ANIL SARANversusTHE STATE OF BIHAR AND ANR.

A                             ANIL SARAN
                                                                                    ...
                                   v.
                      THE STATE OF BIHAR AND ANR.

                                AUGUST 24, 1995

B               [K. RAMASWAMY AND B.L. HANSARIA, JJ.)

          Code of Oiminal Procedure, 1973: Sections 190 and 192.

         Offence-Cognizance of-When takes place-Held cognizance takes
  place as soon as the Magistrate applies his judicial mind to the offence stated
C in the complaint.

          Chief Judicial Magistrate-Complaint before-Transfer of case to Judi-
    cial Magistrate without taking cognizance-Magistrate examining witnesses
    and issuing proces~Held Magistrate committed no error of jurisdiction in
D   taking cognizance of offence.

          Indian Penal Code, 1860: Section 406.

          Partnership property-Climinal breach of tntst by partner-Held it must
    be shown that property was entntsted under a special contract and he held
    the property in a fiduciary capacity.
E
        A partnership firm, consisting of three partners viz. the appellant,
  the second respondent and one A, entered into an agreement with the first
  accused (before the Trial Court) for exhibition of a film owned by the firm.
  Under the terms of the agreement, the film along with the sale proceeds
F was to be returned after exhibition. On failure of the first accused to do
  so, the second respondent filed a complaint before the Chief Judicial
  Magistrate, Patna that the first accused in collusion with the appellant
  and the other partner of the firm steathily and illegally misappropriated
  the collections and dishonestly made wrongful gain for themselves and
  caused wrongful loss to the complainant and the partnership firm. The
G Chief Judicial Magistrate examined the complainant and transferred the
                                                                                          c
  case to Judicial Magistrate-II who examined witnesses and issued process
  under sections 406 and 420 of the Indian Penal Code. The appellant's
  application under section 482 of the Code of Criminal Procedure, 1973 was
  dismissed by the High Court on the ground that the complaint prim a f acie
H disclosed commission of the alleged offences.
                                         58
                          ANILSARAN v. STATE                               59

       In appeal to this Court it was contended for the appellant that (i)       A
without taking cognizance of the case the Chief Judicial magistrate com-
mitted manifest jurisdictional error in transferring the complaint to the
Magistrate who took further action therein; (ii) the appellant, being a
partner in the complainant finn, cannot be said to have committed
criminal breach of trust of his own funds and therefore, it is a case of civil
                                                                                 B
liability only.

      Dismissing the appeal, this Court

       HELD : 1. The word 'cognizance' has not been defined in the Code
of Criminal procedure. But it is now settled law that the court takes            C
cognizance of the offence and not the offender. As soon as the Magistrate
applies his Judicial mind to the offence stated fo the complaint or the
police report etc. cognizance is said to be taken. Cognizance of the offence
takes place when the Magistrate takes Judicial notice of the. offence.
Whether the Magistrate has taken cognizance of offence on a complaint or
on a police report or upon information of a person other than the police         D
officer, depends upon further steps taken pursuant thereto and the attend-
ing circumstances of the particular case including the mode in which case
is sought to be dealt with or the nature of the action taken by the
Magistrate. [61-H; 62-A-B]
                                                                                 E
      2. The power to take cognizance has been conferred on a Magistrate
by section 190(1) of the Code, and he would not be denuded of this power
because the case has come to his filed pursuant to some illegal order of
the Chief Judicial Magistrate. The former would be exercising his power
of taking cognizance even in such a case, because of his having received a
complaint constituting the offence. It would not be material, for this           F
purpose, as to how he came to receive the complaint - directly or on
transfer from the Chief Judicial Magistrate. Therefore, no error of juris-
diction was committed by the Judicial Magistrate in taking cognizance of
the offence. [62-E-G]

      3. Partnership firm is not a legal entity but a legal mode of doing G
business by all the partners. Until the firm is dissolved as per law and the
accounts settled, all the partners have dominion in common over the
property and funds of the firm. Only after the settlement of accounts and
allotment of respective share, the partner becomes owner of his share.
However, criminal breach of trust under section 406 of Indian Penal Code H
    60                     SUPREME COURT REPORTS (1995) SUPP. 3 S.C.R.

A is not in respect of the property belonging to the partnership firm, but is
    an offence committed by a person in respect of the property which has been       ...
    specially entrusted to such a person under a special contract and he holds
    that property in fiduciary capacity under special contract. If he misap-
    propriates the same, it is an offence. In the instant case, it is not the case
    of the complainant that the appellant and the other accused were entrusted
B   with the dominion of the property of the firm in their capacity as partners
    of the complainant firm. Under these circumstances, it cannot be said that
    the imputations alleged against the appellant have been done in his
    capacity as a partner of the firm. Whether the offence has been made out,
    whether he is liable and what are the defences open to him are not matters
c   at this stage for consideration. It is for the Magistrate to proceed with the
    trial and to deal with a<;cording to law. [63-A-D; E-F]

          CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No.
    1026 of 1995.

D        From the Judgment and Order dated 28.11.90 of the Patna High
    Court in Crl. M. No. 11250 of 1989.

          S.K. Verma for the Appellant.

          K.K. Gupta for the Respondents.
E
          The following Order of the Court was delivered :

          Leave granted.
                                                                                             -
           The appellant was a partner in M/s. Agjevinath Films along with the
F   second respondent, Shiv Prakash, and another person, Ajit .Tai Tilak. The
    firm was constituted to distribute, exhibit and exploit the cinematography
    films. The firm had entered into an agreement with producer, Bhojpuri film
    for distribution of 'Hamari Dulhaniya' and had two prints of the films
    obtained from the laboratory at Bombay and were arranged for exhibition
    in Roopak Cinema, Patna. It is the case of Shiv Prakash, the complainant
G   on behalf of M/s. Ajgevinath Films, that the first accused, namely, M/s.
    Sapna Enterprises, had contracted on June 22, 1988 to take the film, exhibit
                                                                                             ...._
    the same and account for the proceeds in terms of the contract. Pursuant
                                                                                      '--'
    thereto, M/s. Sapna Enterprises was entrusted with the second copy of the
    film for exhibition and they exhibited the film from July, 1, 1988. But the
H   first accused had not returned the print to the complainant- second respon-
                          ANIL SARAN v. STATE                             61

 dent with ulterior and dishonest intention to make wrongful gain and to A
 cause wrongful loss to the second respondent. Subsequently, it came to the
 knowledge of Shiv Prakash that the first accused colluded and conspired
 with the appellant and Ajit with an intention to defraud the second
 respondent; and the firm exploited the second copy of the film in the said
 cinema and "they stealthily and illegally misappropriated collections and B
 dishonestly made wrongful gain for themselves and caused wrongful loss
 to the complainant and the said concern." It was also alleged that the
 appellant and Ajit induced the first accused by conspiracy to illegally
 obtain the films prepared for themselves and fabricated the documents and
 thereby Ajit, the first accused firm and the appellant, in collusion and
 conspiracy with common intention to do mischief, committed the offence C
 referred to earlier. Admittedly, the complaint was filed before the Chief
 Judicial Magistrate, Patna who, after examining the complainant, trans-
 ferred the case to .Judicial Magistrate-II, patna whose Presiding Officer
 then was Mr. AK. Srivastava. The learned Magistrate examined three
 witnesses and thereafter issued process to the appellant and third respon- D
 dent under ss.406 and 420 IPC. The appellant thereafter filed an applica-
 tion under s.482 of the Code of Criminal Procedure, 1973 (for short, 'the
 Code') before the High Court, Patna to quash the complaint.

       The High Court in the impugned order dismissed the application
 holding that the complaint plima facie discloses the offence punishable        E
 under the sections for which cognizance was taken and process was issued
 to the appellant and another. The question, therefore, is whether the
 complainant-second respondent made a prima facie case to take cog-
 nizance of the offence and issued process to the appellant and others.
                                                                                F
       It is contended for the appellant that the Chief .Judicial Magistrate,
 having entertained the complaint, was required to examine other witnesses,
 take cognizance and then could have transferred the case, if he so desired,
 to a competent Magistrate subordinate to hiin as envisaged by s.192(1) of
 the Code. But, in this case without taking cognizance, the Chief .Judicial
 Magistrate committed manifest jurisdictional error in transferring the com-    G
 plaint to the Magistrate who took further action therein.

        We find no force in the contention. Though the Code defines,
  "cognizable offence" and "non-cognizable offence", the word "cognizance'
• has not been defined in the Code. But it is now settled law that the court    H
    62                    SUPREME COURT REPORTS (1995] SUPP. 3 S.C.R.

A takes cognisance of the offence and not the offender. As soon as the
    Magistrate applies his judicial mind to the offence stated in the complaint
    or the police report etc. cognisance is said to to be taken. Cognizance of
    the offence takes place when the Magistrate takes judicial notice of the
    offence. Whether the Magistrate has taken cognizance of offence on a
    complaint or on a police report or upon information of a person other than
B
    the police officer, depends upon further steps taken pursuant thereto and
    the attending circumstances of the particular case including the mode in
    which case is sought to be dealt with or the nature of the action taken by
    the Magistrate. Under sub-section (1) of section 190 of the code, any
    Magistrate may take cognizance of an offence (a) upon receiving a com-
c   plaint of facts which constitute such offence. (b) upon a police report of
    such facts, and (c) upon information received from any person other than
    a police officer, or upon his own knowledge, that such offence has been
    committed.

          Sub-section (1) of Section 192 has conferred a special power on the
D Chief Judicial Magistrate, as, normally, the Magistrate taking cognizance
    of an offence, has himself to proceed further as enjoined by the Code. But,
    an exception has been made in the case of Chief Judicial Magistrate, may
    be because he has some administrative functions also to perform. A
    Magistrate who receives the case on transfer and takes cognizance would
E   not become incompetent to do so merely because the sanction of transfer
    of the case to his file is not in accordance with law. The power to take
    cognizance has been conferred on a Magistrate by s.190(1) of the Code,
    and he would not be denuded of this power because the case has come to
    his file pursuant to some illegal order of the Chief Judicial Magistrate. The
    former would be exercising his power of taking cognizance even in such a
F
    case, because of his having received a complaint constituting the offence.
    It would not be material, for this purpose, as to how he came to receive
    the complaint - directly or on transfer from the Chief Judicial Magistrate.

        We are, therefore, of the opinion that no error of jurisdiction was
G   committed by the Judicial Magistrate in taking cognizance of the offence.

           It is next contended that the appellant, being a partner in the              ,...-
    complainant firm, cannot be said to have committed criminal breach of
    trust of his own funds and that, therefore, it is a case of civil liability only.
H   The contention that one partner cannot commit criminal breach of trust •
                          ANIL SARAN v. STATE                               63

against other partners, though p1inw f acie alluring, on facts of this case, it   A
does not appear to be tenable. Partnership firm is not a legal entity but a
legal mode of doing business by all the partners. Until the firm is dissolved
as per law and the accounts settled, all the partners have dominion in
common over the property and funds of the firm. Only after the settlement
of accounts and allotment of respective share, the partner becomes owner
                                                                                  B
of his share. However, criminal breach of trust under s.406 is not in respect
of the property belonging to the partnership firm, but is an offence com-
mitted by a person in respect of the property which has been specially
entrusted to such a person under a special contract and he holds that
property in fiduciary capacity under special contract. If he misappropriates
the same, it is an offence.                                                       c
       At this stage, we have only to see whether the allegations made in
the complaint make out the offence pTima facie. It is not the case of the
complaint that the appellant and the other accused Ajit were entrusted
with the dominion of the property of the firm in their capacity as partners
of the complainant firm. On the other hand, the complainant firm entered D
into a contract with the first accused firm-M/s. Sapna Enterprises.
entrusted the second film for exhibition and for accounting the sale
proceeds in terms of the contract and to return the film. They had neither
accounted for, not returned the film. The first accused, the appellant and
Ajit, therefore, were alleged to have committed the offences in question.   E
      Under these circumstances, we do not think that the imputations
alleged against the appellant have been done in his capacity as a partner
of the firm. Whether the offence has been made out, whether he is liable
and what are the defences open to him are not matters at this stage for
consideration. It is for the learned Magistrate to proceed with the trial and     F
to deal with according to law.

      The appeal is accordingly dismissed.

T.N.A.                                                     Appeal dismissed.