Jharkhand High Court

The Sai Appliances vs The State Of Jharkhand on 14 August, 2023

                                                                        Cr. M.P. No.4285 of 2022




           IN THE HIGH COURT OF JHARKHAND AT RANCHI
                               Cr.M.P. No.4285 of 2022
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1. The Sai Appliances, a Proprietorship Firm

2. Sahil Gupta, S/o- Navneet Gupta, Age-33 years, Proprietor of Sai Appliances

3. Nawnit Gupta, S/o- N.C. Gupta, Age-60 Years, Marketing Director of Sai Appliances, all three R/o Plot No.18, Toy City, MUP- II, Greater Noida, Gautam Budh Nagar, P.O. & P.S.- Noida Sector 24, Uttar Pradesh ... Petitioners Versus

1. The State of Jharkhand

2. Pramod Kumar Singh, S/o Late Ram Chandra Sharma, R/o 5, New Area, Tisri Gali, Sumitra Sadan, P.O. & P.S.- Hazaribagh, District- Hazaribagh ... Opposite Parties

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             For the Petitioners          : Mr. Rohit Sinha, Advocate
                                            Mr. Anadi Barhma, Advocate
                                            Mrs. Neha Priya, Advocate
                                            Mr. M.I. Hassan, Advocate
             For the State                : Mr. Pankaj Kumar, P.P.
             For the O.P. No.2            : Mr. Shailendra Jit, Advocate
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                                       PRESENT
                 HON'BLE MR. JUSTICE ANIL KUMAR CHOUDHARY


By the Court:-    Heard the parties.

2. This Criminal Miscellaneous Petition has been filed invoking the

jurisdiction of this Court under Section 482 of the Code of Criminal Procedure

with a prayer to quash the entire criminal proceeding arising out of Sadar P.S.

Case No.803 of 2017 corresponding to G.R. No.3309 of 2017 registered for the

offences punishable under Sections 406, 420, 467, 468 and 120 (B) of the Indian

Penal Code which is pending before the learned Chief Judicial Magistrate,

Hazaribagh.

Cr. M.P. No.4285 of 2022

3. The allegation against the petitioners is that the opposite party

No.2/complainant/informant entered into an agreement with the petitioners

for becoming the C&F Agent of the petitioner No.1 for the State of Jharkhand.

The opposite party No.2 transferred a total amount of Rs.12,51,000/- to the

petitioner's bank account. After receiving the said amount, the petitioner never

sent any goods nor returned the said amount despite repeated reminders. The

opposite party No.2/complainant/informant filed a complaint which was

referred to police under Section 156 (3) of Cr.P.C. but there is no averment in

the complaint that the petitioners ever approached the police before filing the

complaint.

4. Learned counsel for the petitioners submits that the dispute between the

parties is purely a civil dispute and the arbitration of the dispute was made by

sole arbitrator and the arbitrator has prepared the award on 08.08.2022 by

which the arbitrator has dismissed both the claim and counter-claim and the

said order of arbitrator has not been challenged, hence, it has attained finality.

Learned counsel for the petitioners draws the attention of this Court in the case

of Rashmi Jaiswal @ Rashmi Purayar @ Bulbul & Others vs. The State of

Jharkhand & Another passed in Cr.M.P. No.1047 of 2021 dated 11th of April,

2023 wherein this Court relied upon the para-31 of the judgment of Priyanka

Srivastava & Another vs. State of Uttar Pradesh & Others reported in (2015) 6

SCC 287 and quashed and set aside the entire criminal proceeding in view of

non-compliance of Section 154 (3) of Cr.P.C.

5. Learned counsel for the petitioners next relies upon the judgment of the

Hon'ble Supreme Court of India in the case of Sarabjit Kaur vs. The State of

Punjab & Another reported in (2023) 5 SCC 360 paragraph-13 of which reads

as under:-

Cr. M.P. No.4285 of 2022

"13. A breach of contract does not give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction. Merely on the allegation of failure to keep up promise will not be enough to initiate criminal proceedings. From the facts available on record, it is evident that Respondent 2 had improved his case ever since the first complaint was filed in which there were no allegations against the appellant rather it was only against the property dealers which was in subsequent complaints that the name of the appellant was mentioned. On the first complaint, the only request was for return of the amount paid by Respondent 2. When the offence was made out on the basis of the first complaint, the second complaint was filed with improved version making allegations against the appellant as well which was not there in the earlier complaint. The entire idea seems to be to convert a civil dispute into criminal and put pressure on the appellant for return of the amount allegedly paid. The criminal courts are not meant to be used for settling scores or pressurise parties to settle civil disputes. Wherever ingredients of criminal offences are made out, criminal courts have to take cognizance. The complaint in question on the basis of which FIR was registered was filed nearly three years after the last date fixed for registration of the sale deed. Allowing the proceedings to continue would be an abuse of process of the court." (Emphasis supplied)

and submits that at best the allegations made give rise to a breach of

contract and does not give rise to a cause for criminal prosecution for cheating

and criminal breach of trust. Hence, it is submitted that the entire criminal

proceeding arising out of Sadar P.S. Case No.803 of 2017 corresponding to G.R.

No.3309 of 2017 which is pending before the learned Chief Judicial Magistrate,

Hazaribagh, be quashed and set aside.

6. Learned P.P. appearing for the State and the learned counsel for the

opposite party No.2 vehemently oppose the prayer to quash the entire criminal

proceeding arising out of Sadar P.S. Case No.803 of 2017 corresponding to G.R.

No.3309 of 2017 which is pending before the learned Chief Judicial Magistrate,

Hazaribagh and learned counsel for the opposite party No.2 submits that the

allegations made against the petitioners are sufficient to constitute the offence

punishable in respect of which the F.I.R. has been registered. Hence, it is

submitted that this Cr.M.P., being without any merit, be dismissed but it is

fairly submitted that there is no averment in the complaint regarding non-

compliance of Section 154 (3) of the Cr.P.C.

Cr. M.P. No.4285 of 2022

7. Having heard the rival submissions made at the Bar and after carefully

going through the materials available in the record, it is pertinent to mention

here that it is a settled principle of law as has been held by the Hon'ble

Supreme Court of India in the case of Uma Shankar Gopalika vs. State of

Bihar & Another reported in (2005) 10 SCC 336, paragraph No. 6 of which

reads as under :-

6. Xxxxx It is well settled that every breach of contract would not give rise to an offence of cheating and only in those cases 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 there was any intention on behalf of the accused persons to cheat which is a condition precedent for an offence under Section 420 IPC."

(Emphasis supplied) that every breach of contract would not give rise to an offence of cheating

and only in those cases 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 will not amount to cheating.

8. It is also a settled principle of law that if the property entrusted to an

accused is used by him, mere retention of that property would not amount to

dishonest misappropriation of the property as has been held by the Hon'ble

Supreme Court of India in the case of Satish Chandra Ratanlal Shah vs. State

of Gujarat & Anr. reported in (2019) 9 SCC 148, paragraph Nos. 11 to 13 of

which read as under:-

"11. Having observed the background principles applicable herein, we need to consider the individual charges against the appellant. Turning to Section 405 read with Section 406 IPC, we observe that the dispute arises out of a loan transaction between the parties. It falls from the record that Respondent 2 knew the appellant and the attendant circumstances before lending the loan. Further it is an admitted fact that in order to recover the aforesaid amount, Respondent 2 had instituted a summary civil suit which is still pending adjudication. The law clearly recognises a difference between simple payment/investment of money and entrustment of money or property. A mere breach of a promise, agreement or contract does not, ipso facto, constitute the offence of the criminal breach of trust contained in Section 405 IPC without there being a clear case of entrustment.

Cr. M.P. No.4285 of 2022

12. In this context, we may note that there is nothing either in the complaint or in any material before us, pointing to the fact that any property was entrusted to the appellant at all which he dishonestly converted for his own use so as to satisfy the ingredients of Section 405 punishable under Section 406 IPC. Hence the learned Magistrate committed a serious error in issuing process against the appellant for the said offence. Unfortunately, the High Court also failed to correct this manifest error.

13. Now coming to the charge under Section 415 punishable under Section 420 IPC. In the context of contracts, the distinction between mere breach of contract and cheating would depend upon the fraudulent inducement and mens rea. (See Hridaya Ranjan Prasad Verma v. State of Bihar [Hridaya Ranjan Prasad Verma v. State of Bihar, (2000) 4 SCC 168 : 2000 SCC (Cri) 786] .) In the case before us, admittedly the appellant was trapped in economic crisis and therefore, he had approached Respondent 2 to ameliorate the situation of crisis. Further, in order to recover the aforesaid amount, Respondent 2 had instituted a summary civil suit seeking recovery of the loan amount which is still pending adjudication. The mere inability of the appellant to return the loan amount cannot give rise to a criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, as it is this mens rea which is the crux of the offence. Even if all the facts in the complaint and material are taken on their face value, no such dishonest representation or inducement could be found or inferred." (Emphasis supplied)

9. It is also a settled principle of law that in order to establish the offence

punishable under Section 406 of Indian Penal Code the following ingredients

are to be established :-

      (i)     Mens rea,

      (ii)    There must be dishonest misappropriation or conversion to one's own

use, or use in violation of a legal direction or of any legal contract and

(iii) The accused dishonestly used or disposed of the property.

10. Now, coming to the facts of the case, there is absolutely no allegation of

any dishonest misappropriation of the entrusted property by the petitioner.

The only allegation against the petitioners is that the petitioners have received

the money but did not supply the articles nor have refunded the money. The

undisputed fact remains that there was claim and counter-claim before the

arbitrator, both have been dismissed by the sole arbitrator and the order of the

arbitrator has not been challenged in any forum. Hence, this Court has no

Cr. M.P. No.4285 of 2022

hesitation in holding that the offence punishable under Section 406 of the

Indian Penal Code is not made out.

11. So far as the offence punishable under Section 420 of the Indian Penal

Code is concerned, the essential ingredients of the said offence is :-

(i) Deception of a person either by making a false or misleading

representation or by dishonest concealment or by any other act

or omission,

(ii) Fraudulent or dishonest inducement of that person to either

deliver any property or to consent to the retention thereof by

any person or to intentionally induce that person so deceived

to do or omit to do anything which he would not do or omit if

he were not so deceived; and

(iii) Such act or omission causing or is likely to cause damage or

harm to that person in body, mind, reputation or property.

as has been held by the Hon'ble Supreme Court of India in the case of

Mohammed Ibrahim & Ors. vs. State of Bihar & Anr., reported in (2009) 8

SCC 751.

12. Now, coming to the facts of the case, there is no allegation against the

petitioners of any deception of the informant/opposite party No.2 by the

petitioners since the very inception. So, in the absence of any specific allegation

against the petitioners of having any dishonest intention at the very inception

and also in the absence of other ingredients of Section 420 of the Indian Penal

Code, as mentioned in this judgment, this Court has no hesitation in holding

that the offence punishable under Section 420 of the Indian Penal Code is not

made out.

Cr. M.P. No.4285 of 2022

13. So far as the essential ingredients of the offence punishable under Section

120B of the Indian Penal Code is concerned, the essential ingredients of the said

offence are as follows:-

(i) An agreement between two or more persons to commit an

offence

(ii) In doing so, either commit or caused to be done an illegal act or

act which is not in itself illegal, by illegal means

as has been held by the Hon'ble Supreme Court of India in the case of

State vs. Nalini reported in (1999) 5 SCC 253 which has been reiterated in the

case of Sudhir Shantilal Mehta vs. CBI reported in (2009) 8 SCC 1 as also in

the case of Major E.G. Barsay vs. State of Bombay reported in AIR 1961 SC

1762 as well as Ram Narayan Popli vs. CBI reported in (2003) 3 SCC 641.

Further, the other essential ingredients of the offence punishable under

Section 120B of the Indian Penal Code are that;

(i) such an act done or caused to be done; was an offence

punishable under the Indian Penal Code and

(ii) If the act so done was not an offence then an overt act had been

done by one or more parties to such agreement in pursuance

thereof.

14. Now coming to the facts of the case, there is absolutely no allegation

against the petitioners of having committed any of the acts, deeds and things to

constitute the offence punishable under Section 120B of the Indian Penal Code.

Under such circumstances, this Court has no hesitation in holding that offence

punishable under Section 120B of Indian Penal Code is also not made out in the

facts of the case.

Cr. M.P. No.4285 of 2022

15. So far as the offence punishable under Section 467 of the Indian Penal

Code is concerned, the essential ingredients to constitute the said offence is that

             (i)     The accused committed a forgery;

             (ii)    He did so by preparation of forged document which purports

to be a valuable security or the documents mentioned in

Section 467 of the Indian Penal Code.

16. Now coming to the facts of the case, there is no allegation against the

petitioners of forging any document which purports to be a valuable security or

any other document, referred to in section 467 of the Indian Penal Code. Hence,

in the considered opinion of this Court, no offence punishable under Section

467 of the Indian Penal Code is made out.

17. So far as the offence punishable under Section 468 of the Indian Penal

Code is concerned, the essential ingredients are that:-

(i) There should be a forgery in respect of the document or

electronic record in question;

(ii) The intention of the forgery should be that the forged

document or electronic record is to be used for the purpose of

cheating;

(iii) There should be forgery with particular intent, as has been held

by the Hon'ble Supreme Court of India in the case of Ram

Narayan Popli vs. CBI (supra)

18. Now coming to the facts of the case, there is no allegation against the

petitioners of committing forgery so obviously there is no allegation of

committing any forgery for the purpose of cheating. Hence, in the considered

opinion of this Court, the offence punishable under Section 468 of the Indian

Penal Code is not made out against the petitioners.

Cr. M.P. No.4285 of 2022

19. Perusal of the record reveals that there is no compliance of Section 154 (3)

of the Cr.P.C. There is no averment in the complaint that the petitioners ever

approached any police before filing the complaint.

20. Considering the aforesaid facts, this Court has no hesitation in holding

that the continuation of this criminal proceeding will amount to abuse of

process of the law and this is a fit case where in the interest of justice the, entire