Madhya Pradesh High Court
Ratan Singh Chouhan vs The State Of Madhya Pradesh on 5 February, 2025
Author: Gurpal Singh Ahluwalia
Bench: G. S. Ahluwalia
NEUTRAL CITATION NO. 2025:MPHC-GWL:2407
1 MCRC-46674-2023
IN THE HIGH COURT OF MADHYA PRADESH
AT GWALIOR
BEFORE
HON'BLE SHRI JUSTICE G. S. AHLUWALIA
ON THE 5 th OF FEBRUARY, 2025
MISC. CRIMINAL CASE No. 46674 of 2023
RATAN SINGH CHOUHAN AND OTHERS
Versus
THE STATE OF MADHYA PRADESH AND OTHERS
Appearance:
Shri Bhupendra Singh Dhakad - Advocate applicants.
Shri Naval Kishor Gupta - Public Prosecutor for respondent No.1/State.
Shri Sanjay Gupta and Shri Rohit Jagwani- Advocates for respondent No.2.
ORDER
This application, under Section 482 of the Code of Criminal Procedure,
1973, has been filed for quashment of FIR in Crime No.115/2023 registered at
Police Station Madhoganj, District Gwalior (M.P.) for the offences punishable
under Sections 406, 420, 34 of IPC.
2. The facts necessary for disposal of the present petition are that respondent
No.2 lodged an FIR on the allegations that on 10.02.2022 he was informed by his
well-wisher that Ratan Singh Chouhan and Ashutosh Singh Chouhan/applicants
have got a liquor licence and they are in need of money to store liquor.
Accordingly, Aakash Singh Rajawat arranged a meeting of respondent No.2 with
applicants. Gajendra Sen was also accompanying respondent No.2 at the time of
meeting. Applicants informed that they are in need of approximately 30 to 40 lacs
and they have got liquor licence for Jaurasi and Bilaua and they are required to
store liquor. The contract is for a period of one year. Accordingly, Rammurari
Singh Tomar gave an amount of Rs.1,50,000/- in cash and after three days
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complainant gave Rs.4 lacs in cash to applicants. Thereafter, a total amount of
Rs.20,41,000/- was given to applicants through bank on multiple occasions.
Similarly, Rammurari Singh Tomar gave Rs.9,40,000/- through bank to applicants
on multiple occasions but applicants did not induct respondent No.2 as a partner.
Whenever the amount was demanded back, they avoided to pay the same and
accordingly it was alleged that applicants by playing fraud on respondent No.2
have taken an amount of Rs.35,31,000/- and accordingly it was prayed that
applicants be directed to return the aforesaid amount and legal action be taken
against them.
3. Challenging the FIR, it is submitted by counsel for applicants that
present case is predominantly of civil in nature. Even if the allegations are
accepted, then it is clear that a loan transaction has taken place between the
parties. If applicants have failed to return the amount, then respondent No.2 has to
file a suit for recovery of the same. Even otherwise, in the FIR as well as in the
statements recorded under Section 161 of Cr.P.C., it has been alleged by
respondent No.2 and Rammurari Singh Tomar that applicants may be directed to
return the amount. Thus, it is clear that the sole intention behind lodging FIR is to
somehow recover the amount as alleged in the FIR. To buttress his contentions,
counsel for applicants has placed reliance on the judgment passed by Supreme
Court in the case of Sachin Garg Vs. State of U.P. and others reported in 2024 (1)
SCR 1134 .
4. Per contra , application is vehemently opposed by counsel for respondent
No.2. It is submitted that applicants had persuaded and promised respondent No.2
to make him a partner in the contract. They knew that a contract has been awarded
to an individual and therefore no-one can be made a partner and in spite of that
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false representation was given by applicants to respondent No.2, which clearly
shows that intention of applicants right from the very inception was to cheat
respondent No.2, Thus, it is submitted that where allegations made in the FIR
contain ingredients of civil as well as criminal case, then criminal proceedings can
also go on and cannot be dismissed merely on the ground that the case is of civil
in nature.
5. Heard learned counsel for the parties.
6. The FIR has been reproduced in the previous paragraphs. The statements
of witnesses are in line with the FIR. Neither in the FIR nor in the statements
recorded under Section 161 Cr.P.C. it is alleged by respondent No.2 or his
witnesses that before lending money to applicants a promise was made by them to
induct respondent No.2 as a partner. Therefore, the contention of counsel for
respondent No.2 that money was taken by applicants on the pretext that they
would induct respondent No.2 as a partner is nothing but an afterthought.
Although in the latter part of FIR as well as in the latter part of statements it has
been alleged by witnesses that respondent No.2 was not inducted as partner but
once there is nothing on record to show that money was given only on the
assurance by applicants that respondent No.2 would be inducted as partner, then
even if applicants have failed to induct respondent No.2 as partner, it would not
make any difference. Furthermore, it is clear in the FIR that money was given on
the ground that applicants are in need of money to store liquor. The Supreme
Court in the case of Naresh Kumar & Another Vs. State of Karnataka and another
decided on 12.03.2024 passed in SLP (Crl.) No.1570/2021 has held as under:
"6. In the case of Paramjeet Batra v. State of Uttarakhand
(2013) 11 SCC 673 , this Court recognized that although the
inherent powers of a High Court under Section 482 of the
Code of Criminal Procedure should be exercised sparingly,
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yet the High Court must not hesitate in quashing such
criminal proceedings which are essentially of a civil nature.
This is what was held:
"12. While exercising its jurisdiction under Section
482 of the Code the High Court has to be cautious. This
power is to be used sparingly and only for the purpose
of preventing abuse of the process of any court or
otherwise to secure ends of justice. Whether a
complaint discloses a criminal offence or not depends
upon the nature of facts alleged therein. Whether
essential ingredients of criminal offence are present or
not has to be judged by the High Court. A complaint
disclosing civil transactions may also have a criminal
texture. But the High Court must see whether a dispute
which is essentially of a civil nature is given a cloak of
criminal offence. In such a situation, if a civil remedy
is available and is, in fact, adopted as has happened in
this case, the High Court should not hesitate to quash
the criminal proceedings to prevent abuse of process of
the court."
(emphasis supplied)
Relying upon the decision in Paramjeet Batra (supra), this
Court in Randheer Singh v. State of U.P. (2021) 14 SCC
626, observed that criminal proceedings cannot be taken
recourse to as a weapon of harassment. In Usha Chakraborty
& Anr. v. State of West Bengal & Anr. 2023 SCC OnLine
SC 90 , relying upon Paramjeet Batra (supra) it was again
held that where a dispute which is essentially of a civil
nature, is given a cloak of a criminal offence, then such
disputes can be quashed, by exercising the inherent powers
under Section 482 of the Code of Criminal Procedure.
7. Essentially, the present dispute between the parties relates
to a breach of contract. A mere breach of contract, by one of
the parties, would not attract prosecution for criminal
offence in every case, as held by this Court in Sarabjit Kaur
v. State of Punjab and Anr. (2023) 5 SCC 360 . Similarly,
dealing with the distinction between the offence of cheating
and a mere breach of contractual obligations, this Court, in
Vesa Holdings (P) Ltd. v. State of Kerala, (2015) 8 SCC
293, has held that every breach of contract would not give
rise to the offence of cheating, and it is required to be shown
that the accused had fraudulent or dishonest intention at the
time of making the promise."
The Supreme Court in the case of Jay Shri & Anr. Vs. State of Rajasthan
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decided on 19.01.2024 in SLP (Crl.) No.14423/2023 has held that mere breach of
a contract does not amount to offence under Section 420 or 406 of IPC unless the
fraudulent or dishonest intention is shown right at the beginning of transaction.
Any effort to settle civil disputes and claims, which do not involve any criminal
offence, by applying pressure through criminal prosecution should be deprecated
and discouraged.
7. The Supreme Court in the case of Jaswant Vs. State of Punjab and Anr.
by order dated 20.10.2021 passed in Criminal Appeal No.1233/2021 has held as
under:
"19. From the above discussion on the settled legal
principles, it is clear from the facts of the present case that
there was a clear abuse of the process of the Court and
further that the Court had a duty to secure the ends of justice.
We say so for the following reasons:
a) The allegations made in the FIR had an
overwhelmingly and predominatingly a civil flavour
inasmuch as the complainant alleged that he had paid
money to Gurmeet Singh, the main accused to get
employment for his son abroad. If Gurmeet Singh
failed the complainant could have filed a suit for
recovery of the amount paid for not fulfilling the
promise.
b) Initially, the investigating officer and two superior
officers of the economic wing has found that there is
no substance in the complaint making out even a prima
facie triable case and had therefore, recommended for
closure. However, on the orders of the Senior
Superintendent of Police, the FIR was registered and
the matter was investigated. No criminal breach of trust
was found and the charge sheet was submitted only
against Gurmeet Singh under section 420 I.P.C.
c) The complainant Nasib Singh had clearly deposed
that he had paid Rs 4 lacs cash to Gurmeet Singh and
had also given a cheque of Rs 2 lacs favouring
Gurmeet Singh which he had encashed.
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d) During trial the present appellant as also the other
co-accused Gurpreet Singh were summoned in April
2014 invoking powers of Section 319 Cr.P.C., for
being tried under Section 420 I.P.C. It may be noted
that no specific allegations of cheating are made
against these two accused as they were both settled
abroad in Italy.
e) The complainant Nasib Singh entered into a
compromise with the main accused Gurmeet Singh
which was filed before the learned Magistrate and the
same was accepted vide order dated 26.09.2014 and the
alleged offence being of financial transaction stood
compounded. Proceedings against Gurmeet Singh were
closed.
f) Right from 2014, the present appellant and other co-
accused Gurpreet Singh who were in Italy were being
summoned by the Court. The appellant was declared
proclaimed offender. The appellant applied before the
High Court challenging the order declaring him
proclaimed offender and also filed a 482 Cr.P.C.
petition for quashing of the proceedings wherein, he
also filed the compounding order of 26.09.2014.
g) The High Court merely perused the FIR and noting
the fact that the name of the appellant was mentioned
in the FIR, declined to exercise the inherent power
under Section 482 Cr.P.C."
8. The Supreme Court in the case of Sachin Garg (supra) has held as
under:-
8. It was observed in the judgment under appeal that the
applicant has got the right of discharge which could be freely
taken up by him before the Trial Court. Mr. Mukul Rohatgi,
learned senior counsel has appeared in this matter on behalf
of the appellant along with Mr. Guru Krishna Kumar, while
the case of respondent no.2 has been argued by Ms. Divya
Jyoti Singh. State was represented before us by Mr. Sarvesh
Singh Baghel. The main contentions urged by Mr. Rohatgi
is that the complaint made against the appellant does not
disclose any criminal offence and at best, it is a commercial
dispute, which ought to be determined by a Civil Court. In
so far as the allegations of commission of offence
under Sections 405 and 406 are concerned, he has relied on
a judgment of this Court in the case of Deepak Gaba and
Ors. -vs- State of Uttar Pradesh and Another [(2023) 3 SCC
423]. This decision deals with the basic ingredients of a
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complaint under Sections 405 and 406 of the 1860 Code and
it has been held in this judgment:-
"15. For Section 405 IPC to be attracted, the following
have to be established:
(a) the accused was entrusted with property, or
entrusted with dominion over property;
(b) the accused had dishonestly misappropriated
or converted to their own use that property, or
dishonestly used or disposed of that property or
wilfully suffer any other person to do so; and
(c) such misappropriation, conversion, use or
disposal should be in violation of any direction of
law prescribing the mode in which such trust is to
be discharged, or of any legal contract which the
person has made, touching the discharge of such
trust."
9. The judgment in Deepak Gaba (supra) was delivered in a
case in which there was subsisting commercial relationship
between the parties and the complainant had made
allegations of a forged demand, for a sum of around rupees
six and a half lakhs. On that basis a summoning order was
issued for trial under Section 406 of the 1860 Code. A
coordinate Bench of this Court held:-
"17. However, in the instant case, materials on record
fail to satisfy the ingredients of Section 405 IPC. The
complaint does not directly refer to the ingredients of
Section 405 IPC and does not state how and in what
manner, on facts, the requirements are satisfied. Pre-
summoning evidence is also lacking and suffers on this
account. On these aspects, the summoning order is
equally quiet, albeit, it states that "a forged demand of
Rs 6,37,252.16p had been raised by JIPL, which
demand is not due in terms of statements by
Shubhankar P. Tomar and Sakshi Tilak Chand". A
mere wrong demand or claim would not meet the
conditions specified by Section 405 IPC in the absence
of evidence to establish entrustment, dishonest
misappropriation, conversion, use or disposal, which
action should be in violation of any direction of law, or
legal contract touching the discharge of trust. Hence,
even if Respondent 2 complainant is of the opinion that
the monetary demand or claim is incorrect and not
payable, given the failure to prove the requirements
of Section 405IPC, an offence under the same section
is not constituted. In the absence of factual allegations
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which satisfy the ingredients of the offence under
Section 405IPC, a mere dispute on monetary demand
of Rs 6,37,252.16p, does not attract criminal
prosecution under Section 406IPC."
10. The same view was expressed by this Court in the cases
of Prof. R.K. Vijayasarathy and Anr. -vs- Sudha Seetharam
and Anr. [(2019) 16 SCC 739] and Vijay Kumar Ghai and
Ors. -vs- State of West Bengal and Ors. [(2022) 7 SCC 124].
The judgment of this Court in the case of Dalip Kaur and
Ors. -vs- Jagnar Singh and Anr. [(2009) 14 SCC 696] has
also been cited in support of the appellant's case and in this
decision it has been, inter-alia, held:-
"10. The High Court, therefore, should have posed a
question as to whether any act of inducement on the
part of the appellant has been raised by the second
respondent and whether the appellant had an intention
to cheat him from the very inception. If the dispute
between the parties was essentially a civil dispute
resulting from a breach of contract on the part of the
appellants by non-refunding the amount of advance the
same would not constitute an offence of cheating.
Similar is the legal position in respect of an offence of
criminal breach of trust having regard to its definition
contained in Section 405 of the Penal Code."
This goes for allegations relating to Section 406 of the 1860
Code."
9. Considering the totality of facts and circumstances of the case, this Court
is of considered opinion that from the FIR, as well as, the statements of witnesses
recorded under Section 161 of Cr.P.C. it is clear that allegations made in the FIR
are predominantly of civil in nature and respondent No.2 has tried to covert a
business transaction which is predominantly of civil in nature into a criminal case.
Even otherwise from the FIR, as well as, statements of witnesses recorded under
Section 161 of Cr.P.C., it is clear that the primary intention behind lodging of FIR
is to somehow recover the amount which according to respondent no.2
and Rammurari Singh Tomar was paid to applicants.
10. Considering the totality of facts and circumstances of the case, this
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Court is of considered opinion that continuation of criminal proceedings would
amount to abuse of process of law. Accordingly, FIR in Crime No.115/2023
registered at Police Station Madhoganj, District Gwalior (M.P.) for the offences
punishable under Sections 406, 420, 34 of IPC and consequential proceedings are
hereby quashed.
11. Application succeeds and is hereby allowed.
(G. S. AHLUWALIA)
JUDGE
(and)
