# R. K. DALM.IA v. DELHI ADMINISTRATION

- **Citation:** [1963] 1 S.C.R. 253
- **Court:** Supreme Court of India
- **Decided:** 1963
- **Case number:** Criminal Appeals Nos. 464-C, 465-C and 463-D of 1959
- **Bench:** K. SuBBA RAo, RA<iHUBAR DAYAL
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/r-k-dalm-ia-v-delhi-administration-2548
- **Pages:** 152

## Headnote

253
Criminal Trial-Transactions to divert money of Insurance
Company to losses incurred by Chairman in share speculationChairman and Agent, if guilty of criminal breach of trustOharge, if legal-Confession before Investigator, if voluntary--
'Agent'-''In the way of his busittess"--Meaning-Falsification
of
account-Conspiracy-Accomplice-Corroboration-Indian
Penal Oode 1860 (XIV of 1860), ss. 120B, 409, 405, 477.AOode of Criminal Procedure, 1898 (Act 5 of 1898), s. 233-'-
lnaurance Act, 1938 ( 4 of 1938), s. 33.
Appellant Dalmia was the Chairman of the Board of
Directors and Principal Officer of the Bharat Insurance company and appellant Chokhani its agent in Bombay. Appdlant
Vishnu Prasad, nephew of Chokhani, was the ne;minal owner
of Bhagwati Trading Company but its business was entirely
conducted by Chokhani. Gurha, the other appellant, was a
Director of Bharat Union Agencies, a company dealing in forward transactions of speculation in sh~res, and owned for all
practical purposes by Dalmia. This Company suffered heavy
losses in its business during the period August, 1954, to September, 1955. The prosecution case against the appellants in
substance was that in order to provide funds for the payment
of those losses in due time, they entered into a conspiracy,
along with five others, to divert the funds of the Insurance
company to the Union Agencies through the Bhagwati Trading
Company and to cover up such unauthorised transfer of funds,
the various steps for such transfer and the falsification of
accounts of the Insurance Company and the Union Agencies
and its allied concern and committed offences under s. 120B
read with s. 409 of the Indian Penal Code.
Dalmia made a
confession before Mr. Annadhanam, a Chartered Accountant,
who was appointed Investigator under s.33( I) of the Insurance
Act, 1938, which was as follows:-
·
"I have misappropriated securities of the order of
Rs. 2,20,00,000 of the Bharat Insur ince Company Ltd. I have
lost this money in speculation."
'"'
.f;ril I.
1962
R. K. Da/mia
v.
Delhi Administration
254
SUPREME COURT REPORT8 [1963]
"At any cost, I want to pay full amount by requesting
by relatives or myself in the interest of the policy holders".
The prosecution primarily depended upon the evidence
of Raghunath Rai, the Secretary-cum-Accountant of the Insuranc: Company, and it was contended on behalf of the appellants that he was an accomplice.
The Sessions Judge convicted all the appellants under
s. 120B read with s. 409 of the Indian Penal Code, and further convicted Dalmia and Chokhani for substantive offences
under s. 409, Chokhani under s. 477A read withs. I IO and
Gurha under s. 477 A of the Indian Penal Code.
He however
acquitted the others.
The High Court in sub,tance agreed with the findings of
the Sessions Judge, except that it did not rely on the confession of Dalmia.
Held, that the Delhi Court had jurisdiction to try Chokhani for the offence under s. 409 of the Indian Penal Code,
committed beyond its jurisdiction in pursuance of the alleged
conspiracy with which he and the other co-accused were char•
ged.
Purusho1tam Das Dalmia v. State of West Bengal, [1962]
2 S. C.R. IOI, followed.
The charge against Dalmia under s. 409 of the Indian
Penal Code was not hit by s. 233 of the Code of Criminal
Procedure. The charge framed was not for four distinct offences. It was really with respect to one offence though the mode
of committing it was not precisely stated. Any
objection as to the vagueness of the charge on the score could not
invalidate the trial since no prejudice haq been caused to the
accused nor any contention raised to that effect.
The word 'property' used in s. 405 of the Indian Penal
Code could not be confined to movable property since the section itself did not so qualify it. The word 'property' 'Was much
wider than the expression 'movable property' defined in s. 22
of the Code. The question whether a particular offence could
be committed in respect of any property depended not on
the meaning

## Text

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' -
1 s.c.R.
SUPREME COURT REPORTS
R. K. DALM.IA
v.
DELHI ADMINISTRATION
(S .K. D..\s, K. SuBBA RAo and
RA<iHUBAR DAYAL. JJ.)
253
Criminal Trial-Transactions to divert money of Insurance
Company to losses incurred by Chairman in share speculationChairman and Agent, if guilty of criminal breach of trustOharge, if legal-Confession before Investigator, if voluntary--
'Agent'-''In the way of his busittess"--Meaning-Falsification
of
account-Conspiracy-Accomplice-Corroboration-Indian
Penal Oode 1860 (XIV of 1860), ss. 120B, 409, 405, 477.AOode of Criminal Procedure, 1898 (Act 5 of 1898), s. 233-'-
lnaurance Act, 1938 ( 4 of 1938), s. 33.
Appellant Dalmia was the Chairman of the Board of
Directors and Principal Officer of the Bharat Insurance company and appellant Chokhani its agent in Bombay. Appdlant
Vishnu Prasad, nephew of Chokhani, was the ne;minal owner
of Bhagwati Trading Company but its business was entirely
conducted by Chokhani. Gurha, the other appellant, was a
Director of Bharat Union Agencies, a company dealing in forward transactions of speculation in sh~res, and owned for all
practical purposes by Dalmia. This Company suffered heavy
losses in its business during the period August, 1954, to September, 1955. The prosecution case against the appellants in
substance was that in order to provide funds for the payment
of those losses in due time, they entered into a conspiracy,
along with five others, to divert the funds of the Insurance
company to the Union Agencies through the Bhagwati Trading
Company and to cover up such unauthorised transfer of funds,
the various steps for such transfer and the falsification of
accounts of the Insurance Company and the Union Agencies
and its allied concern and committed offences under s. 120B
read with s. 409 of the Indian Penal Code.
Dalmia made a
confession before Mr. Annadhanam, a Chartered Accountant,
who was appointed Investigator under s.33( I) of the Insurance
Act, 1938, which was as follows:-
·
"I have misappropriated securities of the order of
Rs. 2,20,00,000 of the Bharat Insur ince Company Ltd. I have
lost this money in speculation."
'"'
.f;ril I.
1962
R. K. Da/mia
v.
Delhi Administration
254
SUPREME COURT REPORT8 [1963]
"At any cost, I want to pay full amount by requesting
by relatives or myself in the interest of the policy holders".
The prosecution primarily depended upon the evidence
of Raghunath Rai, the Secretary-cum-Accountant of the Insuranc: Company, and it was contended on behalf of the appellants that he was an accomplice.
The Sessions Judge convicted all the appellants under
s. 120B read with s. 409 of the Indian Penal Code, and further convicted Dalmia and Chokhani for substantive offences
under s. 409, Chokhani under s. 477A read withs. I IO and
Gurha under s. 477 A of the Indian Penal Code.
He however
acquitted the others.
The High Court in sub,tance agreed with the findings of
the Sessions Judge, except that it did not rely on the confession of Dalmia.
Held, that the Delhi Court had jurisdiction to try Chokhani for the offence under s. 409 of the Indian Penal Code,
committed beyond its jurisdiction in pursuance of the alleged
conspiracy with which he and the other co-accused were char•
ged.
Purusho1tam Das Dalmia v. State of West Bengal, [1962]
2 S. C.R. IOI, followed.
The charge against Dalmia under s. 409 of the Indian
Penal Code was not hit by s. 233 of the Code of Criminal
Procedure. The charge framed was not for four distinct offences. It was really with respect to one offence though the mode
of committing it was not precisely stated. Any
objection as to the vagueness of the charge on the score could not
invalidate the trial since no prejudice haq been caused to the
accused nor any contention raised to that effect.
The word 'property' used in s. 405 of the Indian Penal
Code could not be confined to movable property since the section itself did not so qualify it. The word 'property' 'Was much
wider than the expression 'movable property' defined in s. 22
of the Code. The question whether a particular offence could
be committed in respect of any property depended not on
the meaning of the word 'property' but on whether that pro·
perty could be subjected to that offence. 'Property' in a particular section could, therefore, mean only such kind of pro·
perty with respect to which that offence could be committed.
The fonds of the Bharat Insurance Company referred to in the
charge amounted to property within the meaning of s. 405 of
the Indian Penal Code.
(
\
1 S.C.R.
SUPREME COURT REPOR'TS
255
Reg. Girdhar Dharamdas (1869) 6 Born. High Ut. Rep.
(Crown Cases) 33, and Jugdown Sinha v. Queen Empress
(1895) I. L. R. 23 Cal. 372, disapproved.
Emperor v. Bishan Prasad, (1914) I L.R. 37 All. 128,
Ram Ohand Gurvala v. King Emperor A. I. R. l 926 Lah. 385,
Manchersha Ardeshir. v. Ismail Ibrahim, (1935) I.L.R. 60 Bom.
70.P, Daud Khan v. Emperor A. I. R. 1925 All. 672 and The
D~lhi O'loth and General Mills Oo. Ltd. v. Harnam Singh
0955] 2 S. C.R. 402, referred to.
'
The relevant articles and bye-laws of the Insurance
Company and the resolutions passed by its Board of Directors
established that both Dalmia and Chokhani were entrusted
with dQminion over the funds of the company in the Banks
within the meaning of s. 409 of the Indian Penal Code.
· Peoples Bank v. Harkishan Lal, A. I. R. 1936 Lah. 408,
G. E, Ry. Oo. v. Turner, L. R. (1872) 8 Ch. App. 149 and
Re. Forest of Dean Etc. Oo., L. R. (1878) IO Ch. D. 450 referred to,
The offence of Criminal breach of trust could be committed by Chokhani eyen though he alone could not opf'rate the
Bank account and could do so jointly with another.
Bindeshwari v. King Emperor (1947) I.L.R. 26 Pat. 703, held
inapplicable.
Nrigendro Lall Chatterjee v. Okhoy Ooomar Shaw, (1874)
(Cr. Rulings) 59 and Emperor v. Jagannath Ragunathdas,
(1931) 33 Bom. L. R. 1518, referred to.
The expression 'in the way of business as agent' occurring ins. 409 of the Indian Penal Code meant that the propety must have been entrusted to such agent 'in the ordinary
course of his duty or habitual occupation or profession or
trade.' He should get the entrustment or dominion in his
capacity as agent and the requirements of the section would
be satisfied if the person was an agent of another and that
person entrusted him with the property or with dominion over
the property in the course of his duties as an agent, A person
might be an agent of another for some pu~pose and if he was
entrusted with property not in connection with that purpose
but for another purpose, that would not be entrustment within
the meaning of s. 409 of the Code.
Mahumarakalage Edward Andrew Oooray v. Queen. [1953]
~· C. 407 and Reg. v. Portugal, [1885] 16 Q. B. D, 487, considered.
1962
R. K. ualml11
v.
Dtll,i Atlminislr11tion
1968
B. K. DaJmia
y,
D1lhi Administration
256
SUPREME COURT REPORTS (1963]
Both Dalmia and Chokhani were agents of the Bharat
Insurance Company within the meaning of s. 409 of the Code.
Guiab Singh v. Punjab Zamindara Bank, A. I. R. 1942
Lah. 47, referred to.
Raghunath Rai was not an accomplice as he did not
participate in the commission of the actual crime charged
against the accused.
An accomplice must be
a particeps
criminis, except where he was a receiver of stolen property or
an accomplice in a previous shuilar offence committed by the
ac.cused when evidence of the accused having committed crimes
of identical type on other occasions was admissible to prove
the system and intent of the accused committing the offence
charged.
Davies v. Director of Public Prosecutions, [1954] A.C. 378
referred to.
Chokhani was a servant of the Insurance Company within the meaning of s. 477 A of the Indian Penal Code. He was
a paid Agent of the company and as such was its servant even
though he was a full-time servant of the Bharat Union Agencies.
Each transaction to meet the losses of the United Agencies, was not an independent conspiracy by itself.
There was
identity of method in all the transactions and they must be
held to originate from the one and same conspiracy.
Since the confessio:-t made by n, lmia had not been
shown to have been made under any threat or inducement or
promise from a person in autho1·ity, it could not be anything
but voluntary even though it might have been made for the
-
purpose of screening the 5cheme of the conspiracy and the
High Court was in error in holding that it was otherwise.
A person appointed an Investigator under s. 33( I) of the
Insurance Act did not ipso facto become a public servant within the meaning ofs. 21, Ninth, of the Indian Penal Code and
s. 176 of the Indian Penal Code could have no application to
an examination held under s. 33(3) of the Act.
The confession of Dalmia was not hit by Art. 20(3) of
the Constitution since it was not made by him at a time when
he was accused of an offence.
State of Bombay v. Katpi Kalu Oghad, R. [19ti2) 3 S.C.R.
10, referred to.
The expression 'with intent to defraud' in s. 4 77 A of the
Indian Penal Code did not mean intention to defraud someone
in the future and could relate to an attempt to cover up what
had ahcady happtned.
1 S.C.R.
SUPREME COURT REPORTS
257
Emperor v. Ragho Ram, I. L. R. ( 1933} 55 All. 783,
approved.
CRIMINAL APPELLATE JURISDICTION: Criminal
Appeal Nos. 7 to 9 of Hl61.
Appeals by special leave from the judgment
and order dated January 2, 1961, of the .i'unjab
High Court (Circuit Bench) at Delhi in Criminal
Appeals Nos. 464-C, 465-C and 463-D of 1959.
Dingle Foot, D. R. Prem, 8. JJJ. Sikri, G. H . .J a1thar·i and A. N. Goyal, for the appellant (in Cr. A.
No. 7 of 61).
R. L. Kohli and A. N. Goyal, for the appellant (in Cr. A. No. 8 of 1961).
Prem Nath Ohadha, Madan Gopal Gupta and
K. R. Ohoudhri, for appellant No. 2 (in Cr. A. No. 9
of 1961).
0. K. Daphtary, Solicitor General of India,
R. L. Mehta and R. H. Dhebar, for the respondents.
1962. April 5. The Judgment of the Court was
delivered by
1961
R. E. Dalmia
y,
f> el hi A.dministratio n
RAGHUBAR DaYAL, J.---These tltte-e. appeals
Roghnbar Dayal J.
are by special leave. .Appeal No. 7 of 1961 is by
R. K. Dalmia.
Appeal No. 8 of .l.96 l
is by
R.P.Gurha. Appeal No. 9 of 1961 is by G.L.Chokhani
and Vishnu Prasad. All the appellants were convicted of the offence under s. LO-B read with s.409
I.l>.C., and all of them, except Vishnu Prasad, were
also convicte.d of certain offences arising out of the
overt acts committed by them. Dalmia-and Chokhani were convicted under s. 409 I.P.C. Chokhani
was also convietetd under s. 477A read withs. llO,
I. P. C.
Gurha 'was convicted under s. 47iA
I. P. C.
To appreciate the case against the appellants,
we •may first state generally the facts leading to the
~se? ·,Pharat ~nsurance 9omrany was incorporateq
1968
R. K. D•lmia
••
Dtl/ai Admini1tr11J'on
Jt,avAui" D•y•I J.
258
SUPREME COURT REPORTS (1963]
in 1896. In 1936 Dalmia purchased certain shares of
the com ·1any and became a Director and Chairman
of the company:·· He reeigned from these offices in
1942 and was succeeded by his brother J. Dalmia.
The head office of the Bharat Insura.nce Company
was shifted from Lahore to IO, Daryaganj, Delhi.
in 11147. Dalmia was co-opted a Director on March IO,
1949 and was again elected Chairman of the company on March
19, 1949
when his
brother
J. Dalmia resigned.
R. L. Chordia, a relation of Dalmia and
principal Officer of the Insurance Company, was
appointed Managing Director on February 27, 1950.
Dalmia. was appointed Principal Officer of the
company with effect from August 20, 11154.
He
remained the Chairman and Principal Officer of tha
Company till September 22, 1955. The period of
criminal conspiracy charged against the appellant is
from Augni;t 1954 to Sept11mber 1955. Dalmia was
therefore, during the relevant period, both Chairman
and Printipa.1 Officer of the Insurance Company.
Dut ing this relevant period, this company had
its curre11 t account in the Chartered Bank of India,
Australia and China Ltd. (hereinafter called the
Chartered Bank) at Bombay. The COillpany also
had an account with this bank for the safe custody
of its securities the company also had a separate
current account with the Punjab National Bank,
Bombay.
At Ddhi, where the head office was, the
company had an account for the safe custody of
securities with the Imperial Bank of India, New
Delhi.
;
Exhibit P-785 consists of the Memorandum of
Association and the Articles of Association of the
Bharat Insurance Company. Articles 116 and 117
deal with the powers of the Directors.
Exhibit P-786 is said to be tht> original Byelaws passed by the Directors on September 8, 19/H.
'
•
I S.C.R.
SUPREME COURT REPORTS
259
The pages a.re signed by K.L. Gupta, who was the
19'!
General Mana!!er of the company during the rele-
-
~
R. IC'. Dalmi•
vant period, and not by Da.lmia t.he Chairman, as
•·
should have been the case in view of the resolution
Delhi Mministr•ti;n
dated 'May 8, 1951. The genuineness of this docuR11g1tu6ar Da,al J.
ment is not, however, admitted.
Exhibits P-15 and P-897 are said to be copies
of these Bye-laws which
were sent to 8hri
K. Annadhanam (Chartered Accountant, appointed
by the Government of India on September 19, 1955,
to investigate into the aff nirs of the Bharat Insurance Company under s. 33(1) of the Insurance Act)
and to the. Imperial Bank of India, New Delhi,
respectively, and the ev.idence about their genuine·
ness is questioned.
Bye-law 12 deals with the powers of the
Chairman. Clause (b) thereof empowers .the Chairman to grant loans to persons with or without
security, but from August 30, 1954, the power was
restricted to grant of loans on mortgages. Clause
(e) empowers the Chairman to negotiate transfer buy
and sell Government Securitfos and to pledge,
indorse, withdraw or otherwise deal with them.
On January 31, 1951, the Board of Directors
of the Insurance Company passed resolutions to the
following effect : ( l) To open an account in the
Chartered Bank at Bombay.
(2) To authorise
Chokhani to operate on the account of the Insurance
Company.
(3) To arrange for the keeping of the
Government securities hcl<J by the company, in safe
custody, with the Chartered Bank. (4) To instruct
the Bank to accept instructions with regard to
withdrawal from Chokhani and Chordia.
On the samo day, Dalmia and Chordia made
an application for the opening of the account at
Bombay with the result that Current Account
No. I !20 was opened. On the same day Chokhani
w~s n.ppoint~d Agent of the company at Bombay.
''"
11.. /f. D•lmia
v.
Bilhi Afknimistralion
/tlf"--~""' J.
260
SUPREME COURT REPORTS (1963]
He was its agent during the relevant period. From
1951 to 1953, Chokhani alone operated on that
account. On October l, 1953, the Board of Directors directed that the current account of the
company with the Chartered Bank, Bombay, be
operated jointly by Chokhani and Raghunath Rai,
P.W. 4.
Raghunath Rai, joined the company in 1921 as
a Clerk, became Chief Accountant in 1940 and
Secretary-cum-Chief Accountant of the company
from August 17, 1954.
The modus operandi of the joint operation of
the bank account by Chokhani and Raghunath Rai
amounted, in practice to Chokhani's operating that
account alone. Chokhani used to get a number of
blank cheques signed by Raghunath Rai, who worked
at Delhi.
Chokhani signed those cheques when
actually issued. In order to have signed cheques in
possession whenever needed, two cheque books were
used. When the signed cheques were nearing.depletion
in one cheque book, Chokhani would send the other
cheque book to Raghunath Rai for signing again a
number of cheques. Thus Raghunath Rai did not
actually know when and to whom and for what
amount the cheques would be actually issued and
therefore, so far as the company was concerned, the
real operation of its banking account was done by
Chokhani alone. This system led to the use of
the company's funds for unauthorized purposes.
Chokhani used to purchase and sell securities
on behalf of the company at Bombay. Most of
the securities were sent to Delhi and kept with the
Imperial Bank of India there. The other securities
remained at Bombay and were kept with the
Chartered Bank. Sometimes securities were kept
with the Reserve Bank of India and inscribed stock
was obtained instead. The presence of the inscri·
bed stock was a guarantee that the securities were
in the Ba.nk.
1 S.C.R.
SUPREME COURT REPORrs
261
Chokhani was not empowered by any resolution of the Board of Directors to purchase and sell
securities. According to the prosecution, h~ purchased and sold securities under the instructions of
Dalmia. Dalmia and Chokhani state that Dalmia'
had authorised Chokhani in general to purchase and
sell securities and that it was in pursuance of sueh
authorisation that Chokhani on his own purchased
and sold securities without any further reference to
Dalinia or further instructions from Dalmia.
The transactions which have given rise to the
present proceedings against the appellants consisted
of purchase of securities for this company and sale
of the securities which the company held. The
transactions were conducted through recognised
brokers and ostensibly were normal transactions.
The misappropriation of funds of the company arose
in this way. Chokhani entered into a transaction
1_,f purchase of securities with a broker. The broker
entered into a transaction of purchase of the same
securities from a company named Bhagwati Trading
Company which was owned by Vishnu Prasad,
appellant, nephew of Chokhani and aged about 19
yea.rs in 1954.
The e.ntire business for BhagwatiTrading Company was really conducted by Chokhani.
The securities purchased were not delivered by
the brokers to Chokhani. It is said that Chokhani
instructed the brokers that he would have the
securities from Bhagwati rrrading Company. The
fact, however, Chokhani however was that Bhagwati Trading Company did not deliver the securities.
Chokhani however issued cheques in payment of
the purchase price of the securities to Bhagwati
Trading Company.
Thus, the amount of the
cheques was paid out of the company's funds with.
out any gain to it.
The sale transactions consisted in the sale of
the securities held or supposed to be held by the
company to a broker and the price obtained from
1962
R. K. Dalmia
v.
Delhi Administrati o 1
R~ghubar Dayal J.
1962
R. K Dalmia
..
D1I•• Administration
B.,Aubar D.,.1 I.
262
SUPREME COURT REPORTS (1963]
the sale was unutilised in purchasing formally
further securities which were not received. The
purchase transaction followed the same pattern,
viz., Chokhani purchased for the company from a
broker, thti broker purchased the same securities
from Bhagwati Trading Company and the delivery
of the Recurities was agreed to be given by Bhagwati Trading Company to Chokhani. Bhagwati
Trading Company did not deliver the securities but
received the price from the Insurance Company.
In a few cases, securities so purchased and not
received were received later when fresh genuine
purchase of similar securities took place from the
funds of the Bharat Union Agencies or Bhagwati
Trading Company.
These securities were got
endorsed in favour of t,ho Insurance Company.
The funds of the company, ostensibly spent
on the purchase of securities, ultimately roached
another company the Bharat Union Agencies.
Bharat Union Agencies ( hereinafter referred
to as the l:;nion Agencies) was a company which
dealt in speculation in shareH and, according to the
prosecution was practically owned by Dalmia who
held its shares either in his own names or in the
names
of persons
or
firms
connected with
him.
The Union Agencies suffered
lo~ses in
the relevant period from August 1954 to September, 1955.
The prosecution case is that to
provide funds for the payment of these losses at
the due time, the accused persons entered into the
conspiracy for the diversion of the funds of
the Insurance Company to the Union Agencies.
To cover up this unauthorised transfer of funds,
tho various steps for the transfer of funds from
one company to thA other and the falsification of
accounts of the Insuntn<Je Company and tho lJnion
AgenuieB took place and this conduct of the accused
ga vu 1 ise to the various offences the;r were charged
with and convicted of.
·
i s.c.R.
SUPREME COURT REPORTS
263
The real nature of the sale and purchase
transactions of the securities -did not come to the
notice of the head office of the Insurance Company
at Delhi as Chokhani communicated to the head
office the contracts of sale and purchase with the
brokers' statements of accounts, with a covering
letter stating the purchase of securities from the
brokers, without mentioning that the securities
had not been actually received or that the cheques
in payment of the purchase price were issued to
Bhagwati Trading Company and not to the brokers.
Raghunath Rai, the Secretary-cum-Accountant of the Insurance Company, on getting the advice about the purchase of securities used to inquire
from Da.lmia. about the transaction and used to
get the reply that Chokhani had purchased them
under Dalmia's instructions. Thereafter, the usual
procedure in making the entries with respect to
the purchase of securities was followed in the
office and ultimately the purchase of securities used
to be confirmed at the meeting of the Board of
Directors. It is said that the matter was put up
in the meeting with an office note which recorded
that the purchase was under the instructions of the
Chairman. Dalmia however, denies that Raghunath
Rai ever approached him for the confirmation or
approval of the purchase transaction and that he
told him that the purchase transaction was entered
into under his instructions.
The firm of Khanna and Annadhanam, Chartered Accountants, was appointed by the Bharat
Insurance Company, its auditors for the year 1954.
Shri Khanna oarri~d out the audit and was not
satisfied with respect to certain matters and that
made him ask for the counterfoils of the cheques
and for the production of securities and for a
satisfactory explanation of the securities not with
the company at Delhi.
IHI
R. T\. Dalmiu
v.
D1lhi Administratio1
--
1962
R. tr. Dalmia ~
••
Dell•i A•lminialratian
Raghub'J Dayal J.
264
SUPREME COURT REPORTS [1963]
The matter, however, came to a head not on
account of the auditors' report, but on account of
Shri. Kaul, Deputy Secretary, Ministry of Finance,
Government of India, hearing at Bombay in
September 1955 a rnmour about the unsatisfactory
position of the securities of the Insurance Company.
He contacted Dalmia and learnt on September 16,
1!);35 from Dalmia's relatives ihat there was a
short-fall secmities. He pursued the matter Departmentally and, eventually, the Government of India
appointed Shri Annadhanam under s. 33 (l) of
the Insurance Act, to investigate into the affairs
of the company. This was done on September
I!), 1955. Vcdmia is said to h3Ne made a confessional statemtJnt to Annadhanam on September 20.
Att0mpt was made to reimburse the Insurance
Company with respect to the short-foll in securities.
The matter was, however, made over to the Police
and the appellants and a few other persons,
acquitted by the Sessions Judge, were proceeded
against as a result of the investigation.
Dalmia's defence, in brief, is that he hnd
nothing to do with the details of the working of
the company, that he had authorised Chokhani, in
1953, to purchase and sell securities and that thereafter Chokhani on his own purchased and sold
securities. H•i had no knowledge of the actual
modus operand·i of Chokhani which~led to the dil,ersion of the fund~ of the company to the Union
Agencies.
He rcdmits knowledge <•f tho losses
incurred by the Union Agencies and being told -'Y
Chokha.ni that he would arrange funds to merot
them. He denies that he was a party to what
Chokhani did.
Chokhani admits that ho carried out the transactions in the form alleged in order to meet the
losses of the Union Agencies of which he was an
employee. He states that he did so as ho expect-
!ld that the Union Agencies would, in due course,
1 S.C.R.
SUPREME OOURT REPORTS
265
make np the losses and the money would be returned
to the Insurance Company. According to him, ho
was under the impression that what he did
amounted to giving of a loan bv the Insurance
Company to the Union Agencies and that there was
nothing wron~ in it. He asserts emphatically that
if he had known that he was doi9g was wrongful,
he would have never done it and would have
utilised other means to raise the money to meet
the losses of the Union Agencies as he had large
credit in the business circle at Bombay and as the
Union Agencies possessed shares which would be
sold to meet the losses.
Vishnu Prasad expresses his absolute ignoran·ce about the transactions which were entered into
on behalf of Bhagwati Trading Company and states
that what he did himself was under the instructions
of Chokhani, but in ignorance of the real nature of
the transactions.
Gurha denies that he was a party to the
fabrication of false accounts and vouchers in the
furtherance of the interests of the conspiratJy.
The learned Sessions Judge found the offences
charged against the appellants proved on the basis of
the circumstances established in the case and, accordingly, convicted them as stated. above.
The High
Court substantially agreed with the findings of the
Sessions Judge exc~pt that it did not rely. on the
confession of Dalmia.
Mr. Dingle Foot, counsel for Dalmia, has
raised a number of contentions,, both of law and of
facts. We propose to deal with the pc;>ints of law
first.
In order to appreciate the points of law raised
by Mr. Dingle Foot, we may now sta.te the charges
which were framed against the various appellaats.
1969
R. K. Dalmia
v.
Delhi Administration
RaghubM Da1al J.
1162
R. K. Dalmi•
..
D 1lh1 .4dminfstralion
266
SUPREME COURT REPOR:rs (1963]
The charge under s. 120.B read with s. 409,
I.P.C., was against the appellants and five other
persons and read :
"I, Din Daya.I Sharma, Magistrate I
Class, Delhi, do hereby charge you,
R. Dalmia (Ram Krishna Dalmia) s/o etc.
2.
G. L. Chokhani s/o etc.
3. Ba.jranglal Chokhani s/o etc.
4. Vishnu Pershad Bajranglal s/o
etc.
5. R. P. Gurha (Ragbubir Pershad
Gurha) s/o etc.
6. J. S. Mittal
(Jyoti
Swarup
Mitta.l} s/o etc.
7. S. N. Duda.ni (Shri Niwa.s Dud.
ani} s/o etc.
8.
G. S. Lakhotia. ( Gauri Shanker
La.khotia) s/o etc.
9. V. G. Kannan Vellore Govindaraj
Kannan s /o etc. accused
as
under:-
That you, R. Dalmia, G. L. Chokha.ni,
Bajrang La.I Chokhani, Vishnu Pershad Ba.jranglal, R. P. Gurha, J. S. Mittal, S. N. Dudani, G. S. Lakhotia and V. G. Kannan,
during the period between August 1954
and September 1955 at Delhi, Bombay and
other places in India.
were parties to a criminal conspiracy to
do and cause to he done illegal acts ; viz.,
criminal breach of trust of the funds of the
Bharat Insurance Compa.ny Ltd.,
by agreeing amongst yourselves and with
otht>rs that criminal breach of trust be com·
mitted by you R. Dalmia and G. L. Chokhani
-
1 S.C.R.
SUPREME COURT REPORTS 267
in respflct of the funds of the said Insurance
Company in current account No. 1120 of the
said Insurance Company with the Chartered
Bank of India., Australia and China, Ltd.,
Bombay,
the dominion over which funds
was
entrusted to you R. Dalmia in your capacity
as Chairman and the Principal Officer of the
said Insurance Company, and
to you G. L. Chokhani, in your capacity
as Agent of the said Insurance Company,
for the purpose of meeting losses suffered
by you R. Da.lmia in forward
t~ansaction (of
speculation) in shares; which transactions
were carried on in the name of the Bharat
Union Agencies Ltd., under the directions and
over all control of R. Dalmia, by you, G. L .
Chokhani, at Bomboy, and by you, R. P.
Gurha, J. S. Mittal·&nd S. N. Dudani at Cal·
cut ta; and for other purposes not conneoted
with the affairs of the said Insurance Com~,
pany,
by further agreeing that current account
No. Rl763 be opened with the Bank of India,
Ltd., Bombay and current account No. 1646
with the United Bank of India Ltd.. Bombay,
in the name of M/s. Bhagwati Trading Company, by you Vishnu PerE'had accused with the
assistance of you G. L. Chokhani, and Ba.jrangla.l Chokhani accused for the illegal purpose of diverting the funds of the said lnsurance Company to the said Bharat Union
Agencies, Ltd.,
by further agreeing that false entries showing that the defalcated funds were invested in
Government Securities by the said Insurance
Company
be got made in the
books of
1961
B. K. Dolmia
v.
D 11 Iii Atlniinislrali#tt
Raghubar Dqol J.
1962
R.iK. Dalmia
••
Dt!hi Admfr,islra1ion
Roghuhar D4.J1al J.
268
SUPREME COURT REPORTS [1963]
accounts of the said Insurance Company at
Delhi, and
by further agreeing to the making of
false and fraudulent entries by you R. P.
Gurha, J. S. Mittal, G. S. Lakhotia, V. G.
Kannan, and others, relating to the diversion
of funds of the Bharat Insurance Company to
the Bharat Union Agenoies Ltd., through M/s.
Bhagwati Trading Company, in the books of
account of the said Bharat Union AgenC'ies,
Ltd., and its allied concern known as Asia
Udyog Ltd., and
that the same aots were committed in
pursuance of the said agreement and
thereby you committed an offence punishable under seotion 120-B read with section
409 I.P.C., and within the cognizance of the
Court of Sessions."
Da!mia was further chargC'd on two counts for au
offence under s. 409 I. P. C.
These charges were
as follows :
·•I, Din Dayal Sharma, Magistrate I
Class, Delhi charge you, R. Dalmia accused
as under:-
FIRSTLY, that yon R. Dalmia, in pursuance of the said conspiracy between tho 9th
day of August 1954 and the 8th day of August
1955, at Delhi.
Being the Agent, in your capacity as
Chairman of the Board of Directors and the
Principal Officer of the Bharat Insurance Company Ltd., ·and as suoh being entrusted with
dominion over the funds of the said Bharat
Insurance Company,
committed oriminal breach of trust of the
1 s.c.n..
SUl>B.EM:E COtJRT B.EPoB.'rS
269
funds of the Bharat Insurance Company Ltd.,
amounting to Rs. 2,37 ,483-9-0,
by wilfully suffering your co-accused
G. L. Qhokhani to dishonestly misappropriate
the said funds and dishonestly use or dispose
of the said funds in violation of the directions
of law and the implied contract existing between you and the said Bharat Insurance
Company, prescribing the mode in which such
trust was to be discharged,
by withdrawing the said funds from current account No. 1120 of the said Bharat
Insurance Company with the Chartered Bank
of India, Australia & China, Ltd.,. Bombay,
by means of cheque Nos. B-540329 etc., issued
in favour of M/s. Bhagwati Trading Company,,
Bombay, and cheque No. B-540360 in favour
of F. C. Podder, and
by dishonestly utilising the said funds
for meeting losees suffered by you ·in forward
transactions in shares carried on in the name
of Bharat Union Agencies, Ltd., and for other
purposes not connected with the affairs of the
said Bharat Insurance Company ; a.nd
thereby committed an offence punishable
under section 409, I. P. C., and within the
cognizance of the Court of Sessions;
SECONDLY, that you R. Dalmia, in pursuance of the said conspiracy between the 9th
day of August 1955 and the 30th day of September 1955, at Delhi,
Being the Agent in your capacity as
Chairman of the Board of Directors and the
Principal O:flicer of the Bharat Insurance
Company, Ltd., and as such being entrusted
with dominion over the funds of the said
Bharat lasur$D08 Company,
1162
R.K.Dalmia
••
D;lhi .4tlministrati111 .
Raghntai iia,aJ J.
11111
B. Jr, Da/mia
..
Dtllli Adminislration
B111Aohor Da.1al J
270
SUPREME OOURT REPORTS (1963]
committed criminal breach of trust of the
funds of the Bharat Insurance Company Ltd.,
amounting to Rs. 55,43,220-12-0,
by wilfully suffering your co-accused G.L.
Chokhani to dishonestly misappropriate the
said funds and dishonestly use or dispose of the
said funds in violation of the directions of law
and the implied contract existing between you
and the said Bharat Insurance Company
prescribing the mode in which such trust was
to be discharged,
by withdrawing the said funds from current account No. 1120 of the said Bharat
Insurance Company with the Chartered Bank
of India, Australia & China, Ltd., Bombay by
means of Cheque Nos. B-564835 ...... issued in
favour of M/s. Bhagwati Trading Company
Bombay, and,
by dishonestly utilising the said funds for
meeting losses suffered by you in forward
transactions in shares carried on in the name
of the Bharat Union Agencies Ltd., and for
other purposes not connected with the affairs
of the said Bharat Insurance Company, and
thereby committed an offence punishable
under section 409 I. P. C., and within the
cognizance of the Court of Sessions."
Hr. Dingle Foot has raised the following
contentions:
(I) The
Delhi
Court had no territorial
jurisdiction to try offences of criminal breach of
trust committed by Chokhani at Bombay.
(2) Therefore, there had been misjoinder of
charges..
(3) The defect of miajoinder of charges was
1 s.c.R.
SUPREME OOUR'r REPORTS
271
fatal to the validity of the tria.1 and was not curable under s. 531 s. 537 of the Code.
(4) The substantive charge of the offence
under s. 409, I. P. C., against Dalmia offended a.ga·
inst the provisions of s. 233 of the Code; therefore
the whole trial was bad.
(5) The funds of the Bharat Insurance Company in the Chartered Bank, Bombay, which were
. alleged to have been
misappropriated were not
'property' within the meaning of ss. 405 and 409,
I. P. C.
(6) If they were, Dalmia did not have dominion over them.
(7) Dalmia was not an 'agent' within the
meaning of s. 409 I. P. C., as only that person could
be such agent who professionally carried on the
business of agency.
(8) If Dalmia.'s conviction for an offence under
s. 409 I. P. C., fails, the conviction for conspiracy
must also fail a.a conspiracy must be proved as laid.
(9) The confeBSional statement Exhibit P-10
made by Da.lmia on September 20, 1955, was not
admissible in evidence.
(10) If the confeasional statement was not inadmissible in evidence in view of s. 24 of the Indian
Evidence Act, it was inadmissible in view of the
provisions of cl. (3) of Art. 20 of the Constitution.
(11) The prosecution bas failed to establish
that Dalmia was synonymous with Bharat Union
Agenciea Ltd.
(12) Both the Sessions Judge and the High
Court failed to consider the question of onus of proof
i.e., failed to consider whether the evidence on
record really proved or established the conclusion
arrived at by the Courts.
1911
B. K. Dalmia
v.
D1lAi A'minuiraltm
Ba11aubar Dayal J.
1961
R, E. Da!mia
v.
Delhi Administratfott
Raghu6ar Dayal J.
272
SUPREME COURT REPORTS [1963]
(13) Both the Courts below erred in their
approach to the evidence of Raghunath Rai.
(14) Both the C,mrts below were wrong in
holding that there was adequate corroboration of
the evirlence of Regunath Rai who was a.n accomplice
or at least such a witness whose testimony required
corroboration.
(15) It is not eetablished with the certainty
required by law that Dalmia had knowledge of the
impugned transactions at the time they were enter.
ed into.
We have heared the learnea counsel for the
parties on facts, even though there are concurrent
findings of fact, as Mr. Dingle Foot has referred us
to a large number of inaccuracies, most of them not
of much importance, in the narration of facts in the
judgment of the High Court and has also complained of the omission from discussion of certain
matters which were admittedly urged before the
High Court and also of misapprehension of certain
arguments presented by him.
We need not, however, specifically consider
points No. 12 to 15 as questions urged in that form.
In discussing the evidence of Raghnnath Rai, we
would discuss the relevant contentions of Mr. Dingle
Foot, having a bearing on Raghunath Rai's reliability. Our view of the facts will naturally dispose
of the last point raised by him.
Mr. Dingle Foot's first four contentions relating to the illegalities in procedure may now be deal
with. The two charges under s. 409, I.P.C., against
Chokbani mentioned .that he committed criminal
breach of trust in pursuance of the ea.id conspiracy.
One of the charges related to the period from
August 9, 1954 to Angust 8, 1955 and the other
related t? the period from August 9, 1955 to
September 30, 195/ii.
1 S.C.R. SUPREltE COURT REPORTS
273
This Court held in P.urush'>itam Das Dalmia v.
State of West Bengal (1) that the Court having jurisdiction to try the offence of conspiracy has also
jurisdiction to try an offence constituted by the
overt acts which are committed, in pursuance of the
conspiracy, beyond its jurisdiction. M. Dingle Foot
submitted that this decision required reconsideration and we heard him and the learned Solicitor
General on the point and, having considered their
submissions, came to the conclusion that no case for
reconsideration was made out and accordingly
expressed our view during the hearing of these
appeals. We need not, therefore, discuss the first
contention of Mr. Dingle Foot and following the
decision in Purushott,am Das Dalmia's case(1) hold
that the Delhi Court had jurisdiction
to try
Chokhani of the offence under s. 409 I.P.C. as the
offence was alleged to have been committed in
pursuance of the criminal conspiracy with which he
and the other co-accused were charged.
In view of this opinion, the second and third
contentioni:: do not arise for consideration.
The fourth contention is developed hy Mr.
Dingle Foot thus. The relevant portion of the charge
under s. 409 I. P. C., against Dalmia reads:
''Firstly, that you Da.lmia, in pursuance
of the said conspiracy between .•. being the
Agent, ip your capacity as Chairman of the
Board of Directors and as Principal Officer of
the Bharat Insurance Company Ltd., and as
such being.entrusted with dominion over the
funds of the said Bharat Insurance Company,
committed criminal breach of trust of the
, fundE' ••• by wilfully suffering your co-accused
G. L. Chokhani to dishonestly misappropriate
the said funds and dishonestly use or dispose .
of the said funds in violation:1 of the directions
of law. and the implied contract existing bet. ·
ween you and the said Bharat Insura.noe
(1)
~1SG2J 2 s. c. R lQl.
1962
R. K. Dalmia
v.
Delhi Administrnt irri
Raghuhar Dayal J.
274
SUPREME COURT REPORTS [1963]
lift
Company prescribing the mode in which such
R. x. Dalmia
trust was to be discharged ... "
y,
Dtlhi .A.dminilt1ation This charge can be split up into four charges, each
of the charges being restricted to one particular
mode of committing the offence of criminal breach
of trm1t.
These four offences of criminal breach of
trust were charged in one count, e~.oh of these four
amounting to the offence of criminal breach of
trust 'by wilfully suffering Chokhani (i) to dishonestly misappropriate the said funds; (ii) to dishonestly
use the said funds in violation of the directions of
law; (iii) to dishonestly dispose of the said fundsin violation of the directions of law; (iv) to dishonestly use the said funds in violation of the implied
contract existing between Dalmia and the Bharat
Insurance Company'.
Section 233 of the Code or Criminal Procedure
permits one charge for every distinct offence and
directs that every charge shall be tried separately
except in the oases mentioned in ss. 234, 235, 236
~nd 239.
Section 234 allows the trial, together, of
offences up to three in numbu, when they be of
the same kind and be committed within the
space of twelve months. The contention, in this case
is that the four offences into which the charge
under s. 409 I.P.C. against Dalmia can be split up
were distinct offences and therefore could not be
tried together. We do not agree with this contention. The charge is with respect to one offence,
though the mode of committing it is not stated
precisely. If it be complained that the charge
framed under s.409 I. P. C.