# STATE OF PUNJAB v. PRITAM CHAND AND ORS

- **Citation:** [2009] 3 S.C.R. 173
- **Court:** Supreme Court of India
- **Decided:** 2009
- **Case number:** Criminal Appeal No. 28-DBA of 1991
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-of-punjab-v-pritam-chand-and-ors-25548
- **Pages:** 6

## Headnote

174
SUPREME COURT REPORTS
(2009] 3 S.C.R.
A order of trial court. Hence the present appeal.
Partly allowing the appeal and remitting the matter to
High Court, the Court
HELD: 1. High Court should not have in a summary
· B manner dismissed the appeal after having recorded that
a criminal case may arise even when breach of contract
is also there and there is no bar for prosecution under
the criminal law. Having said so, the High Court came to
an abrupt conclusion that because two views are
C possible as to whether the allegation made was of a civil
dispute or of a criminal nature no interference was called
for. The approach is clearly erroneous. [Para 9] (177-H;
178-A]
D
Rajesh Bajaj v. State NCT 01 Delhi 1999 (3) SCC 259
and Trisuns Chemical Industry v. Rajesh Agarwal and Ors.
1999 (8) sec 686, relied on.
2. Section 406 IPC deals with punishment for criminal
breach of trust. In a case under Section 406 the
E prosecution is required to prove that the accused was
entrusted with property or he had dominion over the
property and that the accused misappropriated or
converted the property to his own use or used or
disposed of the property or willfully suffered any person
F to dispose of the property dishonestly or in violation of
any direction of law prescribing the mode in which the
entrusted property should be dealt with or any legal
contract express or implied which he had entered into
relating to carrying out of the trust. [Para 4] (176-B]
G
Case Law Reference:
1999 (3) sec 259
1999 (8) sec 686
Relied on.
Relied on.
Para 6
Para 8
H

## Text

174
SUPREME COURT REPORTS
(2009] 3 S.C.R.
A order of trial court. Hence the present appeal.
Partly allowing the appeal and remitting the matter to
High Court, the Court
HELD: 1. High Court should not have in a summary
· B manner dismissed the appeal after having recorded that
a criminal case may arise even when breach of contract
is also there and there is no bar for prosecution under
the criminal law. Having said so, the High Court came to
an abrupt conclusion that because two views are
C possible as to whether the allegation made was of a civil
dispute or of a criminal nature no interference was called
for. The approach is clearly erroneous. [Para 9] (177-H;
178-A]
D
Rajesh Bajaj v. State NCT 01 Delhi 1999 (3) SCC 259
and Trisuns Chemical Industry v. Rajesh Agarwal and Ors.
1999 (8) sec 686, relied on.
2. Section 406 IPC deals with punishment for criminal
breach of trust. In a case under Section 406 the
E prosecution is required to prove that the accused was
entrusted with property or he had dominion over the
property and that the accused misappropriated or
converted the property to his own use or used or
disposed of the property or willfully suffered any person
F to dispose of the property dishonestly or in violation of
any direction of law prescribing the mode in which the
entrusted property should be dealt with or any legal
contract express or implied which he had entered into
relating to carrying out of the trust. [Para 4] (176-B]
G
Case Law Reference:
1999 (3) sec 259
1999 (8) sec 686
Relied on.
Relied on.
Para 6
Para 8
H
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal
..
..
STATE OF PUNJAB v. PRITAM CHAND AND ORS .
175
.......
No. 1069 of 2004.
A
From the Judgment and Order dated 16.10.2002 of the
High Court of Punjab and Haryana at Chandigarh in Criminal
Appeal No. 28-DBA of 1991.
Ajay Pal and Arun K. Sinha for the Appellant.
B
Rajeev Singh, Rajesh Prasad Singh and Jaspreet
""
Gogia(NP) for the Respondent.
The Judgment of the Court was delivered by
c
DR. ARIJIT PASAYAT, J. 1. Challenge in this appeal is
to the judgment of a learned Single Judge of the Punjab and
Haryana High Court dismissing the appeal filed by the State
of Punjab against the judgment of acquittal recorded by learned
...
Judicial Magistrate, 1st Class, Samana. The respondents were
D
charged for alleged commission of offence punishable under
Section 406 of the Indian Penal Code, 1860 (in short the 'IPC').
;
They were partners of one Jagdamba Rice Mills to whom the
paddy was entrusted for milling by the Punjab State Civil
Supplies Corporation Ltd. (in short the 'Corporation') during the
E
-i
year 1983-84. It was alleged that the accused failed to account
for the paddy and thus misappropriated the same. Pursuant to
'
arbitration clause between the parties an arbitrator was
o(
appointed and an award of Rs.1,81,315.43 was rendered in
favour of the Corporation. The trial Court acquitted the accused
F
on the ground that the matter arose out of breach of contract,
the same was of civil nature and a criminal case against the
accused was not made out.
2. High Court endorsed the view and dismissed the
G
ji
appeal.
3. In suprort of the appeal, learned counsel for the State
~
submitted that the High Court's judgment is totally unreasoned
..
as no reason has been indicated. Merely because there was
allegedly a breach of contract, that cannot in all cases rule out
H
176
SUPREME COURT REPORTS
[2009) 3 S.C.R.
A the criminal prosecution. It is pointed out that even the arbitration
,.,
award on which reliance has been placed by the trial Court to
direct acquittal, was a factor in favour of the Corporation and
without examining the ingredients of Section 406 IPC the trial
Court and the High Court directed acquittal.
B
4. Section 406 IPC deals with punishment for criminal
breach of trust. In a case under Section 406 the prosecution is
required to prove that the accused was entrusted with property
,..
or he had dominion over the property and that the accused
c misappropriated or converted the property to his own use or
used or disposed of the property or willfully suffered any person
to dispose of the property dishonestly or in violation of any -
direction of law prescribing the mode in which the entrusted
property should be dealt with or any legal contract express or
D
implied which he had entered into relating to carrying out of the
trust.
..
5. Criminal breach of trust is defined in Section 405 IPC.
The ingredients of offence under Section 405 are (i) entrusting
~
any person with property or with dominion over the property,
E (ii) the person entrusted (a) dishonestly misappropriated or
\;--
converted to his own use the property or (b) dishonestly used
' ~
or disposed of the property or willfully suffered any other person
so to do in violation (i) of any direction of law prescribing mode
,
in which such mode is to be discharged or (ii) of any legal
F contract made touching the discharge of trust.
6. In Rajesh Bajaj v. State NCT of Delhi (1999 (3) SCC
259) it was held as follows:
"10. It may be that the facts narrated in the present
G
complaint would as well reveal a commercial transaction
or money transaction. But that is hardly a reason for holding
,•
that the offence of cheating would elude from such a
transaction. In fact, many a cheatings were committed in
the course of commercial and also money transactions.
•
H
One of the illustrations set out under Section 415 of the
STATE OF PUNJAB v. PRITAM CHAND AND ORS.
177
[DR. ARIJIT PASAYAT, J.]
..
Indian Penal Code [Illustration ~ is worthy of notice now:
A
"(f) A intentionally deceives Z into a belief that A means
to repay any money that Z may lend to him and thereby
dishonestly induces Z to lend him money, A not intending
to repay it. A cheats."
B
7. While dealing with a case under Section 482 of the
Code of Criminal Procedure, 1973 (in short the 'Code') this
...
Court referred to the aforesaid judgment and held that merely
because an act has a civil profile is not sufficient to denude it
of its criminal outfit.
c
8. In Trisuns Chemical Industry v. Rajesh Agarwal and
Ors. (1999 (8) sec 686) it was noted as follows:
"9. We are unable to appreciate the reasoning that the
D
..
provision incorporated in the agreement for referring the
disputes to arbitration is an effective substitute for a
criminal prosecution when the disputed act is an offence.
Arbitration is a remedy for affording reliefs to the party
affected by breach of the agreement but the arbitrator
E
cannot conduct a trial of any act which amounted to an
offence albeit the same act may be connected with the
discharge of any function under the agreement. Hence,
-'i
those are not good reasons for the High Court to axe down
the complaint at the threshold itself. The investigating
agency should have had the freedom to go into the whole
F
gamut of the allegations and to reach a conclusion of its
own. Pre-emption of such investigation would be justified
only in very extreme cases as indicated in State of
Haryana v. Bhajan Lal. (1992 Supp (1) SCC 335)"
G
,,
(Underlined for emphasis)
9. These aspects were not considered by the trial Court
and, therefore, the High Court should not have in a summary
manner dismissed the appeal after having recorded that a
H
criminal case may arise even when breach of contract is also
178
SUPREME COURT REPORTS
[2009] 3 S.C.R.
A there and there is no bar for prosecution under the criminal law.
Having said so, the High Court came to an abrupt conclusion
because two views are possible as to whether the allegation
made was of a civil dispute or of a criminal nature no
interference was called for. The approach is clearly erroneous.
B Therefore, we set aside the impugned judgment of the High
Court and remit the matter to it for fresh consideration in
accordance with law.
10. The appeal is allowed to the aforesaid extent.
C KK.T.
Appeal partly allowed.
. '
..
>
'
I