# DEBABRATA GUPTA v. S. K. GHOSH

- **Citation:** [1970] 3 S.C.R. 765
- **Court:** Supreme Court of India
- **Decided:** 1970-02-23
- **Case number:** CRIMINAL AP PELLA TE JURISDICTION : Criminal Appeal No. 134 of 1967
- **Bench:** A. N. Ray, I. D. Dua
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/debabrata-gupta-v-s-k-ghosh-4963
- **Pages:** 5

## Headnote

765
Indian Penal Code Section 406--Criminal breach of
trus--Jngrt'dients necessary-Proof of entrustment.
Certain disputes arose between the appellant and the respondent '"ho
were partners in a firm.
After the respondent had sent to the appellant
a notice for dissolution of the partnership, the appellant withdrew cenain
funds from the firm account. The respondent thereafter lodged a complaint against the appellant alleging criminal breach of trust \vithin the
meaning of Section 406 I.P.C. He also instituted a suit for the dissclution of the partnership and for accounts. The Additional Chief
Presidency Magistrate issued summons to
the appellant under Section .!06.
'fhe appellant instituted proceedings in the High Court for quashing the
criminal proceedings but the High Court rejected his prayer.
On appeal to this Court,
HELD : Dismissing the appeal :
The offence of criminal breach of
trust under section 406 of
the
Indian Penal Code is not in respect of property belonging to the p;?rtnership but is an offence committed by the person in respect of prOJ'.'erty
which has heen
specially entrusted to such a person and which he P.olds
in a fiduciary capacity. [768 Fl
Jn the present case_. the appellant denied that there \Vas any special
entrustrnent of any property or that he, wa5 holding any property in 'a
fiduciary capacity.
It was neither possible nor desirable to express any
opinion on the merits of such a plea.
It \Vas not possible to do so because the facts were not in possession of the court and furthermore the
facts could not h.z before the court \vithout proper investigation and enquiry.
It was not desirable to do so because if :iny such opinion be
expressed it might prejudice or embarrass either party, [768 G]
R. P. Kapur v. State of Pnnjab, [1960] 3 S.C.R. 388; Ve/ji Rarhavji
Patel v. State of Maharashtra, [1965] 2 S.C.R. 429, lli1t1ban Mohan R,mc.
v. Surendra Mohan Das, I.LR. [1952] 2 Cal. 23, referred to.
CRIMINAL
AP PELLA TE
JURISDICTION : Criminal
Appeal
No. 134 of 1967.
Appeal by special leave from the judgment and order dated
June 7, 1967 of the Calcutta High Court in Criminal Revision
No. 1100 of 1965.
Debabrata Mukherjee and Sukumar Ghose, for the
appellant.
Sadhu Singh, for the re1pondent.
766
SUPREME COURT REPORTS
[1970] 3 S.C.R.
The Judgment oi the Court was delivered by
Ray, J.
This is an appeal by special leave against the judgment of the Calcutta High Court dated 7 June, 1967 refusing to
quash the process issued and the proceedings pending before the
Additional Chief Presidency Magistrate, Calcutta under section
406 of the Indian Penal Code.
The appellant and the respondent entered into a registered
deed of partnership on 27 March, 1963. The name of the partnership business was
"Allied Engineers".
The nature of
the
business was that if the tender submitted by the respondent to
the Eastern Railways for extension of bridge No. 2 at the west
and of Howrah yard, West Bengal was accepted by the Eastern
Railways the said work would be deemed to be included within
the partnership.
Under the terms of partnership agreement the
capital was Rs. 20,000 to be contributed equally by the partners
within six months from the date of the agreement.
The main
office of the partnership was at 12/1/5 Manohar Pukur Road,
Kalighat, Calcutta.
Another term of the partnership was that
if the tender was accepted the appellant would advance or lend
from time to time a total sum of Rs. 20,000 towards the work
represented by the tender as and when necessary.
The amount
so advanced would be repayable to the appellant with interest at
six per cent per annum and 503 of the profit to be earned. The
respondent was, under the terms of partnership agreement,
to
execute an irrevocable power of attorney in the manner and with
powers as provided in the draft approved by the partners. The
bankers of the firm would be United Bank of India Limited and
all cheques on the said bank would be signed by both the partners.
The agreement further provided that

## Text

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DEBABRATA GUPTA
v.
S. K. GHOSH
February 23, 1970
[A. N. RAY AND I. D. DUA, JJ.]
765
Indian Penal Code Section 406--Criminal breach of
trus--Jngrt'dients necessary-Proof of entrustment.
Certain disputes arose between the appellant and the respondent '"ho
were partners in a firm.
After the respondent had sent to the appellant
a notice for dissolution of the partnership, the appellant withdrew cenain
funds from the firm account. The respondent thereafter lodged a complaint against the appellant alleging criminal breach of trust \vithin the
meaning of Section 406 I.P.C. He also instituted a suit for the dissclution of the partnership and for accounts. The Additional Chief
Presidency Magistrate issued summons to
the appellant under Section .!06.
'fhe appellant instituted proceedings in the High Court for quashing the
criminal proceedings but the High Court rejected his prayer.
On appeal to this Court,
HELD : Dismissing the appeal :
The offence of criminal breach of
trust under section 406 of
the
Indian Penal Code is not in respect of property belonging to the p;?rtnership but is an offence committed by the person in respect of prOJ'.'erty
which has heen
specially entrusted to such a person and which he P.olds
in a fiduciary capacity. [768 Fl
Jn the present case_. the appellant denied that there \Vas any special
entrustrnent of any property or that he, wa5 holding any property in 'a
fiduciary capacity.
It was neither possible nor desirable to express any
opinion on the merits of such a plea.
It \Vas not possible to do so because the facts were not in possession of the court and furthermore the
facts could not h.z before the court \vithout proper investigation and enquiry.
It was not desirable to do so because if :iny such opinion be
expressed it might prejudice or embarrass either party, [768 G]
R. P. Kapur v. State of Pnnjab, [1960] 3 S.C.R. 388; Ve/ji Rarhavji
Patel v. State of Maharashtra, [1965] 2 S.C.R. 429, lli1t1ban Mohan R,mc.
v. Surendra Mohan Das, I.LR. [1952] 2 Cal. 23, referred to.
CRIMINAL
AP PELLA TE
JURISDICTION : Criminal
Appeal
No. 134 of 1967.
Appeal by special leave from the judgment and order dated
June 7, 1967 of the Calcutta High Court in Criminal Revision
No. 1100 of 1965.
Debabrata Mukherjee and Sukumar Ghose, for the
appellant.
Sadhu Singh, for the re1pondent.
766
SUPREME COURT REPORTS
[1970] 3 S.C.R.
The Judgment oi the Court was delivered by
Ray, J.
This is an appeal by special leave against the judgment of the Calcutta High Court dated 7 June, 1967 refusing to
quash the process issued and the proceedings pending before the
Additional Chief Presidency Magistrate, Calcutta under section
406 of the Indian Penal Code.
The appellant and the respondent entered into a registered
deed of partnership on 27 March, 1963. The name of the partnership business was
"Allied Engineers".
The nature of
the
business was that if the tender submitted by the respondent to
the Eastern Railways for extension of bridge No. 2 at the west
and of Howrah yard, West Bengal was accepted by the Eastern
Railways the said work would be deemed to be included within
the partnership.
Under the terms of partnership agreement the
capital was Rs. 20,000 to be contributed equally by the partners
within six months from the date of the agreement.
The main
office of the partnership was at 12/1/5 Manohar Pukur Road,
Kalighat, Calcutta.
Another term of the partnership was that
if the tender was accepted the appellant would advance or lend
from time to time a total sum of Rs. 20,000 towards the work
represented by the tender as and when necessary.
The amount
so advanced would be repayable to the appellant with interest at
six per cent per annum and 503 of the profit to be earned. The
respondent was, under the terms of partnership agreement,
to
execute an irrevocable power of attorney in the manner and with
powers as provided in the draft approved by the partners. The
bankers of the firm would be United Bank of India Limited and
all cheques on the said bank would be signed by both the partners.
The agreement further provided that all cheques in respect of the work in the name of the respondent, S. K. Ghosh,
in Eastern Railways would be drawn on the banking account
operated by the partner Debabrata Gupta, namely, the
appellant for which the respondent would
execute
an
irrevocable
power of attorney.
The case of the appellant is that he advanced to the partnership from time io time an aggregate sum of Rs. 50,000 for
completion of the work. The respondent executed the power of
attorney in favour of the appellant on 27
March,
1963 and
authorised the appellant to submit all bills, interim as well
as
final. to receive cheques and to do necessary things on behalf of
the respondent in connection with the said work for extension
of bridge under the partnership agreement.
On 18 April, 1964 a second deed of partnership was made
between the appellant and the respondent in modification of the
earlier deed dated 27 March, 1963.
It was recited there that
the appellant had invested to the extent of Rs. 50,000 for the
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DEBABRATA V. S. K. GHOSH (Ray, J.)
aforesaid work of constructibn of the bridge. It was also recited
in the agreement that the respondent was not in a position to
contribute to his share of the capital. The second deed further
provided that the amount contributed by the appeilant "shall be
repaid immediately after the collection of the
bills from
the
Eastern Railway\;".
The banking account was to be operated
by the appellant and all bills collected and security refunded by
the Eastern Railways in respect of the first agrecmcnc was to be
deposited by the p«rnc; """ ,\te bank forthwith.
It appears that disputes arose between the appellant ana: the
respondent whereupon the respondent wrote to the bank to stop
all payments to the appellant. The respondent sent to the appellant a notice for dissolution of the partnership. The appellant in
accordance with the partnership agreement instituted proceedings
in the High Court at Calcutta on or about 8 September, 1965
for filing an arbitration agreement under section 20 of the Arbitration Act. The High Court appointed an arbitrator for adjudication of disputes between the parties.
Meanwhile, summons was issued by the Chief Presidency
Magistrate, Calcutta under sections 406 and 424/34 of the
Indian Penal Code against the appellant. The respondent on 19
June, 1965 had lodged a complaint against the
appellant for
process under sections 406 and 424/34 of the Indian Penal Code
against the appellant and against two other persons alleging that
the appellant had dishonestly withdrawn sums totalling about
Rs. 92, 000 from the account of the partnership firm and further
that in collusion with other persons had removed the books of
accounts.
The respondent also filed a suit being Title Suit No. 15 of
1966 in the Third Court of the Subordinate Judge, Alipore, West
Bengal against the appellant for dissolution of partnership and
for accounts.
In that suit the respondent obtained a temporary
injunction against the appellant restraining him from
receiving
payment from the Eastern Railways and from operating the bank
account of the partnership.
.
The appellant and the accused No. 2 instituted proceedings
~n the High C.ourt at Calcutta for quashing the criminal proceedings.
Th~ Htgh Court at Calcutta quashed the process issued
under sections 424/34 of the Indian Penal Code against accused
No. 2 on the ground of want of territorial jurisdiction but refused
to quash the process under section 406 of .the Indian 'Penal Code
against the api ··Hant.
'
Counsel on behalf of the appellant contended first that there
could be no issue of process in dispuies between the partners and.
768
SUPREME COURT REPORTS
[1970) 3 S.C.R.
secondly the Additional Chief Presidency Magistrate had no
jurisdiction to issue process because the alleged offence had ta.ken
place outside the jurisdiction of that court.
Counsel for the
appellant relying on the decision of this Court in R. P. Kapur v.
The State of Punjab(') contended that the High Court could
exercise inherent jurisdiction to quash proceedings where the
allegations in the complaint did not make oui a case. It is true
.that the Court can in some cases do so. The question is whether
the present case is one of that type.
Counsel for the- appellant relied on the decision of this Court
in Velji Raghavji Patel v. State of Maharashtra(') where one of
the partners was convicted of an offeurce of criminal breach of
trust under section 409 of the Indian Penal Code and this Court
held that where a partner realised the sum in his capacity as
partner and utilised them for the business of the partnership, he
was only liable to render accounts to his partners and his failure
to do so would not amount to criminal breach of trust. Counsel
for the appellant invoked the application of the same doctrine to
the present case.
In order to accede to the contention it has to be established
first that the dispute is only between the partners and secondly it
does not relate to any special entrusiment of property which constitutes one of the basic ingredients of an offence under section
406 of the Indian Penal Code. 1his Court in Patel's case(2 )
approved the decision of the Calcutta High Court in Bhuban
Mohan Rana v. Surendra Mohan Das(') and said that before
criminal breach of trust is established it must be shown that the
person charged has been entrusted with property or with dominion over the property. In other words, the offence of criminal
breach of trust under section 406 of the Indian Penal Code is not
in respect of property belonging to the partnership but is an
offence committed by the person in re.spect of . property _which
has been specially entrusted to such a person and which_b~lds
in a fiduciary capacity.
In the present case, the appellani denies that there was any
special entru.stment of any property or that he was holding any
property in a fiduciary capacity. It is neither possible nor desirable to expr.~ss any opinion on the merits of such a plea. Ii is
not possible to do so because the.facts are not in possession of the
court and furthermore the faCts cannot be before the court without proper investigation and. enquiry. It is not desirable to do so
because if any such opinion be expressed it may prejudice or
embarrass either party.
(!) [1960] 3 S.C.R. 388.
(2) [1965] 2 S.C.R. 429.
(3) I.LR. [1952] 2 Cal. 23.
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DEBABllATA V. S, K, GHOSH (Ray, J.)
76~
The plea as to lack of territorial jurisdiction cannot also be
decided on the materials nor can an opinion be expressed on that
question.
It is made clear that all pleas and defences are left open to
the appellant including the question whether there was any special
entrustment of any prop~rty to the appellant and the territorial
jurisdiction of the Court.
For these reasQllS, the appeal fails and is dismissed.
R.K.P.S.
Appeal dismissed.