Payments made towards chit fund transactions amount to entrustments within the meaning of Section 405 I. P. C.

( 1 ) IN these petitions, the point that arises for consideration is whether the payment made towards Chit funds constitute entrustment which is one of the ingredients for the offence under Section 406 I. P. C accused 1 to 5 of whom A4 is since dead, were partners of srijagagturu brikrishna Prabhu Commercial Corporation, Bandarulanka, running Chit fund transactions of various denominations of Rs. 10000/-, 5000/- and 2500/- etc. Al was the managing partner, while a6 was a Bill Collector. The procedure followed was that in each of these denominations those who were willing to contribute had to pay a certain sum each week and every two weeks there would be an auction and the lowest bidder would get the amount and out of the profit 5% would be taken out as commission and the rest of it would be divided and distributed among the members as dividends and the person who is the lowest bidder would also continue to make the payments due and also execute a pronote for the amount taken by him The complainant who is a doctor, at the instance of A5 who was a native doctor and who was sometimes bringing patients to him, started contributing to three such chits, one for Rs. 10000/- in his minor daughter s name and two for Rs. 5000/- each in his own name and in his son s name and towards these three chits, he had contributed Rs. 7500/-, 4925/- and 4875/ -. The bonus declared was Rs. 1200/- Ks. 1870/- and 1116/- buc of this bonus the Company paid him only the first sum of Rs. 1200/- and in all a sum of Rs. 19786/- was still due to hirrti According to the complainant when he had approached these accused for payment of these amounts, they had promised to pay it but were postponing and later on his approaching P. W. 1. an advocate, there were talks with the accused and the accused had stated that they had invested these monies in a bus-transport business and promissed to pay the amount but they had failed to pay and hence he had filed three complaints for offences under Section 406 I. P. C. He examined himself as p. W. 1. and six other witnesses in support of his case.

( 2 ) THE accused in their statements, while admitting that P. W. 1. was a subscriber of the cnit funds, stated that he was not regular in his payments and that the payments made by him do not amount to entrustment to attract the provisions of Section 405 I P. C.

( 3 ) THE Magistrate held that there was entrustment within the meaning of Section 406 I. P. C. and there was also wrongful conversion of the monies so entrusted and convicted the accused of the offence under Section 406 I. P. C. in each of the cases and sentenced each of them to undergo R I. for six months in each of the cases. On appeal the sessions Judge held that the payments on instalments towards chit fund do not constitute entrustment, within the meaning of Section 405 I. P. C. that it is more in the nature of a business resembling that of a Bank and that the liabillity is civil and in that view set aside the conviction of all the accused in the three cases and aquitted them of the charges. Hence these revision petitions.

( 4 ) AS stated already, the only point that arises now for consideration is whether the payments made towards the chit fund transactions amount to entrustments within the meaning of beoion 408 I P C. There is hardly any discussion in the Judgment of the appellate court with regard to this aspect of the case. He has merely stated as follows :-IN the present case, there is no entrustment as contemplated under Section 405 I. P. C. The transaction between the parties in these three cases is like a business resembling a banki The money deposited with the company of the accused is not an entrustment. In the case of entrustment, the person that handed over any property to another continues to be its owner. But in the present case if the ownership is retained, the bid and the payments become unauthorised acts. He has further stated that the learned Addl. Public Prosecutor, Grade I has co