MUDHOLKAR, J.: - (1.) THE following Judgment of the court was delivered by '
(2.) THE respondent No. 1 was tried before the court of Sessions, Visakhapatnam for offences under s. 120-B, Indian Penal Code, s. 409, s. 477-A and s. 471 read with s. 467, Indian Penal Code while respondent No. 2 was tried for an offence under s. 120-B and for offences under ss. 409 read with s. 109, 477-A and 471 read with s. 467, Indian Penal Code Each of the respondents was convicted of the first two offences, but the respondent No. 1 alone was convicted of the other two offences. Various sentences were passed against them by the Additional Sessions judge, Visakhapatnam, who presided over the court. The respondents preferred appeals before the High court challenging their convictions and sentences. The State on the other hand preferred an application for revision under s. 439, Cr. P.C. for the enhancement of the sentences passed on the respondents. The High court allowed the two appeals, acquitted the respondents and dismissed the application for revision preferred by the State. The State of Andhra Pradesh has come up before this court in appeal by obtaining special leave under Art. 136 of the Constitution. The prosecution case in so far as it is material for the decision of this appeal is as follows : In the year 1929 the Andhra Engineering Co., which was originally a partnership firm formed by one D.L.N. Raju was converted into a private limited, company with its headquarters at Visakhapatnam. (We shall refer to this company throughout as the AECO). It obtained licences from the government under the Electricity Act for supply of electrical energy to Visakhapatnam, Anakapalli and some other places. As the AECO did not have the necessary capital to undertake the work Raju floated in the year 1933 a public limited company called Visakhapatnam Electric Supply Corporation Ltd., (referred hereafter as VESCO) and another in the year 1936 called the Anakapalli Electric Supply Corporation Ltd. The AECO transferred its licences for the supply of electrical energy to the consumers of Visakhapatnam to VESCO and similarly transferred to AECO the licence to supply electrical energy to consumers at Anakapalli. The AECO was appointed Managing Agent for each of these corporations under separate agreements. Some time later other industrial concerns, the Andhra Cements Ltd., Vi jayawada and the East Coast Ceremics, Rajahmurthy were started apparently by Raju himself and the AECO was appointed the Managing Agent of each of these concerns. The original managing agency agreement in favour of AECO with respect to VESCO was for a period of 15 years i.e., from 1933 to 1948 and was later renewed for the remaining term of the currency of the licence granted by the government under the Electricity Act. A mention may be made of the fact that in June, 1952 the VESCO undertaking was acquired by the government under the provisions of the ''Electricity Undertaking Acquisition Act' but nothing turns on it. The VESCO had its own Board of Directors while the AECO had also its own separate Board of Directors. The VESCO had no Managing Director but at each meeting of its Board of Directors one of the Directors used to be elected Chairman. The same practice was followed at the meeting of the general body of the shareholders. The AECO on the other band always had a Managing Director, first of whom was D.L.N. Raju. He died in the year 1939 and was succeeded by R.K.N.G. Raju, an Advocate of Rajahmundry. This person, however, did not shift to Visakhapatnam on his becoming the Managing Director but continued to stay most of the time at Rajahmundry. According to the prosecution both these concerns were running smoothly and efficiently during the lifetime of D.L.N. Raju because he was personally attending to their affairs. His successor, however, apart from the fact that be continued to be staying mostly at Rajahmundry, was also interested in several other ventures, including a sugar factory at Dewas in central India. Eventually many of those ventures failed. According to the prosecution the second Raju was not bestowing sufficient care and attention on the affairs of VESCO. The AECO as Managing Agents of VESCO had appointed in the year 1939 one D.V. Appala Raju, a trusted employee, as its representative and as the secretary of VESCO. In 1944 this person resigned from his appointments and started his own business in radio and electrical goods in the name of D. Brothers. He was succeeded by T. Visweswara Rao, P.W. 6, an employee of the AECO.
(3.) THE respondent No. 1, Ganeswara Rao was also an old employee of AECO, having been appointed a stenotypist in the year 1923 on an initial salary of Rs. 40.00 p.m. Eventually he became the Head Clerk therein. He pressed his claim for appointment as secretary of VESCO and representative of the Managing Agents at Visakhapatnam and R .H.G. Raju appointed him to that post. All this is not disputed. The respondent No. 1, even after his appointment on two posts connected with VESCO, continued to work with the AECO also whose business had by then been confined only to that of Managing Agents of the four companies floated by D.L.N. Raju. It is the prosecution case that as secretary of VESCO and the resident representative of the Managing Agents, the respondent No. 1 was attending to the day to day affairs of VESCO, which included the receiving of all sums of money due to VESCO, spending money for the purpose of VESCO attending to the appointment, supervision and control of the staff of VESCO, purchasing materials required for the purpose of VESCO and supervising over the accounts of VESCO. He was thus all important with respect to the every day affairs of VESCO. His dual capacity enabled the respondent No. 1 to earn the confidence not only of the Directors of AECO but also of those of VESCO. The accounts maintained by the VESCO used to be explained by him not only to the Directors but also to the shareholders. The knowledge of the Financial position of VESCO obtained by them used to be derived essentially from the respondent No. 1. As secretary of VESCO it was his duty to convene the meetings of the Board of Directors, to present before them the periodical statement of receipts and expenditure of VESCO, to convene meetings of the General Body, to prepare the Managing Agents' report and the Director's report as also to see to the presentation of auditors' report and the statement of accounts. The explanations of the Managing Agents and the Directors of VESCO with respect to the items mentioned in the orders of the Board used also to be placed by him before the shareholders. It was also his duty to have the accounts of VESCO audited by the auditors elected by the general body and to produce before the auditors the relevant accounts, vouchers, bank statements and so on. There were no complaints about the management of the affairs of VESCO or the AECO till the end of 1946 or the beginning of 1947. One significant fact, however, which occurred prior to 1946 is referred to by the prosecution. Till the -year 1945 Messrs C. P. Rao and Co., a firm of Chartered Accountants were the auditors of VESCO but after the respondent No. 1 became secretary. one B. Rajan was elected Auditor not only for VESCO but for all the other four concerns, including AECO. This person was Auditor for Greenlands Hotel at Visakhapatnam, of which the respondent No. 1 was a Director. ;