being either for five bars of silver or for 1,000 tolas of gold bar, or for 1,000 sovereigns.
If any member has sent delivery orders without signing he shall attend the Clearing House at 10 A.M. in the morning on the date fixed for giving delivery orders by the Clearing House and shall sign the delivery orders.
If the Clearing House finds it necessary it can call for further delivery orders from any member, and the member shall have to furnish the same forthwith but if the goods are with a bank he shall have to give delivery orders on the bank directly as mentioned above.
" Bye law 137 A(1) deals with theobligations of a member whose clearance sheet shows outstanding sales and it reads : "137 A(1).
A member whose Clearance Sheet shows outstanding sales shall submit to the Clearing Housewith hisdelivery orders a complete list of bars(gold or silver) in his possession or in the possession of his Banker inBombay with their number and marks, to bedelivered against such delivery orders.
" As stated earlier, it is now common ground that the appellant did not carry out his obligations under this bye law.
Bye law 137 B whose proper construction is raised by this appeal deals with the obligations of members whose Clearance Sheet shows outstanding purchases.
It reads : "137 B. A member whose Clearance Sheet shows outstanding purchases will submit to the Clearing House with his Clearance Sheet a cheque certified "good for payment" or a demand draft on a Bank or a Bank 's payslip or cash for an amount sufficient to pay for all his outstanding purchases at the rate fixed by the Association.
Failing payment as aforesaid the purchases outstanding in the Clearance Sheet or a part thereof will be auctioned at the purchaser 's risk on the same day.
The cheques, demand drafts etc., so received by the Clearing House will be paid into the Clearing House Account in the Bank of Baroda Ltd., Bullion Hall Subbranch, and crossed cheques payable to bearer or payslips 255 of the said Bank in favour of the sellers whose delivery orders are given by the Clearing House to the purchasers will be handed over by the Clearing House to the said purchasers.
The sellers shall give delivery of the goods covered by the delivery order to the said purchasers against such cheques or payslip issued by the said bank.
Refusal by a seller to give delivery of goods covered by his delivery order to the purchaser against such a cheque or payslip during the time fixed for giving delivery, will amount to failure to give delivery and consequences in Bye law 147 will ensue.
" It was not contested that if by the transactions to which we shall refer presently, members whose Clearance Sheets showed outstanding purchases had fulfilled their obligations under Bye law 137 B, the Association was entitled to effect the purchases at the risk and cost of the appellant under the succeeding bye laws which confer upon the Association this power to effect purchases or sales to square the transactions of defaulting members.
An analysis of the bye law 137 B would show that a member whose Clearance Sheet showed outstanding purchases had, on the Vaida day, to file his Clearance Sheet and to make a payment into the Clearing House of an amount sufficient to pay for all his outstanding purchases at the rate fixed by the Association.
This payment had to be made along with the Clearance Sheets and had to be in one of four forms: (a) a cheque certified good for payment, or (b) a Demand Draft on a bank, or (c) a bank 's pay in slip, or (d) cash.
The question raised in this appeal, relates to whether certain of the purchasers had made payments into the Clearing House of the amounts payable by them in any of the permitted modes.
Before proceeding further we might add that the Bank of Baroda which was the Clearing House admitted that the amounts required to be paid by the several purchaser members had been received by it on the 3rd and the total amounts represented by these payments were credited to the Association.
Before setting out the matters in controversy as regards the form of payment adopted by certain purchasers under bye law 137 B, it is necessary to premise the narrative by a few facts.
As already stated, the Bank of Baroda Ltd. had been appointed as the Clearing House of the Association under bye law 120 in or about 1949 and had been functioning as such ever since.
To facilitate payments by and between members the Bank had opened a special branch called the 'Bullion Hall Sub branch ' in the premises of the 256 Association itself.
Bye law 174(3) required every member to open an account in the Bank, so that it might be convenient to pay or draw cheques for effecting clearance.
All the members had, in pursuance of and in obedience to this bye law, opened such accounts.
The Bank issued special pay in slips for doing its business as a Clearing House.
These slips were in triple foil, all of which had to be filled in by the member making the payment.
When a member made a payment into the Bullion Exchange Branch of the Bank the extreme right of the three parts which recited the payment to the credit of the Clearing House of the Association by the member named and of the amount, also specifying the particulars of the payment would be signed or initialled by the Cashier and Ledger Keeper and be retained with the Bank.
The paying in slip consisting of the other two parts in which similar entries were made and bearing the signature or initials of the Bank authorities was handed over to the member making the payment.
He had thereafter to present this slip to the Clearing House along with the Valan or the Clearance Sheet, and thereupon the Clearing House department would endorse receipt on the part to the extreme left which would be returned to the member the other part being retained by the Clearing House.
The settlement for the Vaida on February 3, 1963 appears.
to have been an exceptionally heavy one on account of the very large volume of sales and purchases for that settlement and there was a total outstanding sale of 1897 bars of silver with, of course, corresponding purchases of the same number.
Sellers of 1,004 bars gave delivery orders as required by bye laws 137 and 137 A but the appellant who had an outstanding sale of 853 bars failed to submit to the Clearing House the necessary delivery orders.
The purchasers of the 1,897 bars had, under the bye laws, to submit their Clearance Sheets and make payments into the Clearing House in the manner provided by bye law 137 B of a total sum of Rs. 88,31,050 by February 3, 1953.
By reason of the extraordinary situation created by the heavy payments having to be made coupled with a strike of the Clerks of the members on the previous day, the Directors of the Association passed a resolution extending the time for payment and delivery of Clearance Sheets beyond the usual banking hours to 7 P.m. on the 3rd February.
The point in controversy in the appeal is whether this amount had been paid into the Bank on the 3rd February to the credit of the Clearing House in the manner provided by bye law 137 B. Out of the Rs. 88,31,050, some amount was paid in cash, 257 Rs. 42,99,400 by cheques drawn by members on their respective accounts with the Bullion Hall Sub branch of the Bank of Baroda Ltd. in favour of the Association 's Clearing House account, Rs. 24,64,050 by four pay slips of other banks in favour of the Bank of Baroda Ltd., Rs. 15,30,150 by transfers by two members from their accounts with the Jhaveri Bazar branch of the Bank of Baroda Ltd., to the Bullion Hall Sub branch for payment to the Association, Rs. 4,65,000 was by a cheque drawn by a member on his account with the Fort Branch of the Bank of Baroda Ltd., in favour of the Association, Clearing House Account.
Of these, the submission of the appellant was that only the cash payment was a proper one and that the rest were not made in accordance with bye law 137 B. Before dealing with it, however, it might be stated that the Bank of Baroda Ltd. Clearing House submitted a statement on February 4, 1953 stating that all the payments totalling Rs. 88,31,050 had been received by it as a Clearing House and had been credited to the Association.
Now, taking first the amounts paid by cheques drawn by mem bers on their accounts in the Bullion Hall Sub branch, several points were urged in support of the contention.
The first was this : On February 3, 1953 the banking hours ended at 2.30 P.m. and several of the payments into the Clearing House Account by cheques drawn on the Banking account at this branch were made after that hour.
It was, therefore, contended that even if there was enough money in the accounts of the several members to meet the cheques drawn by them, still their cheques could not be treated as cash as the banking hours had passed.
This was answered by the Division Bench by pointing out that there was nothing illegal in the bank functioning for the purpose, of the members of the Clearing House after 2.30 P.m. that day.
There was evidence before the Court that the ledgers and other books of account in the bank were available for being looked into to ascertain whether a member 's account had sufficient funds to meet the cheques which had been drawn.
There was also evidence that the state of the member 's account was ascertained before the triplicate form was accepted by the bank and the two left side foils passed on to the depositing member for being handed over to the Clearing House and, as we stated earlier, on the next day the bank submitted a statement acknowledging receipt of the amount of the several cheques and showed their amounts to the credit of the Association.
In these circumstances, the learned Judges of the High Court came to the conclusion that there had been a payment as required by the bye law 137 B on February 3, 1953.
L3Sup./65 258 We entirely agree with the High Court as regards the alleged illegality said to have been caused by the Bank accepting cheques after the close of the usual Banking hours.
It would be noticed that the extension of the banking hours from 2.30 P.m. to 7 p.m. that day was not in contravention of any statute and whatever the position might have been, if such extension acted to the detriment of a constituent of the bank, in the case on hand it was really for the benefit of the customer.
In those circumstances, there was nothing illegal and, of course, nothing improper in the banking business having continued so long as the work of the bank as a Clearing House continued.
There were also other objections raised to support the argument that these payments were contrary to bye law 137 B.
To appreciate them it would be necessary to state a few more facts.
From the analysis that we have made of payments that were made into the Clearing House by the purchasers in satisfaction of the amounts due by them for the settlement, Rs. 42,99,400 were by way of cheques drawn on the Bullion Hall Sub branch of the bank.
We have also stated that the staff of the bank to whom the cheques were presented had endorsed on the slips that there were sufficient funds in the account to enable the cheque to be cleared and that it was after this process that the pay in slips were presented to the Clearing House with the Clearance Sheets in fulfilment of their obligations under the bye law.
In regard to these payments by transfer entries to the credit of the Association it was urged (1) That several of the members numbering about 17 or so, did not, in fact, have enough funds in their accounts before 7 P.m. that day to enable the cheques which they drew in favour of the Clearing House to be honoured and that in consequence notwithstanding the acceptance of the cheques by the bank, such a payment could not be deemed within bye law 137 B.
It was common ground that at 2.30 P.m. on the 3rd of February the amount to the credit of several of these members was not sufficient to enable the cheques which they issued later in the day to be cleared.
But before the cheques were actually presented the purchaser members paid into their accounts (a) refunds which they obtained of margin moneys which they had deposited with the Association and to which they were entitled under the bye laws and (b) other cheques in favour of the Bank of Baroda.
Taking up first the margin money refunds, purchasers had, under the bye laws, to pay margin moneys on their purchases and these had to be refunded to them on fulfilment of certain conditions. 'Me amounts 259 originally paid as margin by the purchasers had been credited to the Association and when the amount had to be refunded payment orders were made out by the Association on the 3rd of February of the amounts due to be refunded and these refund orders were paid by the respective purchasers to the credit of their accounts and their accounts were so credited with the Bullion Hall Subbranch.
It was not the case of the appellant that the members were not entitled to the refund granted by the Association but what was objected to was that the refunds were really not due that day and had been improperly paid over by the Association in advance of the time when it was due Bye law 33 C(2) deals with the refund of margin money and it reads: "Where the conditions described in clause (a) or (b) as the case may be, cease to exist, the Association shall return the margin amount to the members concerned on the day following the next clearance day after making the necessary adjustment.
" On this the appellant 's case was that the margin money could have been returned only on the 4th and that the Association acted improperly in refunding the amounts to the purchasers on the 3rd itself to enable them to utilise that money for the purpose of making their payments towards the settlement.
We do not see any sub.
stance in this complaint, nor do we see any relevance of this to the point now in controversy, viz., whether there had been a compliance with bye law 137 B. As already pointed out, the Vaida was originally fixed for the 2nd of February and if that had stood the amount would have been refundable on the 3rd.
It was, however, owing to a strike of the Gumashtas of the members that a situation had arisen by reason of which the Vaida had to be postponed by a day.
Whether as urged by Mr. Purshottam, that upon the proper construction of bye law 33 C that when a Vaida day is shifted the day fixed for the refund of the margin money also gets shifted or whether it would be payable on the day originally fixed, would, in our opinion, make no difference to the result.
The bye law imposes an obligation on the Association to refund the margin money on the day next after the Vaida.
On its terms, however, if the conditions of cls.
(a) & (b) cease to exist, and obviously they ceased to exist in the present case even on the 2nd, there is nothing in the bye law to preclude the Association from refunding the margin money.
Again, even if the margin money were returned before such refund could be legally enforced, the propriety or impropriety of the refund would have no bearing on the only point for consideration relevant to the question whether bye law 137 B was 260 complied with or not viz., whether the accounts of the members were in credit at the time the cheques were presented.
(2) The next category of objection under this head was in relation to the bank having given credit to one of the members for the amount of a cheque of Rs. 2,00,000/ which was drawn on the Bank of India, Australia and China.
Now, the evidence in the case was that this constituent Khimji Poonja & Co. had to pay Rs. 4,65,000/ as a purchaser.
He had a credit balance at 2.30 P.m. on the 3rd of Rs. 1,93,215/13/5.
To enable him to meet the cheque for Rs. 4,65,000/ which he drew on the Bullion Hall Sub Branch he paid into his account Rs. 1,05,500/ as refund of margin money.
Besides, he drew a cheque for Rs. 2,00,000/on his account with the Bank of India, Australia & China in favour of the Bank of Baroda and paid this cheque to the credit of his account with the Head Office of the Bank of Baroda.
The Head Office intimated this credit to the Bullion Exchange Branch and when he presented his cheque for Rs. 4,65,000/ to the Bullion Exchange Branch the same was honoured and the amount credited to the Association.
The learned Judges accepted this evidence and the explanation and held that this constituent had enough funds with the Bank to meet the cheque of Rs. 4,65,000/ which he drew.
Mr. Purshottam challenged the credibility of this evidence.
We do not, however, propose to go into it for the reason that if, as a matter of fact, the Bank of Baroda as a Banking Institution gave Khimji Poonja & Co. credit for Rs. 2 lakhs that was a matter between those two parties and is not a matter which bears upon the validity of the payment for Rs. 4,65,000/ which Khimji made.
It is not disputed, or rather it cannot be disputed that the Head Office of the bank credited Khimji Poonja & Co. with the sum of Rs. 2,00,000/ and there is evidence as to the intimation of this credit by the Head Office.
Of course, the cheque by Khimji on the Chartered Bank was not certified "good for payment" but that was not a payment under bye law 137 B. The Head Office accepted it and therefore nothing follows from their not having insisted on that cheque being certified.
The fact remains that the Head Office accepted that cheque; we shall take it in anticipation of being cleared, and as a fact it was cleared the next day.
With the propriety of the Head Office of the Bank crediting the constituent with the amount of that cheque before actual realisation neither the Bullion Exchange Branch nor the Association to whose account the sum of Rs. 4,65,000/ represented by the cheque drawn in their favour was credited, nor the appellant are concerned.
When once the Bank credited that sum into the account there was enough 261 credit for meeting the cheque of Rs. 4,65,000/ which is the only point we are concerned with.
(3) The third head of objection that was raised, and this was the one which was the subject of strenuous contest in the High Court and before us, was whether the cheques on the Bullion Exchange Sub branch which were paid in with the Clearance Sheets were "certified good for payment" within bye law 137 B.
It was urged that only four modes of payment were recognised and that a cheque even on the customer 's account in the same bank was still a cheque and that unless 'It was certified good for payment it did not satisfy the requirement of a valid payment within bye law 137 B.
In this connection it was stressed that having regard to the consequences flowing from a payment or non payment on the terms of the bye laws a strict and literal construction of the bye law was called for and that the Courts should so construe the bye law and hold that a literal and not merely a substantial compliance with it in the sense of the Clearing House having received payment would satisfy the rule.
In connection with the submission that cheques drawn against the customer 's account in the same branch of the bank could not be "cheques certified good for payment" even though there were enough funds to meet the cheques, learned Counsel drew our attention to the fact that certification of a. cheque was a well known form of commercial procedure which bankers adopted for the purpose of clearance by which the certifying and the Clearing bank became bound to each other.
Reliance was, in this connection, placed on the observations of the Privy Council in Gaden vs
The Newfoundland Savings Bank(1) where it is stated : "The only effect of the certifying is to give the cheque additional currency by showing on the face that it is drawn in good faith on funds sufficient to meet its payment, and by adding to the credit of the drawer that of the bank on which it is drawn.
" Reference was also made to the judgment of Lord Wright in Bank of Baroda vs Punjab National Bank(2) where the histroy of certification or marking of cheques in India is dealt with.
We do not, however, derive any assistance from these decisions on the point now in controversy.
The first thing to be noticed about this objection as to certification is that there is no question of certification where a cheque drawn on an account in a branch of a bank is paid into the same branch to the credit of another party who has an account in that branch.
Certification is a method adopted when a (1) [18991 A.C. 281 at p. 285.
(2) 71 I.A. 124.
262 bank on which a cheque is drawn verifies the customer 's account on which it is drawn and indicates on the cheque that there are enough funds in his account to meet that cheque.
It is obvious that there could be no question of such a certification by a bank of a cheque ,drawn on an account in a branch when the drawer pays it to the credit of a different account in the same branch.
The verification of the account of the constituent for the purpose of ascertaining whether there is enough credit to meet the cheque which precedes a certification takes place at the very moment when the cheque is cleared.
There is therefore no question then of two banks a certifying bank on which the cheque is drawn and a clearing bank into which that cheque is paid.
In such circumstances, we should consider that the proper view to take of the payment would be that it is really a payment in cash.
The Privy Council had, in Arsene A. Larocque vs Hyacin the Beauchmin,(1) to consider whether the payment a company by receipts given by it on account of the purchase price of the property which they sold was a payment in cash.
In dealing with this question Lord Macnaghten quoted with approval the following from the judgment of James L. J. in Spargo 's(2) case : "It was said by the Lord Chancellor, and we entirely concurred with him, that it could not be right to put any construction upon that section (section 25 of the Companies Act, 1867) which would lead to such an absurd and un justifiable result as this, than in exchange of cheques would not be payment in cash, or that an order upon a banker to transfer money from the account of a company would not be a payment in cash." and another passage from the judgment of Mellish, L.J. "It is a general rule of law that in every case where a transaction resolves itself into paying money by A to B and then handing it back again by B to A, if the parties meet together and agree to set one demand against the other, they need not go through the form and ceremony of handing the money backwards and forwards.
" We consider these observations apposite and hold that where a payment was made by a cheque drawn on an account with the Bullion Exchange Sub branch and the amount represented by that cheque was transferred to the Clearing House Account of the Association it is virtually a payment in cash, though in form a payment by cheque.
(1) (2) L.R. 8 Ch.
407. 263 The next transaction to which objection was taken was a payment into the Bullion Hall Sub branch of a sum of Rs. 4,65,000/ by one Sri Bansilal & Sons.
The evidence was that the cheque was drawn not on his account on the Bullion Hall Sub branch of the Bank of Baroda but with the branch of the Bank at the Fort, Bombay.
The evidence which the Court accepted was that on the presentation of the cheque the staff ascertained that the constituent had enough funds in the bank for the cheque to be cleared and accepted it and credited the same to the account of the Bullion Exchange Association.
The objection raised to the receipt of this payment was also founded on the cheque not being certified as good for payment.
It will be noticed that the only point of difference between this cheque and the cheques which were drawn on accounts of members with the Bullion Hall branch which we have dealt with just now is, that the cheque for Rs. 4,65,000/was not drawn on the drawer 's account with the Bullion Hall Subbranch but on an account in the same bank at the Fort branch.
For the purpose of considering this point it is not necessary to enter on any examination of the question as to what extent the two branches of the same bank are separate entities.
There is no doubt that a customer cannot claim to draw cheques except on the branch where his moneys are deposited and on the account in respect of which the cheque is issued.
But that is not what is in controversy in the present case.
Here a cheque drawn on the Fort Branch is paid into the Bullion Hall Sub branch to the credit of the Association.
The Bullion Hall Sub branch of the bank accepts that cheque and credits it to the Association after ascertaining that the drawer of the cheque has enough funds at the Fort branch for meeting that cheque.
The only question is whether the payment could be treated as by a cheque which is certified as good for payment.
We consider that what we have stated earlier as to the position in regard to a cheque drawn on an account in the same branch would also apply to the present case and that a certificate of the banker that is referred to in the bye law is a certificate of a bank different from that into which the cheque is being paid.
Even if there be any doubt in this matter we are satisfied that when once the staff at the Bullion Hall Sub branch ascertained that the cheque was backed by sufficient funds to the credit of the customer in the account on which it is drawn, it satisfies the requirements of a cheque certified as good for payment within bye law 137 B.
The learned Judges of the High Court, therefore,, rightly held that this payment was not outside the payments permitted by the said bye law.
The last of the cases concerns a payment by one Jethalal Sangji Shah of a cheque for Rs. 1.16,250/ .
The cheque was 264 made in favour of the Bank of India Ltd. not certified good for payment and was paid into the Bullion Hall Sub branch.
The Clearing House received this cheque from Jethalal Sanagi Shah after obtaining a declaration from him that he had enough credit in his account with the Bank of India for meeting that cheque.
It was stated that the Directors of the Association were approached by the Bank as to whether this cheque could be received in payment and that it was on their advice that a declaration in the form specified was taken from the member and it was only thereafter that the payment was accepted as conforming to bye law 137 B. Mr. Purshottam submitted that this payment could certainly not be within bye law 137 B. and we consider that learned Counsel is right.
This, however, does not help him because it concerns the price for 25 bars and, having regard to the quantity of silver with which we are concerned, Mr. Purshottam could not but concede that even if the payment by this constituent was irregular it would not affect the validity of the purchase at the risk of the appellant.
We thus reach the conclusion that except the last payment which was not quite regular but whose irregularity is not material, all the other payments were substantially, if not literally, in accordance with the requirements of bye law 137 B and in consequence the purchase made by the Directors at the risk of the appellant was legal and justified under the bye laws.
Before concluding it is necessary to advert to the fact that both before the learned trial Judge as well as before the Division Bench a detailed analysis was made of the several payments made by about 17 members of the Association with a view to establish that those payments were not, even if they were made on the 3rd.
in accordance with bye law 137 B.
The learned Judges considered the several objections which were formulated to the validity of these payments and after discussing some of the details of the individual cases which were placed before the Court, recorded their finding that the payments satisfied the requirements of the relevant bye law.
In view of the arguments addressed to us we have not examined in detail each one of the objections but have dealt only with those specifically urged before us and the tenability in general of the principles on which these objections were based.
The appeal accordingly fails and is dismissed with costs.
Appeal dismissed.

summary:
The members of the Bombay Bullion Association, respondent herein, were permitted under the Forward Contracts Control Act (Bom.
Act 64 of 1947) to carry on forward dealings in bullion subject to the bye laws framed by the Association.
The appellant who was a member of the Association and was carrying on business as bullion merchant, defaulted in performing his obligation to tender silver of which he was the forward seller, on the settlement day, and so the Association, purporting to act under its bye laws, purchased a quantity of silver at the risk of the appellant and claimed from him the difference in price.
The appellant paid the amount and challenging the legality of his being treated as in default filed a suit for its refund.
The suit was dismissed by the High Court.
In appeal to the Supreme Court it was contended that the Association should not have made the purchase because the purchasers had not fulfilled the terms of their obligations under the bye laws in making their payments to the Association.
The contentions were that : (i) certain of the purchasers who had made payments into the Clearing House of the Association by cheques, drawn on their account in the Clearing House, had not had the cheques certified as good for payment as required by bye law 137 B, and (ii) one payment was made by a purchaser, by a cheque drawn, not on the Clearing House but on a branch of the Clearing House in the city, and which besides was not certified good for payment as required by the bye law.
HELD : (i) Where a payment was made by a cheque drawn on in account with the Clearing House and the amount represented by that cheque was transferred to the Clearing House Account of the Association, it is virtually a payment in cash, though in form a payment by cheque.
Since payment in cash is one of the modes of payment recognised by the byelaw it satisfied the requirement of a valid payment.
[255 E F; 262 G H] Arsene A. Larocque vs Hyacinthia Beauckemin, (1897) A.C. 358, referred? to.
(ii)Where the Clearing House had accepted the cheque and credited it to the Association after ascertaining from the branch on which it was drawn, that the drawer of the cheque had enough funds at that branch for meeting of the cheque, the cheque need not be certified as good for payment.
The position with respect to such a cheque is the same as when the cheque is drawn on an account in the same branch, because the certificate of the banker that is referred to in the bye law is the certificate of a bank different from that into which the cheque is being paid.
In any event, when the staff of the Clearing 1 louse ascertained from the branch that the cheque was backed by sufficient funds to the credit of the customer in the branch on which it was drawn, it satisfied the requirements of a cheque certified as good for payment within the bye law.
[260 B; 262 A C; 263 G H] up./ 65 17 250


judgement:
iminal Appeals Nos.
218 to 221 of 1964.
Appeals by special leave from the judgment and orders, dated May 21, 1964 of the Madhya Pradesh High Court (Indore Bench) at Indore in Criminal Appeals Nos. 30 and 31 of 1962 Nos. 246 and 258 of 1963 respectively.
Jai Gopal Sethi, R. C. Mukati and R. L. Kohli, for the appellant (in all the appeals).
I. N. Shroff, for the respondent (in all the appeals).
284 The Judgment of the Court was delivered by Raghubar Dayal, J.
The appellant, in these four appeals by special leave, was convicted in four cases of an offence under section 409 I.P.C. and was sentenced to 4 years ' rigorous imprisonment and fine in the first two cases on January 17, 1962, by the First Additional Sessions Judge, Ujjain, Shri H. B. Aggarwal.
He was also convicted in these two cases of offences under section 467 read with section 471 and section 477A I.P.C. The sentences imposed for these offences were to run concurrently with the sentence of imprisonment for the of fence under section 409 I.P.C. The sentences imposed in the two cases for the offence under section 409 I.P.C. were to run consecutively as no order had been made by the Sessions Judge for the sentence in the case in which judgment was pronounced later, to run concurrently with the sentence imposed in the other case.
In each of the other two cases, the appellant was sentenced to 3 years ' rigorous imprisonment under section 409 I.P.C. by Shri Dube, First Additional Sessions Judge, Ujjain, on July 20, 1963.
The Sessions Judge ordered the sentences in these two cases to run concurrently, but did not order them to run concurrently with the sentence awarded in the first case on January 17, 1962.
The appeals against the conviction of the appellant in the four cases were dismissed by the High Court.
With respect to the sentence in the appeal against the first conviction in Sessions Trial No. 35 of 1961, the High Court said : "Coming to the sentences, the basic offence is criminal breach of trust under section 409 IPC and a sentence of four years ' rigorous imprisonment cannot, in these circumstances, be considered excessive.
If anything, I would call it somewhat lenient.
" The sentence of fine of Rs. 1,000 was considered to be 'feeble '.
In disposing of the appeal against the conviction in the second case, Sessions Trial No. 36 of 1961, the High Court said with respect of the sentence : "The sentence of imprisonment is also low; but possibly the Sessions Court took account of the fact that there were other and similar cases against Ranchhodlal in which there was a possibility of a conviction.
" In the third appeal from the order in Sessions Trial No. 55 of 1962, the High Court said : "If there had been an application for enhancement of sentence, I would not have hesitated to increase the 285 sentence because this paying himself on the part of the appellant is a very serious matter.
But there being no such prayer by the State, the matter has to be left at that.
" In the fourth appeal, the High Court said "The trial Court has awarded a sentence of three years without fine.
It is quite lenient.
" The result of the four convictions and sentences passed in these cases is that the appellant has to undergo imprisonment for 11 years for mainly committing the offences under section 409 I.P.C. with respect to different amounts, in his capacity as Sarpanch of the Mandal Panchayat, Ujjain.
Special leave was granted on the question of sentence only.
One of the grounds taken in the special leave petitions was that his being tried in four cases for committing criminal breach of trust with respect to different amounts, led to the petitioner 's prejudice and harassment inasmuch as he was to undergo sentences, of imprisonment consecutively.
Sub section (1) of section 397, Cr.
P.C. provides that when a person already undergoing a sentence of imprisonment is sentenced on a subsequent conviction to imprisonment, such imprisonment shall commence at the expiration of the imprisonment to which he has been previously sentenced, unless the Court directs that the subsequent sentence shall run concurrently with such previous sentence.
It follows that a subsequent sentence of imprisonment is ordinarily to commence at the expiration of imprisonment under the previous sentence, and that the Court recording the conviction has the discretion to order that the later sentence would run concurrently with the previous one.
The Additional Sessions Judge who convicted the appellant in two cases in January 1962 did not exercise his discretion in favour of the appellant.
The other Sessions Judge who convicted the appellant in two cases in 1963 exercised his discretion to the extent that he made the sentences in those two cases concurrent and did not make those sentences concurrent with the earlier sentences imposed on the appellant in January 1962.
The judgments in the four Sessions Trials are not before us and we are not in a 'Position to say whether this aspect of the matter was urged before the Sessions Judges when they recorded the convictions and sentenced the appellant in the four Sessions Trials.
It was not urged before the High Court that the sentences in all the four cases be made to run concurrently.
If it had been urged, the decision might have gone against the appellant if one 286 considers the remarks of the High Court on the nature of the sentence in each case.
The High Court considered that the sentences were inadequate.
Learned counsel for the appellant has not urged that there is any illegality in the sentences awarded to the appellant in the various Sessions cases or in not making them run concurrently with the sentence awarded in the first Sessions Trial No. 35 of 1961.
He has, however, urged that the various acts of criminal breach of trust which formed the basis of the convictions took place within a period of a few months, from November 19, 1955 to February 23, 1956, and that therefore the appellant should have been charged for committing criminal breach of trust with respect to the total amount he had misappropriated, in view of section 222 Cr.
P.C. and that if he had been so charged, the charge for misappropriating the total amount would have been the charge for one offence and the appellant would have been tried on such one charge at one trial and, on conviction, would have been awarded only one sentence which would not have ordinarily exceeded 4 years ' rigorous imprisonment.
Section 222 Cr.
P.C. reads : "(1) The charge shall contain such particulars as to the time and place of the alleged offence, and the person (if any) against whom, or the thing (if any) in respect of which, it was committed, as are reasonably sufficient to give the accused notice of the matter with which he is charged.
(2) When the accused is charged with criminal breach of trust or dishonest misappropriation of money, it shall be sufficient to specify the gross sum in respect of which the offence is alleged to have been committed, and the dates between which the offence is alleged to have been committed, without specifying particular items or exact dates, and the charge so framed shall be deemed to be a charge of one offence within the meaning of section 234 : Provided that the time included between the first and last of such dates shall not exceed one year.
" Sub section (2) is an exception to meet a certain contingency and is not the normal rule with respect to framing of a charge in cases of criminal breach of trust.
The normal rule is that there should be a charge for each distinct offence, as provided in section 233 of the Code.
Section 222 mentions what the contents of the charge should be.
It is only when it may not be possible 287 to specify exactly particular items with respect to which criminal breach of trust took place or the exact date on which the individual items were misappropriated or in some similar contingency, that the Court is authorised to lump up the various items with respect to which criminal breach of trust was committed and to mention the total amount misappropriated within a year in the charge.
When so done, the charge is deemed to be the charge of one offence.
If several distinct item with respect to which criminal breach of trust has been committed are not so lumped together, no illegality is committed in the trial of those offences.
In fact, a separate trial with respect to each distinct offence of criminal breach of trust with respect to an individual item is the correct mode of proceeding with the trial of an offence of criminal breach of trust.
Learned counsel for the appellant also relied on section 234 Cr.
P.C. and urged that three offences of criminal breach of trust could have been tried at one trial as section 234 provides that when a person is accused of more offences than one of the same kind committed within the space of twelve months from the first to the last of such offences, whether in respect of the same person or not, he may be charged with, and tried at one trial for any number of them not exceeding three.
This again, is an enabling provision and is an exception to section 233 Cr.
If each of the several offences is tried separately, there is nothing illegal about it.
It may also be mentioned that the total number of items charged in the four cases exceeded three.
Lastly, reference was made, on behalf of the appellant, to section 235 Cr.
P.C. and it was urged that all these offences were committed in the course of the same transaction, and therefore, they should have been tried at one trial.
Assuming, without deciding, that these offences could be said to have been committed in the course of the same transaction, the separate trial of the appellant for certain specific offences is not illegal.
This section too is an enabling section.
Apart from the fact that the separate trials of the appellant in four cases for committing breach of trust with respect to several items was not illegal, there is nothing on record to show that the investigating agency had worked out all the cases of criminal breach of trust prior to prosecuting the appellant for the offences of which he was tried at Sessions Trial No. 35 of 1961.
If all the offences had not been worked out prior to that, there could not have been a joint trial for all of them even if that could have been thought to be more reasonable way of proceeding against the appellant.
288 The fact that the first two Sessions Trials ended in a conviction in January 1962 on commitments made sometime in 1961 and that the Sessions Trials ending on July 20, 1963 were on commitments made sometime in 1962, prima facie indicate that the investigating agency submitted the charge sheets against the appellant for the offences tried in 1963 after and possibly long after it had submitted charge sheet with respect to the first two cases.
There cannot therefore be any design in prosecuting the appellant for different offences in four cases.
We are, therefore, of opinion that there had been no illegality in the Court 's trying the appellant in four cases and in not ordering the various sentences awarded in different Sessions Trials to run concurrently with the sentences awarded in Session Trial No. 35 of 1961.
It has been strongly urged that the total sentence of 11 years which the appellant has to undergo for committing the various offences of criminal breach of trust is severe and that if he had been tried for these offences at one trial after taking advantage of the provisions of section 222 Cr. P.C., the sentence which would have been awarded to him would not have exceeded 4 years, as that is the normal maximum sentence awarded for an offence under section 409 I.P.C. An offence under section 409 I.P.C. is punishable up to imprisonment for life or imprisonment up to 10 years.
The measure of the sentence is usually governed by the nature of the offences committed and the circumstances of their commission and it cannot be held as a hard and fast rule that a. sentence is not to exceed a certain period of imprisonment when the law has itself laid down the extent up to which a sentence can be inflicted for a certain offence and has left discretion to the Court to adjust the sentence according to the circumstances of each case.
We need not detail the circumstances of these cases, but would simply note that they do not justify taking any lenient view about the sentences for the offences committed by the appellant who held a very responsible position as Sarpanch of the Societies and as such had to deal with the proper disbursement of public money for the purposes of public benefit.
He miserably failed in discharging these duties in the manner expected of him.
A deterrent sentence is always essential so that others in such responsible Positions and having occasions to deal with large sums of public money do not victim to greed and dishonesty.
We, therefore, dismiss these appeals.
Appeals dismissed.

dataset_name: IN-Abs

summary:
The appellant was convicted in four cases for an offence under section 409 I.P.C. He was sentenced to imprisonment and line in the first two cases.
The sentences imposed in the other two cases for the offence under section 409 I.P.C. were to run consecutively.
The High Court dismissed the appellant 's appeal.
HELD : (i) There had been no illegality in the Court 's trying the appellant in four cases regarding amounts embezzled within a few months and in not ordering the various sentences awarded in different Sessions Trials to run concurrently.
[288 C] The normal rule is that there should be a charge for each distinct offence, as provided in section 233 of the Code.
Section 222 mentions what the contents of the charge should be.
It is only in certain circumstances that the court is authorised to Jump up the various items with respect to which criminal breach of trust was committed and to mention the total amount misappropriated within a year in the charge.
When so done, the charge is deemed to be the charge of one offence.
[286 H 287 B] (ii)Section 234 is an enabling provision and is an exception to a. 233 of Code of Criminal Procedure.
There is nothing illegal in trying each of the several offences separately.
[287 E] (iii)Assuming without deciding, that these offences could be said to have been committed in the course of the same transactions, the separate trial for certain specific offences is not illegal.
Section 235 too is an enabling section.
[287 F G]


judgement:
minal Appeal No. 128 of 1962.
Appeal from the judgment and order dated January 30, 1962, of the Calcutta High Court in Criminal Appeal No. 429 of 1960.
section C. Mazumdar, for the appellant.
P. K. Chakravarti and P. K. Bose, for the respondent No. 2.
The Judgment of the Court was delivered by Wanchoo, J.
This is an appeal on a certificate granted by the Calcutta High Court.
The appellant hired a westing house, 399 D. C. motor from the Modem Electrical Works (hereinafter referred to as the Works) on April 4, 1958 on a rent of Rs. 40 per month.
The hiring period was to last for at least three months and it was agreed that if the motor or parts thereof were lost or damaged by the appellant, he would be bound to pay the whole cost of the motor and the parts.
The motor remained in the use of the appellant and hire charges were paid by him from April 1958 to January 1959.
Thereafter it is said that no hire charges were paid.
On June 8, 1959, the appellant wrote a letter to the Works in which he said that he had purchased the motor in question for Rs. 600 on condition that the same would be tried for three months, and if it was found satisfactory the money would be paid and the purchase completed.
The letter also stated that the agreement was that if the motor was not found satisfactory, the appellant would pay three months ' hire at Rs. 40 per month and the motor would be returned thereafter.
Finally, the appellant said in the letter that the Works had been paid Rs. 620 in all and thus the purchase had been completed.
The appellant therefore requested the Works to give him a slip saying that the motor had been sold to the appellant, as no further money was due to the Works.
On June 15, 1959, the Works sent a reply to the appellant denying that any such agreement as was alleged by the appellant had been made.
It was also denied that Rs. 620 had been paid, and therefore the purchase was complete.
Finally it was said that the appellant had only paid Rs. 400 and Rs. 200 were still due from him for the months of February to June 1959.
The appellant replied to this letter in which he reiterated his stand taken in the earlier letter and gave details of how the payment of Rs. 620 had been made.
Thereafter the Works filed a complaint through its servant Mohd. Ayub on July 1, 1959 in which after stating its case it urged that the appellant had committed criminal breach of trust and was therefore guilty under section 406 of the Indian Penal Code.
On this complaint the appellant was summoned by the Presi dency Magistrate 9th Court, Calcutta and after taking some evidence for the prosecution, the Magistrate discharged the appellant holding that there was no satisfactory evidence of dishonest misappropriation or conversion of the motor by the appellant to his own use and that the dispute between the parties was essentially of a civil nature.
Mohd. Ayub then went in revision to the High Court.
The High Court set aside the order of discharge and directed further enquiry in the matter by another Magistrate.
The case then went back to the Third Presidency Magistrate, Calcutta, 400 who eventually found the appellant not guilty and ordered his acquittal on the ground that there was dispute between the parties as to the actual nature of the transaction and it could not be said that there was any dishonest intention on the part of the appellant to misappropriate the motor.
Mohd. Ayub then filed an appeal before the High Court under section 417(3) of the Code of Criminal Procedure.
Eventually the matter was heard by a Division Bench of the High Court, and it came to the conclusion that it was clear from the letter of June 8, 1959 (to which we have already referred) that the same could not have been written unless the appellant dishonestly in violation of the entrustment wanted to cause wrongful loss to the complainant and wrongful gain to himself.
It was further held that the letter did not show that there was a bona fide claim of ownership over the property and the claim was merely a pretence which could not exonerate the appellant from being punished under section 406 of the Indian Penal Code. 'The appellant then applied for a certificate to enable him to file an appeal to this Court, which was granted; and that is how the matter has come up before us.
We are of the opinion that this appeal must succeed.
It is not in dispute between the parties that the motor was entrusted to the appellant by the Works for his use.
The dispute was whether this entrustment was merely by way of hire (which was the case of the Works) or, as was the case of the appellant, was on the basis of an agreement between the parties that the appellant would purchase the motor if he found it satisfactory after trying it for .three months and pay Rs. 600 as the price and that he would return it if he found it unsatisfactory during this period of three months and pay Rs. 40 each month as hire for that period.
The real dispute between the parties therefore was as to the nature of the agreement between them when the motor was entrusted to the appellant in April 1958.
That dispute was clearly of a civil nature.
The Works however contended that by writing the letter of June 8, 1959 the appellant committed breach of trust and was guilty under section 406 of the Indian Penal Code.
Now in that letter the appellant put forward his side of the case as to the terms of the agreement when he took delivery of the motor in April 1958.
The question is whether by writing that letter the appellant could be said to have committed the offence defined in section 405 of the Indian Penal Code and punishable under section 406 thereof.
Now section 405 runs as follows : "Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly mis 401 appropriates or converts to his own use that property, 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 he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits criminal breach of trust.
" It may be accepted that the appellant was entrusted with the motor by virtue of the agreement between him and the Works, the terms of which are seriously in dispute.
The question however is whether the 'appellant dishonestly misappropriated or converted to his own use that motor.
On the facts in the present case the motor was handed over to the appellant for his use even according to the case of the Works.
Unless therefore it can be shown that the appellant by doing something to the motor which he was not entitled to do dishonestly misappropriated or converted the motor to his own use, he cannot be guilty of breach of trust under this part of section 405.
Now the case of the Works is that the appellant must be deemed to have misappropriated or converted to his own use the motor by writing the letter of June 8th.
It is clear however that the letter shows no change in the use of the motor, which, according to the Works, the appellant had hired for his own use.
Therefore it cannot be said that merely by writing that letter of June 8, the appellant dealt with the motor in such manner as would amount to its misappropriation or conversion to his own use by him.
Clearly the appellant was using the motor for his own purpose before that letter and continued to use it in the same way after the letter.
That letter therefore cannot in our opinion result in the misappropriation or conversion of the motor to his own use by the appellant within the meaning of these words in section 405 in the circumstances of the present case.
It is however urged that even if that be so, the appellant must be held to have dishonestly used or disposed of the motor in violation of the legal contract, express or implied, which he had made touching the discharge of such trust, because of the letter of June 8.
Now it is clear from the receipt given by the appellant to the Works when he took the motor in April 1958 that he was taking it for his own use on certain terms.
There is however nothing to show that by writing the letter of June 8 the appellant used the motor in violation of any legal contract, express or implied, which he bad made with respect to it for use of the motor was the same before the letter as well as after it.
Nor can it be 402 said that the appellant had disposed of the motor in violation of any legal contract which he had made with respect thereto for it is not the case of the Works that the appellant had parted with the possession of the motor to somebody else.
If, for example, the appellant had sold that motor, there might have been something to be said for the view that he had disposed of the motor in violation of the contract with respect to it even if it was a hirepurchase contract.
But on the facts of this case all that the letter of June 8 does is to put forward the case of the appellant with respect to the transaction of April 4, 1958.
So far as the use of the motor is concerned there has not been any change in it to indicate either misappropriation or conversion or disposal of it in any manner against the terms of the contract, express or implied.
Clearly section 405 contemplates something being done with respect to the property which would indicate either misappropriation or conversion or its use or disposal in violation of the contract, express or implied.
But where, as in the present case, nothing was done with respect to the use of the property which was not in accordance with the hiring agreement between the parties, it cannot be said that there was misappropriation or conversion of the property or its use or disposal in violation of the contract.
We are not expressing any opinion as to the correctness of the case either of the appellant or of the Works in this behalf.
All that we emphasise is that the letter of June 8 merely raises a ' dispute of civil nature between the parties and there is no question of any criminal breach of trust with respect to the motor on the basis of that letter.
In this view of the matter we allow the appeal, set aside the conviction of the appellant and order his acquittal.
The fine, if paid.
will be refunded to him.
Appeal allowed.

summary:
The appellant took an electric motor from an electrical Works in which the respondent was employed.
Dispute arose about the terms on which the motor had been taken.
The appellant wrote a letter to the Works that he had purchased the motor after paying its full price; on behalf of the works it was said that it had only been given on hire.
The Works, through the respondent, filed a complaint against the appellant alleging breach of trust.
The complaint was dismissed by the trying magistrate but in appeal under section 417(3) Criminal Procedure Code the High Court held that the claim of ownership made by the appellant in his letter was not bona fide and that by writing the said letter he had sought to cause wrongful gain to himself and wrongful loss to the works in violation of the entrustment, which made him guilty under section 406 of the Indian Penal Code.
In appeal to the Supreme Court by special leave, HELD:The appeal must succeed.
Clearly section 405 contemplates something being done with respect to the property which would indicate either misappropriation or conversion to the offender 's own use, or its use or disposal in violation of the contract express or implied.
But when as in the present case nothing was done with respect to the use of the property which was not in accordance with the hiring agreement between the parties it cannot be said there was misappropriation or conversion of the property or its use or disposal in violation of the contract.
The appellant did not part with the possession of the motor to any body else; he put it to his own use the purpose for which he had taken it.
The use of the motor remained the same after the letter in question as before it.
The said letter merely raised a dispute of a civil nature between the parties and there was no question of any criminal breach of trust punishable under section 406 with respect to the matter on the basis of that letter.
[401 D F; 402 E]