# 196! se1mn1Ja, 27. 3!2 SUPREME COURT REPORTS [1963] SUPP, TULSI RAM v. STATE OF U. P. u~.rER IMAM, K. suBBA RAo, N. R~JAGOP.4.LA

- **Citation:** [1963] Supp. 1 S.C.R. 382
- **Court:** Supreme Court of India
- **Decided:** 1963
- **Case number:** Criminal Appeals Nos. 62 and 63 of 1958
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/196-se1mn1ja-27-3-2-supreme-court-reports-1963-supp-tulsi-ram-v-state-of-u-p-u-2715
- **Pages:** 27

## Headnote

196!
se1mn1Ja, 27.
3!2 SUPREME COURT REPORTS [1963] SUPP,
TULSI RAM
v.
STATE OF U. P.
u~.rER IMAM, K. suBBA RAo, N. R~JAGOP.4.LA
AYYANGAR and J. R. MuDHOLKAR, JJ.)
Criminal Trial-Conspiracy-Sanction-Letter of Under
&cretary stating Governor has grrznted sanction-If sufficientPruumpfion as to official acta-Gheating--Dishonutly- Wro11j1f11l gain-Whether wrongftil loss also necessary-Sentence-Red11ction of-Gode of G1·iminal Procedure, 1898 (Act V of 1898),
s. 196A-lndian Penal Code, 1860 (Act ][LV of 186~), s. J2~.
The appellant• were tried and convicted for conspiracy to
cheat certain banb. The pro1ecution had put on record a letter
from the Under Secretry to Government which stated that the
Governor had been pleased to grant sanction for the pro1ecution
of the appellants.
The sanction was not challeneed before the
trial court or the High Court, but before the Supreme Court the
appellants contended that no sanction as required bys. 196A,
Code of Criminal Procedure was on record and that the document on record did not show on its face that the facts of the case
had been considered by the Governor. The appellant further
contended that for conviction for cheating the prosecution had
to establish both that the appellants had caused wrongful gain to
themselves and caused wrongful loss to the bank! and that as no
wrongful loss to the banks had been established, the appellants
could not be convicted of cheating or of con1piracy to cheat.
Held, that the appellants were not entitled to raise the
question of sanction for the first time in the Supreme Court as it
required for its decision investigation of facts.
The document
on record '\Vas an official communic.1tio11 \vhich recited the fact
that the Governor had granted the sanction. A presumption
arose that the sanction had in fact been accorded.
A further
presumption arose that the official act of granting sanction to
which reference was made in the communication had been
regularly
performed. The document on record prima facie
satisfied the reqtiirements of s. J 96A.
He/,d, further, that to establi5h that the accused had
disho~
nestly induced another to part \\'ith property \vithin the lneaning
of s. 420, Indian Penal Code, it \>\'as not lle'.cessary to prove both
wrc>n:ful 'a.ii' and wrongful loss.
Wrongful gain and wrongful
1 s.c.R. SUP:lt.BM:r COURT REPORTS
383
loss were two facets of the definition of di1honesty and it was
enough to establish the existence of one of them.
In the present
case, the appellants had made wrongful gain to themselves by
obtdning credits by unlawful means and even if no wrongful
1oss was caused to the banks, the appellants were guilty of
cheating.
Sanjiv Ratanappa Ronad v. Emperor, (1932) I. L. R, LVI
Bom. 488, and Kotamraju Venkatarayudu v. Emptror, (1905)
I. L. R. 28 Mad. 90, distinguished.
The sentences of imprisonment imposed on four of the
appellants were reduced to the period already undergone and a
fine of Rs. 3,000/- was imposed on each on the grounds that no
useful purpose would be served by sending these appellants to
jail after a long interval of time, that these appellants were very
young at the time of the commission of the offences and that they
had acted under the influence of the dominating personality of
the main accused.

## Text

_Characters 0–39,813 of 53,866. This is a partial read: ask again with offset=39813 for what follows._

196!
se1mn1Ja, 27.
3!2 SUPREME COURT REPORTS [1963] SUPP,
TULSI RAM
v.
STATE OF U. P.
u~.rER IMAM, K. suBBA RAo, N. R~JAGOP.4.LA
AYYANGAR and J. R. MuDHOLKAR, JJ.)
Criminal Trial-Conspiracy-Sanction-Letter of Under
&cretary stating Governor has grrznted sanction-If sufficientPruumpfion as to official acta-Gheating--Dishonutly- Wro11j1f11l gain-Whether wrongftil loss also necessary-Sentence-Red11ction of-Gode of G1·iminal Procedure, 1898 (Act V of 1898),
s. 196A-lndian Penal Code, 1860 (Act ][LV of 186~), s. J2~.
The appellant• were tried and convicted for conspiracy to
cheat certain banb. The pro1ecution had put on record a letter
from the Under Secretry to Government which stated that the
Governor had been pleased to grant sanction for the pro1ecution
of the appellants.
The sanction was not challeneed before the
trial court or the High Court, but before the Supreme Court the
appellants contended that no sanction as required bys. 196A,
Code of Criminal Procedure was on record and that the document on record did not show on its face that the facts of the case
had been considered by the Governor. The appellant further
contended that for conviction for cheating the prosecution had
to establish both that the appellants had caused wrongful gain to
themselves and caused wrongful loss to the bank! and that as no
wrongful loss to the banks had been established, the appellants
could not be convicted of cheating or of con1piracy to cheat.
Held, that the appellants were not entitled to raise the
question of sanction for the first time in the Supreme Court as it
required for its decision investigation of facts.
The document
on record '\Vas an official communic.1tio11 \vhich recited the fact
that the Governor had granted the sanction. A presumption
arose that the sanction had in fact been accorded.
A further
presumption arose that the official act of granting sanction to
which reference was made in the communication had been
regularly
performed. The document on record prima facie
satisfied the reqtiirements of s. J 96A.
He/,d, further, that to establi5h that the accused had
disho~
nestly induced another to part \\'ith property \vithin the lneaning
of s. 420, Indian Penal Code, it \>\'as not lle'.cessary to prove both
wrc>n:ful 'a.ii' and wrongful loss.
Wrongful gain and wrongful
1 s.c.R. SUP:lt.BM:r COURT REPORTS
383
loss were two facets of the definition of di1honesty and it was
enough to establish the existence of one of them.
In the present
case, the appellants had made wrongful gain to themselves by
obtdning credits by unlawful means and even if no wrongful
1oss was caused to the banks, the appellants were guilty of
cheating.
Sanjiv Ratanappa Ronad v. Emperor, (1932) I. L. R, LVI
Bom. 488, and Kotamraju Venkatarayudu v. Emptror, (1905)
I. L. R. 28 Mad. 90, distinguished.
The sentences of imprisonment imposed on four of the
appellants were reduced to the period already undergone and a
fine of Rs. 3,000/- was imposed on each on the grounds that no
useful purpose would be served by sending these appellants to
jail after a long interval of time, that these appellants were very
young at the time of the commission of the offences and that they
had acted under the influence of the dominating personality of
the main accused.
CRIMINAL APPELLATE JURISDICTION: Criminal
Appeals Nos. 62 and 63 of 1958.
Appeals from the judgment and order dated
April 15, of the Allahabad High Court in Criminal
Appeals Nos. 1332 and 1476 of 1954.
A. N. 1r!i1Ua, B. B. Tawakley, J. P. Goyal,
A. Banerji and K. P. Gupta, for the appellants.
G. C. Jlfathur and C. P. Lal, for the respondents.
1962. September 27.
The Judgme.nt of the
Court was delivered by
1962
v.
St•ta of ti. P.
MuDHOLKAR, J.-These are appeals by a
Mu.U..llm, J,
certificate granted by the High Court of Allahabad.
They arise 0•1t of the same trial. The appellants in
both the appeals except Chandrika Singh were
convicted by the Second Additional District & Sessions
Judge, Kanpur, of offences under s. 4 71, Indian Penal
Code read with ss. 467 and 468, I.P.C. and sentenced
variously. Tulsi Ram, Beni Gopal and Babu Lal
were each convicted of offences under s. 417 read with
s. 420 and Moti Lal of offences under s. 417, I.P.C.
and Lachhimi Narain of offences under s. 420, I.P.C.
Separate
sentences
were
awarded
to
each of
them in respect of these olfences. All the six appellants
1962
T""'i nv.
Slat. of U. P.
Mudlwlkar 1 J.
384 SUPREME COURT REPORTS [1963] SUPP.
were,
in
addition,
convicted
under s. 120 B,
I.P.C. and sentenced separately in respect of that
offence.
In appeal the High Court set aside the
conviction and sentences passed on Tulsi Ram, Beni
Gopal, Babu Lal and Moti Lal of offences under
s. 4 71 read with ss. 467 and 468, I.P.C. and also
acquitted Moti Lal of the offence under s. 417, I.P.C.
It, however, upheld the conviction of all the appellants under s. l20B, I.P.C. as well as the conviction
of Tulsi Ram, Beni Gopal and Babu Lal of offences
under s. 417 read with s. 420, I.P.C. As regards
Lachhimi Narain it maintained the conviction and
sentences passed by the Additional Sessions Judge in all
respects and dismissed the appeal in toto.
The
relevant facts are as follows :
The appellants, other than Chandrika Singh,
are members of a Marwari trading family belonging
to Rae Bareli and Chandrika Singh was their
employee.
The relationship
amongst Lachhimi
Narain and the first four appellants in Cr!. A. 62 of
1958 would be clear from the following genealogical
table:
Bhairo Prasad
I
Sri Niwas (accused)
I
Sagar Mal
I
I
Lachhimi Beni
Narain Gopal
I
I
I
I
Tulsi Gobardhan- Pahlad
I
Ram
das
Rai
I
Babu Lal
I
(Suraj Mal-minor)
I
Nand Lal
(deceased)
Moti Lal
Parshottamdad
(died during pendency
ef the case).
1 S.C.R.
SUPREME COURT REPORTS
385
It is common ground that Lachhimi Narain was the
karta of the familv and the entire business of the
family was done under his directions and supervision.
This fact is material in view of the defence taken by
the first four appellants in Cr!. A. 62 of 1958.
It is common ground that the family carried on
business in the names and styles of ( l) firm Beni
Gopal Mohan Lal with head office at Rae Bareli, (2)
firm Tulsi Ram Sohan Lal with head office at Lalgunj
in the district of Rae Bareli, (3) firm Bhairon Prasad
Srinivas with head office at Rae Bareli, (4) firm
Gobardhan Das Moti Lal with head office at Madhoganj in the district of Partapgarh and (5) firm Sagarmal Surajmal with head office at Unchahar in the
district of Rae Bareli. Though different members of
the family were shown as partners in these five firms,
one thing is not disputed and that is that the business
of each and every one of these firms was being conducted by and under the orders and directions of
Lachhimi Narain though in point of fact he was
shown as partner along with his father Sri Niwas and
brother Pahlad only in the firm of Bhairo Prasad
Srinivas.
It is common ground that in May, 1949, the
firm Bhairo Prasad Srinivas was appointed the sole
importer of cloth for distribution amomist wholesalers in the Rae Bareli district.
Prior to the ~ppoint
ment of this firm as sole importer a syndic~e consisting of four firms of Rae Bareli was the sole importer
of cloth in that district. It would, however, appear
that this syndicate failed to take delivery of large
consignments of cloth with the result that the Deputy
Commissioner discovered that cloth bales valued at
about Rs. 2,25,000/- were lying at the railway station
and demurrage on the consignment was mounting every
day.
It is not disputed either that it was at the
instance of the Deputy Commissioner that the firm
Bhairo Prasad Srinivas agreed to act as sole importers, take delivery of the clnth and distribute it
1962
Tulsi Ram
v.
State of [T, P,
M"dholkar, J.
1962
Tul.siRam
v.
State of U. P.
Mudholk<Jr, J.
a86 SUPREME COURT REPORTS [1963] SUPP.
amongst wholesalers. They were also required to take
delivery subsequently of cloth worth over Rs. 23
lakhs.
This firm and one other allied firm were
also importers and distributors of foodgrains and salt
in the district.
Both the courts below have held that in order to
obtain short term credits the appcll ants hit upon an
ingenious device and succeeded in securing credits to
the tune of Rs. 80 lakhs between May, HJ49, and
December, 1949. While the appellant Lachhimi
Narain has throughout admitted that such a device
was resorted to, the other appellants denied any knowledge of the aforesaid device.
The particulars of the device adopted are these:
A partner or an employee of one of the firms booked
small consignments of say two or three bags of rape
seed, poppy seed or mustard seed from various stations
in Rae Bareli and Partapgarh districts to various
stations in West Bengal,
including the city of
Calcutta. The person concerned used to execute forwarding notes and obtain railway receipts in respect
of such consignments.
These receipts were prepared
by the railway authorities in triplicate, one being
given to the consignor, one sent to the destinati0n
station and one kept on the record of the forwarding
station. The consignor's foil of the railway receipt
was then taken to Rae Bareli and there it was
tampered with by altering the number of bags,
the weight of the consignment and the freight charges.
All this was admittedly done by munims under the
direction of Lachhimi Narain himself. These forged
railway receipts were then endorsed by the consignor
in favour of one or other of the firms Beni Gopal
Mohan Lal, Tulsi Ram Sohan
Lal,
Sagarmal
Soorajmal or Bhairo Prasad Srinivas and thereafter
these firms drew large sums of money commensurate
with the huge quantities of goods specified in the forged railway receipts and on the security of ~he~e
railway receipts drew demand drafts or hundJS m
1 S.C.R.
SUPREME COURT REPORTS
387
favour of variour banks and two firms in Kanpur as
payees on a firm styled as Murarka Brothers, Calcutta,
as drawee. It may be mentioned that this firm was
established by the family in Calcutta about a year or
so before the transactions in question were entered
into.
After this firm was established in Calcutta
Lachhimi Narain opened an account in the name of
the firm in the Calcutta Branch of the Allahabad
Bank and authorised Babu Lal and Chandrika Singh,
who was
originally an employee
of the firm
Bhairo Prasad Srinivas and was transferred to Calcutta, to operate on the account.
The banks which
discounted the hundis and the drafts were the Kanpur
branches of the Bank of Bikaner, the Bank of Bihar,
the Bank of Baroda and the Central Bank of India
and the firms were Matadin Bhagwandas and Nand
Kishore Sitaram, both of Kanpur. These payees
realised the amounts by presentation of the hundis and
railway receipts to Murarka Brothers at Calcutta. The
banks obtained payment through their branches in
Calcutta while the two firms obtained payments
through certain banks. To enable Murarka brothers
at Calcutta to honour the hundis on presentation
Lachhimi Narain and Tulsi Ram, the acquitted accused Srinivas and a munim of theirs named Hanuman
Prasad, who was also an accused but died during
investigation, used to get money transmitted from
the firms' account in the Rae Bareli, Lucknow and
Kanpur branches of the Allahabad Bank to the account of Murarka Brothers at Calcutta by telegraphic
transfers. Delivery of the consignments despatched Ly
the partners or the employees of th~ various famiiy.
firms could obviously not be taken with the help ol
forged railway receipts because had that been done
the fraud would have been immediately discovered.
Instead, delivery was taken throug~ commission a_gents
on indemnity bonds on the allegat10n that the railway
recci pts had bj:en lost.
Such bonds were executed
either by one of the p~rtners or by an. employee and
after getting them verified by the stat10n masters and
1962
Tutsi Ram
v.
Slate of U. P.
Mudholkar, J.
1962
Tutsi Ram
v.
State of U. P.
Mudholkar, J.
388 SUPREME COURT REPORTS [1963] SUPP.
goods clerks of the booking stations they were endorsed in favour of the consignees. It has been established by evidence--ar.d it is not disputed before
us-that these consignees in fact took delivery of the
small
consignments-at
the special request of
Lachhimi Narain, disposed of the consignments and
credited the sale proceeds to the account of Bhairo
Prasad Srinivas or Murarka Brothers at Calcutta.
The bulk of these forged railway receipts is not forthcoming, presumably because they have been destroyed
after the hundis supported by them were honoured
and the receipts received from the banks or the firms
which were payees under the hundis. It is the prosecution case that the banks and the firms obtained
discount charges of one or two annas per cent for the
a!Ilounts paid by them, although had the family firms
obtained these amounts by way of loan they would
have been charged interest at 6 to 9 per cent on these
amounts.
Towards the end of December, 1949, the Kanpur
branch of the Bank of Bikaner and the Bank of Bihar
received back a number of hundis unhonoured along
with corresponding forged railway receipts. The Bank
of Bikaner received five hundis for an amount of
Rs.
3,52,000/-
out
of which
hundis
worth
Rs. 1,82,000/- had been negotiated by the bank directly with the firm Bhairo Prasad Srinivas and hundis
worth Rs. 1, 70,000/- through N and Kishore Sitaram.
Six hundis were received back by the Bank of Bihar,
Kanpur, valued at Rs, 1,92,000/-.
These were
negotiated through Matadin Bhagwandas. The bank
adjusted
the
account
by
debiting
Matadin
Bhagwandai; with the amount. These unpaid payees
instituted inquiries from the consignees and the railways and came to know that the railway receipts
offered as security to them were forged. These
railway receipts have been exhibited in this case in
order to. prove the charge of forgery.
1 S.C.R. SUPREME COURT REPORTS
389
After the cheating practised by the family firms
and forgeries committed by them came to light, Daya
Ram, P. W. 62, a partner in the firm
Matadin
Bhagwandas filed a complaint before
the City
Magistrate, Kanpur on January 4, 1950, and B. N.
Kaul, Manager of the Bank of Bihar, lodged a report
at the police station, Colonelganj, Kanpur, on
January 18, 1950. The appellants, except Chandrika
Singh, executed a mortgage deed on January 5, 1950,
in favour of the Bank of Bikaner for Rs. 3,62,000/-
which included Rs. 3,52,000/- due on unpaid hundis
interest and other charges.
According to the prosecution, Bhairo Prasad Srinivas paid the firm Matadin
Bhagwandas Rs. 1,00,000/- and that Lachhimi Narain
executed a promissory note for the balance of
Rs. 92,000/- in their favour. According to the defence,
however, the criminal
case
filed
by Matadin
Bh11gwandas was compounded by payment of the
amount settled between the parties and that as a
result they stood acquitted of the .charge contained in
the complaint of Matadin Bhagwandas.
The appellant, Lachhimi Narain, has taken all
the blame upon himself. He not only admitted that
he had obtained credit to the tune of Rs. 80 lakhs on
the security of railway receipts in which the quantities
of goods consigned had been increased, but also
admitted that he had got the quantities inflated by
his munims, Raj Bahadur and Hanuman Prasad, both
of whom are dead. According to him except for the
complicity of the two munims the whole thing was
kept a secret from everybody else.
His defence
further was that he had committed no offence as he
intended to pay off and did pay off the entire amount
raised. The other appellants admitted that each of
them had played some part or other in these tra,JSactions but denied havfng been a member of the
conspiracy and contended what each of them did was
at the bidding of Lachhimi Narain.
1962
TulsiR4m
v.
State of U. P.
Mud/wlkar, J.
1962
TulsiRam
v.
State of U. P.
Mudholkar, J.
390 SUPREME COURT REPORTS [1963] SUPP.
The first point raised by Mr. A. N. Mulla on
behalf of the appellants was that no sanction as
required by s. l 96A of the Code of Criminal Procedure
was on the record of the case and, therefore the
entire proceedings are void ab initio. He ad~itted
that there is a document on record, Ex. P 1560 which
is a letter addressed by Mr. Dave, Under S~cretary
to the Government of U. P., Home Department to
the District Magistrate, Kanpur informing him that
the Governor has been pleased to grant sanction to
the initiation of proceedings against the persons
rnehtioned in that order. But according to Mr. Mulla,
this communication cannot be treated "either as a
valid sanction or its equivalent". He points out that
for a sanction to be valid it must be by a written
order signed by the sanctioning authority and that no
one can function as a substitute for the sanctioning
authority nor can oral consent, even if it was given,
be deemed in law to be valid.
He further contended
that the document on record does not show on its face
that the facts 'of the case were considered by the
Govern.or. His argument is that had the true facts
6f this case been placed before the Governor, that is,
that the firm Bhairo Prasad Srinivas never sought its
appointment as sole importer of cloth for Rae Bareli
district, that the firm was in fact prevailed upon by
the Deputy Commissioner to take up the work and
help the Government in a critical situation, that
though large credits were undoubtedly obtained by
making fraudulent representations and committing
forgeries it was never the intention of Lachhimi
Narain to cause loss to anyone, that in fact everyone
has been paid in full, and that the prosecution was
launched not at the instance of any of these persons
but at the instance of the railway authorities and
that, therefore, no useful purpose would be served
by launching a prosecution, sanction would not have
been given.
We did not permit Mr. Mulla to raise this point
because it i$ not a pure question of law but requires
1 S.C.R.
SUPREME COURT REPORTS
391
for its decision investigation of facts.
It is not his
contention that there was no sanction at all but the
gravamen of his complaint is that there is no proper
proof of the fact that sanction was given by the authority concerned after considering all the relevant facts
and by following the procedure as laid down in
Art. Hl6 of the Constitution. Had the point been raised
by the appellant in the trial court, the prosecution
would have been able to lead evidence to establish
that the Governor had in fact before him all the relevant material, lhat he cousidered the material and
after considering it he accorded the sanction and that
that sanction was expressed in the manner. in which
an act of the Governor is required to be expressed.
Mr. Mulla, however, says that s. l 96A of the Code
of Criminal Procedure is a sort of brake on the powers
of the criminal court to enquire into the charge of
conspiracy, that the court does not get jurisdiction to
enquire into that charge unless the brake is removed
and that it is, therefore, essential for the prosecution
to establish that the brake was removed by reason of
the fact that the appropriate authority had accorded
its sanction to the prosecution after complying with
the provisions of law and that it was not obligatory on
the defence to raise an objection that there was no
proper sanction. There would have been good deal
of force in the argument of learned counsel had
Ex. P. 1560 not been placed on record. Though that
document is not the original order made by the Governor or even its copy, it recites a fact and that fact is
that the Governor has been pleased to grant sanction
to the prosecution of the appellants for certain offences as required by s. 196A of the Code of Criminal
Procedure. The document is an official communication emanating from the Home
Dep~rcment and
addressed to the District 'Magistrate at Kanpur, A
presumption would, therefore, arise that sanction to
which reference has been made in the document, had
in fact been accorded. Further, since the communication is an official one, a presumption would also arise
1962
Tutsi Ram
v.
Stute of U. P.
MudlwlkcJr, J.
1962
Tutsi Ram
v.
State of U. P.
}Judholkar, J.
392
SUPREME COURT REPORTS [1963] SUPP.
that the official act to which reference has been made
in the document was regularly performed. In our
opinion, therefore, the document placed on record
prima facie meets the requirements of s. 196A of the
Code of Criminal Procedure and, therefore, it is not
now open to the appellants to contend that there was
no evidence of the grant of valid sanction. We, therefore,
overrule the contention raised by learned
counsel.
•
The next point urged by Mr. Mulla is that the
charge as framed jumbles up several offences and,
therefore, has led to miscarriage of justice. This also
is not a point which had been taken up in the courts
below. That apart, we do not think that there is any
substance in this point. The objection is with respect
to the first charge which reads as follows:
"That between the months of May 1949 and
December 1949 both months inclusive, in the
district of Rae Bareli, Pratabgarh and Kanpur,
Sri Niwas, Lachhimi Narain, Tulsi Ram, Beni
Gopal, Babula!, Moti Lal, Brij Lal Coenka,
Chajju Lal and Chandrika Singh agreed to do
amongst themselves and the deceased Hanuman
Prasad and Purshottom Dass or caused to be
done illegal acts viz. the act of cheating the (1)
Bank of Bikaner, Kanpur, (2) Bank of Baroda,
Kanpur (3) Bank of Bihar, Kanpur, ( 4) Central
Bank of India, KaHpur, (5) M/s.
Matadin
Bhagwan Dass, Kanpur and (6)
M/s. Nand
Kishore Sitaram of Kanpur by dishonestly inducing them to part with huge sums of money on
the basis of hundis drawn on J\1urarka Bros.,
Calcutta covered with securities knowing such
R/Rs. to be forged and cheated the aforesaid
Banks and Bankers by using forged documents
as genuine knowing them to be forged in pursuance of a common agreement
amongst them
all and thereby committed an offence punishable
nnder section 120B read with sectiom 467/.168/
I S.C.R.
SUPREME COURT REPORTS
393
471 and 420 of the Indian Penal Code and
within the cognizance of the court of Sessions."
It is the concluding portion of the charg::: to which
learned counsel has taken objection. We do not think
that there has at all been any jumbling up of the
charges.
The charge is just one and that is of cor,spiracy.
A reference is made to other sections of the
Code to indicate the objects of the conspiracy, that is,
to cheat and to commit forgery. The charge by referring to various sections of the Indian Penal Code
merely makes it clear that the object of the conspiracy
was to forge railway receipts, which were valuable
securities, to commit forgeries for the purpose of cheating and to use forged documents as genuine. What
was meant by the charge was apparently fully understood by the appellants because they never complained
at the appropriate stage that they were confused or
bewildered by the charge. In the circumstances,
therefore, we overrule this objection also of learned
counsel.
Since the commission of forgeries by Lachhimi
Narain could not be denied what we have next to
ascertain is whether Lachhimi Narain is guilty of
cheating and if so whether s. 420, I.P.C. as held by
the learned Additional Sessions Judge and the High
Court or under s. 417, I.P.C. as contended before us.
Learned counsel points out and rightly, that for a
person to be convicted under s. 420, l.P.C. it has to
be established not only that he has cheated someone
but also that by doing so he has dishonestly induced
the person who was cheated to deliver any property
etc.
A person can be said to have done a thing dishonestly if he does so with the intention of causing
wrongful gain to one person or wrongful
loss
to another person. Wrongful loss is the loss by
unlawful means of property to v1hich a person
is entitled while wrongful gain to a person means a
gain to him by unlawful means of property to which
1962
Tutsi Ram
v.
State of U. P.
Mudlwlkar, J.
1962
Tulsi Ram
v.
Slate of U. P.
A1udholkar, J.
394 SUPREME COURT REPORTS [1963] SUPP.
the person gaining is not legally entitled. Learned
counsel contended that there has been no wrongful
loss whatsoever to the banks and the two firms which
discounted the hundis drawn by one or the other of the
firms owned by the family. The High Court has held
that these firms did sustain a wrongful loss inasmuch
as they got very meagre amounts for discounting the
hundis whereas ·had the true facts been known to them
they would not have discounted the hnndis though
they may have advanced loans and charged interest
at between () and 9% on the amounts advanced. It
was because of the fraudulent misrepresentation made
to the banks and the firms that they lost what they
could have otherwise been able to obtain and thus
wrongful Joss has been caused to them. Vl/e have
been taken through a large number of documents on
the record and it is clear from these documents that
those who discounted the hundis in question were entitled to charge, apart from the discount charges,
interest at 6 % or above in case of non-payment within 24 hours of presentation.
A reference to some of
the exhibits 1440 to 1454 which are the debit vouchers of the Bank of Bikaner and Exs. · 1330 to 1345
which are debit vouchers of the Bank of Bihar clearly
show that in fact interest in the case of the first Bank
at 6% and in the case of the second at 9% was charged, debited and realised by these banks from the
firms in question for the entire period during which
the hundis though presented, remained unpaid. These
documents arc only illustrative but they do indicate
that in fact the banks were not deprived of interest.
Learned counsel pointc.d out that the Managers and
officers of the Banks and the firms were examined and
they do not say that any loss of interest was caused
to them in these transactions.
Mr. Mathur who appears for the State, however, pointed out that in the
nature of things the lrnndis could not be presented
for payment in less than ten days and in this connection he referred to Exs. P. J l on and l Oiili.
These arc
rrcords of bills purc!J<1scd by Lhc Centrnl Bank of
I S.C.R.
SUPREME COURT REPORTS
395
India, Kanpur. He referred us to the penultimate
columns of these exhibits headed "date enquired on"
and contended that this column contained the date of
presentation.
As an illustration he referred us to the
first entry dated June 10. It was the date on which
the hundi was discounted by the Central Bank of
India and then he said that the date in the penultimate column is June 20 which means that the hundi
was presented on June 20.
According to him, therefore, for this period of ten days and for 24 hours
thereafter the bank would have got only the discount
charges and no interest. The hundi in question was
realised on June 25 and, therefore, according to him
all that the bank must have got was interest for four
days. But it may be pointed out that the heading of
the penultimate column has not been correctly reproduced in the paper book. We have been referred
to the original and there the heading is "Date enquired". Bearing in mind this fact as well as the
entry in the last column which is headed "non-payment advice sent" we think that what is stated in the
penultimate column is not the date of presentation at
all but some other date. Unfortunately there is no
column in either of the documents to show the date of
presentation. Therefore; these documents do not help
the State at all.
Apart from that we may mention
that it was for the Bank to take care to see that there
was no delay jn the presentation of hundis and if they
themselves delayed they had to take the consequences.
Further, we may point out that if the Bank was not
able to earn interest or earn only very little interest in
these transactions for as long as ten days that would
have been so in all the transactions, that is, not merely. transactio;is which were supported by forged
railway receipts but also transactions which were
supported by genuine railway receipts.
There is,
therefore, no
substance in the
contention of
Mr. Mathur.
Mr. Matltm then contends that the fact that
the banks stood the risk of losing their moneys
1962
Tulsi Ram
v.
State of U. P.
Mudlwlkar, J.
J9fj2.
Tw/si Ram
v.
State •f U. P.
Mudholkar, J.
396 SUPREME COURT REPORTS [1963] SUPP.
because the railway receipts which supported the bills
were forged documents, wrongful loss must be deemed
to have been caused to tl,te banks by the action of the
firms.
There is considerable force in this argument
but we do not wish to express any final opinion there·
on, because. in our opinion the firms of the appellant
have undoubtedly made an unlawful gain.
No doubt, Mr. Mulla contended that because
the firms were able to obtain temporary credits on
the basis of their hundis, it cannot be said that they
have made any wrongful gain to themselves. His
contention is that the firms had good credit in'the
market and for obtaining credit in the transactions in
question they gave good equivalents in the shape of
hundis.
He also pointed out that out of the 180 odd
hundis drawn by the firms only a very few were
dishonoured and that this happened only in the month
of December, 1949. It was not shown, he proceeded,
that Murarka Brothers on whom the hundis were
drawn were not throughout the period of nine months
when the transactions were entered into, in a position
to meet the hundis. Out of hundis worth Rs. 80 lakhs
those worth Rs. 74 lakhs were in fact honoured and
even the remaining hundis would have been honoured
but for the fact that there was slump in the market
and cotton bales worth Rs. I:' lakhs belonging to the
appellants were lying pledged in the godowns of the
Central Bank of India for securing an amount of
Rs. 9 lakhs.
Had these bales been sold in the normal
course there would have been no crisis in December
of the kind which occurred and led to the dishonourment of certain hundis, in which the Bank of Hikaner
and Matadin Bhagwand•ts were payees. Bearing in
mind all these facts. learned counsel wants us to draw
the inferenr.e that tlv°'. obtaining of credit was not
on 1l1e security of forged railway receipts but on the
security of hundis themselves which were drawn by
parties who had credit in the market and drawn on a
party which has not been shown not to be possessed
1 s.c.R.
SUPREME COURT REPORTS
397
of adequate funds to meet the hundis throughout the
period covered by the transactions. We do not think
that the argument of learned counsel has much force.
B. N. Kaul, (P.W. 32), the Manager of the Kanpur
branch of the Bank of Bihar, has said that he purchased
hundis because the railway receipts showed ihat the
consignments were large and their value was commensurate with the amount for which the bills had been
drawn.
He added that he would not have purchased
these hundis if the consignments were for very small
quantities, apparently meaning thereby that if tbe
value of the consignments was not commensurate with
the amount to be advanced he would not have
purchased the hundis.
Apart from the evidence of
Kaul there is also other evidence to show that the
real basis of discounting bills was not merely the
credit of the appellant or the security afforded by
these
bills.
This evidence is in consonance with
the normal banking practice of discounting hundis
only when they are supported by railway receipts of
consignments despatched by the drawer to outside
parties.
No doubt, bills or hundis are themselves
securities and taking into consideration the credit of
the drawer of a hundi a bank may conceivably discount such hundis but where the hundis are themselves
supported by railway receipts it would be futile
to say that the railway receipts were not intended by
the parties to be regarded as further security for
discounting the bills.
Where a consignor of goods
draws a hundi for the price of the consignment on
some bank or firm and supports that hundi with the
railway receipt obtained by him in respect of the
consignment, the party in fact pledges the consignment to the bank discounting the hundi and, therefore, in such a transaction the railway receipt cannot
be regarded as :anything el~e than a security for that
transaction. If that security turns out to be worthless
or practically wnrthless because the value of the
consignment i~ only a fraction uf what it was represented to be, the discoun'ting of the hundi by the party
1962
Tulsa Ram
v.
Slall of U. P.
Mudholkar, J,
1962
T~/si Ram
..
Stat1 of U. P.
Mudholkar, J.
398 SUPREME CdURT REPORTS [1963}S0PP.
.drawing it must necessarily be regarded as unlawful.
It would thus follow that Vie fumS in question·mad,e
a gain by obtaining credits and thfit" these creditlj
were".obtained by, them by resorting to unlawful means.
T!).e gain they made was, therefore, unlawf\11.
Mr.
Mull a contended that for an act to ·be regarded as
disliqnest it is not en?ugh to show that one· person
tlecei:ved anOiher a.Pd thereby made a wrongful gain
but it is fortj:i.el' nece5sary to show that as a result of
the deception the other persoi:;i 'sustain~d· wrongful
loss.
In support of his conl'entio'n hc'has relied upon
the decision in Sanjiv Rdta.naJ?pa 'Roiiad v. -E..mpefor ('.).
That :was a'.'case where thlifirst accused wlio was. a
'police ~Sub-Inspector was found to have mad.e a· false
document by· altering a certain entry made by him
in his diary with a view to create evidence. It was
argiied before the Court! that•in order to constitute an
offence of forgery· under ·ss! 46::! .and 464 tli.e document rriust be made dishonestly or fra~dulehtly and
those words must be read in t:J:i.e sense in wliicli tliey
are defined in the Indian Penal Code and ·that it was
not ,enough to show that the' deception was intended
to secu,re an advantage to the deceiver. Dealing with
thiS argument Baker, J,, who was one of the Judges'
constituting the 'Beμch observed at p. 493 :
"The definition of "dishonestly' in section 24
·of the Indian Penal Code applies only to wrongful gain or wrongful loss and" although.there are
conflicting rulings bn the question of the definition of the worc:1''fraudulently', the concensus
of opinion of this Court has been that there
must be some ail vantage on the. one side with
a corresponding loss" on the other."
Section 463; which defines forgery, runs ~hus :
1,
"W,hoever makes ';\Ily,. false decument or part
of a document with intent to cause damage
or injury, to the public qr to any person, or to
\1)
(1932) I. L. R. LVI Bom. -l88.
I
1 s.c:R:-- St}PREME COURT REPORTS_
399
support any claim or title, or to cause any
" person to part with property, or to enter .into
'll/'lY cxpress·or implied contract, or with intent to.
•commit· fraud or that.fraud marbe co1:fnnittec;l,
commits for~ery."
'
'.I'he intention•to·cause damage or injury to the_ public
or to any person is thus, an clement which has· to P«·
established· before a fabricated document can J?,c he)d.
to bc·afalse docuμient.or a. forgery.
lri .view.of-the
,terms.of s. 463 .what the learned Judge has observed
'is \mderstai1dable and may be right.
J:I«re, however,,
we are concerned witlt the offence under s. 420, I.P .C.
which speaks of dishonest inducement as a necessary
ingre9,ient·., As Baker, J., has rightly pointed out:
"As dishonesty involves a wrongful gain .or ,
wrongful loss, obviously it does not apply to
the present case where no pecuniary question
arises.''
-
,,
\
J
But, in an offence, under s. 420, I.P .C., a pecuniary
question necessarily ;aris~. The first. part' of s .. 464,
1.P .C. provides that .a person. is. said to make a ·false
document who disbonestly or fraudulently .makes,
signs etc., a document with a particular intention ·and
covers cases both of acts· which are dishonest and acts
which are fraudulent. Where no pecuniary question
arises the elemen~ of dishonesty need not be establish-
.ed and it would be sufficient to establish that )the act
was fraudulent and, then;fore, it may be, as the
learned -Judge has held, that where an act is
fraudulent• the intention to cause jnjury to the person
defrauded must
be established. But where the
allegation is that a person has dishonestly induced
another to part with property something different has
to be considered and that is whether he has thereby
caused a wrongful loss to the .p,erson who parted with
property or, bas' made a wrongf4l gain to hilI)self.
These
are the
~wo facets of the definition of
1962
Tu/si Ram
v.
Stal,• of U. P.
Mudholkar, J.
1962
Tutsi Rt.m
v.
State of U. P.
Mudholkar, J.
400 SUPREME COURT REPORtS [1963] SUPP.
dishonesty and it is enough to establish the existence
of one of them.
The law does not require that both
should be established. The decision relied upon by
learned counsel is, therefore, distinguishable. Learned
counsel then referred to the dissenting judgment of
Subrahmania Ayyar, J., in Kotarnraju Venkatarayudu
v. Emperor (1) to the effect that in regard to offences
falling under s. 465 and 461 it must b.e established
that the deception involved some loss or risk of loss to
the individual and to the public and that it was not
enough to show that the deception was intended to
secure advantage to the deceived.
This decision as
well as some other decisions referred to by learned
counsel are therefore distinguishable for the same
reason which distinguishes Sanjiv Ratanappa Ronad's
case (') from the one before us.
We are, therefore,
of the view that the offence of cheating has been
established.
The High Court has found that dishonesty has
been established against Lachhimi Narain because it
was he who drew and negotiated the various hundis.
According to learned counsel the prosecution has not
established that the other appellants· had either drawn
any hundi or discounted any hundi,
this contention,
however, does not appear to be sound because there
is a finding of the learned Additional Sessions Judge
that the appellant Tulsi Ram had sold to the Central
Bank of India certain hundis covered by forged railway receipts.
He has also found that the appellant
Beni Gopal had admittedly booked a consignment of
two bags of rape seed from Rae Bareli to Raniganj
and drawn a hundi of Rs. 40,000/- on the basis of the
railway receipt which was
tampered with and
subsequently got verified the stamped indemnity bond
for this very consignment which was sent to the firm
Chiranji Lal Ram Niwas for taking delivery. Another
consignment of two bags, this time containing poppy
seeds, was booked by the firm of Beni Gopal and Beni
Gopal drew a hundi for Rs. 38,000/- on Murarka
(1) I 1905) I. L. R. 28 Mad. 90.
(2)
(1932) I. L. R. LVI Bom. 488.
1 S.C.R.
SUPREME COURT REPORTS
401
Brothers and sold that hundi to the Central Bank of
India. This hundi was supported by a railway
receipt which had been tampered with. It is on the
basis of those findings that the learned Additional
Sessions Judge convicted both these appellants for an
offence under s. 417/420, I.P.C. The learned Addi·
tional Sessions Judge has also held that the appellants,
Babu Lal and Moti Lal, were likewise guilty of
offences under s. 417/420, I.P.C. The conviction and
sentence passed on M oti Lal was set aside by the
High Court. In our opinion the prosecution has
failed to establish that Babu Lal had either drawn or
negotiated hundis supported by
forged
railway
receipts. The material upon which the learned
Additional Sessions Judge has relied and, apparently,
on which the High Court has relied, does not touch
these matters at all. Whatever other part Babu Lal
might have played in these transactions his actions do
not bring hdme to him the charge under s. 420, I.P.C.
For this reason his conviction and sentence for the
offence of cheating must be set aside and we accordingly do so.
The High Court has affirmed the conviction of
Tulsi Ram and Beni Gopal for offences under s. 417/
420, I. P. C.