Delhi High Court

Rohit Jain vs State & Ors. on 7 November, 2008

Author: Aruna Suresh

                  Reportable
*     HIGH COURT OF DELHI AT NEW DELHI

+               Crl. M. C. No. 3793/2007

                                 Date of decision : 7.11. 2008

#     ROHIT JAIN                         ...... Petitioner
!                   Through : Mr. S.D. Ansari, Adv.


                             Versus


$     STATE & ORS.                             ..... Respondents
^                   Through : Mr. O.P. Saxena, APP

%
      CORAM:
      HON'BLE MS. JUSTICE ARUNA SURESH

     (1) Whether reporters of local paper may be
         allowed to see the judgment?

     (2) To be referred to the reporter or not?                 Yes

     (3) Whether the judgment should be reported
         in the Digest ?                                        Yes

                          JUDGMENT

ARUNA SURESH, J.

1. Impugning the order of the learned MM dated

1.8.2007 in complaint case No. 4211/1 filed by the

petitioner under Sections 420/34 Indian Penal Code

(hereinafter referred to as IPC) and of the revisional

court dated 29.9.2007, this petition has been filed by

the petitioner/complainant.

2. Complainant through accused No. 3 had entered into

an agreement for sale of Flat No. 117, Hans Bhawan,

Bahadur Shah Zafar Marg, New Delhi with accused

No. 1 Upender Singh for consideration of Rs. 29.50

lacs. Accused No. 1 handed over property tax and

electricity bills to the complainant showing the title of

accused No. 2 Kamaljit Kaur in the said property and

represented himself to be the power of attorney

holder of accused No. 2 and, therefore, empowered to

execute necessary documents for sale of the property

in favour of wife and sister-in-law of the complainant.

3. Complainant paid a sum of Rs. 1 lac in cash against

receipt-cum-agreement to sell in the name of his wife

and sister-in-law on the condition that sale deed

would be executed within 30 days but accused No. 1

failed to execute the sale deed as promised. Despite

efforts made by the complainant, the accused persons

did not contact the complainant. The accused persons

allegedly misrepresented the facts and gave false

receipt-cum-agreement to sell. Feeling cheated

complainant reported the matter to the police on

3.7.2007 who did not take any action on the said

report. Hence, complainant filed complaint under

Section 200 Criminal Procedure Code (hereinafter

referred to as Cr.P.C.) for offences under Sections

420/34 IPC against the accused persons.

4. Learned counsel for the petitioner has submitted that

the Magistrate could not have dismissed his

application under Section 156 (3) Cr.P.C. and it

should have sent the matter to the SHO for

investigation.

5. There might be a dispute between the parties, may

be, purely of civil or criminal in nature. For deciding

the dispute purely of civil in nature, the aggrieved

person is required to seek civil remedy in a civil court

of law whereas for dispute of criminal nature the

aggrieved person has to approach appropriate

authorities for initiating criminal proceedings against

the offender. In mixed or hybrid kind of cases

involving both civil disputes and criminal offences, the

aggrieved person can file a civil suit as well as

approach the concerned authorities or a criminal

court for taking criminal action against the offender.

These disputes can be personal or private in nature

or may relate to commercial transactions or a

contractual dispute.

6. In Indian Oil Corporation v. NEPC India Ltd. -

2006 VI AD (SC) 441, it was observed:

"(V) A given set of facts may make out: (a) purely a civil wrong; or (b) purely a criminal offence; or (c) a civil wrong as also a criminal offence. A commercial transaction or a contractual dispute, apart from furnishing a cause of action for seeking remedy in civil law, may also involve a criminal offence.

As the nature and scope of a civil proceeding are different from a criminal proceeding, the mere fact that a complaint relates to a commercial transaction or breach of contract, for which a civil remedy is available or has been availed, is not by itself a ground to quash the criminal proceedings. The test is whether the allegation in the complaint disclose a criminal offence or not."

7. The transaction in question relates to property and

the matter is of contractual dispute in nature. An

offence punishable under Section 420 IPC speaks of

an offence of cheating and dishonestly inducing any

person for delivery of property.

8. This dishonest intention to cheat should be at its

initial stage when the transaction is entered into

between the parties and therefore, it has to be

inferred from the facts and circumstances as narrated

in the complaint or found out during the investigation

of the case. Any subsequent act on the part of the

defaulter even if it reflects dishonest intention cannot

be considered by the court as an offence falling within

the meaning of Section 420 IPC. The distinction

between breach of contract and the offence of

cheating is very fine. It depends upon the intention of

the accused at the time of inducement which can be

judged by a subsequent conduct but, the subsequent

conduct itself cannot be the sole test. Fraudulent or

dishonest intention has to be shown to exist right at

the beginning of the transaction. If a person fails

subsequently to keep up his promise, it would not

mean that he had culpable intention not to fulfil his

part of the contract or to keep his promise

subsequently.

9. On the facts and circumstances as narrated in the

complaint prima facie no offence under section 420

IPC is made out against any of the accused persons.

Complainant had served a notice dated 3.7.2007 upon

the accused persons calling upon them to specifically

perform the receipt-cum-agreement to sell dated

9.11.2005 entered into inter se the complainant and

accused No. 2. Perusal of the notice makes it clear

that complainant had nowhere alleged that he had

been cheated by making misrepresentations by any of

the accused persons. Rather this notice makes it

clear that complainant wanted the accused persons to

perform their part of the contract by executing the

sale deed as he was ready and willing to pay the

balance amount as per the agreement. He called

upon the accused persons to inform him within 15

days of receipt of notice as to the date and time when

they would come to Delhi for the purpose of executing

proper sale deed of the flat in question in favour of

the complainant. It is only in para 12 of the notice

that complainant has expressed his displeasure to the

act and conduct of the accused persons and it was

only in case the accused persons failed to execute the

sale deed in performance of receipt-cum-agreement to

sell, the complainant would presume that he had been

duped or cheated by the accused persons intentionally

and malafidely. Thus, it is clear that till notice was

issued, there was no circumstance to indicate that

accused persons at the time of entering into an

agreement with the complainant had misrepresented

the facts with an intention to cheat him of Rs. 1 lac,

the earnest money paid by the complainant.

10. The dispute, therefore, essentially is civil in nature

and the remedy available to the complainant is to file

a suit for specific performance of the said agreement.

Non performance of the agreement in any manner

would not culminate into any criminal offence under

Section 420 IPC.

11. Criminal breach of trust is defined in Section 405

IPC and it is made punishable under Section 406 IPC.

For invoking these provisions, complainant has to

show that he had entrusted the accused persons with

property or, had given them any dominion over his

property and the accused persons dishonestly

misappropriated or converted the said property to

their own use or, dishonestly disposed of the said

property. Sections 405/406 have been interpreted in

Indian Oil Corporation (supra) as follows:

"22. A careful reading of the section shows that a criminal breach of trust involves the following ingredients: (a) a person should have been entrusted with property, or entrusted with dominion over property; (b) that person should dishonestly misappropriate or convert to his own use that property, or dishonestly use or dispose of that property or willfully suffer any other person to do so; (c) that such misappropriation, conversion, use or disposal should be in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract which the person has made, touching the discharge of such trust."

12. Thus, it is clear that there has to be entrustment of

property with dominion over the said property and in

the absence of the same, there cannot be any criminal

breach of trust.

13. In the present case, as per the complaint of the

complainant himself there was no entrustment of

property or entrustment with dominion over the

property. Complainant had paid Rs. 1 lac as earnest

money at the time of execution of receipt-cum-

agreement to sell with conditions incorporated

therein. Therefore, no offence under Section 406 IPC

is made out against any of the accused persons.