Ramaswamy Nadar Vs. State of Madras

GOOD FAITH WINS OVER PUBLIC DEMAND

This case is with regard to criminal misappropriation which has been enumerated in section 403 of Indian Penal Code, 1860. A serious question regarding the capability of the High Court to pass an order with reference to section 423(1)(a) of Criminal Procedure Code, 1898 was also raised and discussed with reference to previously established case laws in this particular case. In this case the appellant carried out prize-competitions as a proprietor of a firm. Certain persons who had paid money in connection with competition no.92 complained that they had not received their prize money worth Rs.310000 though they had been declared the winners. They had charged that without given them money, the accused had spent the proceeds of the competition which was about Rs.96000 to clear his previous debts thereby putting it for his self-use. The trial court held that though his business skills were reckless and foolish yet his actions did not fulfil the criteria for offence under section 420 of Indian Penal Code, 1860 and hence acquitted him. On appeal the High Court at Madras charged him for criminal misappropriation as his subsequent intention was dishonest and there was presence of mens rea. On further appeal the apex court held that the elements to prove criminal misappropriation, that is intention and self-benefit were missing and so acquitted him of all charges.

RATIO DECIDENDI

The learned 4th Presidency Magistrate at Madras held that though he was utterly reckless and unwise in his business plan yet the absence of mens rea in conducting the competition saves him from any criminal prosecution. The prosecution had failed to prove beyond reasonable doubt the guilt of the accused. Hence he was acquitted.

Justice Somasundaram of the High Court at Madras acquitted the appellant of the charge under s. 420 of Indian Penal Code, 1860 but convicted him of criminal misappropriation. He held that though there was absence of dishonesty at the initial level, but he was subsequently dishonest in using the proceeds from the said competition for clearing his previous debts.

In the Supreme Court Justice Bhuvaneswar Prasad Sinha held the opinion that the accused was neither dishonest in collecting the money nor did his intention become dishonest subsequently. He had conducted the competition in good faith and had used the proceeds not for his self-interest. Thus he cannot be charged for criminal misappropriation.

ISSUES

1. Whether the High Court has the authority to reverse the judgement of a trial court to the extent of convicting the accused under a section for which he had not been convicted or acquitted in the trial court?
2. Whether the accused was reckless and unwise in conducting the competition no. 92?
3. Whether the accused can be charged under section 420 of Indian Penal Code, 1860?
4. Whether the charges under section 403 of Indian Penal Code, 1860 apply to the accused?

ARGUMENTS ON BEHALF OF THE PROSECUTION

1. The High Court is at liberty to convict a person under any provision of the Indian Penal Code even if it had not been mentioned in the trial court. Going by the precedents of two cases namely Emperor v Ismail Khadirsab (1928) I.L.R. 52 Bom 385 and Begu v Emperor (1923) L.R.I.A. 191, it is seen that the appellate court while deciding an appeal from an order of acquittal, has the power to convict the accused person of an offence other than that with which he had been charged. 

2. It is clear from the very facts of the case that the proprietor of ‘Lotus Cross Words’ was utterly reckless and unwise in his business plan. He had incurred loss worth Rs.400000 in the previous three bumper competition and had a separate debt of Rs.157000 previously. He was unable to satisfy and appease about a thousand previous prize winners. Inspite of such a huge debt he had hosted the competition. A man of ordinary prudence could have easily foreseen that such an endeavour would be very risky and would increase the debt amounts.

3. The accused cannot be charged under section 420 of Indian Penal Code, 1860. From the facts of the case it is quite clear that neither was there any fraudulent inducement made by the accused nor any intention to deceive the prize winners. The initial motive of the accused to conduct the competition was honest and not tainted by any evil mind.

4. Going by the provisions laid down in section 403 of Indian Penal Code, 1860, to charge a person under this section three essentials have to be proved. They are:

1. The property was of the complainant
2. The accused used it for his own use or his own benefit
3. The accused did this act dishonestly

The proceeds from the competition which was about Rs.96000 was used to award the previous prize winners. It is clear from the facts that all the three essentials have been fulfilled. The money collected belonged to the public, the accused had used a portion of his money to clear his own debts thereby putting it for his own benefit and also did it without awarding the rightful winners their due which was represented to be Rs.310000, hence dishonest approach. Thus the accused should be charged under section 403 of Indian Penal Code, 1860 and awarded the rightful punishment.

ARGUMENTS IN FAVOUR OF DEFENCE

1. The High Court does not have the authority to convict the accused for fresh charges. As per section 423(1)(a) of Criminal Procedure Code, 1898, the High Court can convert an order of acquittal into an order of conviction but not pass an order with reference to a fresh section for which the accused had not been acquitted. If this is done then it will tend to add on to the provision under the given section.

2. The accused’s business plan cannot be called reckless and unwise. He conducted the business not for his own profit but to appease a number of prize winners. As his business plan was not mala fide it cannot entail a criminal liability.

3. The accused cannot be charged under section 420 of Indian Penal Code, 1860. The facts clearly state that neither was there any fraudulent inducement made by the accused nor any intention to deceive the prize winners. The initial motive of the proprietor to conduct competition no. 92 was honest and not tainted by any evil mind.

4. The essentials that need to be present in order to prove charge under section 403 of Indian Penal Code, 1860 is not present in this case. It is clear from the facts that the business of the proprietor was incurring a loss and for that matter it had to be shut down. He had spent Rs.150000 from his own capital to fulfil the demands of several winners and the obligations of only a handful of them could not be satisfied. He had used the sum of Rs.96000 gained from competition no. 92 to provide for some more winners. Hence he had neither put it to his own benefit nor did he have a dishonest intention. Further nowhere in the contact of the company was it mentioned that the prize amount had to be disbursed from the proceeds of the competition. Thus the accused had committed no offence by using the proceeds for clearing previous debts.

CRITICAL ANALYSIS

The facts and scenarios of the case support the judgement passed by the Supreme Court. The accused though was unreasonable and immensely foolish in hosting competition no. 92, did it in good faith. His business was running low and in order to compensate for his previous losses he had taken a risk. He did not have any dishonest intention of depriving any person nor did he use the money gained from the competition for any of his personal benefit. The question raised by the appellant in the Supreme Court regarding the power of the High Court in passing a judgement with respect to a different provision was also answered well. All appeal courts being superior to the lower court should have the above mentioned power and the provision in section 423(1)(a) of Criminal Procedure Code, 1898 also speak of the same. It is very unfortunate on the part of the deserving prize winners yet a criminal action cannot be brought against the accused as he had committed no offence.

JUDGEMENT

The accused was neither charged under section 420 nor under section 403 of Indian Penal Code, 1860 and no punishment was awarded.