Deepak Sharma And Another vs State Of U.P. And Another
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Allahabad High Court

Deepak Sharma And Another vs State Of U.P. And Another on 18 August, 2025

Author: Deepak Verma

Bench: Deepak Verma

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 


?Neutral Citation No. - 2025:AHC:140545
 
Court No. - 72
 

 
Case :- APPLICATION U/S 528 BNSS No. - 8418 of 2025
 

 
Applicant :- Deepak Sharma And Another
 
Opposite Party :- State of U.P. and Another
 
Counsel for Applicant :- Nisha Mishra,Vinod Shankar Tripathi
 
Counsel for Opposite Party :- G.A.
 

 
Hon'ble Deepak Verma,J.
 

1. Second supplementary affidavit, filed today, is taken on record.

2. Heard Sri Vinod Shankar Tripathi, learned counsel for the applicants; learned A.G.A. for the State and perused the record.

3. The present 528 BNSS application has been filed to quash the charge sheet dated 18.06.2024, cognizance order dated 21.06.2024 as well as entire proceeding of case no. 9069 of 2024 (State Vs. Deepak Sharma and another) arising out of case crime no. 53 of 2024, under Sections 420, 406, 467, 468, 471, 120-? ?.?.?. Police Station Behat, District Sharanpur, pending in the Court of Additional Chief Judicial Magistrate, Ist Saharanpur.

4. It is alleged in the FIR that applicant being Branch Manager of SVCL Pvt. Ltd., Branch Behat, there is charges against the applicant in regard to embezzlement of Rs.50 lacs. Allegation in the FIR is false and baseless and not supported by any evidence. I.O. has not collected any evidence to prosecute the applicant in the present case U/s 420 and 406 I.P.C. Applicant's counsel submits that as per statement of first informant, applicant is an authority for supervision of the Branches situated at Saharanpur and as per the norms of the company, applicant is authorized to distribution of the loan amount after verification of the documents. There is no evidence collected by I.O. that applicants have embezzled the said amount, as alleged in the FIR. All the money transferred in the account of loan holders. Statement and allegation, alleged in the FIR, are not supported by any evidence. In support of his contention, he has placed reliance over the judgment of Hon'ble The Apex Court in Delhi Race Club (1940) Ltd. vs. The State of Uttar Pradesh & Anr., 2024 SCC OnLine SC 2248, relevant paragraph nos. 25, 28, 30, 31 and 32, are quoted herein below:-

"25. What can be discerned from the above is that the offences of criminal breach of trust (Section 406 IPC) and cheating (Section 420 IPC) have specific ingredients. In order to constitute a criminal breach of trust (Section 406 IPC): -

1) There must be entrustment with person for property or dominion over the property, and

2) The person entrusted: -

a) dishonestly misappropriated or converted property to his own use, or

b) dishonestly used or disposed of the property or willfully suffers any other person so to do in violation of:

i. any direction of law prescribing the method in which the trust is discharged; or ii. legal contract touching the discharge of trust (see: S.W.P. Palanitkar (supra).

Similarly, in respect of an offence under Section 420 IPC, the essential ingredients are:

1) deception of any person, either by making a false or misleading representation or by other action or by omission;

2) fraudulently or dishonestly inducing any person to deliver any property, or

3) the consent that any persons shall retain any property and finally intentionally inducing that person to do or omit to do anything which he would not do or omit (see: Harmanpreet Singh Ahluwalia v. State of Punjab, (2009) 7 SCC 712 : (2009) Cr.L.J. 3462 (SC))

28. Every act of breach of trust may not result in a penal offence of criminal breach of trust unless there is evidence of manipulating act of fraudulent misappropriation. An act of breach of trust involves a civil wrong in respect of which the person may seek his remedy for damages in civil courts but, any breach of trust with a mens rea, gives rise to a criminal prosecution as well. It has been held in Hari Prasad Chamaria v. Bishun Kumar Surekha & Ors., reported in (1973) 2 SCC 823 as under:

"4. We have heard Mr. Maheshwari on behalf of the appellant and are of the opinion that no case has been made out against the respondents under Section 420 Penal Code, 1860. For the purpose of the present appeal, we would assume that the various allegations of fact which have been made in the complaint by the appellant are correct. Even after making that allowance, we find that the complaint does not disclose the commission of any offence on the part of the respondents under Section 420 Penal Code, 1860. There is nothing in the complaint to show that the respondents had dishonest or fraudulent intention at the time the appellant parted with Rs. 35.000/- There is also nothing to indicate that the respondents induced the appellant to pay them Rs. 35,000/- by deceiving him. It is further not the case of the appellant that a representation was made, the respondents knew the same to be false. The fact that the respondents subsequently did not abide by their commitment that they would show the appellant to be the proprietor of Drang Transport Corporation and would also render accounts to him in the month of December might create civil liability on the respondents for the offence of cheating."

30. The distinction between mere breach of contract and the offence of criminal breach of trust and cheating is a fine one. In case of cheating, the intention of the accused at the time of inducement should be looked into which may be judged by a subsequent conduct, but for this, the subsequent conduct is not the sole test. Mere breach of contract cannot give rise to a criminal prosecution for cheating unless fraudulent or dishonest intention is shown right from the beginning of the transaction i.e. the time when the offence is said to have been committed. Therefore, it is this intention, which is the gist of the offence. Whereas, for the criminal breach of trust, the property must have been entrusted to the accused or he must have dominion over it. The property in respect of which the offence of breach of trust has been committed must be either the property of some person other than the accused or the beneficial interest in or ownership' of it must be of some other person. The accused must hold that property on trust of such other person. Although the offence, i.e. the offence of breach of trust and cheating involve dishonest intention, yet they are mutually exclusive and different in basic concept. There is a distinction between criminal breach of trust and cheating. For cheating, criminal intention is necessary at the time of making a false or misleading representation i.e., since inception. In criminal breach of trust, mere proof of entrustment is sufficient. Thus, in case of criminal breach of trust, the offender is lawfully entrusted with the property, and he dishonestly misappropriated the same. Whereas, in case of cheating, the offender fraudulently or dishonestly induces a person by deceiving him to deliver any property. In such a situation, both the offences cannot co-exist simultaneously.

31. At the most, the court of the Additional Chief Judicial Magistrate could have issued process for the offence punishable under Section 420 of the IPC i.e. cheating but in any circumstances no case of criminal breach of trust is made out. The reason being that indisputably there is no entrustment of any property in the case at hand. It is not even the case of the complainant that any property was lawfully entrusted to the appellants and that the same has been dishonestly misappropriated. The case of the complainant is plain and simple. He says that the price of the goods sold by him has not been paid. Once there is a sale, Section 406 of the IPC goes out of picture. According to the complainant, the invoices raised by him were not cleared. No case worth the name of cheating is also made out.

32. Even if the Magistrate would have issued process for the offence punishable under Section 420 of the IPC, i.e., cheating the same would have been liable to be quashed and set aside, as none of the ingredients to constitute the offence of cheating are disclosed from the materials on record."

5. Per contra, learned A.G.A. vehemently opposed the submission raised by the counsel for the applicants and submitted that the submissions raised by the counsel for the applicants are disputed question of facts which cannot be considered, at this stage. On perusal of F.I.R. and other material evidence collected by the I.O., it is evident that applicants have misappropriated the money. The argument raised by counsel for the applicants is require proper examination and, prima facie, offence is made out against the applicants.

6. Considered the argument raised by counsel for the applicants and perused the record. From the record, it is apparent that applicants embezzled the money in dispute. The argument raised by the counsel for the applicants that in view of the judgment of Apex Court in the case of Delhi Race Club (supra), the cognizance and summoning by the learned Magistrate is bad in the eye of law. The Hon. Apex Court while deciding the case Delhi Race Club (supra) in final conclusion has observed that:

"41. Before we close this matter, we would like to say something as regards the casual approach of the courts below in cases like the one at hand. The Indian Penal Code (IPC) was the official Criminal Code in the Republic of India inherited from the British India after independence. The IPC came into force in the sub-continent during the British rule in 1862. The IPC remained in force for almost a period of 162 years until it was repealed and replaced by the Bharatiya Nyaya Sanhita ("BNS") in December 2023 which came into effect on 1st July 2024. It is indeed very sad to note that even after these many years, the courts have not been able to understand the fine distinction between criminal breach of trust and cheating.

42. When dealing with a private complaint, the law enjoins upon the magistrate a duty to meticulously examine the contents of the complaint so as to determine whether the offence of cheating or criminal breach of trust as the case may be is made out from the averments made in the complaint. The magistrate must carefully apply its mind to ascertain whether the allegations, as stated, genuinely constitute these specific offences. In contrast, when a case arises from a FIR, this responsibility is of the police ? to thoroughly ascertain whether the allegations levelled by the informant indeed falls under the category of cheating or criminal breach of trust. Unfortunately, it has become a common practice for the police officers to routinely and mechanically proceed to register an FIR for both the offences i.e. criminal breach of trust and cheating on a mere allegation of some dishonesty or fraud, without any proper application of mind.

43. It is high time that the police officers across the country are imparted proper training in law so as to understand the fine distinction between the offence of cheating viz-a-viz criminal breach of trust. Both offences are independent and distinct. The two offences cannot coexist simultaneously in the same set of facts. They are antithetical to each other. The two provisions of the IPC (now BNS, 2023) are not twins that they cannot survive without each other."

7. The Hon. Apex Court by way of aforesaid judgment has directed all the police authority that the police officers across the country should be imparted proper training in law so as to understand the distinction between the offence of cheating and criminal breach of trust. Both offences are independent and distinct. The two offences cannot co-exist simultaneously, in the same set of facts. The Hon. Apex Court while dealing with private complaint has laid down the law that the learned Magistrate before summoning should apply judicial mind after perusing the complaint and statement of the witnesses recorded under Sections 200 Cr.P.C. and 202 Cr.P.C. and should also consider the distinction between the two offences of cheating and criminal breach of trust.

8. Considering the argument raised by applicants' counsel and in view of judgment passed by Hon'ble The Apex Court in the case of Delhi Race Club (1940) Ltd., cognizance/summoning order dated 21.06.2024 passed by learned Magistrate is without application of judicial mind.

9. Accordingly, the impugned order dated 21.06.2024 passed in case no. 9069 of 2024, arising out of case crime no. 53 of 2024, under Sections 420, 406, 467, 468, 471, 120-? ?.?.?. Police Station Behat, District Sharanpur, pending in the Court of Additional Chief Judicial Magistrate, Ist Saharanpur, is hereby quashed.

10. With aforesaid observation, the present 528 BNSS application is disposed off and the matter is remanded back to learned Magistrate with direction that learned Magistrate shall pass an appropriate order within a month from the date of production of certified copy of this order keeping in view the order of Hon'ble The Apex Court passed in the case of Delhi Race Club (1940) Ltd. vs. The State of Uttar Pradesh & Anr.

Order Date :- 18.8.2025

Nitin Verma

(Justice Deepak Verma)