# [1968] 2 S.C.R. 408

- **Citation:** [1968] 2 S.C.R. 408
- **Court:** Supreme Court of India
- **Decided:** 1968
- **Case number:** Criminal Appeal No. 759 of 1963
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1968-2-s-c-r-408-4215
- **Pages:** 5

## Headnote

THE STATE OF (;li.J \UAT
JASWA!\TL\L :\ATllAl.AL
Nm·ember 23, 1967
IS. M. SIKRI, J. M. SllELAT A'.'D K. s. HEGDE. .IJ.]
Indian J>e11ai Code, 1860, s. 409--Government .relling ce111ent 10 contractor .a1;ail1.\·~ allotment for spec;fic construction lvork-re.\·po11dtnt taking delivrry 011 behalf of
co111ractor
Gild
di\,erting
.ron11~ quantityH·hether thert• \\'l1S enrru.H111rnt to hiu1-if breach of trt1.,·r cumn1itttd.
The appellant State Government gave on a con1r;ict to a contractor
the work of construction of a building. The contractor ln lurn izave that
\\'Ork on suh-c0ntract to a firm K & Co.
and the respondent: \lo·as Jookiniz
after the cons1ruc1ion \Vork on behalf of the firm.
Upon an ~· :Jlication
made to the l)eputy Engineer. A!imcdabad, the contractor w.is allotted
100 ba.Jt,S of cement for construction work. This cement
was
sold
by
the Governmenl to the conlrac1or :ind Jclivcrcd to the respondent for
and on beho11r of the contractor.
After taking deliverv of 1hc cement
1he respandcnl delivered "Only part of it to the conslruc1ion ~i1c and the
h:ilance was diverted and 5tocked on accounl of K: & Co.
On thC"C
facts and. the appel1ant's con1plain1. the respondent \t:as nrosc-cuteJ for
hreach of tru't unJer "· 4fl9 of rhc Indian Penal Code. ·rhc rcs110ndcnl's
cao.;,e wa!:> that in an1icipa1ion of allolment of cement 10
1h~ contractor.
K & C'-0. had utilized son1e of t~cir O\\'O cement and therefore thL' cement
diverted to th.:111 \\ra" on ;1ccount of a auar.tily alrc;idv uc;cd h\" them for
1he contractor.
·nie Trial Court d.isbclieved rhi" \'cr.:.i0n :lnd l"l111victed
!he rec;pondcnl.
The
J~i1!h ('ourt. hO\\·cvcr. alkn\t:J ;1n .1t1pl'.d ;ind ~c
uuined the respondent.
On appeal to thi~ C'ourt
HELD : Dismi!\sin)! 1he appeal : Th~ pro ... ccutior. hJL! f.1!11.:J 10 prove
cntrusiment to 1he rc-.pcndent.
The expression "enlrustmcnt" carries v.·ith it the implic;ilil)O that the
person handin~ over anv propcrtv or on \\·hose hchJlf thai
propcrtv is
handed over to another. continues t0 he it" owner.
Fur1her thf: person
h;i.nding over the propenv must have confiJcnce in !he pcrian takin.'?, the
propertv so as to create n tiduci:tr\· relationship betv,,.ccn 1hcm.
A mere
trJns;1ction of sale cannot ;inH)UJll tl) <!rl L·ntn.hlmcn~. fJ 11 8--(-~
.i\Jthough the Go,ernmcnl h:ld sold the cement in
QUt"'St1011 to tho:-
contractor solely for !he purpose of f•cine. used in connection
~·ith the
construction work, that circumstance JiJ not make the transa:tion in
Qt:estion anythin.R other than a sale.
After the dclivcn• of th~ cement.
the Governn1ent had neither anv right nor dominion over it.
If the purchaser or it~ reprcscntalive had failed to comphr \\ith the TN111ircmcnts
of anv Jaw relating to tie cement control. he ~hould havL~ hecn prosecuted for the same.
II could not he held that 1hcrc \V:t<: :in,· hrr;1ch of
trust. 141 I C-Dl ·
Ve/ji RaRhva;i.Patrl v. Statt' of Mahara.d11t·a. f1965J ~ SC.R
42Q:
Jaswantrai Mnflilal Akhane:v v. State of Ron1bay. [19~61 S.C.R 48'.l. 49R-
."OO: Sc.tvendra Natli M11l • ./1t•1ji v.
F:111peror.
1.L.R.
[1947]
I
Cal. 97,
rcfcrrec! to.
A
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II
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GU.JARAT v. JASWANTLAL (Hegde, J.)
409
The Ki11g v. Grubb. I 1915] 2 K.B. 683, held in applicable.

## Text

THE STATE OF (;li.J \UAT
JASWA!\TL\L :\ATllAl.AL
Nm·ember 23, 1967
IS. M. SIKRI, J. M. SllELAT A'.'D K. s. HEGDE. .IJ.]
Indian J>e11ai Code, 1860, s. 409--Government .relling ce111ent 10 contractor .a1;ail1.\·~ allotment for spec;fic construction lvork-re.\·po11dtnt taking delivrry 011 behalf of
co111ractor
Gild
di\,erting
.ron11~ quantityH·hether thert• \\'l1S enrru.H111rnt to hiu1-if breach of trt1.,·r cumn1itttd.
The appellant State Government gave on a con1r;ict to a contractor
the work of construction of a building. The contractor ln lurn izave that
\\'Ork on suh-c0ntract to a firm K & Co.
and the respondent: \lo·as Jookiniz
after the cons1ruc1ion \Vork on behalf of the firm.
Upon an ~· :Jlication
made to the l)eputy Engineer. A!imcdabad, the contractor w.is allotted
100 ba.Jt,S of cement for construction work. This cement
was
sold
by
the Governmenl to the conlrac1or :ind Jclivcrcd to the respondent for
and on beho11r of the contractor.
After taking deliverv of 1hc cement
1he respandcnl delivered "Only part of it to the conslruc1ion ~i1c and the
h:ilance was diverted and 5tocked on accounl of K: & Co.
On thC"C
facts and. the appel1ant's con1plain1. the respondent \t:as nrosc-cuteJ for
hreach of tru't unJer "· 4fl9 of rhc Indian Penal Code. ·rhc rcs110ndcnl's
cao.;,e wa!:> that in an1icipa1ion of allolment of cement 10
1h~ contractor.
K & C'-0. had utilized son1e of t~cir O\\'O cement and therefore thL' cement
diverted to th.:111 \\ra" on ;1ccount of a auar.tily alrc;idv uc;cd h\" them for
1he contractor.
·nie Trial Court d.isbclieved rhi" \'cr.:.i0n :lnd l"l111victed
!he rec;pondcnl.
The
J~i1!h ('ourt. hO\\·cvcr. alkn\t:J ;1n .1t1pl'.d ;ind ~c
uuined the respondent.
On appeal to thi~ C'ourt
HELD : Dismi!\sin)! 1he appeal : Th~ pro ... ccutior. hJL! f.1!11.:J 10 prove
cntrusiment to 1he rc-.pcndent.
The expression "enlrustmcnt" carries v.·ith it the implic;ilil)O that the
person handin~ over anv propcrtv or on \\·hose hchJlf thai
propcrtv is
handed over to another. continues t0 he it" owner.
Fur1her thf: person
h;i.nding over the propenv must have confiJcnce in !he pcrian takin.'?, the
propertv so as to create n tiduci:tr\· relationship betv,,.ccn 1hcm.
A mere
trJns;1ction of sale cannot ;inH)UJll tl) <!rl L·ntn.hlmcn~. fJ 11 8--(-~
.i\Jthough the Go,ernmcnl h:ld sold the cement in
QUt"'St1011 to tho:-
contractor solely for !he purpose of f•cine. used in connection
~·ith the
construction work, that circumstance JiJ not make the transa:tion in
Qt:estion anythin.R other than a sale.
After the dclivcn• of th~ cement.
the Governn1ent had neither anv right nor dominion over it.
If the purchaser or it~ reprcscntalive had failed to comphr \\ith the TN111ircmcnts
of anv Jaw relating to tie cement control. he ~hould havL~ hecn prosecuted for the same.
II could not he held that 1hcrc \V:t<: :in,· hrr;1ch of
trust. 141 I C-Dl ·
Ve/ji RaRhva;i.Patrl v. Statt' of Mahara.d11t·a. f1965J ~ SC.R
42Q:
Jaswantrai Mnflilal Akhane:v v. State of Ron1bay. [19~61 S.C.R 48'.l. 49R-
."OO: Sc.tvendra Natli M11l • ./1t•1ji v.
F:111peror.
1.L.R.
[1947]
I
Cal. 97,
rcfcrrec! to.
A
'
8
('
II
ti
A
B
c
'.
D
E
F
G
H
GU.JARAT v. JASWANTLAL (Hegde, J.)
409
The Ki11g v. Grubb. I 1915] 2 K.B. 683, held in applicable.
CRIMINAL APPELLATE JURISDICTION:' Criminal Appeal No.
93 of J 965.
Appeal by special leaye from the judgment and order dated
June 19. 1964 of the Gujarat High Court in Criminal Appeal No.
759 of 1963.
R. H. Dhebar. for the appellant.
N. N. Keswani. for the respondent.
The Judgment of the Court was delivered by
Hcgdc, J.
The State of Gujarat has tiled this appeal, by special
leave against the order of acquittal made by the High Court of
Gujarat in Criminal Appeal No. 759/63 on its file.
The respondent herein was convicted for an offence under s. 409 IPC by the
city magistrate. 7th court, Ahmedabad, and sentenced to suffer
rigorous imprisonment for one year and to pay a fine of Rs. 500.
in default to suffer rigorous imprisonment for four months more.
The facts of the case lie within a narrow compass. The Government of Gujarat gave on contract to Bharat Sewak
Samai
(Gujarat) the work of construction of a building for the government litho-printing press.
From Exh. 20 it appears that the BSS
in its turn p:ave that work on sub-contract to a firn1 known as M/s.
Kaushik & Co .. though it was sought to make
out that M/s.
Kaushik & Co. were merely appointed to supervise the work. The
firm Kaushik & Co. consisted of two partners.
The respondent
who is the brother of one of the partners was looking after the
construction work.
On 9-4-62, BSS applied to the Deputy Engineer ( construclion sub-division, Ahmedabad)
for allotment
of
ten tons of cement for the construction work in question.
ln
response to that application. the Deputy Engineer allotted
five
tons ( 100 bags I of cement and the same was delivered to the
respondent for and on behalf of BSS on I 0-4-62.
All these fac1'
are admitted.
The further case of the prosecution is that after taking delivery
of the aforementioned 100 bags of cement, the respondent delivered at the work site sixty bags of cement and the remaining
forty bags he sent to the godown of PW2 Tayabali Jiwaji. About
these facts also there is no dispute.
From the above facts, the appellant wants us to conclude that
the respondent had committed breach of trust in respect of the
forty bag~ of cement he sent to the godown of PW2. The case
for the respondent is that in anticipation of allotment to BSS
Kaushik & Co. had utilized for the construction work in question
forty bags of cement helonging to them, and hence he sent forty
410
SUPRFME CO\;RT REPORTS
[196RJ ~ SCR
bag, ol c~ment to the godown of· PW2 to be stocked for and .on
behalf of Kaushik & Co.
The trial court disbelieved that vers1::m
and convicted the respondent under s. 409 IPC.
The High Court
in a highly laconic judgmem allowed the appeal and acquitted the
respondent.
Bdorc examining the correctness of the Higi1 Court's judgment 11 j, necessary to mention that in this case the BSS had not
made any complaint against the respondent.
fn other words. it
is not the case of BSS that the respondent who took delivery of
hundred bags of cement on their behalf had misappro:iriated forty
bags out of the same.
The case against the respondenl proceeded
on the basis that the government had entrusted to him I 00 bags
of cement for the purpose of being used in the construction of the
building in question, but he misappropriated forty bags out of the
same.
Therefore, we haw to sec whether the prosecution has
cstabli>hcd the entrusment pleaded and
the misappropriation
allc~cd
We were not made aware of the conditions under which the
government gave
the construction
work to BSS.
The written
agreement between the government and the BSS, if there be any.
has not been produced in this case.
There is also no oral evidence in regard to the particulars of the agreement
between
the
government and the BSS.
Therefore we have to proceed on the
basis that the contract given to the BSS is one of those usual
contracts under which it was for the contractor to secure the
necessary materials.
Evidently because cement was a controlled
commodity in 1963. BSS had to apply for its allotment.
In the
absence of any evidence to the contrary we have to proceed on
the basis that BSS either paid for the cement in question or it'
price was adjusted towards the money due to it.
OA the proved facts, it is difficult to accept the contention of
the appellant that after the sale of the cement in question the
government had any proprietary right over the same.
Nor can
it be said that the transaction in question resulted in any fiduciarv
relationship either between the government and BSS or between
the government and the respondent.
It was a nom1al transaction of sale though the sale in question was effected by the government on the representation that cement was required
for
a
particular purpose.
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The term "entrusted" found in s. 405 IPC !!Overns not onlv
the words "with the property" immediately following it but also
the words "or with any dominion over the property" occurring
II
thereafter-see Velji Raghvaji P,ate/ v. Sratr of Maharashtra(')
(ll (196~) ~ S.C.R:429
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Gl'JARAT v. JASWANTLAL (Hegde, J.)
411
Bdor~ there can be any entrustment there must be a trust meaning thereby an obligation aI\nexed to the ownership of property
and a confidence reposed in and accepted by the owner or declared and accepted by him for the benefit of another or of another
and the owner.
But that does not mean that such an entrustment need conform to all the technicalities of the law of trustscc Jaswantrai Mani/al Akhaney v. State of Bombay(' J.
The
expression 'entruslment' carries with it the implication that the person handing over any property or on whose behalf that property
is handed over to another, continues to be its owner. Further the
person handing over the property must have confidence io the
person taking the property so a~ to create a fiduciary relationship
between them.
A mere transaction of sale cannot amount to an
entrustment. lt is true that the government had sold the cement
in question to BSS solely for the purpose of being used In connection with the construction
work
referred to earlier.
But that
circumstance does not make the transaction in question anything
other than a sale.
After delivery of the cement, the government
had neither any right nor dominion over it. If the purchaser or
his representative had failed to comply with the requirements of
any law relating to cement control, he should have been prosecuted for the same.
But we are unable to hold that there was
any breach of trust.
A case somewhat similar to the one before us came up for
consideration before a division bench of the Calcutta High Court
in Satyendra Nath Mukher;i v. Emperor('). These are the facts
of that case.
One Satya Sunder Mitra was a contractor.
He
was granted a permit by the Executive Engineer, A.RP. (Sh~1ters), construction division, to purchase seven tons of cement from
Balmer Lawrie and Company.
The permit was granted on :he
condition that the cement was to be used in the work connected
with the construction of shelters. which work he had contracted
to do for the Executiv_e Engineer.
The finding in the case was
that with the help of an employee of Mitra and Chaudhuri who
were ba11ians of Balmer Lawrie and Company. six tons of cement
were diverted and disposed of for another- purpose.
The trial
court convicted Satya Sunder Mitra under s. 406 IPC and another
for abetting the offence committed by Satya Sunder Mitra.
The
High Court allowed their appeal, holding that there was no entrustment qf the cement in question within the ine<ming of the
term as used in s. 405 of Indian Penal Code.
Tn the course of
the judgment it was observed :
"The permit was granted in accordance with the
system of control established under the Defence of India
(I) [ 1956] S.C. R. 483. 498-500
(2) I.LR. [1947] I Cal. 97.
SUPREME COURT RCl'<lRTS
( 1968) 2 S.C.R.
Rules. under which an order has been isq1ed by the Government of India preventing selling agents rnch as Balmer
Lawrie and Company from
delivering
any cement
except under instructions from
the
Government
or
lrnm the Cement Adviser.
The tr;1n;action. so far as
the contractor is concerned, was one of purchase and
the property in the cement clearly passed to him.
No
doubt he could not have obtainc<l the permit throuph
the Executive Engineer if it had not been intcndc<l that
the cement should be used for the purpose directed by
the Engineer, but, in our opinion, in no <ense can it be
said that there was any entrustmcnt either of the property
or of any dominion over the property.''
We arc of the opinion that the legal position is as explained 111
that decision.
The decision of rhe Kings Bench Divisicm in
The
King v.
Grubb!' I relied on hy Mr. Dhcbar learned counscl for the appellant docs not bear on the question under consideration.
Thcrc!n.
the factum of entrustment was not in dispute.
The only question
of bw thar arose for decision in that case was whcrher when a
property is entrusted to a company, and the person directing and
controliillj! the company, by whose instructions the property had
passed into the possession of the company, had converted the same
fraudulently. that person can be said to have committed an offence
under s. I of the Larceny Act 190 I.
The court answered that
question in the aftirmative.
I" view of our conclusion that the prosecution has failed to
prove the cntrustment pleaded. it io. unnecessary to consider whether on rhe material on record it can be concluded that the respondent had mi"1rpropriated 40 hags
of cement
referred
to
earlier.
In the r"'ulr. rhis 3ppcal foils and the same is dismi"cd.
'R.K.P.S.
.-lppral di1missed .
..
•(I) Jl915J 2 K.B. 683.
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