Gujarat High Court
Vijaybhai Dwarkadas Patel vs State Of Gujarat on 21 April, 2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION (FOR QUASHING & SET ASIDE
FIR/ORDER) NO. 3949 of 2020
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VIJAYBHAI DWARKADAS PATEL
Versus
STATE OF GUJARAT & ANR.
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Appearance:
MR.MINHAJ M SHAIKH(6847) for the Applicant(s) No. 1
NOTICE SERVED TO CONCERNED POLICE STATION HOWEVER,
SERVICE REPORT NOT FILED BY POLICE STATION for the Respondent(s)
No. 2
MR MANAN MEHTA, ADDL. PUBLIC PROSECUTOR for the Respondent(s)
No. 1
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CORAM:HONOURABLE MR. JUSTICE J. C. DOSHI
Date : 21/04/2025
ORAL ORDER
1. By way of this application under Section 482 of the Code of
Criminal Procedure, 1973 (hereinaft referred to as "the Code"),
the petitioner has prayed for quashing and setting aside FIR
being C.R.No.I - 5 of 2020 registered with Santhal Police Station,
for the offences punishable under Sections 406, 420, 114 of the
IPC as well as all other consequential proceedings arising out of
the aforesaid FIR qua the petitioner herein.
2. Brief facts of the case are as under:-
2.1 The complainant / the respondent no. 2 herein is serving
with Godrej Pashu Aahar Private Limited. The complainant / the
respondent no. 2 herein is also doing work of dealer with the
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company namely GPG Cattle Field Company Punjab Firozpur.
The complainant / the respondent no. 2 herein used to supply
the cattle field to the applicant / accused and the applicant /
accused used to make payment to that effect by transferring the
amount into account of mother of the respondent no. 2 herein
namely Chetnaben Dilipkumar Modi.
2.2 Similarly, the complainant / the respondent no. 2 herein
supplied the material to one person namely Prashantbhai valued
of Rs. 5,20,000/- upon say of applicant / accused on dated
02.11.2018 and thereafter, the complainant / the respondent
no. 2 herein had also issued bill on dated 03.11.2018 for an
amount of Rs. 5,52,000/- vide bill no. 109; however, the same
bill was not repaid to the complainant / the respondent no. 2
herein and thereby committed fraud to that effect.
3. Learned advocate for the petitioner submitted that on plain
reading of FIR, it fails to disclose any essential ingredient of
criminal breach of trust or cheating defined in section 405 and
415 of IPC having punishment defined in section 406 and 420 of
IPC. He would submit that FIR on its face value indicates that
the complainant / the respondent no. 2 herein used to supply
the cattle field to the applicant / accused and the applicant /
accused used to make payment to that effect by transferring the
amount into account of mother of the respondent no. 2 herein
namely Chetnaben Dilipkumar Modi. He would further submit
that similarly, the complainant / the respondent no. 2 herein
supplied the material to one person namely Prashantbhai valued
of Rs. 5,20,000/- upon say of applicant / accused on dated
02.11.2018 and thereafter, the complainant / the respondent
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no. 2 herein had also issued bill on dated 03.11.2018 for an
amount of Rs. 5,52,000/- vide bill no. 109; however, the same
bill was not repaid to the complainant / the respondent no. 2
herein. It is further submitted that in absence of any essential
ingredient of section 406 and 420 of IPC, civil transaction has
been given color of criminality. Therefore, it is submitted to
quash the FIR. In support of his submission, learned advocate
for the petitioner has relied on judgment of Hon'ble Apex Court
in the case of Delhi Race Club (1940) Ltd. v/s. State of Uttar
Pradesh [2024 INSC 626].
3.1 Upon such submission, learned advocate for the petitioner
requests to allow the petition.
4. When the matter is called out, none present for the
respondent No.2.
5. Learned APP submits that it is case where the petitioner
has cheated the complainant and therefore, offence u/s 406 and
420 are made out. Therefore, it is submitted to dismiss the
petition.
6. I have heard learned advocates for the parties and perused
the record. Bare reading of FIR demonstrate that upon say of
the petitioner, the complainant supplied goods worth
Rs.5,20,000/- to one Mr. Prashantbhai and since said Mr.
Prashantbhai did not pay the amount to the complainant,
present FIR is filed under section 406 and 420 of IPC. Section
405 and 420 being relevant provision of law defines criminal
breach of trust and cheating as under :-
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405. Criminal breach of trust.--
Whoever, being in any manner entrusted with property, or with
any dominion over property, dishonestly misappropriates or
converts to his own use that property, or dishonestly uses or
disposes of that property in violation of any direction of law
prescribing the mode in which such trust is to be discharged, or
of any legal contract, express or implied, which he has made
touching the discharge of such trust, or wilfully suffers any other
person so to do, commits "criminal breach of trust".
420. Cheating and dishonestly inducing delivery of property.--
Whoever cheats and thereby dishonestly induces the person
deceived to deliver any property to any person, or to make, alter
or destroy the whole or any part of a valuable security, or
anything which is signed or sealed, and which is capable of
being converted into a valuable security, shall be punished with
imprisonment of either description for a term which may extend
to seven years, and shall also be liable to fine.
7. Punishment of criminal breach of trust and cheating are
slated in section 406 and 420. If any person has been dominion
over the property or entrustment with property, dishonestly
misappropriated or converted property to his own use or
dishonestly used or disposed of the property or willfully suffers
any other person so to do in violation of any direction of law
prescribing the method in which the trust is discharged but
someone violates trust and dishonestly misappropriated or
converted property to his own can be said that he has committed
criminal breach of trust.
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8. In background of above provision of law, if we again see
contents of FIR, at no point of time, it appears that no offence is
made out and it becomes amply clear that instead of filing a
money recovery suit, the respondent No.2 has filed the FIR.
Thus, FIR is filed giving color of criminality. It is significant to
note that first informant feels duped, he could have filed civil
suit for recovery of outstanding amount.
9. What could be noticed that police authorities have misused
powers and added section 406 and 420 of IPC for the purpose of
recovery of outstanding amount which alleged to have been due
in commercial transaction. This Court has time and again
deprecated approach of police authorities for filing such kind of
FIR whereby civil dispute has been converted into criminal
proceedings. Even highest police officer of State in the rank of
DGP has issued circular to police personnel for not registering
FIR where civil dispute are given color of criminal proceedings.
But for the reason best known to the police officers concerned
without following those circulars, FIR of such kind are
registered.
10. Hon'ble Apex Court recently examined the issue in the case
of Delhi Race Club (1940) Ltd. (supra). The finding and
observation of Hon'ble Apex Court are in para 24 to 41, which
reads as under :
"24. This Court in its decision in S.W. Palanitkar & Ors. v.
State of Bihar & Anr. reported in (2002) 1 SCC 241
expounded the difference in the ingredients required for
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constituting an of offence of criminal breach of trust
(Section 406 IPC) viz-a-viz the offence of cheating (Section
420). The relevant observations read as under: -
"9. The ingredients in order to constitute a criminal breach
of trust are: (i) entrusting a person with property or with
any dominion over property, (ii) that person entrusted (a)
dishonestly misappropriating or converting that property to
his own use; or (b) dishonestly using or disposing of that
property or wilfully suffering any other person so to do in
violation (i) of any direction of law prescribing the mode in
which such trust is to be discharged, (ii) of any legal
contract made, touching the discharge of such trust.
10. The ingredients of an offence of cheating are: (i) there
should be fraudulent or dishonest inducement of a person
by deceiving him, (ii)(a) the person so deceived should be
induced to deliver any property to any person, or to
consent that any person shall retain any property; or (b)
the person so deceived should be intentionally induced to
do or omit to do anything which he would not do or omit if
he were not so deceived; and (iii) in cases covered by (ii)(b),
the act of omission should be one which causes or is likely
to cause damage or harm to the person induced in body,
mind, reputation or property."
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).
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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))
26. Further, in both the aforesaid sections, mens rea i.e.
intention to defraud or the dishonest intention must be
present, and in the case of cheating it must be there from
the very beginning or inception.
27. In our view, the plain reading of the complaint fails to
spell out any of the aforesaid ingredients noted above. We
may only say, with a view to clear a serious misconception
of law in the mind of the police as well as the courts below,
that if it is a case of the complainant that offence of
criminal breach of trust as defined under Section 405 of
IPC, punishable under Section 406 of IPC, is committed by
the accused, then in the same breath it cannot be said that
the accused has also committed the offence of cheating as
defined and explained in Section 415 of the IPC,
punishable under Section 420 of the IPC.
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
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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."
29. To put it in other words, the case of cheating and
dishonest intention starts with the very inception of the
transaction. But in the case of criminal breach of trust, a
person who comes into possession of the movable property
and receives it legally, but illegally retains it or converts it
to his own use against the terms of the contract, then the
question is, in a case like this, whether the retention is
with dishonest intention or not, whether the retention
involves criminal breach of trust or only a civil liability
would depend upon the facts of each case.
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
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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.
33. It has been held in State of Gujarat v. Jaswantlal
Nathalal reported in (1968) 2 SCR 408, "The term
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"entrusted" found in Section 405 IPC governs not only the
words "with the property" immediately following it but also
the words "or with any dominion over the property"
occurring thereafter--see Velji Raghvaji Patel v. State of
Maharashtra [(1965) 2 SCR 429]. Before there can be any
entrustment there must be a trust meaning thereby an
obligation annexed to the ownership of property and a
confidence reposed in and accepted by the owner or
declared and accepted by him for the benefit of another or
of another and the owner. But that does not mean that
such an entrustment need conform to all the technicalities
of the law of trust -- see Jaswantrai Manilal Akhaney v.
State of Bombay [1956 SCR 483]. The expression
"entrustment" carries with it the implication that the
person handing over any property or on whose behalf that
property is handed over to another, continues to be its
owner. Further the person handing over the property must
have confidence in the person taking the property so as to
create a fiduciary relationship between them. A mere
transaction of sale cannot amount to an "entrustment"".
34. Similarly, in Central Bureau of Investigation, SPE,
SIU(X), New Delhi v. Duncans Agro Industries Ltd.,
Calcutta reported in (1996) 5 SCC 591 this Court held that
the expression "entrusted with property" used in Section
405 of the IPC connotes that the property in respect of
which criminal breach of trust can be committed must
necessarily be the property of some person other than the
accused or that the beneficial interest in or ownership
thereof must be in the other person and the offender must
hold such property in trust for such other person or for his
benefit. The relevant observations read as under: -
"27. In the instant case, a serious dispute has been raised
by the learned counsel appearing for the respective parties
as to whether on the face of the allegations, an offence of
criminal breach of trust is constituted or not. In our view,
the expression "entrusted with property" or "with any
dominion over property" has been used in a wide sense
in Section 405 IPC. Such expression includes all cases in
which goods are entrusted, that is, voluntarily handed over
for a specific purpose and dishonestly disposed of in
violation of law or in violation of contract. The expression
'entrusted' appearing in Section 405 IPC is not necessarily
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a term of law. It has wide and different implications in
different contexts. It is, however, necessary that the
ownership or beneficial interest in the ownership of the
property entrusted in respect of which offence is alleged to
have been committed must be in some person other than
the accused and the latter must hold it on account of some
person or in some way for his benefit. The expression
'trust' in Section 405 IPC is a comprehensive expression
and has been used to denote various kinds of relationships
like the relationship of trustee and beneficiary, bailor and
bailee, master and servant, pledger and pledgee. When
some goods are hypothecated by a person to another
person, the ownership of the goods still remains with the
person who has hypothecated such goods. The property in
respect of which criminal breach of trust can be committed
must necessarily be the property of some person other
than the accused or the beneficial interest in or ownership
of it must be in the other person and the offender must
hold such property in trust for such other person or for his
benefit. In a case of pledge, the pledged article belongs to
some other person but the same is kept in trust by the
pledgee. [...]" (Emphasis supplied)
35. The aforesaid exposition of law makes it clear that
there should be some entrustment of property to the
accused wherein the ownership is not transferred to the
accused. In case of sale of movable property, although the
payment may be deferred yet the property in the goods
passes on delivery as per Sections 20 and 24 respectively
of the Sale of Goods Act, 1930.
"20. Specific goods in a deliverable state. -- Where there is
an unconditional contract for the sale of specific goods in a
deliverable state, the property in the goods passes to the
buyer when the contract is made and it is immaterial
whether the time of payment of the price or the time of
delivery of goods, or both, is postponed.
xxx xxx xxx
24. Goods sent on approval or "on sale or return". -- When
goods are delivered to the buyer on approval or "on sale or
return" or other similar terms, the property therein passes
to the buyer--(a) when he signifies his approval or
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acceptance to the seller or does any other act adopting the
transaction;
(b) if he does not signify his approval or acceptance to the
seller but retains the goods without giving notice of
rejection, then, if a time has been fixed for the return of the
goods on the expiration of such time, and, if no time has
been fixed, on the expiration of a reasonable time."
36. From the aforesaid, there is no manner of any doubt
whatsoever that in case of sale of goods, the property
passes to the purchaser from the seller when the goods are
delivered. Once the property in the goods passes to the
purchaser, it cannot be said that the purchaser was
entrusted with the property of the seller. Without
entrustment of property, there cannot be any criminal
breach of trust. Thus, prosecution of cases on charge of
criminal breach of trust, for failure to pay the
consideration amount in case of sale of goods is flawed to
the core. There can be civil remedy for the non-payment of
the consideration amount, but no criminal case will be
maintainable for it. [See : Lalit Chaturvedi and Others v.
State of Uttar Pradesh and Another : 2024 SCC OnLine SC
171 & Mideast Integrated Steels Ltd. (MESCO Steel Ltd.)
and Others v. State of Jharkhand and Another :2023 SCC
OnLine Jhar 301]
37. The case at hand falls in category No. 1 as laid in Smt.
Nagawwa (supra) referred to in para 7 of this judgment.
38. If it is the case of the complainant that a particular
amount is due and payable to him then he should have
filed a civil suit for recovery of the amount against
the appellants herein. But he could not have gone to the
court of Additional Chief Judicial Magistrate by filing a
complaint of cheating and criminal breach of trust.
39. It appears that till this date, the complainant has not
filed any civil suit for recovery of the amount which
according to him is due and payable to him by the
appellants. He seems to have prima facie lost the period of
limitation for filing such a civil suit.
40. In such circumstances referred to above, the
continuation of the criminal proceeding would be nothing
but abuse of the process of law.
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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."
11. Applying aforesaid ratio, in the present case, FIR appears
to be complete misuse of power.
12. This Court may gainfully refer to the following observations
of this Court in the case of State of Haryana v. Bhajan Lal [1992
Suppl (1) SCC 335], and the law laid down therein has been
consistently followed. In para 102, the Hon'ble Apex Court held
as under :-
"102. In the backdrop of the interpretation of the various
relevant provisions of the Code under Chapter XIV and of
the principles of law enunciated by this Court in a series of
decisions relating to the exercise of the extraordinary
power under Article 226 or the inherent powers under
Section 482 of the Code which we have extracted and
reproduced above, we give the following categories of cases
by way of illustration wherein such power could be
exercised either to prevent abuse of the process of any
court or otherwise to secure the ends of justice, though it
may not be possible to lay down any precise, clearly
defined and sufficiently channelised and inflexible
guidelines or rigid formulae and to give an exhaustive list
of myriad kinds of cases wherein such power should be
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exercised.
(1) Where the allegations made in the first information
report or the complaint, even if they are taken at their face
value and accepted in their entirety do not prima facie
constitute any offence or make out a case against the
accused.
(2) Where the allegations in the first information report and
other materials, if any, accompanying the FIR do not
disclose a cognizable offence, justifying an investigation by
police officers under Section 156(1) of the Code except
under an order of a Magistrate within the purview of
Section 155(2) of the Code.
(3) Where the uncontroverted allegations made in the FIR
or complaint and the evidence collected in support of the
same do not disclose the commission of any offence and
make out a case against the accused.
(4) Where, the allegations in the FIR do not constitute a
cognizable offence but constitute only a noncognizable
offence, no investigation is permitted by a police officer
without an order of a Magistrate as contemplated under
Section 155(2) of the Code.
(5) Where the allegations made in the FIR or complaint are
so absurd and inherently improbable on the basis of which
no prudent person can ever reach a just conclusion that
there is sufficient ground for proceeding against the
accused.
(6) Where there is an express legal bar engrafted in any of
the provisions of the Code or the concerned Act (under
which a criminal proceeding is instituted) to the institution
and continuance of the proceedings and/or where there is
a specific provision in the Code or the concerned Act,
providing efficacious redress for the grievance of the
aggrieved party.
(7) Where a criminal proceeding is manifestly attended with
mala fide and/or where the proceeding is maliciously
instituted with an ulterior motive for wreaking vengeance
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on the accused and with a view to spite him due to private
and personal grudge."
13. In view of above discussion, the judgment cited by the
respondent No.2 in case of Priti Saraf (supra) rendered no
assistance to the respondent No.2.
14. In wake of above reasons, the petition deserves
consideration and accordingly, it is allowed. The impugned FIR
registered as C.R.No.I - 5 of 2020 registered with Santhal Police
Station and further proceedings arising thereof are hereby
quashed and set aside qua the petitioner herein. Rule is made
absolute. Direct service is permitted.
(J. C. DOSHI,J)
SHEKHAR P. BARVE
