Kallan And Others vs State Of U.P. And Another
2018 Latest Caselaw 658 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

A.F.R.
 
Court No. - 45
 

 
Case :- APPLICATION U/S 482 No. - 13969 of 2004
 
Applicant :- Kallan And Others
 
Opposite Party :- State Of U.P. And Another
 
Counsel for Applicant :- V.M. Zaidi
 
Counsel for Opposite Party :- Govt. Advocate,A.K. Mishra,U.K. Mishra
 

 
Hon'ble Suneet Kumar,J.

List revised.

No one has put in appearance on behalf of the opposite party no. 2.

Heard Sri Rashid Ali holding brief of Sri V.M. Zaidi, learned counsel for the applicant.

By the instant application, applicants are assailing the charge sheet dated 23 July 2004 and proceedings of the Case No. 5517 of 2004, State Versus Kallan and others for offence under Sections 420, 467, 468, 471, 504, 506 I.P.C., pending in the court of Chief Judicial Magistrate, Saharanpur.

It is alleged that the opposite party no. 2 entered into an agreement with the applicants on 20 September 2001 for purchase of mango crop for two years, it was agreed that a consideration of Rs. 6,75,000/- shall be paid to the informant. It is alleged that the first and second instalment agreed upon was paid, thereafter, further instalment was not paid by the applicants, consequently, Rs. 4,26,000/- was outstanding. On demanding the balance sum, it is alleged by the applicants that it was paid and the receipts therefor was produced by them. The matter was not settled between the parties despite the village panchayat intervening. Consequently, F.I.R. was lodged. Upon investigation, charge sheet was filed.

It is urged by the learned counsel for the applicants that dispute admittedly arises from a contract which is purely civil in nature and the purpose of institution of the instant criminal case is to coerce the applicants to pay the alleged balance amount which according to the applicants they have paid and have produced the receipts. Under the garb of criminal prosecution, a contract for specific performance cannot be enforced. The remedy available to the opposite party is civil court where rights and contentions of the parties would be tested upon evidence. The case tantamounts to malicious prosecution. In para 11 of the affidavit filed in support of the application, it has been clearly stated that the third instalment was paid and this has not been denied in para 19 of the counter affidavit filed by the opposite party no. 2.

In my opinion, having due regard to the facts and circumstances of the case, pendency of the criminal case would tantamount to gross misuse of the process of the Court. The criminal forum is being used by the informant for execution of a contract which can be enforced by the competent civil court or the opposite party can seek damages for breach of the contract.

The Hon'ble Apex Court since the very beginning has in very clear terms held that any civil liability cannot be allowed to be executed through criminal case by exerting pressure. In V.Y. Jose and another Vs. State of Gujarat and another1, it was held as follows:

"12. For the purpose of constituting an offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. Even in a case where allegations are made in regard to failure on the part of the accused to keep his promise, in absence of a culpable intention at the time of making initial promise being absent, no offence under Section 420 of the Indian Penal Code can be said to have been made out.

15. There exists a distinction between pure contractual dispute of civil nature and an offence of cheating. Although breach of contract per se would not come in the way of initiation of a criminal proceeding, there cannot be any doubt whatsoever that in absence of the averments made in the complaint petition where from the ingredients of an offence can be found out, the court should not hesitate to exercise its jurisdiction under Section 482 of the Code of Criminal Procedure.

We may reiterate that one of the ingredients of cheating as defined in Section 415 of the Indian Penal Code is existence of an intention of making initial promise or existence thereof from the very beginning of formation of contract."

In International Advanced Research Centre For Powder Metallurgy and New Materials (ARCI) and others Vs. Nimra Cerglass Technics Private Limited and another2, Supreme Court was of the view that breach of contract and cheating would depend upon the intention of the accused at the time of alleged inducement:

"16) Distinction between mere breach of contract and the cheating would depend upon the intention of the accused at the time of alleged inducement. If it is established that the intention of the accused was dishonest at the very time when he made a promise and entered into a transaction with the complainant to part with his property or money, then the liability is criminal and the accused is guilty of the offence of cheating. On the other hand, if all that is established that a representation made by the accused has subsequently not been kept, criminal liability cannot be foisted on the accused and the only right which the complainant acquires is the remedy for breach of contract in a civil court. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown at the beginning of the transaction. In S.W. Palanitkar & Ors. vs. State of Bihar & Anr.3, this Court held as under:

"21 ...... In order to constitute an offence of cheating, the intention to deceive should be in existence at the time when the inducement was made. It is necessary to show that a person had fraudulent or dishonest intention at the time of making the promise, to say that he committed an act of cheating. A mere failure to keep up promise subsequently cannot be presumed as an act leading to cheating."

The above view in Palanitkar's case was referred to and followed in Rashmi Jain vs. State of Uttar Pradesh & Anr. (2014) 13 SCC 553."

The view was reiterated by the Supreme Court in Anil Mahajan Vs. Bhor Industries Ltd.4 228 and Indian Oil Corporation Vs. NEPC India Ltd. and other5, wherein, it is clearly observed that it is the intention which is material, if the intention is bad from the very beginning then a criminal proceeding can be initiated but if in a contractual obligation one of the party failed to observe any liability, then it cannot be said that it is an act of cheating.

The legal position is well-settled that when a prosecution at the initial stage is asked to be quashed, the test to be applied by the court is, as to whether uncontroverted allegations as made in the complaint establish the offence. The High Court being superior court of the State should refrain from analyzing the materials which are yet to be adduced and seen in their true perspective. The inherent jurisdiction of the High Court under Section 482 Cr.P.C. should not be exercised to stifle a legitimate prosecution. Power under Section 482 Cr.P.C. is to be used sparingly only in rare cases. In a catena of cases, Supreme Court reiterated that the powers of quashing criminal proceedings should be exercised very sparingly and quashing a complaint in criminal proceedings would depend upon facts and circumstances of each case. (Vide State of Haryana & Ors. vs. Bhajan Lal & Ors.6; State of T.N. vs. Thirukkural Perumal7; and Central Bureau of Investigation vs. Ravi Shankar Srivastava8).

Supreme Court has time and again drawn attention to the growing tendency of complainants attempting to give the cloak of a criminal offence to matters which are essentially and purely civil in nature, obviously either to apply pressure on the accused, or out of enmity towards the accused, or to subject the accused to harassment. Criminal courts should ensure that proceedings before it are not used for settling scores or to pressurise parties to settle civil disputes. But at the same, it should be noted that several disputes of a civil nature may also contain the ingredients of criminal offences and if so, will have to be tried as criminal offences, even if they also amount to civil disputes. [See: G. Sagar Suri v. State of U.P. 9 and Indian Oil Corporation vs. NEPC India Ltd.10.

In Dr. Vimla vs. Delhi Administration11, Supreme Court explained the meaning of the expression `defraud': "The expression "defraud" involves two elements, namely, deceit and injury to the person deceived. Injury is something other than economic loss that is, deprivation of property, whether movable or immovable, or of money, and it will include any harm whatever caused to any person in body, mind, reputation or such others. In short, it is a non-economic or non-pecuniary loss. A benefit or advantage to the deceiver will almost always cause loss or detriment to the deceived. Even in those rare cases where there is a benefit or advantage to the deceiver, but no corresponding loss to the deceived, the second condition is satisfied."

The above view was in essence reiterated in State of UP vs. Ranjit Singh12.

Applying the law as enunciated by the Supreme Court in the facts of the case at hand, it is nowhere stated in the complaint that there was any intention on part of the accused persons to cheat or defraud at the inception of the contract. It is admitted that pursuant to the agreement, two installments was paid and thereafter the subsequent installments were not paid. Hence, mere failure to keep a promise subsequently cannot be presumed as an act leading to cheat. The ingredients of the other offence is also not made out taking the allegation on its face value. This fact has been admitted by the opposite party no. 2 in the counter affidavit.

Having due regard to the facts and circumstances of the case, case, prima facie, appears to be malicious prosecution lodged with ulterior motive. Consequently, the proceedings pending before the court below is liable to be quashed. Order accordingly.

The application under Section 482 Cr.P.C. is accordingly allowed.

Order Date :- 18.5.2018

K.K. Maurya