R.L Anand, J.:— Vide this judgment, I dispose of eight Criminal Misc. Nos. 22388-M of 1996, Smt. Sunita Bajaj v. Punjab and Sind Bank,; 11993-M of 1997, Saraswati Mehra Woollen Mills v. Punjab and Sind Bank; 11995-M of 1997, Saraswati Mehra Woollen Mills v. Punjab and Sind Bank; 11999-M of 1997, Saraswati Mehra Woollen Mills v. Punjab and Sind Bank; 11997-M of 1997, N.K Woollens v. Punjab and Sind Bank; 12003-M of 1997, N.K Woollens v. Punjab and Sind Bank; 12001-M of 1997, N.K Woollens v. Punjab and Sind Bank and 12005-M of 1997, N.K Woollens v. Punjab and Sind Bank, as in the opinion of this Court common questions of law and fact are involved in all the criminal miscellaneous petitions. For the sake of facts, I am taking the facts from Criminal Misc. No. 22388-M of 1996 Smt. Sunita Bajaj v. Punjab and Sind Bank (supra).

2. Smt. Sunita Bajaj and others have filed the present petition under Section 482, Cr.P.C, for the quashment of complaint (Annexure P1) dated 28th October, 1995 and the summoning Order (Annexure P3) dated 17th November, 1995 for the offence under sections 403/409, Indian Penal Code, presently pending in the Court of Additional Chief Judicial Magistrate, Amritsar.

3. The case set up by the petitioners is that respondent No. 1, i.e, Punjab and Sind Bank filed a complaint under Section 408/409, IPC alleging that the petitioners took loan from respondent No. 1 to the tune of Rs. 29.6 lacs as cash credit hypothecation limit and term loan against hypothecation of stock of Rice and Bardana and machinery. It was further alleged that the loan was sanctioned and disbursed to the petitioners on the condition that the hypothecated goods shall not be disposed of without the prior permission of the Bank and without depositing the sale proceeds of the same. Since the petitioners disposed of the hypothecated goods without the permission of the Bank, they have committed offence punishable under Sections 408/409 of the Indian Penal Code. The learned Magistrate vide the summoning order dated 17th November, 1995 summoned the petitioners. According to the petitioners, the perusal of the order would show that there was total lack of judicious application of mind by the learned Magistrate. The learned Magistrate has not specified in the summoning order as to what offence has been committed by the petitioners. No preliminary evidence has been recorded on the ground that the Manager of the Punjab and Sind Bank was a Public Servant. The summoning order has been passed in a mechanical manner which does not show judicious application of mind on the part of the learned Magistrate; so much so counsel for the complainant sought adjournment in order to show the law that the Branch Manager of Punjab and Sind Bank was a Public Servant but the learned Magistrate did not give any opportunity. As per the petitioners, no offence under Sections 408/409, Indian Penal Code, is made out because the ownership of the hypothecated goods remained with the petitioners in spite of the hypothecation of the goods with the Bank against the loan secured by the petitioners. The dispute, if any, was predominantly of civil nature. Therefore, the complaint and the summoning order are liable to be quashed. It was also pleaded that the complaint was nothing but an abuse of the process of law.

4. With the above main averments, the petitioners have prayed for the quashment of the complaint (Annexure P-1) and the summoning order (Annexure P-3).

Page: 1315. Before I proceed further I would like to incorporate the material averments of the complaint (Annexure P-1). The record shows that the Punjab and Sind Bank filed criminal complaint under Sections 408/409, Indian Penal Code, against Sardar Bahadur Rice Mill, Smt. Sunita Bajaj, Shri Shamsher Chand Bhatia and Shri Manohar Lal Bajaj. It was alleged by the Bank in para No. 2 of the complaint that the accused persons approached the complainant vide loan application dated 2nd September, 1994 with a request that the complainant should grant a loan to them to the tune of Rs. 29.6 lacs as Cash Credit Hypothecation Limit and against hypothecation of stocks of rice and bardana as machinery which the accused persons intended to purchase with that loan amount. The complainant acceded to the request of the accused vide sanction letter dated 14th September, 1994 and sanctioned Rs. 29.1 lacs and disbursed the amount to the accused persons with a specific undertaking that the aforesaid hypothecated goods shall not be disposed of without the consent or permission of the Bank and without depositing the sale proceeds thereof. Under these circumstances the accused were under legal and contractual obligation to make available for the complainant's inspection the hypothecated goods, but the accused persons had failed to do so. Rather the accused persons have disposed of the hypothecated goods comprising of rice and bardana without informing the Bank and, therefore, they have prima facie committed the offence under sections 408/409 IPC.

6. Notice of the main petition was given to the respondents who filed the written statement and denied the allegations. The stand taken up by the respondent-Bank is that the petitioners have usurped the public money by misappropriating the same criminally. It has also been pleaded by the respondent-Bank that the property in goods still remains with the Bank. Therefore, sale of hypothecated stock is a criminal offence. The availability of civil remedy is no ground to stop the criminal proceedings. It has also been pleaded that no relief can be granted to the petitioners under Section 482, Cr.P.C

7. I have heard Shri Malkeet Singh, Advocate, appearing on behalf of the petitioners; and Shri Lakhinder Singh, Advocate, appearing on behalf of the Punjab and Sind Bank; as well as Shri J.S Brar, DAG Punjab, appearing on behalf of respondent No. 2, and with their assistance have gone through the record of this case.

8. Learned counsel for the petitioners invited my attention to CBI, New Delhi v. Duncans Agro Industries Ltd., Calcutta, 1996 (3) Recent Criminal Reports 60, and submitted that the ownership of the hypothecated goods still remained with the petitioners, who hypothecated the goods, and in these circumstances there was hardly any entrustment with the Bank and as such no offence under Sections 405, 406, 408 or 409, Indian Penal Code, is made out.

9. On the contrary it was submitted by the learned counsel appearing on behalf of the respondent-Bank that under the loan documents there was a specific undertaking given by the petitioners that the hypothecated goods shall not be disposed of without the consent of the Bank and without depositing the sale proceeds thereof. In these circumstances the Bank has got the beneficial interest in the hypothecated goods and, therefore, it becomes the ‘entrustment’ within the meaning of Section 406, Indian Penal Code.

10. I have considered the rival contentions of the parties and I am of the considered opinion that all the petitioners are liable to succeed. In the written statement filed by the respondent-Bank before this Court, there is not an iota of averment about the creation of beneficial interest. The only plea which has been taken up by the respondent-Bank is that as the property in goods still remained with the Bank, therefore, the sale of hypothecated stock is a criminal offence. The controversy in hand is fully covered by the decision of the Hon'ble Supreme Court in the case reported as CBI, New Delhi v. Duncans Agro Industries Ltd., Calcutta (supra) and para No. 27 of the judgment passed by the Hon'ble Supreme Court is very relevant, which I would like to quote as follows:—

“In the instant case, a serious dispute has been raised by the learned counsel appearing for the respective party as to whether on the face of the allegations, an offence of criminal breach of trust is constituted or not. In our view, the expression ‘entrusted with property’ or ‘with any dominion over property’ has been used in a wide sense in Section 405, IPC. Such expression includes all cases in which goods are entrusted, that is, voluntarily handed over for a specific purpose and dishonestly disposed of in violation of law or in violation of contract. The expression ‘entrusted’ Page: 132appearing in Section 405 IPC is not necessarily a term of law. It has wide and different implications in different contexts. It is, however, necessary that the ownership or beneficial interest in the ownership of the property entrusted in respect of which offence is alleged to have been committed must be in some person other than the accused and the latter must hold it on account of some person or in some way for his benefit. The expression ‘trust’ in Section 405 IPC is a comprehensive expression and has been used to denote various kinds of relationship like the relationship of trustee and beneficiary, bailor and bailee, master and servant, pledger and pledgee. When some goods are hypothecated by a person to another person, the ownership of the goods still remains with the person who has hypothecated such goods. The property in respect of which criminal breach of trust can be committed must necessarily be the property of some person other than the accused or the beneficial interest in or ownership of it must be in other person and the offender must hold such property in trust for such other person or for his benefit. In a case of pledge, the pledged article belongs to some other person but the same is kept in trust by the pledgee. In the instant case, a floating charge was made on the goods by way of security to cover up credit facility. In our view, in such a case for disposing of the goods covering the security against credit facility the offence of criminal breach of trust is not committed. In the facts and circumstances of the case, it, however, appears to us that the respondents moved the High Court only in 1991 although the first FIR was filed in 1987 and the second was filed in 1989. The CBI, therefore, got sufficient time to complete the investigation for the purpose of framing the charge.”

11. It has been laid down by the Hon'ble Supreme Court that the property in respect of which criminal breach of trust can be committed must necessarily be the property of some person other than the accused. With the execution of the documents of loan creating hypothecation in favour of the Bank, a floating charge is created on the goods which are supposed to be purchased ultimately by the loanee. The ownership of these goods always remains with the loanee.

12. For the sake of argument if some undertaking is given by the loanee in the loan documents itself that the hypothecated goods shall not be disposed of without the consent of the Bank, still it cannot be said that the property in respect of which the criminal breach of trust is alleged to have been committed was the property of the Bank. Only the right of recovery of the amount has been conferred upon the Bank, but by no stretch of imagination it can be stated that any beneficial interest has been transferred in favour of the Bank by creating loan documents vide which the loanee was supposed to purchase the goods from the loan amount. Pardeep Kumar… v. State Of Haryana…., 1996 (2) Recent Criminal Reports 791, is another judgment which can be useful for me in order to adjudicate the controversy in hand. In this case the accused got the loan after hypothecation of the stock; so much so, the accused paid some instalments and thereafter, sold the stock hypothecated with the Bank and the question arose whether in these circumstances any offence under Section 406 or Section 420, Indian Penal Code, is made out or not. His Lordship held as follows in para No. 12 of the judgment:—

“12. It cannot be disputed that an offence under section 406, IPC is antithesis to an offence under Section 420, IPC. Even otherwise, dishonest intention is an essential ingredient of both these offences. To constitute an offence under Section 406 or Section 420, IPC, it is for the prosecution to allege and prove that there was dishonest intention to do the particular act on the part of the accused person. If there is no such averment or any evidence in support thereof, no offence thereunder would be constituted. In the, case in hand there is no such averment even regarding any dishonest intention on the part of the petitioner in transacting his business and selling the stock of acid and chemicals in his shop. Moreover, as already stated above, the petitioner had raised this loan only for the purpose of carrying on his business in acid and chemicals. From a bare perusa of the agreement of loan (Annexure CI) and the hypothecation deed (Annexure C2), it is evident that no particular item of acid or chemical was hypothecated to the complainant-Bank. In schedule III to the agreement ‘C-1’, it is specifically mentioned that the nature of the surety is hypothecation of stock in shop. No specific and identified item of acid or chemical was hypothecated to the respondent-Bank. Still further, the petitioner has been paying the instalments right upto December 1993 and is alleged to have defaulted since January 1994. In these circumstances, the allegations contained in Page: 133the complaint (Annexure P-1) reveal only a breach of contract, and does not constitute an offence either under section 406 or Section 420, IPC.”

13. No view contrary to the above has been cited by the learned counsel appearing on behalf of the respondent-Bank and in this view of the matter, I am of the clear view that the launching of the complaint and the summoning order cannot be sustained in the eyes of law.

14. Faced with this difficulty, learned counsel appearing on behalf of the respondent-Bank then submitted that the disputed questions of fact and law should not be adjudicated and in these circumstances the provisions of Section 482, Cr.P.C, should not be invoked by this Court.

15. So far as the legal proposition propounded by the learned counsel appearing on behalf of the respondent-Bank is concerned, there is no quarrel about it. However, this legal proposition is subject to one basic exception, i.e, if all the allegations of the complaint are taken together on its face value and still those allegations do not constitute an offence for which the petitioner has been summoned by the learned Magistrate, this Court has the power to invoke the provisions of Section 482, Cr.P.C, in view of the celebrated judgment of the Hon'ble Supreme Court reported as State of Haryana v. Ch. Bhajan Lal, 1991 (1) RCR (Crl.) 383 : 1992 Supp (1) SCC 335 : AIR 1992 SC 604.

16. Resultantly, all the petitions are hereby allowed. The complaint and the summoning order passed against the petitioners are hereby quashed with no order as to costs.

Petitions allowed.