Holding

A final finding that the gate‑pass entries were made inadvertently and negligently, not wilfully or with intent to defraud, binds later proceedings and defeats the element of dishonesty required for s.420, thereby obligating acquittal on that charge.

Summary

Amritlal Ratilal Mehta and Gajanan Gandhi, employees of a private firm, were charged with cheating the Central Excise Department by making false entries in gate passes. They were tried for offences under IPC s.420 read with s.34 (cheating) and s.477‑A read with s.34 (false entry). The magistrate acquitted them of s.420 but convicted them of s.477‑A; the Sessions Judge later acquitted them of s.477‑A, finding the entries were made inadvertently and negligently, not wilfully or with intent to defraud. The Gujarat High Court dismissed the appeal against the s.477‑A acquittal but upheld a conviction under s.420, holding the offences different. The Supreme Court held that a final finding of fact at an earlier stage – that the entries were inadvertent and negligent – is binding on later proceedings and destroys the element of dishonesty required for s.420, so the earlier acquittal operates to the benefit of the accused and mandates acquittal on s.420 as well. The appeal was allowed and the appellants were acquitted.

Issues considered

The binding effect of a final finding of fact recorded at an earlier stage of the same case on subsequent charges.
Whether an acquittal under s.477‑A read with s.34 precludes conviction under s.420 read with s.34 when the essential factual allegations are the same.
Whether the difference in the statutory ingredients of the two offences is determinative of the effect of the earlier acquittal.

Legislation cited

Indian Penal Code, 1860s. 34, s. 420, s. 477-A

Subjects

acquittalbinding effect of earlier findingissue estoppelsection 420 IPCsection 477-A IPCcheatingfalse entrycriminal procedurefinality of judgment

Judgment

•
72

A AMRITLAL RATILAL MElITA & ANR.
v.
STATE OF GUJARAT
November 16, 1979 •
B [R. S. SARKARIA AND 0. CHINNAPPA REDDY, JJ.]

lndtan Penal Code 1860 (Act 45 of 1860) Ss 34, 420 and 477-A-Accused
charged under section 420/34 & section 471-A/34-Acquittal on charge untie~
'
section 471-A--In appeal confirmed-Acquittal on cha_rge under section 480-
Whether follows.

C Cri1ninal Trial-Finding of fact finally determined at an earlier stage of
cnse-At later stages-Binding' force and conclusive nature of such finding.

The prosecution alleged that the appellants {accused) who were employees
of a private company, wilfully and with an intention to defraud the Central
Excise Department, made false declaration in gate passes which were prepared
by Appellant No. I and signed by Appellant No. 2, secured clearance of
D dutiable goods without payment of Central Excise Duty, and thereby caused
wrongful loss to the Central Excise -Department. They were therefore charged
with having committed offences punishable under sections 420 read with section:
34 I.P.C. and section 477-A read with section 34 I.P.C.

The. Magistrate who tried the case found that neither of the accused

E
intended to cheat and make wrongful .gain but that they made a false entry in t
the g3.te passes with a view to help their employers, and acquitted both of them·
of the charge under section 420 read with section 34 I.P.C., but convicted
them under section 477-A read with section 34 I.P.C. and sentenced them t<>
pay fines.

In the appellants' appeal, the Sessions Judge found that the gate passes were
prepared by the accused under a mistake, that the worst that could be said
F against them was that they acted inadvertently or negligently that the expres-
Sion "intent to defraud'' denoted some element of dishonesty and that the appel-
lants having acted neither wilfully nor with intent to defraud the Government,.
acquitted them of-ihe charge under section 477-A read with section 34.

The' State filed two appeals in the High Court, one against the order of
acquittal recorded by the Sessions Judge on the charge under section r>477-A
G read with section 34 I.P.C., and the other, against the order of acquittal re-
corded by the Magistrate1 on the charge· under section 420 read with section 34
l.P.C. The former appeal was dismissed summarily by a Division Bench, while
the latter was allowed by a Single Judge who imposed a sentence of fine. The
Judgo was of the view that the acquittal of the oharge under section 477-A was
not a bar to a conviction under section 420 as the ingredients of the two
offences were different, and that the gist of the offence under section 477-A was
B that the false entries mnst have been made wilfully and with intent to defraud
whereas the essence of the offence under section 420 was that the accused '
should have acted dishonestly. (
A. R. MEHTA v. GUJARAT (Chinnappa Reddy, J.) 73

Jn the appeal, lo this Court it was contended on behalf of the appellants A
that the findings of fact recorded by the Session! Judge on the charge under
section 477-A read with section 34 I.P.C. having become final as a result of
the dismissal of the appeal by the Division Bench, the charge under section 420
read with section 34 l.P.C. would automatically fail.
Allowing the appeal,
• HELD : 1. The question about the binding force, of a finding at an earlier B
stage would depend on the question as to what the alle~tions were and what
were the facts required to be proved and what findings were arrived at. The
question is not whether the ingredients of the two offences are· the same but
whether the facts alleged and required to be proved in the particular case to
establish the offences are basically the same. [76 A·B]
Bhagat Rani v. State of l~ajasthan [1972] 2 S.C.C. 466; State of (~ \
Rajastha1i v. 1 arachand Jain [19741 3 S.C.C. 72 referred to.

In the instant case the charges against the appellants showed that the essen·
tial allegation to be proved was whether the gate passes were made 'dishonestly'
so far as se.ction 420 was concerned and "with intent to defraud'' so far as the
charge under section 477·A was concerned. A finding that the gate passes
were made inadvertently and negligently was destructive of @oth the charg(s.
[76 CJ D
2. If for the purpose of the offence under section 477·A, the court found
that the entries made by the accused in the gate passes were 1nade inadvertently
and negligently but not wilfully or with a vie'N tO' defraud and that finding bad
become final, it would not be· open to the court, later to find, on the charge,
under section 420, that the entry on the gate passes was made not inadvertently
and negligently, but dishonestly. [76 DJ · E
3. The acquittal of the accused having become final, must operate for the
benefit of the accused and lead to their acquittal on the charge under section
420 also. [76 EJ

CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 222 of
1973.
F
Appeal by Special Leave from the Judgment and Order dated
27 /28-2-73 of the Gujarat High Court in Criminal Appeal
No. 731/71.
Frnnk Anthony and K. L. Hathi for the Appellant.
• R.H. Dhebar, Miss Pratiloha Pandit and M. N. Shroff for the Res-
pondent. G
The Judgment of the Court was delivered by
CHINNAPPA REDDY, J. To appreciate the question posed in t~e
• present appeal, it is necessary to set out in full the two charges framed
against the two appellants. They were as follows : -
, "I, Chandrakant T. Mashla, Judicial Magistrate 2nd Court, Baroda H
' hereby charge you
11) ·Amritlal Ratilal Mehta
6-868SCI/79
74 SUPREME COURT REPORTS [1980] 2 S.C.R.

A (2) Gajanan Bhikhabhai Gandhi both of Baroda as follows:-

That both of you Amritlal Ratilal Mehta and Gajanan Bhikhablmi
Gandhi on or about 21-12-65, at Baroda cheated the Centrnl Excise
. Department, Baroda in furtherance of common intention to cheat the
Government of excise duty of Rs. 114501- (Eleven thousand four
B hundred and fifty) by dishonestly making false declaration in gate passes
numbers 105, 104, 1 03, all dated 21-12-65 which were prepared and
written by accused No. 1 and signed by accused No. 2 stating therein :
'"Repaired Motor with our replacing statote or Rotor" anJ thereby dis- •
hcnrnly ii<::luccd the Central Excise Inspector to al 1ow the clearance of
Electric Mo'.or Nos. 614193. 614194, 614196 respectively w•thoutpay-
c ment of Ccntrnl Excise duty on the dutiable parts namely Rotors
Number> 41-40-42 which were manufactured by M/s. foy'.o Ltd.,
Company Baroda and were replaced by the said company in the above
• Electric Motors and thereby got the clearance of the abo·1e Electric
Motors without payment of Central Excise Duty, causing thereby wrong-
ful loss o[ Rs 11450/- to the Central Excise departmenL and thereby
D
both of you committed offence punishable u/s. 420 read with s. 34 of
1.P.C. within cognizance of J.M.F.C., Baroda.

And also that both of you at a bout the same time and
plac;o in furtherance of common intention in your capacity
is employees of M/s. Joyto L'd. Baroda wilfully and with an
E
intention to defraud the Central Excise Department. Baroda
made false entries in the gate passes as mwtioned above
belonging to your employer and thereby committed an offence
punishable u/s 477-A, r/w. Section 34 I.P.C. and within
cognizance J.M.F.C., Baroda. And thereby direct that you
F both be tried for the above offences by 2nd Court. J .M.F.C.,
Baroda."

The learned Judicial First Class Magistrate, Baroda who tried the
case acquitted both the accused of the charge under s. 420 read with
s. 34 I.P.C. but convicted them under s. 477A read withs. 34 I.P.C.
and sentenced them to pay fines of Rs. 100/- and Rs. 5001- respec- •
G
tively. The learned Magistrate was of the view that neither of the
accused intended to cheat and make wrongful gain but that they made
a false entry in the gate passes with a view to help their employer.
The two accused preferred an appeal to the Extra Additional Sessions
Judge, Baroda. The learned Sessions Judge acquitted tkem of the
H charges un<ler s. 4 77-A read with s. 34 l.P.C. also. The learned Sessions
Judge found that the gate passes were prepared by the accused •
under a mistake and that the worst that could be said aga;nst the two
II. R. MEHTA v. GUJARAT (Chimwppa RedJy, J.) 75

illc:cui;ed was that they acted inadvertently or negligently. The learned A
I
Sessions Judge took the view that the expression "intend to defraud"
\.

.denoted some element of dishonesty and that the appellants acted nei-
ther wilfully nor with the intent to defraud the Government. The State
of Gujarat filed two appeals, the first against the order of acquittal
recorded by the learned Judicial First Class Magistrate, Baroda on the
-charge undu s. 420 read with s. 34 I.P.C., and the 'econd against the B
order of acquittal recorded by the learned Extra Additional Sessions
Judge, Baroda on the charg~ under s. 477-A read with s. 34 I.P.C.
The appeal against the order of acquittal on the charge under s. 477-A
read with s. 34 I.P.C. was dismissed summarily on 13-3-72 by J. M.
~ Sheth and A. A. Dave, JJ. The appea1 against the order of acquittal
)
I c
on the charge under s. 420 read with s. 34 I.P.C. was allowed on
27 /28-2-73 by J. M. Sheth, J. and the two accused were sentenced
to pay fines of Rs. 300/- and 500/- respectively. It is against this
judgment of J. M. Sheth, J. that the present appeal has been preferred
by special leave of this Court.
The principal submission of Shri Frank Anthony, ]earned counsel D
for the appellants was that in view of the findings of fact recorded
by the Sessions Judge on the charge under s. 477-A read with s. 34,
which had become final as a result of the dismissal of the appeal by
'Sheth and Dave, JJ., the charge under s. 420 read with s. 34 I.P.C.
must automatically fail. The learned counsel submitted that. the judg-
ment of the High Court convicting the appellants under s. 420 read E
with s. 34 I.P.C. was patently wrong. We are inclined to agree with
the submission of Shri Frank Anthony.
The learned Judge of the High Court was of the view that the
acquittal on· the charge under s. 477-A was not a bar to a conviction
under s. 420 as the ingredients of the two offences were d;fferent.
·F
According to the learned Judge, the gist of the offence .under s. 477-A
·was that the false entries must have been made wilfully and with intent
to defraud whereas the essence of the offence under s. 420 was that
I the accused should have acted dishonestly. We are afraid that the
• learned Judge entirely misdirected himself. The question here is not
whether the ingredients of the two offences are the same or substantially G
·the same. That question would be relevant if the plea was one autre-
fois oc·auit or autrefois convict. The question is not even one of
'issue estoppel' properly so called as there were no separate trials. The
question really is about the binding force and the conclusive nature,
·at later ~!ages of a case, of a fincling of fact finally determined at an
·earlier stage of the case. The question is not res integra. In Bhagat H
.Ram v. Siatt of Rajasthan(l) and State of Rajasthan v. Tarachand
(I) [1972] 2 S.C.C. 466.
76 5UPREME
, COURT REPORTS [1980] 2 S.C.R.

A Jain(!) it has been held by this Court, an earlier 11nding which had ob-
tained finality is binding in the subsequent proceedings in the case. The
question about the binding force of a finding at an earlier stage would
depend on the question as to what the allegations were, what facts were:
required to be proved and what findings were arrived at. The question
thus is not whether the ingredients of the two offences are the same
B but whether the facts alleged and required to be proved iu the parti-
cular case to establish the offences are basically the same. The charges
set out by us at t,he outset show that the essential allegation which was
required to be proved in respect of the two charges was whether the
gate passes were made 'dishonestly' so far as the charge under s. 420
was concerned and 'with intent to defraud' so far as the charge under
c s. 4 77-A was concerned. A finding that the gate passes were
made inadvertently and negligently was destructive of both the
charges. If for the purpose of the offence under s. 4 77-A, the Court
found that the entries made by the accused in the gate passes were
made inadvertently and ·negligently but not wilfully or with a view to
D defraud and that finding became final, it would not be open to the Court;.
later to find, on the charge under s. 420, that the entries on the gate
passes were made not inadvertently and negligently, but dishonestly. On
the facts of the present case, we hold that the finding of fact to the
effect that the gate passes were made inadvertently and negligently
and not wilfully or with intent lO defraud which led to the acquittal
E of the accused on the charge under s. 477-A must, tha:t acquittal having
become final, operate for the benefits of the accused and lead to their
acquittal on the charge under s. 420 also. The finding that the gate
passes were made inadvertent!y and negligently, as we said, was des-
tructive of the charges under both s. 420 and s. 477-A. The appeal \

is therefore allqwed. The appellants are acquitted. Their bail bonds. __)
.F will be cancelled. Fines if any will be refunded .
.
N.V.K. Appeal allowed.

1

(!) [1974] 3 s.c.c. 72.