[Cites 18, Cited by 0]
Gujarat High Court
Shrenik Kumar Omprakash Balar vs State Of Gujarat on 10 March, 2026
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R/CR.MA/8777/2017 ORDER DATED: 10/03/2026
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION (FOR QUASHING & SET ASIDE
FIR/ORDER) NO. 8777 of 2017
With
CRIMINAL MISC.APPLICATION (FOR INTERIM RELIEF) NO. 1 of 2025
In R/CRIMINAL MISC.APPLICATION NO. 8777 of 2017
With
CRIMINAL MISC.APPLICATION (DIRECTION) NO. 1 of 2026
In R/CRIMINAL MISC.APPLICATION NO. 8777 of 2017
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SHRENIK KUMAR OMPRAKASH BALAR & ANR.
Versus
STATE OF GUJARAT & ANR.
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Appearance:
MR C B UPADHYAYA(3508) for the Applicant(s) No. 1,2
MS SM AHUJA(118) for the Respondent(s) No. 2
MS. VRUNDA SHAH, APP for the Respondent(s) No. 1
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CORAM:HONOURABLE MRS. JUSTICE M. K. THAKKER
Date : 10/03/2026
ORAL ORDER
1. This application is filed for quashing and setting aside the FIR
being I- C.R. No. 60 of 2017 registered with the Shahibaugh Police
Station, Ahmedabad under the provision of Sections 406, 420 and
114 of the IPC, against the present applicant No.1 namely, Shrenik
Kumar Omprakash Balar, who is son of the applicant No.2 -
Omprakash Balar and the applicant No.2 namely, Omprakash Balar.
As per the alleged FIR, the complainant is the dealer in the business
of the clothes, since last 8 to 10 years. It is alleged in the complaint
that accused No.1, who is the father of the accused No.2
approached the complainant for the purpose of purchasing clothe
material on credit and has purchased goods worth Rs.30 Lakhs in
the year 2012, out of which, the said amount of Rs.10 Lakhs was
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paid as partial payment of the goods and the remaining amount has
not been paid. Therefore, the impugned FIR was lodged on
08.03.2017 claiming offence made from 07.08.2012 to 19.10.2012.
2. Heard learned advocate Mr. C.B. Upadhyaya for the applicants
and learned advocate Ms. S.M. Ahuja for the respondent No.2.
3. It is submitted by learned advocate Mr. Upadhyaya that the
FIR was lodged in the year 2017, claiming the transactions prior to
four and half years and without explanation of any delay. It is
submitted that in the said FIR allegations were made for cheating
and breach of trust. It is submitted by learned advocate Mr.
Upadhyaya that dispute which is in the civil nature, tried to given
colour of criminal proceedings and as short cut of recovery of the
amount, the impugned FIR came to be lodged. It is submitted that
as per the business terms credit of 990 days was given and during
this period the accused had paid amount, however, there was
discrepancy with regard to the account and the remaining payment
was not made and the same was stated cheating and breach of
trust. With that background, it is submitted the registration of the
FIR is nothing but abuse of process of law and to secure ends of
justice, the same is required to be set aside by allowing the present
application.
4. Per contra, learned advocate Ms. Ahuja for the respondent
No.2 submits that for the recovery of the amount due, the civil suit
is filed against the wife being Summary Suit No. 1050 of 2022,
which was decreed in favour of the complainant vide judgment
dated 21.06.2023. It is submitted the order passed by the learned
Civil Court came to be challenged before this Court and due to
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pendency of the proceedings before this Court, the complainant is
unable to recover the amount. It is submitted by learned advocate
Ms. Ahuja that accused No.2, who is the son of the accused No.1
used to change the address one after another, therefore the suit,
which is filed against the accused no.2 being Summary Suit No.1486
of 2022 was dismissed for want of further proceedings by the
learned Court. It is submitted that the accused No.2 was shown as
absconding in the charge sheet, which is filed before the learned
Magistrate and warrant under Section 70 of the Cr.PC is also
imposed, in that back ground the impugned FIR is required to be
tried by the learned Magistrate and no interference is required by
this Court.
5. Learned APP Ms. Vrunda Shah appearing for the State
supports the submissions made by the learned advocate for the
complainant and submits that the charge-sheet is filed against the
accused No.1, however, the accused No.2 is absconding and
therefore, the application deserves to be dismissed.
6. Considering the submissions made by learned advocates for
the parties, undisputedly the dispute is with regard to the non
payment of the amount and as per the contents of the FIR, out of
Rs.30,69,871/- only partial payment of Rs.10,00,000/- is made and
remaining amount is yet to be recovered. The respondent -
complainant has already filed Civil Suit and the complainant having
judgment in his favour.
7. At this stage, this Court has considered the ratio laid down by
the Hon'ble Supreme Court, the decision rendered in the case of
Delhi Race Club (1940) Ltd. And Others Vs. State of Uttar
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Pradesh and Another, reported in 2024(10) SCC 690. The
relevant paragraphs read as under:
"35. 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 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. "
36. 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.
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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)
37. 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.
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38. 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.
39. 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
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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."
40. 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.
41. The distinction between mere breach of contract and
the offence of criminal breach of trust and cheating is a
ne 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.
42. 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
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cheating involve dishonest intention, yet they are
mutually exclusive and different in basic concept.
43. 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.
44. 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.
45. 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.
46. 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"
47. 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 benet. 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
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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 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 tuts 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)
48. 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
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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 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."
49. 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 awed 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]
50. The case at hand falls in category No. 1 as laid in
Smt. Nagawwa (supra) referred to in para 7 of this
judgment.
51. If it is the case of the complainant that a particular
amount is due and payable to him then he should have
led 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 ling a
complaint of cheating and criminal breach of trust.. It
appears that till this date, the complainant has not led
any civil suit for recovery of the amount which according
to him is due and payable to him by the appellants. He
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seems to have prima facie lost the period of limitation
for ling such a civil suit.
52. In such circumstances referred to above, the
continuation of the criminal proceeding would be
nothing but abuse of the process of law."
8. Having considered the above ratio and applying in the
background of the facts on hand, in the opinion of this Court, every
failure to keep promise could not attract the provisions of the
Sections 406 and 420 of the IPC. Merely failure to keep the promise,
subsequently, cannot be presumed to be an act leading to cheating
or breach of trust. Unless it reflects the criminal intention at the
time when the contract executed between the parties, cannot say
that the applicant by not making the payment of some amount out
of the total amount is entitled to be prosecuted as held by the Apex
Court in the above case, criminal breach of trust as well as cheating
cannot co-exist simultaneously as well as the facts involved in the
instant case, a civil dispute between the two individual parties tried
to give colour of criminal offence and continuation with the criminal
proceedings would nothing but harassment and abuse of process of
law.
9. In that background, to secure ends of justice, the impugned
FIR and all the consequential proceedings deserves to be quashed
and set aside and the same is hereby quashed and set-aside. The
application is resultantly allowed. In view of the disposal of the main
matter, the connected applications are also disposed of accordingly.
(M. K. THAKKER,J)
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