Jharkhand High Court

Ashit Kumar Gupta @ Aashit Kumar Gupta vs The State Of Jharkhand on 11 June, 2025

Author: Anil Kumar Choudhary

Bench: Anil Kumar Choudhary

                                                                           (2025:JHHC:15103)




           IN THE HIGH COURT OF JHARKHAND AT RANCHI
                            Cr.M.P. No.2939 of 2023
                                       ------

Ashit Kumar Gupta @ Aashit Kumar Gupta, aged about 43 years, son of Late Rajkumar Gupta, resident of Bhatti Mohalla, PO & PS -

            Medininagar, District - Palamau (Jharkhand)
                                                           ...           Petitioner
                                            Versus
            1. The State of Jharkhand

2. Laxmi Narayan Tiwary, S/o Late Mangal Prasad Tiwari, Permanent resident of Village- Mahugand, P.O. + P.S. - Chainpur, Dist- Palamu (Jharkhand), currently residing at Hamidganj, Ward No.12, P.O. + P.S.- Hamidganj, District- Daltonganj at Palamu (Jharkhand) ... Opposite Parties

------

For the Petitioner : Mr. Amit Kumar Das, Advocate For the State : Mr. Prabhu Dayal Agrawal, Spl.P.P. For the O.P. No.2 : Mr. B.M. Tripathy, Sr. Advocate Mr. Sheo Kr. Singh, Advocate

------

                                        PRESENT
                 HON'BLE MR. JUSTICE ANIL KUMAR CHOUDHARY


By the Court:-    Heard the parties.

2. Learned counsel for the opposite party No.2 files a counter affidavit. Let

the same be kept in the record.

3. 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 proceedings against the petitioner in

connection with Daltonganj Town P.S. Case No.76 of 2022 corresponding to

G.R. Case No.717 of 2023 including the order taking cognizance dated

15.05.2023 by which the learned Magistrate has taken cognizance of the

(2025:JHHC:15103)

offences punishable under Sections 406 and 420 of the Indian Penal Code

against the petitioner.

4. The brief fact of the case is that the petitioner took a loan of

Rs.20,00,000/- from the father of the informant with the promise to pay back

the same within six months and subsequently also took a further loan of

Rs.10,00,000/- and issued cheques which were dishonoured. The informant has

not filed any complaint alleging commission of the offence punishable under

Section 138 of the N.I. Act. The petitioner admittedly paid only Rs.5,00,000/-

out of the said loan taken.

5. Learned counsel for the petitioner relies upon the judgment of the

Hon'ble Supreme Court of the India in the case of Satishchandra Ratanlal

Shah vs. State of Gujarat & Another reported in (2019) 9 SCC 148 paragraphs-

11 and 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.

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

(2025:JHHC:15103)

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)

and submits that since the money was taken by the petitioner as loan and

not for safe-keeping so, it cannot be said that the petitioner was entrusted with

any money and in the absence of any entrustment, the offence punishable

under Section 406 of the Indian Penal Code is not made out against the

petitioner.

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

Code is concerned, it is submitted by the learned counsel for the petitioner that

it is a settled principle of law that the mere inability of a loanee to return the

loan amount cannot give rise to a criminal prosecution of cheating unless

fraudulent or dishonest intention is shown right at the beginning of the

transaction.

7. It is next submitted that there is no allegation against the petitioner that

the petitioner was having any dishonest intention since the beginning of the

transaction between the parties, hence, it is submitted that the offence

punishable under Section 420 of the Indian Penal Code is not made out against

the petitioner. It is next submitted that it is a settled principle of law that if the

offence for which an accused person is facing a trial is not made out even if the

entire allegations made against the accused person are considered to be true in

their entirety; even if some witnesses have been examined during the trial, still

the entire criminal proceeding can be quashed.

(2025:JHHC:15103)

8. Learned counsel for the petitioner next relies upon the judgment of this

Court in the case of Kedar Sao vs. State of Jharkhand & Another reported in

2023 SCC OnLine Jhar 1921 wherein this Court relied upon the judgment of

the Hon'ble Supreme Court of India in the case of Uma Shankar Gopalika vs.

State of Bihar reported in (2005) 10 SCC 336 paragraph-6 of which reads as

under:-

"6. Xxxx xxxx xxxx 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)

and submits that therein also the Hon'ble Supreme Court of India has

categorically reiterated the settled principle of law 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. Hence, it is submitted that the prayer, as prayed for in the

instant Cr.M.P., be allowed.

9. Learned Spl.P.P. appearing for the State and the learned senior counsel

appearing for the opposite party No.2 vehemently oppose the prayer of the

petitioner made in the instant Cr.M.P. and submit that this is a clear case of

cheating on the part of the petitioner. It is next submitted that as the trial has

been proceeded substantially and all the four witnesses whose names were

appearing in the witness column of the charge-sheet has been examined, hence,

at this stage the entire criminal proceedings ought not be quashed. Hence, it is

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

(2025:JHHC:15103)

10. 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 which has already been mentioned

above that money taken by a person as a loan cannot be termed as entrustment

as such money is not taken by any person for safe keeping. Under such

circumstances, this Court has no hesitation in holding that in the absence of any

material to show entrustment of property to the petitioner, the offence

punishable under Section 406 of the Indian Penal Code is not made out against

the petitioner even if the entire allegations made against the petitioner are

considered to be true in their entirety.

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

Code is concerned, it is a settled principle of law that in order to constitute the

offence of cheating, the accused must play deception since the beginning of the

transaction between the parties. Now, coming to the facts of the case, there is

absolutely no allegation against the petitioner of having played any deception

since the beginning of the transaction between the parties and in fact, the

petitioner has made part payment of the loan amount taken by him and also

issued cheques for repayment of the loan amount taken by him; of course the

same has been dishonoured.

12. It is needless to mention that it is a settled principle of law, that even if

some of the witnesses have been examined during the trial of the case,

certainly, the same is not a ground for refusing quashing of a criminal

proceeding, in the case, where, even if, the allegations made against the

accused persons of the case are considered to be true; still no offence is made

out against them.

(2025:JHHC:15103)

13. Under such circumstances, this Court is of the considered view that since

neither the offence punishable under Section 420 nor the offence punishable

under Section 406 of the Indian Penal Code is made out against the petitioner

even if the entire allegations made against the petitioner are considered to be

true against him. Therefore, it is a fit case where the entire criminal proceedings

against the petitioner in connection with Daltonganj Town P.S. Case No.76 of

2022 corresponding to G.R. Case No.717 of 2023 including the order taking

cognizance dated 15.05.2023 passed by the learned C.J.M., Palamau at

Daltonganj, be quashed and set aside.

14. Accordingly, the entire criminal proceedings against the petitioner in

connection with Daltonganj Town P.S. Case No.76 of 2022 corresponding to

G.R. Case No.717 of 2023 including the order taking cognizance dated

15.05.2023 passed by the learned C.J.M., Palamau at Daltonganj, is quashed and

set aside.