CENTRAL BUREAU OF INVESTIGATION, SPE, SIU (X), NEW DELHI versus DUNCANS AGRO INDUSTRIES LTD. CALCUTTA

Citation: [1996] SUPP. 3 S.C.R. 360 · Decided: 09-07-1996 · Supreme Court of India · Bench: G.N. RAY · Disposal: Dismissed
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Judgment (excerpt)

A 
CENTRAL BUREAU OF INVESTIGATION, SPE, SIU (X), 
NEW DELHI 
v. 
DUNCANS AGRO INDUSTRIES LTD. CALCUTTA 
B 
JULY 9, 1996 
[G.N. RAY AND G.B. PATTANA!K, JJ.] 
Criminal Procedure Code, 1973-Section 482-Quashing criminal com-
C plaint-Guiding p1inciples-Held, action to be taken at the threshold before 
evidence led in suppolt of the complaint-It is necessmy to consider whether 
on the face of allegation;~ a criminal offence is constituted or not-C01;1plaint 
for offences u/Ss. 120B, 409, 420, 467, 468 & 471-Allegations did not make 
out any offence-Claims of Bank satisfied in civil suits-Long time elapsed 
since complaint was filed in 1987-Proceeding fwther with the complaint will 
D not be expedient-Decision of High Coult quashing complaint justified. 
Indian Penal Code, 1860-Sections 405, 406, 409-Criminal Breach of 
Tnlst--Offence of-Expression 'entrusted with prope1ty' or with any dominion 
over property'-Scope-Held, apression includes all cases in which goods are 
entmsted and dishonestly disposed of in violation of law or in violation of 
E contract-Ownership or beneficial interest 
in ownership of the property 
entmsted must be in some person other than the accused-Cash Credit 
facilities on hypothecation of stocks etc. with Bank-Whether constitute 
entrustment-Held, No. 
F 
F!Rs were lodged by the Central Bureau of Investigation for the 
commission of offences u/s 120B r/wSs 409, 420, 467, 468 and 471 Indian 
Penal Code. The allegations made were that the accused had conspired 
with a criminal design to defraud the Hank and to deliberately misap-
propriate the huge stock lying at different places. It was alleged that Mis 
National Tobacco Company which was a division of the respondent Com-
G pany had cash credit facilities on hypothecation of stocks etc. with United 
Bank of India, to the tune of Rs. 17.50 crores subject to the drawing power 
according to hypothecation of raw materials/stocks etc.; that the respon-
dent obtained an order from the Court that National Tobacco Company 
would henceforth function under the name and style of New Tobacco 
H Company Ltd. which would be fully owned subsidiary of respondent Com-
360 
• 
C.B.l. v. DUNCANS AGRO JNDs.1;m. 
361 
pany, approached the united Bank of India to transfer the credit limits A 
standing in their name to M/s. New Tobacco Company and thereafter the 
Board of Directors of the United Bank resolved that the credit limits of 
the Bank in res1iect of National Tobacco Company, would be allowed to be 
transferred in the new account of new Tobacco Company with retrospective 
effect \\ithout specil)ing whether stocks had been inspected and how the 
Bank would remain a secured creditor of the respondent Company; that 
the Board of Directors of the United Bank of India were misled because 
B 
of the omissions and commissions of the ollicials of the Bank and the 
Board of Directors acted on legal opinion of the Chief Ollicer (Legal) 
although such opinion was detrimental to the interest of the Bank; that 
credit limits were got transferred to the New Tobacco Company and C 
respondent managed with the Executives and Directors of the Bank to 
transfer the debts of the respondents to 'Nil' mthout any payment; that 
the Directors of the New Tobacco Company assured the United Bank that 
the Board's resolution would be furnished to the Bank to the effect that 
without the Bank's written consent, the holding level of percentage of D 
shares in the New Tobacco Company by respondent Company would not 
defraud the Bank and to nullify the assurance given, the respondent 
Company entered into a memorandum of understanding mth New Tobac-
co Company in order to render the very basis of the scheme approved by 
the High Court infructuous and to complete the delinking of the respon- · 
dent company and New Tobacco Company so that the assets of the respon-
dent Company would remain out of reach of its cre~itors and by such 
process, the Bank was defrauded; that the stock worth about Rs. 12 crores 
were either fraudulently or dishonestly removed or disposed ofmthout any 
payment to the Bank although the same were hypothecated mth the Bank, 
that the Chairman of the respondent Company, Director, New Tobacco 
Company and Director, National Tobacco Company along mth some Bank 
Officers, General Manager, the Chief Ollicer (Legal), Law Officer, Assis-
tant Manager (Advances) of United Bank of India and other persons had 
conspired mth a criminal design to defraud the Bank and to deliberat
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