Sulochana Devi vs The State Of Jharkhand
2022 Latest Caselaw 2881 Jhar

       IN     THE HIGH COURT OF JHARKHAND AT RANCHI
                               Cr.M.P. No. 1881 of 2019
       Sulochana Devi
       @ Sulochana
       @ Sulochana Gupta                               .....   ...     Petitioner
                                    Versus
      1. The State of Jharkhand.
      2. Surendra Singh                                 ..... ...     Opposite Parties
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CORAM : HON'BLE MR. JUSTICE SANJAY KUMAR DWIVEDI

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For the Petitioner : Mr. Indrajit Sinha, Advocate.

                                :        Mr. Ankit Apurva, Advocate.
      For the State             :        Mr. Azeemuddin, A.P.P.
      For the O.P. No. 2        :        Mr. J.N. Upadhyay, Advocate.
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06/ 27.07.2022 Heard Mr. Indrajit Sinha, learned counsel appearing for the petitioner, Mr. Azeemuddin, learned A.P.P. for the State and Mr. J.N. Upadhyay, learned counsel for the O.P. No. 2.

2. This petition has been filed for quashing of the order dated 09.10.2018, passed by the learned Chief Judicial Magistrate, Jamshedpur, whereby summoning order under Section 420 of the Indian Penal Code has been issued against the petitioner, pending in the court of learned Chief Judicial Magistrate, Jamshedpur.

3. The complaint case was filed by the O.P. No. 2 against the petitioner stating inter alia that the complainant is running business of Developer in the town of Jamshedpur and accused herself disclosed as owner of the landed property being southern portion holding No. Nil 46 known as Bhagwandas Building along with five numbers of shop room constructed in the southern portion of the said land measuring an area of 6000 sq. feet by virtue of mutual agreement dated 15.07.2013 agreed and inducted to get her above property developed on certain specific terms and conditions incorporated therein, accordingly, the complainant was turned his turn made advance payment of Rs. 15,00,000/- in cash and Rs. 10,00,000/- through cheque. As per specific terms and conditions of the charge agreement the accused get her own name mutated in respect of the aforesaid landed property in the office of the landlord M/s Tata Steel Limited and thereafter handed over the actual physical possession of the landed property to the complainant to enable them to commence their job of development and the job was to be completed within fifteen months.

It is alleged that in spite of expiry of considerable period, the accused failed to fulfill her obligation by handing over the landed

property after due mutation. It is also alleged that job of construction and development over the landed premises has been taken up by some other person without mutation of the property in the name of the accused. The complainant asked her to refund her aforesaid advance amount as the accused had violated the specific terms and conditions of the agreement entered with the complainant, but the complainant failed to return the said amount. The complainant sent a legal notice to the accused by registered post on 03.04.2018 for the refund of the aforesaid amount immediately but the accused persons refused to accept the said legal notice, accordingly, present complaint case was filed which was registered as complaint case No. 1166 of 2018 against the accused persons.

4. Mr. Indrajit Sinha, learned counsel appearing for the petitioner submits that the petitioner is the landlord and the O.P. No. 2 is the developer / builder and pursuant to an agreement for development, the property in question was demolished and in terms of the said agreement, Rs. 15 lakhs was paid to the petitioner. He submits that agreement in question was entered into between the parties in the year 2013, whereas the complaint case has been lodged on 23.04.2018, i.e. after lapse of more than 4 years. He refers for ingredients of Section 420 IPC to Section 415 IPC and submits that from the very beginning, there was no intention to cheat the O.P. No. 2 and that's why cognizance order is bad in law. He further submits that arbitration clause is also there in the said agreement, which speaks that in case of any dispute arising out of the agreement; the same shall be decided and guided by the Arbitration and Conciliation Act 1996. So far the point of ingredients of Section 420 IPC is concerned, he relied in the case of Vijay Kumar Ghai & Ors. Versus The State of West Bengal & Ors., reported in [2022(2) Est. Cr. C 322 (SC)], wherein the Hon'ble Supreme Court in paras-27, 28, 29, 30, 31, 32, 33 and 34 held as under:-

"26. In Sudhir Shantilal Mehta Vs. CBI (2009) 8 SCC 1 it was observed that the act of criminal breach of trust would, Interalia mean using or disposing of the property by a person who is entrusted with or has otherwise dominion thereover. Such an act must not only be done dishonestly but also in violation of any direction of law or any contract express or implied relating to carrying out the trust.

27. Section 415 of IPC define cheating which reads as under: -

"415. Cheating. --Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to "cheat"." The essential ingredients of the offense of cheating are:

1. Deception of any person

2. (a) Fraudulently or dishonestly inducing that person-

(i) to deliver any property to any person ; or

(ii) to consent that any person shall retain any property ; or

(b) intentionally inducing that person to do or omit to do anything which he would not do or omit if he were no so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property.

28. A fraudulent or dishonest inducement is an essential ingredient of the offence. A person who dishonestly induces another person to deliver any property is liable for the offence of cheating.

29. Section 420 IPC defines cheating and dishonestly inducing delivery of property which reads as under: -

"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."

30. Section 420 IPC is a serious form of cheating that includes inducement (to lead or move someone to happen) in terms of delivery of property as well as valuable securities. This section is also applicable to matters where the destruction of the property is caused by the way of cheating or inducement. Punishment for

cheating is provided under this section which may extend to 7 years and also makes the person liable to fine.

31. To establish the offence of Cheating in inducing the delivery of property, the following ingredients need to be proved:-

1. The representation made by the person was false

2. The accused had prior knowledge that the representation he made was false.

3. The accused made false representation with dishonest intention in order to deceive the person to whom it was made.

4. The act where the accused induced the person to deliver the property or to perform or to abstain from any act which the person would have not done or had otherwise committed.

32. As observed and held by this Court in the case of Prof. R.K. Vijayasarathy & Anr. Vs. Sudha Seetharam & Anr. (2019) 16 SCC 739, the ingredients to constitute an offence under Section 420 are as follows:-

i) a person must commit the offence of cheating under Section 415;

and

ii) the person cheated must be dishonestly induced to;

a) deliver property to any person; or

b) make, alter or destroy valuable security or anything signed or sealed and capable of being converted into valuable security. Thus, cheating is an essential ingredient for an act to constitute an offence under Section 420 IPC.

33. The following observation made by this Court in the case of Uma Shankar Gopalika Vs. State of Bihar & Anr. (2005) 10 SCC 336 with almost similar facts and circumstances may be relevant to note at this stage:-

"6. Now the question to be examined by us is as to whether on the facts disclosed in the petition of the complaint any criminal offence whatsoever is made out much less offences under Section 420/120-B IPC. The only allegation in the complaint petitioner against the accused person is that they assured the complainant that when they receive the insurance claim amounting to Rs. 4,20,000, they would pay a sum of Rs. 2,60,000 to the complainant out of that but the same has never been paid. It was pointed out that on behalf of the complainant that the accused fraudulently persuaded the complainant to agree so that the accused persons may take steps for moving the consumer forum in relation to the claim of Rs. 4,20,0000. It is well settled that every breach of

contract would not give rise to an offence of cheating and only in those cases of breach of contract would amount to cheating where there was any deception played at the very inception. If the intention to cheat has developed later on, the same cannot amount to cheating. In the present case, it has nowhere been stated that at the very inception that there was intention on behalf of the accused person to cheat which is a condition precedent for an offence under 420 IPC.

"7. In our view petition of complaint does not disclose any criminal offence at all much less any offence either under Section 420 or Section 120-B IPC and the present case is a case of purely civil dispute between the parties for which remedy lies before a civil court by filing a properly constituted suit. In our opinion, in view of these facts allowing the police investigation to continue would amount to an abuse of the process of court and to prevent the same it was just and expedient for the High Court to quash the same by exercising the powers under Section 482 Cr.P.C which it has erroneously refused."

34. There can be no doubt that a mere breach of contract is not in itself a criminal offence and gives rise to the civil liability of damages. However, as held by this court in Hridaya Ranjan Prasad Verma & Ors. Vs. State of Bihar & Anr.(2000) 4 SCC 168, the distinction between mere breach of contract and cheating, which is criminal offence, is a fine one. While breach of contract cannot give rise to criminal prosecution for cheating, fraudulent or dishonest intention is the basis of the offence of cheating. In the case at hand, complaint filed by the Respondent No. 2 does not disclose dishonest or fraudulent intention of the appellants.

5. Relying on this judgment of Hon'ble Supreme Court, learned counsel appearing for the petitioner submits that from the very beginning, intention was not there to cheat O.P. No. 2, as such, Section 420 IPC is not attracted in this case.

6. On the other hand, Mr. J.N. Upadhyay, learned counsel appearing for the O.P. No. 2 by way of referring the agreement, particularly Clause-2 thereof, submits that only after mutation of the land in question, the petitioner shall hand over the said land to the O.P. No. 2 to develop the land in question. He submits that mutation was not there, that's why O.P. No. 2 is not in a position to develop / construct the building over the land in question.

7. On perusal of the complaint, it transpires that the entire allegation is arising out of a development agreement and admittedly the petitioner is the land owner and the O.P. No. 2 is the developer / builder. In the development agreement, there is an arbitration clause, which is at clause-19 thereof, which shows that any dispute arising out of the agreement, shall be decided and guided by the Arbitration and Conciliation Act 1996 and the case in hand, the criminal case has been put in motion, in spite of said clause-19 of the said agreement.

8. Looking into the summoning order dated 09.08.2018, it transpires that how the ingredients of Section 420 IPC in the light of above facts are attracted, are not disclosed. In passing the cognizance order, there is no need to pass a detail order, however what are the prima facie materials are there must be reflected in the order, which is lacking in the case in hand.

9. As such, the order dated 09.10.2018, passed by the learned Chief Judicial Magistrate, Jamshedpur, whereby summoning order under Section 420 of the Indian Penal Code has been issued against the petitioner, pending in the court of learned Chief Judicial Magistrate, Jamshedpur, is hereby, set aside. The matter is remanded back to the concerned court to pass a order afresh in accordance with law.

10. Accordingly, this petition is disposed of.

(Sanjay Kumar Dwivedi, J.) Amitesh/-