[Cites 17, Cited by 0]
Madhya Pradesh High Court
Bhupendra Dixit vs The State Of Madhya Pradesh on 16 March, 2026
Author: Sanjeev S Kalgaonkar
Bench: Sanjeev S Kalgaonkar
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IN THE HIGH COURT OF MADHYA PRADESH
AT INDORE
BEFORE
HON'BLE SHRI JUSTICE SANJEEV S KALGAONKAR
ON THE 16th OF MARCH, 2026
MISC. CRIMINAL CASE No. 50134 of 2024
BHUPENDRA DIXIT
Versus
THE STATE OF MADHYA PRADESH AND OTHERS
Appearance:
Shri Siddharth Singh - Advocate for the petitioner.
Shri Gajendra Singh Dodia - Govt. Advocate for the respondent/State.
ORDER
This petition u/s 528 of the Bhartiya Nagrik Nayay Suraksha Sanhita,
2023(referred to as 'BNSS, 2023 hereinafter) is filed for quashing of FIR
registered at Crime No. 353/2024 dated 30.06.2024 at P.S. Manak Chowk,
Distt. Ratlam for offence punishable u/S 420 and 406 of IPC against the
petitioner alongwith consequential proceedings.
2. The exposition of facts, giving rise to present petition, is as under:
The complainant Motilal Patidar reported to P.S. Manak Chowk, Distt.
Ratlam on 30.06.2024 that his Firm, Patel Wine and Fruit Processing
Industries, manufactures wine. Bhupendra Dixit (petitioner) R/o Sagar had
taken franchise of his firm. They are supplying wine to Bhupendra Dixit
since the year 2014-15. Bhupendra has been making payment of bills from
time to time. Recently, Bhupendra deferred the payment of bills. Bhupendra
promised to clear the bills and placed order for supply of wine. In the year
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2022-23, Bhupendra purchased wine from his firm on various occasion.
Total outstanding bill against Bhupendra amounts to Rs. 19,27,596/-.
Bhupendra refused to pay the outstanding amount and committed criminal
breach of trust and cheating. On such allegations, the P.S. Manak Chowk
registered FIR at Crime No. 353/2024 for offence punishable u/S 420 and
406 of IPC against Bhupendra Dixit. The Franchise Agreement dated
12.03.2015, copies of ledger and bills were seized during investigation. The
statements of witnesses were recorded. The final report was submitted on
completion of investigation. As informed, no prosecution witness has been
examined till date.
3. This petition is filed for quashing of impugned FIR and consequential
proceedingsarising therefrom on following grounds:
(a) The action of respondent police authorities is unreasonable,
arbitrary and malicious.
(b) No prima-fa cie case for offence punishable u/S 406 and 420 of IPC
is made against the petitioner.
(c) The whole dispute alleged in the police complaint is purely civil in
nature, which has been given colour of criminal prosecution.
On these grounds, it is prayed that the impugned FIR alongwith
consequential proceeding be quashed.
4. Learned counsel for the petitioner, in addition to the grounds
mentioned in the petition, submits that the alleged offence is not made out
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against the petitioner. It is a continued transaction regarding sale and
purchase of wine in furtherance of Bilateral Franchise Agreement with an
Arbitration Clause. Learned counsel refers to Clause no. 13 of the Franchise
Agreement dated 12.03.2015 filed by the respondent/complainant during
investigation, which states that in case of any dispute, it shall be determined
as per the Arbitration Clause. Learned counsel also submits that the dispute
relates to non-payment of price towards purchase of wine It is essentially a
dispute regarding sale of goods. Therefore, the offence regarding criminal
breach of trust is not made out against the petitioner. There was no intention
to defraud at the inception of the transaction. No offence of cheating is made
out against the petitioner. The impugned FIR deserves to be quashed.
5. Per contra, learned counsel for the State opposes the petition and
submits that the contents of FIR and the material on case diary clearly makes
out criminal breach of trust regarding non-payment of the purchased quantity
of wine with intention to defraud and cause wrongful loss to the petitioner.
The FIR cannot be said to be baseless, absurd or malafide. The petition is
meritless and deserves to be dismissed.
6. Heard both the parties, perused the record and the case diary.
7. The Supreme Court in case of State of Haryana & Others vs.Ch.
Bhajan Lal & Others, reported in AIR 1992 SC 604 after an elaborate
consideration of the matter and after referring to its various earlier decisions,
has observed in para 108 as under:-
''108. In the backdrop of the interpretation of the various relevant provisions of
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the Code under Chapter XIV and of the principles of law enunciated by this
Court in a series of decisions relating to the exercise of the extraordinary power
under Article 226 or the inherent powers under Section 482 of the Code which
we have extracted and reproduced above,we give the following categories of
cases by way of illustration wherein such power could be exercised either to
prevent abuse of the process of any Court or otherwise to secure the ends of
justice, though it may not be possible to lay down any precise, clearly defined
and sufficiently channelized and inflexible guidelines or rigid formulae and to
give an exhaustive list of myriad kinds of cases wherein such power should be
exercised.
(1) Where the allegations made in the First Information Report or the
complaint, even if they are taken at their face value and accepted in their
entirety do not prima facie constitute any offence or make out a case against the
accused.
(2) Where the allegations in the First Information Report and other materials, if
any, accompanying the F.I.R. do not disclose a cognizable offence, justifying an
investigation by police officers under Section 156(1)of the Code except under
an order of a Magistrate within the purview of Section 155(2)of the Code.
(3) Where the uncontroverted allegations made in the FIR or complaint and the
evidence collected in support of the same do not disclose the commission of
any offence and make out a case against the accused.
(4) Where, the allegations in the F.I.R. do not constitute a cognizable offence
but constitute only a noncognizable offence, no investigation is permitted by a
police officer without an order of a Magistrate as contemplated under Section
155(2) of the Code.
(5) Where the allegations made in the FIR or complaint are so absurd and
inherently improbable on the basis of which no prudent person can ever reach a
just conclusion that there is sufficient ground for proceeding against the
accused.
(6)Where there is an express legal bar engrafted in any of the provisions of the
Code or the concerned Act (under which a criminal proceeding is instituted) to
the institution and continuance of the proceedings and/or where there is a
specific provision in the Code or the concerned Act, providing efficacious
redress for the grievance of the aggrieved party.
(7) Where a criminal proceeding is manifestly attended with malafide and/or
where the proceeding is maliciously Instituted with an ulterior motive for
wreaking vengeance on the accused and with a view to spite him due to private
and personal grudge.''
8. In the case of Delhi Race Club (1940) Vs. State of U.P. reported in
(2024) 10 SCC 690 , the Supreme Court has held as under:
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4 8 . The aforesaid exposition of law makes it clear that there should be
someentrustment of property to the accused wherein the ownership is not
transferredto the accused. In case of sale of movable property, although the
payment may bedeferred yet the property in the goods passes on delivery as per
Sections 20 and24 respectively of the Sale of Goods Act, 1930.
"20. Specific goods in a deliverable state. -- Where there isan
unconditional contract for the sale of specific goods in adeliverable
state, the property in the goods passes to the buyerwhen the contract
is made and it is immaterial whether the timeof 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". -- Whengoods
are delivered to the buyer on approval or "on sale orreturn" or other
similar terms, the property therein passes tothe buyer--
(a) when he signifies his approval or acceptance to the selleror
does any other act adopting the transaction;
(b) if he does not signify his approval or acceptance to the
sellerbut retains the goods without giving notice of rejection,
then, ifa time has been fixed for the return of the goods on
theexpiration of such time, and, if no time has been fixed, on
theexpiration of a reasonable time."
49. From the aforesaid, there is no manner of any doubt whatsoever that in case
ofsale of goods, the property passes to the purchaser from the seller when the
goodsare delivered. Once the property in the goods passes to the purchaser, it
cannot besaid that the purchaser was entrusted with the property of the seller.
Withoutentrustment 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 theconsideration amount in case of sale of goods is flawed to the core.
There can becivil remedy for the non-payment of the consideration amount, but
no criminalcase will be maintainable for it. [See : Lalit Chaturvedi and Others
v. State ofUttar Pradesh and Another : 2024 SCC OnLine SC 171 &Mideast
IntegratedSteels Ltd. (MESCO Steel Ltd.) and Others v. State of Jharkhand and
Another :2023 SCC OnLine Jhar 301]
9. The Section 420 IPC deals with the cheating by dishonestly inducing
delivery of property. The petitioner's failure to pay the outstanding money
towards purchase of wine has led to charges of cheating. Mere non-
performance of the contract or inaction or deferment in payment in
compliance with the promise may provide cause of action for specific
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performance of contract or recovery of money but dishonest intention to
cheat or fraudulent intention to misappropriate from inception cannot be
inferred from these actions in case of continuing transaction. Mere non-
payment or underpayment of the price of the goods by itself does not amount
to commission of an offence of cheating or criminal breach of trust.[Vir
Prakash Sharma v. Anil Kumar Agarwal, (2007) 7 SCC 373; Ashok Kumar
Jain v. State of Gujarat, 2025 SCC OnLine SC 998 relied]
10. Recently, in the case of Radheyshyam & Ors. Vs. State of Rajasthan
& Anr.(Order dated 22.07.2024 passed in Cr.A. No. 3020 of 2024), reported
in 2024 SCC OnLine SC 2311 the Supreme Court has held as under:
8. Thus, cheating forms an essential ingredient to constitute and offence under
Section 420, IPC. Further, to constitute cheating as defined under Section 415, IPC,
it is necessary that a fraudulent or dishonest inducement is done and the deceived
person is made to deliver any property owing to the fraud. Section 415, IPC, defines
'cheating', as:
"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"."
9. From the bare perusal of the FIR, it is evident that there was no act of cheating,
that is, the complainant was nowhere fraudulently induced or dishonestly deceived
by the appellants. A commercial transaction took place between the parties during
which the parties consensually agreed for the sale of the property of the appellants
and respondent no. 2 paid the part consideration. The default in payment of their
loan dues on part of the appellants is not reflective of their deceitful intention
towards the complainant. Mere non-registration of the sale or its refusal cannot
amount to cheating. The delivery of the advance payment towards consideration was
made in furtherance of an Agreement to Sale and it is not the case of the respondent
that he was in anyway deceived or duped to make such payments to the appellants.
It is a civil dispute and gives rise to the complainant's right to resort to the remedies
provided under civil law by filing a suit for specific performance.
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10. Additionally, the appellants have also been accused of committing the offence
of criminal breach of trust under Section 406, IPC. This offence is defined under
Section 405, IPC as follows:
"Whoever, being in any manner entrusted with property, or with any
dominion over property, dishonestly misappropriates or converts to his own
use that property, or dishonestly uses or disposes off that property in
violation of any direction of law prescribing the mode in which such trust is
to be discharged, or of any legal contract, express or implied, which he has
made touching the discharge of such trust, or wilfully suffers any other
person so to do, commits "criminal breach of trust"."
11. For an offence punishable under Section 406, IPC, the following ingredients
must exist:
i. The accused was entrusted with property, or entrusted with dominion over
property;
ii. 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
iii. 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.
12. In the present case, the appellants were not entrusted with any property by
respondent no. 2 - complainant. The only delivery made was of part payment
towards an Agreement to Sale between the parties. The amount paid towards
consideration cannot be said to have been entrusted with the appellants by
respondent no. 2. Additionally, merely because the appellants are refusing to
register the sale, it does not amount to misappropriation of the advance payment.
Since there was no entrustment of property, the offence of misappropriation of such
property and thereby criminal breach of trustcannot be said to be made out.
1 0 . In case of Hridaya Ranjan Prasad Verma v. State of Bihar reported
in(2000) 4SCC 168, it was held that-
"14. On a reading of the section it is manifest that in the definition there are set
forth two separate classes of acts which the person deceived may be induced to
do. In the first place he may be induced fraudulently or dishonestly to deliver any
property to any person. The second class of acts set forth in the section is the
doing or committing to do anything which the person deceived would not do or
omit to do if he were not so deceived. In the first class of cases the inducing must
be fraudulent or dishonest. In the second class of acts, the inducing must be
intentional but not fraudulent or dishonest.
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15. In determining the question it has to be kept in mind that the distinction
between mere breach of contract and the offence of cheating is a fine one. It
depends upon the intention of the accused at the time of inducement which may
be judged by his subsequent conduct but for this subsequent conduct is not the
sole test. Mere breach of contract cannot give rise to criminal prosecution for
cheating unless fraudulent or dishonest intention is shown right at the beginning
of the transaction, that is, the time when the offence is said to have been
committed. Therefore it is the intention which is the gist of the offence. To hold a
person guilty of cheating it is necessary to show that he had fraudulent or
dishonest intention at the time of making the promise. From his mere failure to
keep up promise subsequently such a culpable intention right at the
beginning,that is, when he made the promise cannot be presumed."
11. Apparently, the parties mutually agreed for the sale and purchase of
wine.They continued in transaction. The dispute relates to non-payment of
price towards purchase of wine, it is essentially a dispute regarding sale of
goods. In case of Sale of goods, the payment may be deferred yet the
property in the goods passes on delivery, therefore, there is no entrustment of
property. The copy of "Franchisee Agreement dated 12.03.2015" on case
diary reveals specific arbitration clause for redressal of disputes. The
subsequent failure of petitioner/accused to pay the amount towards purchase
of wine cannot lead to inference that he had fraudulent or dishonest intention
at the beginning of the transaction. Therefore, in view of the aforestated
dictums of law, the offence punishable u/Ss. 420 and 406 of IPC are prima-
facie not made out against the petitioner from the contents of impugned FIR
and the material on record.
12. The investigation agency was apparently swayed by the magnitude of
the outstanding amount and the inconvenience caused to the respondent, but
the prosecution has to show prima-facie existence of the necessary
ingredients constituting the alleged offence. The impugned FIRis an attempt
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to clock the civil dispute of specific performance of contract (with an
arbitration clause) and recovery of money for sale of wine, with criminal
prosecution for cheating, criminal breach of trust and forgery. Hence,
exercise of inherent jurisdiction u/S 528 of BNSS, 2023 is needed to prevent
abuse of the process of Court.
13. Consequently, this petition u/S 528 of BNSS, 2023 is allowed. The
impugned FIR bearing Crime No. 353/2024 dated 30.06.2024 registered at
P.S. Manak Chowk Distt. Ratlam for offence punishable u/S 420 and 406 of
IPC is quashed alongwith all subsequent proceedings arising therefrom.
14. Petition stands disposed off.
(SANJEEV S KALGAONKAR)
JUDGE
sh
