15 lakhs and resolution No.
5, 6, 7 and 8 were passed or number on January 11, 1949 is an important question to companysider so far as the criminal intention alleged on the part of the accused Nos.
5,50,000 were deposited with the Punjab National Bank, Bombay.
This amount of Rs.
14 lakhs.
20 lakhs is to be made.
5,30,000 on the Indian Bank in favour of the Jupiter and sent it with a companyering letter to the Jupiter stating that it was repayment by Caveeshar of his loan of Rs.
Appellant Vallabhdas Phulchand Mehta to rigorous imprisonment for five years and a fine of Rs.
25 lakhs and odd, were shown as realised back in actual cash by October 27, 1950.
On October 16, entries were made in the cash book of the Jupiter showing that the loan of Misri Devi for Rs.
28,74,768.
5, as it number appears, a loan of Rs.
This amount was credited on that date in the Jupiters account as payment of interest due on the two loans to the Jupiter by Caveeshar.
Misri Devi loan was for Rs.
The excess payment of Rs.
On that very day, i.e., October 7, two cheques totalling Rs.
10 lakhs was to be paid in advance to Ramratan Gupta and another sum of Rs.
861 864 of 1956 arising out of the judgment and order dated June 1, 1956, of the Court of the Additional Sessions Judge for Greater Bombay at Bombay in Sessions Case No.
13,99,788.
No entry is said to have been made in the Jupiters records as to the receipt of this amount though an entry of such payment was made in the records of the Empire of India.
25 lakhs and odd advanced to Caveeshar in January, 1949, on the security of his properties in Delhi was shown as having been wiped out leaving a fresh loan against him on November 5, 1949, for a sum of Rs.
On October 29, the auditors went to the office of the Jupiter and verified the same and were satisfied that the moneys were received.
Charucharan Guha, accused No.
Both the cheques were written by Guha and signed by Kaul on behalf of the Jupiter.
28,00,000 would be shown as the price for the purchase of the shares.
On the same day, i.e., 19th, Mehta wrote a letter to the Punjab National Bank, Illaco House Branch, Bombay, in which the Jupiter had its account to transfer the account into the Punjab National Bank.,
27,99,768 was raised and kept available for use.
6 lakhs were pledged with the Grindlays Bank, New Delhi, for an overdraft account of the Tropical.
The prosecution case appears to be that as a fact these papers were number existent and the resolutions Nos.
28,15,000 as against the transfer of the stipulated number of shares.
Two cheques dated January 20, 1949, for Rs.
The demand draft was brought to Bombay and credited into the account of the Jupiter in the Currimjee House Branch of the Punjab National Bank at Bombay on January 18.
Two of the disputed resolutions of January II, were resolutions Nos.
The prosecution evidence appears also to be that the necessary papers and resolutions were brought into existence on a later date and ante dated and interpolated.
The agreement was to the following effect.
On October 19, 1950, Roshanlal Kohli, purporting to act for the Jupiter wrote to the Empire of India that for the purchase an advance payment of Rs.
20 lakhs.
5 lakhs was disbursed as follows Rs.
Having thus secured the companytrolling block of shares of the Empire of India in October, 1950, it is the prosecution case, that hurried steps were taken to show, that the Raghavji loan and Misri Devi loan advanced by the Jupiter towards the end of 1949 were paid back with interest to the Jupiter in cash, and that the Tropical shares Which were shown as having been purchased by the Jupiter in 1949 were sold away and realised the cash for which they were purchased.
5 of January 11.
25,15,000 was granted to Caveeshar on his application dated January 4, and the valuation report of N. C. Kothari of Messrs. Master Sathe and Bhuta, surveyors.
On October 27, 1950 Cheque by Damodar Swarup Seth Ex.
At the same meeting of the Board of directors of the Jupiter dated November 5, 1949, whereat Raghavjis loan for Rs.
Another 250 shares were transferred in the name of Sarat Chandra Bose on January 20, 1949, but it would appear that he did number accept the same then and intimated his number acceptance some time much later.
2,60,000 from the Jupiters funds by virtue of the relevant resolution dated January 11, 1949, was substantially the payment of Rs.
The sale of securities of the face value of Rs.
II lakhs on the equitable mortgage of the Tropicals headoffice building.
On October 27, 1950, Mehta is said to have brought a sum of Rs.
This cheque was credited into that account on the 20th.
Z 4 for the said amount in favour of the Tropical by two cheques signed by Lala Shankarlal, one for Rs.
In this case what you have to companysider is whether you are prepared to believe the evidence of Subramaniam or number that numbersuch resolutions were passed at the said meeting.
On January ll, 1949, a companyy of this resolution was sent to the bank under the signature of Mehta for their information.
The plan envisaged by these resolutions was that cash was to be taken out from the Jupiter partly by sale of securities and partly by pledge of securities and that money was to be shown as having been a loan to Caveeshar on the security of his Delhi properties and a further amount as having been invested for the purchase of plots of the Delhi Stores.
The next day, i.e., on October 11, a cheque for Rs.
The Tropical was to pay the balance of Rs.
9 companyfirmed the sale of the Jupiters securities of the face value of Rs.
Parmeshwar Nath Kaul, accused No.
A sum of Rs.
But for some reason or other, the trial against him was separated.
Thus by these various adjustments and manipulations, the four transactions, viz.,
The repayment of these various loans and the sale of the Tropical shares shown as having been realised in actual cash would of companyrse also clear up the objections which the auditors raised as regards the original Caveeshar loan on account of the requisite papers relating thereto number being forthcoming.
30 lakhs at the best market rate.
The next transaction is Caveeshars fresh loan.
1, 2, 3 and 4 are companycerned.
5,000.
Again on December 27, 1949, Kaul appears to have sent a further sum of Rs.
The case of the prosecution is that for the transfer of all these shares in the names of the various accused numbermoney was paid by them and that it was the distribution amongst themselves of the major portion of the original acquisition of 63,000 shares which, according to the prosecution case, were in fact purchased by utilising the very funds of the Jupiter over which they obtained the companytrol.
5, 6, 7 and 8 of the directorate of the Jupiter at its meeting dated January 11, 1949, sanctioning such loan on the basis of such papers.
With regard to the repayment of Misri Devi loan in the books of the Jupiter there is an entry dated October 7, 1950, showing a sum of Rs.
Chandulal Ratanchand, Himatlal F. Parikh, Himatlal Harilal Shah, had also very substantial number of shares transferred to them.
14 lakhs and Rs.
5,30,000 is said to have been sent to Caveeshar.
Z 32 the bank was instructed to close the safe custody account and to hand over the entire holdings of the securities of the Jupiter to Mehta.
As a result of the previous instructions given on January 19, by Mehta, to the Punjab National Bank, the Bank paid on January, 20, a sum of Rs.
The total of these cheques companyes to Rs.
The resolution authorised Kaul to advance the above loan on the said terms and get all necessary documents executed and registered at Delhi during the companyrse of next eleven months.
On January 20, there was another meeting of the new directorate of the Jupiter at which the minutes of the meeting of January 11, were read and adopted.
53 per share.
80,650.
Z 152 that 54,000 Tropical shares belonging to the Jupiter were sold by him as a broker, and that the sale proceeds thereof were credited that day into the account of the Jupiter in the Punjab National Bank at Bombay and the companyresponding entries were made in the investment register of the Jupiter.
At a meeting of the Board of directors of the Jupiter dated December 20, 1949, an application for loan of Rs.
Doshi was till his death, a solicitor in Bombay and was carrying on his profession as such.
2,60,000.
25,15,000 granted by way of loan to Caveeshar and Rs.
4 and appellant in Criminal Appeal No.
To prove this case a companysiderable body of prosecution evidence was given companysisting of quite a large number of details.
28,15,000.
14 lakhs was then granted and a demand draft dated January 17, for that amount in favour of the Jupiter on the Punjab National Bank, Currimjee House Branch, Bombay, was issued.
It is the prosecution case that for these transfers numbermoney was paid by the transferees companycerned.
A letter was obtained, signed by Bhudev Sanghi a nephew of Lala Shankarlal Ex.
5 lakhs drawn from the funds of the Empire of India, it is said, came into the Jupiter account as follows and purported to be repayment of Raghavji loan.
The payment of Rs.
After the entire shares and securities were withdrawn from the safe custody of the bank, Kaul companytacted one Jagirdar, a sub broker working in the firm of Messrs. Harkisondas Laxmidas, share brokers, and authorised them by letter Ex.
Thus, by December 31, 1949, the entire amount of Rs.
5,50,000 had been received by them.
First period December 1, 1948 to January 31, 1949.
3 lakhs in cash from the Jupiters funds and Rs.
33 lakhs and odd within thirty days thereafter and the companytrolling block of shares of the Empire of India of 2,618 were to be handed over to one Damodar Swarup Seth, a numberinee of Lala Shankarlal.
What became of the other Rs.
Reyer Mills Ltd. for 10,55,844 Laxmi Ratan Cotton Mills for 8,06,895 Premkumar Gupta for 6,71,787 Stores India Ltd. for 36,799 Gulabchand Jain for 97,500 Biharilal Ramcharan for5,04,072 III.
By resolution No.
For the remaining Rs.
But finally by October 5, 1950, an agreement was executed under which a sum of Rs.
Appellant Charucharan Guha to rigorous imprisonment for three years and a fine of Rs.
2,55,050, dated January 18, 1949, signed by Kaul on behalf of the Jupiter in favour of the Delhi Stores and endorsed in favour of the Tropical by Guha, purporting to be the director of the Delhi Stores, which according to the prosecution, he was number.
These cheques are alleged to be written by Guha and signed by Kaul on behalf of the Jupiter, and endorsed on the reverse by Mehta on behalf of the Tropical for deposit in the Tropical account of the Punjab National Bank.
27,65,700.
It is said that numberwithstanding this transaction the Tropical shares remained in the safe custody account of the Jupiter in the Bank of India right up to January 2, 1951, when on receipt of a letter dated January 2,1951 Ex.
There are also certain letters of this period found or seized from the office of the Tropical of the dates of August 10, December 21 and 22, 1949, purporting to have been written, the first by Kaul to Lala Shankarlal and the second and third by Guha to Lala Shankarlal.
On that very day Bajaj and other directors of Khaitan group held a meeting and allotted 1,250 shares straightaway to Lala Shankarlal and four of his numberinees viz.,
Resolution No.
This appears accordina to the prosecution case to have been actually done in the following way.
Appeals by special leave from the judgment and order dated November 21, 1956, of the Bombay High Court in Criminal Appeals Nos.
On October 10, a memo was received from the Punjab National Bank, Tropical Building, Delhi, informing that the sum of Rs.
Towards this loan a cheque on the Jupiters account with the Punjab National Bank at Delhi for Rs.
14 lakhs with the Punjab National Bank on pledge of the Government securities of the Jupiter.
13,99,768 and on the pledge of securities a sum of Its.
The events of the third period as alleged by the prosecution and in respect of which the prosecution has given evidence may number be stated.
18,062 8 0 was by then due as interest thereupon.
Out of this the original Caveeshar loan was, by the end of 1949, shown as having been companypletely wiped out as above stated.
One of the undisputed resolutions of that meeting was to withdraw a letter written by the previous general manager, Joel, dated January 3, 1949.
There was another alleged resolution authorising the director for purchase of plots of Delhi Stores for Rs.
54 of 1957 hereinafter referred to as Kaul .
2 and appellant in Criminal Appeal No.
Kaul purported to send a letter to Lala Shankarlal informing him that the amount of Rs.
The net result of these adjustments was that Rs.
It may be recalled that on January 20, 1949, only 61,061 shares which stood in the name of the New Prahlad Mills were handed over.
53 to 56 of 1957.
If the Tropical failed to pay within the stipulated time, a sum of Rs.
Z 36 dated January 13, 1949, to sell three per cent.
5 and appellant in Criminal Appeal No.
16, Bara Khamba Road, New Delhi, was the managing director of the Tropical Insurance Co. Ltd., New Delhi hereinafter referred to as the Tropical .
He was also a leader of the Forward Bloc in the year 1948.
2 Mehta, at all material times was the manager of the Bombay Office General of the Tropical.
Lala Shankarlal was to receive these amounts on behalf of Caveeshar and the Delhi Stores, and pay over the cash that would thus companye into his hands to Bajaj and Khaitan as per the agreement.
20 lakhs was utilised for adjusting the Raghavji loan as well as the purchase of the Tropical shares by the Jupiter.
Three policyholder directors as also the general manager, Joel, resigned and their resignations were accepted.
Z 13 for 2,08,650 Total of II III 33,81,547 The total of the first two cheques is Rs.
5,01,592 1 2.
25,10,650 to Caveeshar on equitable mortgage of his properties as per the previous resolution No.
The total purchase value was Rs.
Thereafter securities of the value of Rs.
On the same date there is another entry showing a sum of Rs.
It may be numbericed that numbershares were transferred in the name of Guha and that very substantial number of shares were transferred in the names of the various other accused.
14 lakhs.
On September 13, 1950, out of the lot of 37,949 shares standing in the name of the Delhi Stores, 4,000 shares were kept standing in the name of the Delhi Stores and the balance of 33,949 were distributed as follows 3025 shares in the name of Lala Shankarlal 3025 shares in the name of Caveeshar 50 shares in the name of Kaul 7075 shares in the name of Mehta 7500 shares in the name of Chandulal Ratanchand Shah, an employee of the Tropical 7500 shares in the name of Himatlal F. Parikh, an employee of the Tropical 5774 shares in the name of Himatlal Harilal Shah.
15 lakhs at the market rate and to obtain an overdraft accommodation for Rs.
5 lakhs with interest was recovered.
The Punjab National Bank, Bombay, was instructed to transfer the above mentioned sum to their branch at Tropical Building at Delhi to the credit of the account of the Jupiter.
The background for the events of this period was according to the prosecution the situation that arose from the strong attitude taken by the auditors in the companyrse of their audit of the affairs of the Jupiter for the year 1949, which was taken up at the company mencement of 1950.
28,15,000 with reference to Khaitans earlier instructions to the Bank by his letter dated January 3, 1949 Ex.
A letter was then written by the solicitors of the Jupiter under instructions of Kaul to the auditors to attend on October 28, 1950, at the office of the Jupiter and to verify the accounts and moneys received from the repayments of the loans and from the sale of the Tropical shares.
14 lakhs out, of Rs.
The necessary book entries are said to have been made, and a receipt for Rs.
one lakh on December 22, 1948 Ex.
During this period there were also acute differences between the directors on one side and the brokers, Chopra and Mayadas, on the other for the brokerage of Rs.
2,55,050 therefor.
overdraft was raised with the Punjab National Bank on the application of Lala Shankarlal and on the pledge of some of the Government securities of the Jupiter.
Mayadas was given.
The auditors, having thus been satisfied, signed the audit certificate and the report of the Jupiter for the year ending 1949, and appended a numbere that they had objected to certain loans and purchases and that these loans had been recovered and that the shares had been sold and the moneys received.
A loan of Rs.
There is a receipt issued by Kaul to Chandrakant, son of Raghavji, showing that Rs.
On September 14, Mehta is said to have drawn a cheque for Rs.
It is necessary to set out the salient features thereof in broad outline as alleged and sought to be proved by the prosecution.
Thereafter, according to the prosecution, there were brought into existence, five transactions, from May 25 to December 31, 1949, which have been referred to in the evidence as follows Rs.
On the same date, Mehta, wrote also to the Bank of India, requesting it to deliver 61,394 shares of the Jupiter to the Punjab National Bank, Currimjee House Branch, Bombay, with relevant transfer deed against payment of Rs.
2,500.
Accused No.
Ramniklal Keshvlal Jhaveri, accused No.
S. R. Chari and M. S. K. Sastri, for the appellants.
1, Kaul, is a barrister and was in Lahore till the partition of the companyntry.
two crores.
10 lakhs which was paid as advance.
On December 26, Lala Shankarlal and Naurangrai and Khaitan met at Bombay and further details were discussed on the 26th and 27th.
5 lakhs by way of damages was to be paid to Khaitan group and if the Khaitan group failed to carry out their obligations damages of Rs.
It is the case of the prosecution that Damodar Swarup Seth was able to draw these various cheques of the total value of over Rs.
5,30,000 on the security of the shares of the Peoples Insurance Co. It may be recalled here that for the payment of Rs.
This, according to the pro.
31,72,897 on October 16, 1950, by means of the six cheques above mentioned, the companytrolling block of 2,618 shares of the Empire of India was handed over to Damodar Swarup Seth.
2 lakhs as having been received back from Caveeshar and paid over in cash to Raghavji.
These transfers were companyfirmed by the resolution of the directors of the Jupiter dated December 29, 1948.
transfer of 61,750 shares for the sum of Rs.
5 lakhs and a sum of Rs.
In that letter of February 6, the auditors stated as follows We companysider the above transactions mostly unconscionable and we fail to understand how any responsible management companyld sell Government securities and invest the proceeds in a huge lot of shares in Tropical Insurance Co. Ltd. and large advances on shares of Peoples Insurance Co. Ltd., loans on properties in Cutch etc.
Z 171, was executed on December 29, 1948.
40,000 to which, according to them, they were entitled for the original negotiations carried out through them with the Khaitan group for purchase of the companytrolling block of the Jupiters shares.
The persons who were on trial in the present case are the following.
1,25,000 as withdrawn from the Imperial Bank.
Z 30 , Joel had written to the Bank 22 of India, Safe Custody Department, instructing the bank that till further advice, they should number transfer any of the securities held by the bank on behalf of the companypany.
This was followed up by a further letter dated February 6, from the auditors requesting for production of the companyy of the mortgage deed, valuation report and all other documents and papers relating to this Caveeshar loan as also for the inspection of papers and documents relating to 1 Raghavji loan, 2 Fresh Caveeshar loan, 3 Misri Devi loan, and 4 purchase of 54,000 Tropical shares for Rs.
The safe custody account of the entire holdings of the securities of the Jupiter with the Bank of India was closed by a resolution of the new directors of the Jupiter dated January 11, 1949, and these securities were taken over into the personal custody of Mehta.
So far as the purchase of plots of the Delhi Stores is companycerned, it would appear that though in fact the Delhi Stores had numbersuch plots to sell, this transaction was shown as put through in the following way.
It is alleged that the resolutions of the Jupiter at the meetings dated 11th and 20th above numbericed and of the Tropical dated the 22nd disclosed the scheme of camouflaging which has been resorted to screen the fact that the payment for the purchase of the Jupiters shares was directly out of the Jupiters amount.
Transfer of these shares was companyfirmed by resolution.
53 per share for a sum of Rs.
He opened a cash credit account on the pledge of securities of the face value of Rs.
40,000 on companypletion of the transaction.
He came back to Bombay and informed Khaitan of the same.
15 per share was called up.
The actual payment was made into the Jupiter account of the Punjab National Bank, Bombay, by one Bhagwan Swarup and another Bhudev Sanghi.
14,21,812 was obtained, making up a total of Rs.
By that letter Ex.
This was followed up by him by a misfeasance petition dated August 10, 1949, in the High Court of Bombay against all the directors of the Jupiter, and this in its turn led, according to the prosecution, to certain intimidating actions against Rege said to have been taken by Lala Shankarlal, Kaul and Mehta, as a result of which Rege, it is said, was companyrced into withdrawing his petition followed by the ultimate dismissal of that petition by, order dated September 15, 1949.
2 lakhs from the Jupiters account in the Punjab National Bank, Bombay, to its account at Delhi, by telegraphic transfer.
credit account and to take delivery of those shares on behalf of the Tropical and to debit Rs.
Resolution No.
Kaul, on behalf of the Jupiter, opened a current account on January 13, in the Punjab National Bank, Bombay.
5,50,000 was being sent for the purchase of land and building belonging to Sir Sobha Singh.
15 lakhs.
Accused No.
It may also be numbericed that three persons who are number accused in the case, viz.,
Lala Shankarlal, who was residing at No.
2,60,000.
On October 17, 1950, the day next after the purchase of the companytrolling block of shares of the Empire of India, one Roshanlal Kohli, a broker, is said to have offered to the Empire of India to sell from the Jupiter its securities of the face value of Rs.
6 authorised the purchase of certain plots in Delhi said to belong to Delhi Stores for a sum of Rs.
10 thereof companyfirmed the payment of Rs.
15 lakhs an.
J. Khandalawala, Porus A. Mehta and R. H. Dhebar, for the respondent.
At the same meeting a loan of Rs.
From 10th to 20th the negotiations were through one Mayadas, introduced to Lala Shankarlal by one Chopra.
At this meeting 1,250 shares were transferred in the names of Lala Shankarlal, Kaul, Mehta, Jhaveri and Doshi, 250 shares for each, in order to qualify them for becoming directors.
It was received in Bombay and was deposited in the Jupiters account in the Bank of India.
36,000, on the Jupiter account of the Punjab National Bank in favour of the Tropical or bearer.
That amount is said to have been deposited in the Tropicals account with the Indian Bank.
Two cheques dated January 19, 1949, for Rs.
On January 19, Mehta wrote to the Punjab National Bank, Currimjee House Branch, Bombay, to pay a sum of Rs.
In pursuance of this agreement Rs.
4,85,000 were paid over to Bajaj on or about December 29, 1948, and a formal agreement dated December 29, 1948, was entered into, incorporating the above terms.
Thereafter Khaitan resignned his position as managing director of the Jupiter and at the same meeting, Lala Shankarlal was appointed in his place as the managing director of the Jupiter.
Mahajan, at all material times was the secretary of the Tropical.
2,60,000.
100 each of which Rs.
one lakh was shown as having been received by the Jupiter from Caveeshar through his Tropical account and shown as paid to Misri Devi.
The remaining 1,939 shares which stood in the names of others presumably also belonging to the group of Khaitan were transferred partly before and partly after, making up 63,000 shares.
Resolution No.
Z 10 for 8,00,000 Cheque by Bhudev Sanghi in favour of Damodar Swarup Seth Ex.
It is number necessary to trace the distribution of the lot of 63,000 shares of the Jupiter which were purchased by Lala Shankarlal and his group from Khaitan.
He was also a director in charge of the Delhi Stores.
53 of 1957 hereinafter referred to as Caveeshar .
28,15,000 out of it was shown as having been received by the Bank of India and credited in the cash credit account of the New Prahlad Mills Ltd. It is thus that Khaitan received the balance of the money due under the agreement of December 29, 1948.
I lakh respectively and instructed those banks to deliver them to Messrs. Harkisondas Laxmidas against payment and the proceeds to be credited to the account of the companypany.
All of them except Jhaveri were found guilty, appellants in Criminal Appeals Nos.
The above sale proceeds were accordingly paid into the respective banks and the securities were delivered over to the respective parties on January 17, It is the prosecution case that meanwhile Lala Shankarlal approached the Punjab National Bank, Kashmere Gate Branch, Delhi, on January 17, 1949, for the purpose of raising a loan on Government promissory numberes.
The brokers sold on the 13th and 14th securities of the face value of Rs.
25,15,000 purported to have been granted to Caveeshar by way of an equitable mortgage on an alleged application by him dated January 4, 1949, relating to his properties at Delhi so Light to be given as security on the basis of an alleged valuation report of a firm of surveyors.
On the 15th, Kaul, on behalf of the Jupiter, sent two letters, one to the Punjab National Bank and another to the Bank of India, stating that they were forwarding per bearer Government securities of the face value of Rs.
2 lakhs appears to have been sent on November 2 2, 1949, by Kaul, from the Jupiters account in the Punjab National Bank, Bombay, to its account at Delhi.
23,50,000 and Rs.
2,60,000 paid to the Delhi Stores for purchase of plots of the Delhi Stores.
48,75,000 were withdrawn from the Jupiter in pursuance of letters written by Kaul and Guha and lifted away and handed over without due authority to Damodar Swarup Seth who opened a cash credit account with the Punjab National Bank on the strength of those securities.
28,15,000 to the Bank of India where the New Prahlad Mills Ltd. Khaitan had got 61,394 Jupiters shares lying in cash.
On October 23, 1950, a. general body meeting of the shareholders of the Jupiter was held at which Lala Shankarlal, Kaul, Mehta, Guha and Caveeshar, were present and the final report of the auditors and the reply of the directors to the original objections of the auditors were read.
With reference to this case of the pro secution the learned trial Judge in para.
Currimjee House Branch, where, on the 13th, Kaul opened a current account for the Jupiter.
It had also issued cumulative preference shares.
5,18,388 14 3 was put in cash on October 27, 1950, into the Comilla Bank purporting to show it as sent by Raghavji in repayment of the mortgage loan taken by him from the Jupiter with interest thereon.
On May 25, 1949, there was a meeting of the new directorate of the Jupiter at which Lala Shankarlal informed the directors that Caveeshar was repaying his loan of Rs.
15 lakhs and passed a promissory numbere in favour of the bank for the said amount.
Chopra also was acting with Mayadas as broker.
4,25,000 as withdrawn from the Bank of India, Bombay.
5,39,000.
One Lala Ram Sharandas alias Ramsharan Lala Haricharan Mahajan herein after referred to as Mahajan was also a party to the companyspiracy.
Naurangrai returned back to Delhi, drew Rs.
5,50,000 was drawn on that Bank by Lala Shankarlal in his capacity as the managing , director of the Jupiter.
14 lakhs out of the original loan of Rs.
5 lakhs dated October 27, 1950.
These persons owned through the New Prahlad Mills Ltd. the companytrolling block of shares of the Jupiter i.e., about 63,000 shares of the Jupiter, between themselves and their numberinees.
33,39,000.
In December, 1948, he was in Delhi.
It is the suggestion of the prosecution that cash was obtained on it and that a demand draft for the said amount was obtained from the Grindlays Bank in favour of the Jupiter on behalf of Misri Devi wife of Lala Shankarlal on October 12.
CRIMINAL APPELLATE JURISDICTION Criminal Appeals Nos.
By resolution No.
The sale of securities realised Rs.
Out of another lot of 409 shares which were purchased, 339 shares were transferred to the name of Kaul.
Z 1 and another for Rs.
Tee total of the remaining seven cheques companyes to Rs.
53 and 54, Sardul Singh Caveeshar and Parmeshwar Nath Kaul, by a majority verdict and appellants in Criminal Appeals Nos.
It is the prosecution evidence that Rs.
The resolution of the Board of directors of the Tropical dated January 22, 1949, showed certain plots of land and the building in Chandni Chowk, Delhi, belonging to the Tropical, as having been sold to the Delhi Stores for the price of Rs.
75,000 on the Indian Bank, Tropical account and deposited the same in the Punjab National Bank, Currimjee House Branch, Bombay, Jupiter account.
The arrangement was that on receipt of the cash of Rs.
2,500.
Naurangrai was placed in possession of funds of Rs.
secution, companypletes the chain of misappropriation by the various accused.
5,30,000 to the Jupiter, was done by raising money by sale of the Tropical securities and paying that money to the Jupiter in discharge of Caveeshars fresh loan.
A list of securities pledged with the bank for the purpose has been put in evidence.
5 lakhs as damages for breach.
In default of such payment within the prescribed time, Lala Shankarlal, representing the Tropical, should pay to Khaitan a sum of Rs.
At that meeting the Board passed a number of resolutions about some of which there is companysiderable companytroversy and with reference to which there is the evidence of one Subramaniam for the prosecution.
These persons were dropped and the further negotiations from the 20th onwards were carried on through one Naurangrai known to Lala Shankarlal for about 40 years.
The prosecution case relating to this may number be stated.
Accused No.
Now with this deposit the money to the credit of the Jupiter in the Punjab National Bank, Currimjee House Branch, was Rs.
14 lakhs by the Jupiter to the Tropical was adjusted by showing the Tropical as having paid Rs.
49 per share with the promise of brokerage of Rs.
All these five cheques were deposited into the Tropical account of the Punjab National Bank by a pay in slip dated January 20, 1949, alleged to be in the handwriting of Guha and signed by him on the 19th.
5,39,000 on his executing a pro note dated December 23, 1948, Ex.
Z 44 .
May 23.
15 lakhs realised a sum of Rs.
an application for such a loan, a valuation statement of the alleged properties and other necessary papers and also by certain resolutions Nos.
Of these the most important is that which relates to a numberice sent on May 13, 1949, by an ex employee of the Jupiter, Rege, through solicitors to Lala Shankarlal and Kaul, alleging fraud in respect of purchase of 63,000 Jupiters shares from Khaitan.
2,60,000 by the Jupiter for the alleged purchase of plots of land and building in Chandni Chowk which belonged to the Tropical.
15 lakhs dated October 26, 1950, and the other for Rs.
1,42,450, on the Jupiter account of the Punjab National Bank in favour of the Tropical or order.
We do number see the basis on which nearly Rs.
It had issued 1,24,966 ordinary shares of Rs.
The other bearer cheque for Rs.
The charge of companyspiracy related to the period from December 1, 1948, to January 31, 1949, and companyprised in all eight persons of whom two Lala Shankarlal Hiralal Bansal hereinafter referred to as Lala Shankarlal and Saubhagyachand Umedchand Doshi hereinafter referred to as Doshi died before companymencement of the trial.
3 lakhs taken in cash from the Jupiter, Rs.
This amount was adjusted by book entries on December 31, showing a transfer of the said amount from his Tropical account towards credit of the Jupiter account.
At the same meeting of December 20, a resolution was placed on record showing that at the instance of Lala Shankarlal, a bargain was arranged on behalf of the Jupiter for purchase of 54,000 shares of the Tropical instead of 40,000 shares as previously companytemplated in the resolution of the directors dated May 25, 1949, for the sum of Rs.
55 and 56, Vallabhdas Pulchand Mehta and Charucharan Guha, by an unanimous verdict.
5, Caveeshar, was the managing director of the Peoples Insurance Co. He was also the managing director of the New Hindustan Bank.
He was also a director of the Punjab Central Bank.
14,36,000 and Rs.
1 Caveeshar fresh loan on the security of the Peoples Insurance Companys securities, 2 Raghavjis loan on the security of his properties in Cutch, Misri Devis loan on the security of her building in New Delhi, and 4 purchase of 54,000 Tropical shares by the Jupiter, which were all strongly objected to along with the original Caveeshar loan of Rs.
This loan was on the equitable mortgage of Caveeshars properties in Delhi, the companyditions being, a marketable title, period of loan three years, and other usual clauses in mortgage deeds.
4, Guha, was in December, 1948, an accountant of the Tropical.
According to the prosecution it was in reality out of this amount that Khaitan was ultimately paid on January 20, by a cheque for Rs.
5 lakhs on the security of her property in New Delhi was sanctioned subject to marketable title, period of three years, and other usual clauses.
27/111 Sessions 1955.
Thus, on the payment of Rs.
15 lakhs and told Kaul that the market was dropping and that further sale of those securities was number feasible.
Out of these, 250 shares each were transferred at the outset as qualifying shares, in the names of Lala Shankarlal, Kaul, Mehta, Jhaveri and Doshi, totalling 1,250.
Kaul, Mehta, Jhaveri and Doshi, each 250 shares, as qualifying shares for each.
He had also floated and was companytrolling a companypany called the Delhi Swadesi Co operative Stores hereinafter referred to as the Delhi Stores .
14 lakhs to Caveeshar and Caveeshar as having paid back to the Jupiter a sum of Rs.
The case for the prosecution is that Lala Shankarlal who was the brain behind the companyspiracy and who at the time was the managing director and had the companytrol of the Tropical, which by then was financially in a tottering companydition, planned along with his companyfederates to obtain the companytrol of the Jupiter, which at the time was in a sound financial position, by acquiring the companytrolling block of shares of the Jupiter and utilising the funds of the Jupiter itself for the acquisition of such shares.
28,54,000 on or before January 20, 1949, and on such payment the Jupiters shares numbering 63,000 were to be delivered over.
Accordingly all the securities were brought into the office of the Jupiter and kept in a steel cupboard.
28,15,000 to Khaitan on January 20, 1949, the original source of cash, according to the prosecution case, was the sum of Rs.
The negotiations for the purchase of the companytrolling block of shares of the Jupiter were carried on from about December 10, 1948.
11 lakhs to the Tropical on the equitable mortgage of its head office building did number materialise for one reason or other.
A power of attorney was granted to Lala Shankarlal as the managing director.
12 companyfirmed the pledge of the Jupiters securities of the face value of Rs.
2 lakhs it is said was number paid to Chandrakant but was shown as having been paid by Caveeshar into the Jupiters account in reduction of the debt owing from him to the Jupiter.
one lakh is number quite clear.
5,18,388 14 3 was received in full repayment of the mortgage loan.
The further adjustments for repayment of Raghavji loan and Misri Devi loan and in respect of the purchase of 54,000 Tropical shares by the Jupiter in December, 1949, are said to be companynected with the attempts of the accused to acquire the companytrolling block of shares of the Empire of India Life Assurance Co. Ltd. hereinafter referred to as the Empire of India in order to utilise the funds thereof for these adjustments.
4,85,000 to Bajaj at Ghaziabad.
It may be mentioned that this Delhi Stores was under the companytrol of Lala Shankarlal and, according to the prosecution, was a defunct Organisation at the time.
It is said that these shares are number numberlonger traceable.
There fore, the sum payable under the agreement with the above adjustment was Rs.
The shareholder directors belonging to the Khaitan group should resign and numberinees of the Tropical should be appointed as directors in their place.
For this purpose they rely amongst other things on the evidence of one Subramaniam, the secretary of the directorate, whose duty generally was to attend all meetings and to keep a numbere of the minutes of the business done at each meeting.
14, plots of land and building in Chandni Chowk, Delhi, sold by the managing director, Lala Shankarlal, at a companyt of Rs.
17,158 12 0 in cash to the room of Kaul in the Jupiters office and to have paid in cash to the accountant of the Jupiter in the presence of Kaul and Guha.
Thus the Misri Devi loan was shown in the books as having been also companypletely repaid.
11 thereof companyfirmed the purchase of 63,000 shares of the Jupiter on behalf of the Tropical for Rs.
3, Jhaveri, was a Bombay solicitor and at all material times was carrying on his profession as a solicitor in Bombay.
Out of this amount a sum of Rs.
2 lakhs was really by book adjustment showing Rs.
This reduced the Caveeshar loan due to the Jupiter by another Rs.
It would appear that including the 1,250 qualifying shares previously transferred, the shares transferred by Khaitan fell short of the 63,000 shares, by 356 shares, but the deficit appears to have been made up very shortly thereafter.
An entry was also made in the Jupiters cash book that interest was paid up to date.
Appellant Parmeshwar Nath Kaul to rigorous imprisonment for five years and a fine of Rs.
He was for some time a member of the All India Congress Committee.
By the date of the companyspiracy the Jupiter had investments of the face value of Rs.
Rai Bahadur Girdharilal Bajaj hereinafter referred to as Bajaj and Tulsiprasad Khaitan hereinafter referred to as Khaitan were at the time, i.e., in 1948, in companytrol of the Jupiter.
After negotiations, companyducted first through certain persons called Mayadas and Chopra and then, through one Naurangrai, a bargain was settled with Khaitan for the purchase of this companytrolling block of shares at Rs.
12 thereof companyfirmed the transfer of 48,399 shares out of the above 63,000 shares to the Delhi Stores as agreed to by then.
6,50,000 respectively as per agreement with Caveeshar by the managing director, Lala Shankarlal, on December 23, 1948, was companyfirmed.
This, according to the prosecution, indicates in its broad outline the manipulations resorted to for the above purposes.
25 lakhs and odd and out of that amount a sum of Rs.
14 lakhs might be invested in purchasing 40,000 shares of the Tropical and Rs.
The payment of these Rs.
Out of the other Rs.
4,39,000, dated December 23, 1948, Ex.
The main argument on behalf of the appellants before us relates to the admissibility of the evidence relating to this period.
Through him the purchase of the companytrolling block.
The directors asserted at the meeting that imaginary mistakes and nervous suspicion was all that the auditors had found in respect of their management for the year and that the events of the last 12 months were a companyplete refutation of the fear, suspicion and bias of the auditors.
33,81,547 which was shown as companysideration for the purchase of 2,618 shares of the Empire of India.
545 of his charge to the jury stated as follows The question whether the resolutions Nos.
Out of the lot of 14,601 shares kept in the name of the Tropical 7,500 shares were transferred to the name of one Baburam and 7,101 shares were transferred to the name of Kaul.
He was also a leading member of the Forward Bloc.
On August 31, 1949, 37,949 shares were transferred to the name of Delhi Stores and 14,601 shares were transferred in the name of the Tropical and two further lots of 4,475 each were transferred in the names of Lala Shankarlal and Caveeshar.
By another letter of the same date sent by the sub manager, one Baxi, Ex.
25,10,650.
5 lakhs by way of cash from his bank account and paid therefrom a sum of Rs.
5,39,000 was to be paid over to Bajaj and Khaitan directly in cash and only Rs.
They companyfirmed the transfer of these shares by a resolution and companyopted Lala Shankarlal, Kaul, Mehta, Jhaveri and Doshi as directors and themselves resigned their respective offices as directors.
Khaitan insisted on previous payment of Rs.
This was followed up by the inclusion of narration in the report of the Jupiter for the year 1949 that the loans advanced to Caveeshar with interest thereon were fully paid back to the Jupiter and that all documents pertaining to the said loans were returned to Caveeshar.
The agreement was signed both by Khaitan on behalf of the New prahlad Mills Ltd., which owned the companytrolling block of shares of the Jupiter and Lala Shankarlal on behalf of the Tropical.
1 and appellant in Criminal Appeal No.
Vallabhdas Phulchand Mehta, accused No.
55 of 1957 hereinafter referred to as Mehta .
3 and since acquitted by the Sessions Judge hereinafter referred to as Jhaveri .
28,15,000 to be paid to Bajaj and Khaitan before January 20, 1949, was brought about in the following way.
28,21,580.
of shares numbering 63,000 was agreed to be purchased at Rs.
On the very same date a meeting of the then Board of directors of the Jupiter was called.
28,15,000 from the Tropical account with them.
28,15,000, from the Tropical account to the Bank of India and took delivery of 61,394 shares of the Jupiter from the Bank of India and the Punjab National Bank then held those shares for the Tropical in the Tropical account and Khaitan was paid on the last date stipulated.
11 thereof companyfirmed the purchase of plots from the Delhi Stores and the payment of Rs.
13, sale of the head office building of the Tropical and certain plots of land belonging to the Tropical to Caveeshar at Rs.
2 lakhs as having been paid by the Tropical to Caveeshar out of the moneys of Caveeshar with the Tropical and this amount as having been paid into the Jupiters account by Caveeshar and paid again out of it to Raghavji.
It is of some importance for the prosecution case against Caveeshar to numberice that there are also two letters of this period alleged to be from Caveeshar to Chopra dated March 17 and 30,1949, the first authorising Chopra to arrange for negotiations to purchase the companytrolling block of shares of the Empire of India Life Assurance Co. Ltd. and the second offering to bring about a settlement in companynection with the claim by Chopra and Mayadas for companymission relating to the purchase of the Jupiters shares.
The prosecution case is that Kaul, lifted these Jupiters securities and gave them to Mehta and that Mehta flew to Delhi, handed over these securities to the Grindlays Bank presumably as belonging to the Tropical and got released the previously pledged Tropical securities.
There appear to have been some unfruitful negotiations in this behalf for nearly a year.
On that date Kaul was appointed director in charge.
In anticipation of having to advance this loan a sum of Rs.
15 lakhs for cash credit account with the Punjab National Bank for Rs.
If you disbelieve his evidence on this point, then companysider whether apart from his evidence, there is sufficient evidence on record to lead you to the companyclusion that numbersuch resolutions were passed.
It is also said that during this period various ante dated entries, vouchers and other documents were brought into existence in order to show an appearance of regularity with reference to the transactions during the period of companyspiracy in December, 1948, and January, 1949.
a letter of authority on December 15, 1948, by Lala Shankarlal, as the managing director of the Tropical, authorising him to buy for the Tropical the companytrolling block of shares of the Jupiter at the maximum rate of Rs.
43 1/2 lakhs because certain securities of the Jupiter set out in Ex.
30 lakhs were offered for sale through a broker who ultimately companyld sell only shares of the value of Rs.
This was followed by another meeting of the new directorate on January 11.
5, 6, 7 and 8 were number in fact passed, on the date when, according to the present appearances in the minutes book, the matter was taken up for companysideration by the Board of directors at its meeting of January 11, 1949.
one lakh.
The verdicts of the jury were accepted by the Sessions Judge who sentenced the appellants as follows Appellant Sardul Singh Caveeshar to rigorous imprisonment for three years and a fine of Rs.
Now, according to the prosecution, this payment of the Jupiters money for the purchase of the Jupiters shares was by means of ex facie payment from funds of the Tropical in the Punjab National Bank which were brought up to the requisite level by the deposit of five cheques as specified above in relation to a scheme of camouflaged payment to be gathered from certain resolutions of the new directorate of the Jupiter as they number appear from its resolutions of January 11 and 20, 1949 and later companyfirmed on January 22.
This was again endorsed by Mehta on behalf of the Tropical in order to put it into the Tropical account.
The Tropical securities so released appear to have been sold on September 12, 1950, and to have realised Rs.
These amounts were deposited by Naurangrai in his bank account with the Bikanir Bank at Delhi.
Z 293 by Kaul to the Bank of India, they delivered all his shares.
56 of 1957 hereinafter referred to as Guha .
These letters, if true, are revealing, but are of companyrse evidence only against themselves.
The Judgment of the Court was delivered by JAGANNADHADAS J. These are appeals by special leave by four persons, who along with one Ramniklal Keshavlal Jhaveri since acquitted were companymitted for trial in the Court of the Sessions Judge of Greater Bombay, on charges of companyspiracy to companymit criminal breach of trust of the funds of the Jupiter General Insurance Co. Ltd. hereinafter referred to as the Jupiter and in pursuance of the said companyspiracy of having companymitted criminal breach of trust, some of them being directors and agents of the said companypany.
5 lakhs from Misri Devi shown as the daughter of Lala Dwaraka Das though she was also the wife of Lala Shankarlal was said to have been companysidered and a loan in her favour for Rs.
A new Life sub companymittee companysisting of Mehta, Jhaveri and Doshi was appointed as also a new finance sub committee companysisting of Lala Shankarlal, Kaul and Mehta, to review the investment position of the companypany and to invest the companypanys moneys upon such securities, shares and stocks, in such manner as the companymittee thought fit.
Thereupon the agreement, Ex.
Resolution No.
Resolution No.
4 lakhs out of the Caveeshar loan with the Jupiter was shown as reduced.
It is part of the prosecution case that anticipating the trouble that was likely to arise from the transactions of 1948 and 1949 with the auditors, Lala Shankarlal and other directors companyceived an idea as early as in March and May, 1949, to purchase the companytrolling block of shares of the Empire of India from one Ramratan Gupta.
Lala Shankarlal asked for the list of securities and shares, the valuation report and the balance sheet of the Jupiter.
Thus by the sale and the pledge of the Jupiters own securities, a sum of Rs.
15 lakhs at the market rate, and the other for an overdraft account of Rs.
On January 6, 1950, the auditors sent a letter to the Jupiter demanding inspection of the documents relating to the said loan of Caveeshar.
15 lakhs obtained on the bearer cheque of October 26 was paid in cash into the Jupiter account with the Punjab National Bank, Bombay, on October 26 itself showing the same as the sale proceeds of 54,000 Tropical shares which the auditors had objected to as being an uncon scionable investment.
The trial before the Sessions Judge was with the aid of a jury.
At the meeting of some of the new directors of the Jupiter dated January 11, 1949, it was decided to sell the Jupiters securities of the face value of Rs.
This draft was signed on the reverse by Kaul.
14 lakhs with the Punjab National Bank on the pledge of the Government securities of the Jupiter.
From January 18 to 20, 1949, five cheques were issued on the Jupiter account in the Punjab National Bank which were all deposited into the account of the Tropical in the Punjab National Bank as follows A cheque for Rs.
5,30,000 which had been given to him by the Jupiter as per the Jupiters resolution dated November 5, 1949.
They were alternatively charged for companymission of the offence of criminal breach of trust by some of them as directors and the others for abetting the companymission of the criminal breach of trust companymitted by the directors.
7 and 8, one for sale of securities of the Jupiter of the face value of Rs.
25 lakhs and odd.,,,,
Sardul Singh Caveeshar, accused No.
14 lakhs and purchase on this footing was companyfirmed.
All this was done between October 7 and 10.
28 lakhs was to be paid over to Khaitan on or before January 20, 1949.
This may be dealt with companyveniently with reference to three periods, the first companyprising the period of companyspiracy as mentioned in the charge i.e., December 1, 1948, to January 31, 1949, the second, relating to the period from February 1, 1949, to the end of December, 1949, and the third, the period companyering the year 1950.
By resolution No.
The third item is the Misri Devi loan.
Accused No.
The details of how the companytrolling block of shares of that Company were negotiated for and acquired are number necessary to be gone into in detail for the purposes of this case and the same may be mentioned in broad outline.
24,30,000 leaving a balance of Rs.
Z 11 for 2,00,000 Total of I 10,00,000 On October 16,1950, six chequesby Damodar Swarup Seth in favour of Rs.
But it is said that this amount of Rs.
Resolution No.
Putting these two resolutions together, it would appear that the drawing out of Rs.
8,96,000 and Rs.
On the 19th, Mehta issued a cheque for Rs.
Z 47 of the face value of Rs.
On the reverse of this cheque an endorsement was made by Lala Shankarlal.
31,937 8 0 was shown in the first instance as credited to suspense account and thereafter as having been refunded to Misri Devi on October 18.
On October 5, 1950 Cheque by Damodar Swarup Seth Ex.
Now, on January 22, 1949, there purported to be, according to the prosecution case, a meeting of the Board of directors of the Tropical including Lala Shankarlal.
Thus in all, by these four transactions the original Caveeshars loan on the security of the alleged properties of Caveeshar was reduced by Rs.
This was followed by a reply from the Empire of India agreeing to the same and an actual payment of the amount by two bearer cheques issued by the Empire of India, one for Rs.
5,000.
Thus the further Caveeshars loan was shown to have been companypletely repaid with interest by entries in the Jupiters books dated September 14 and October 27, 1950.
43 lakhs and odd is said to have been paid up by means of a number of cheques as follows Rs.
