Madras High Court
Kulandaisamy vs State Represented By Its on 26 March, 2025
Author: G.K.Ilanthiraiyan
Bench: G.K.Ilanthiraiyan
Crl.O.P.No.7963 of 2024
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 26.03.2025
CORAM:
THE HONOURABLE MR. JUSTICE G.K.ILANTHIRAIYAN
Crl.O.P.No.7963 of 2024
and Crl.M.P.No.5788 of 2024
1.Kulandaisamy
2.Vijayalayan ....Petitioners
vs.
1. State represented by its
Inspector of Police,
DCB Police Station,
Coimbatore.
(Crime No.27 of 2023)
2. V.Nandakumar ..... Respondents
PRAYER: Criminal Original Petition is filed under Section 482 of
Cr.P.C. to call for the records in Crime No.27 of 2023 on the file of the
DCB Police Station, Coimbatore and quash the same.
For Petitioner : Mr.R.Shanmugasundaram
Senior Counsel
For R1 : Mr.A.Gopinath
Govt.Advocate (Crl.side)
For R2 : Mr.A.Parthasarathy
Page 1 of 17
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Crl.O.P.No.7963 of 2024
ORDER
This Criminal Original Petition has been filed to quash the Crime
No.27 of 2023 on the file of DCB Police Station, Coimbatore.
2. It is alleged that in the complaint lodged by the second
respondent before the first respondent in Cr.No.27 of 2023 for the
offence punishable under Sections 406, 420, 468 & 471 of I.P.C. alleging
that the second respondent is one of the trustees of Coimbatore
Education Foundation. The petitioners are the accused and also trustees
and they had misappropriated the funds of trust for their personal use.
A1 and A2 who are the secretaries and CEO of trust were seen showing
lack of transparency in the accounts of the trust and they had misused the
trust fund for their personal use. The second respondent had also filed
suit in O.S.No.708 of 2020 on the file of District Munsif Court,
Coimbatore and the same is pending for adjudication against the
petitioners that the petitioners had collected fees from the students in the
name of the Trust to the tune of Rs.4,30,00,000/- for the period from
April 2019 to September 2020 and another sum of Rs.1,10,00,000/- were
not accounted properly.
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3. The learned counsel appearing for the petitioner submitted that
even as per the F.I.R., no offence was made out by the petitioners and
already the second respondent filed a suit in O.S.No.708 of 2020 for
partition and O.S.No.42 of 2023 for the very same set of allegations.
Both the suits are pending for adjudication.
4. The learned counsel further submitted that the complaint was
lodged only in the year 2023 for the alleged occurrence that is said to
have been taken place in the year 2019. There is absolutely no valid
reason for alleging the complaint. If there was any mismanagement of
the trust, the second respondent ought to have approached the first
respondent under Section 34 of the Indian Trusts Act, 1882 for proper
management of the trust. Therefore, no criminal proceedings can be
initiated as against the petitioners, since proper accounts have been
maintained by the accused and as such there can be no question of
misappropriation.
5. The learned counsel appearing for the second respondent
would submit that there is a specific allegation as against the accused to
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attract the offences punishable under Sections 406, 420, 468 and 471 of
I.P.C., the petitiones have not properly maintained the income and
expenses of the trust. They have acted on even without conducting any
Board Meeting and without serving any notice to the other trustees.
They had also misused the cheque for specific purposes and personal
uses without the consent of other trustees, thereby committing a breach
of trust.
6. Further, they have misappropriated huge sum of the trust funds
from 01.04.2019 to 31.09.2020 by using fake entries in the form of
interest amount and loan process charges. Therefore, there are specific
allegations to attract all the offences as against the accused.
7. Heard the learned counsel on either side and also perused the
materials available on record.
8. There are totally four accused in Cr.No.27 of 2023 . Initially,
this Court dismissed this petition by an order dated 01.04.2024 on the
ground that there appears to be some materials for the investigation to
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proceed. Further, it was observed that the issue involved in the present
case is criminal in nature and hence, interfering with the investigation
which is at nascent stage under Section 482 of Cr.P.C will be an abuse of
process of law. Aggrieved by the same, the petitioners preferred the
appeal in Crl.A.No.1224 of 2025 before the Hon'ble Supreme Court to
set aside the order passed by this Court and the Hon'ble Supreme Court
observed as follows : -
“While dealing with a petition under Section 482 of
Cr.P.Cl such approach, as can be seen in paragraph
7 above, on the part of the high Court is unheard of.
All that we can see from the impugned Judgment is
that the High Court has not considered the plea of
the appellants for quashing the First Information
Report on merits.”
Therefore, we quash and set aside the
impugned order dated 1st April 2024 and restore
criminal O.P.No.7963 of 2024 to the file of the high
Court of Judicature at Madras. The restored
th
petition shall be listed on 24 March, 2025 in the
morning before the roster Bench. The parties
represented today shall be under an obligation to
appear before the High Court on that day and no
further notice shall be served.
A copy of this order shall be forwarded by
the registry of this Court to the Registrar (Judicial)
of the High Court of Judicature at Madras who
shall ensure that the restored petition is liable
before the high Court.
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All questions arre left open to be decided by the
High Court.
The appeal is partly allowed on the above terms.”
9. In view of the direction issued by the Hon'ble Supreme Court of
India, the matter is taken up today.
10. On perusal of the FIR, it can be seen that the crux of the
allegations is that;-
i) lack of transparency on Trust accounts and
improper recording of income and expenditures.
ii) Neglect of proper board meetings,
inadequate notice issuance and withholding of Trust
affairs from the Trustees.
iii) Denial of access to the minutes book,
with potential tampering of its contents for their
convenience.
iv) Mr.Viajalayan's receipt of an unauthorized
monthly salary from M/s.Vivekananda Institute of
Management Studies, contrary to the Trust Deed's
terms, without approval from all of the Trustees.
v) Irregular cash expenses, violating the Trust
Deed and Income Tax Act provisions, with
unaccounted cash fees.
vi) Neglect of statutory deductions, such as
PF and TDS and non-payment to the Income
Department despite deducting on due course.
vii) Large -scale misappropriation of Trust
funds.
viii) Booking their personal expense in the
Trust's Account.
ix) Misuse of cheques issued for specific
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purposes, breaching, Trust agreements and
confusion regarding finances.
x) Inadequate record keeping for income and
expenditure, especially cash tuition fees utilized for
personal and family expenses violating Trust
principles.
xi) Misuse of Trust and Institution properties
by Kulandaiswamy and Vijayalayan and their
family members.
xii) Induction of trustees without consent of
all the trustees.
11. Further, it is alleged that these transactions had happened
between the period from 01.04.2019 to 30.09.2020. Initially, in the year
2020, in which the petitioners have arrayed as A1 and A2 in Cr.No.27 of
2023. They had filed the suit in O.S.No.456 of 2019 on the file of
Principal District Court, Coimbatore, for granting permanent injunction
restraining the defendants from calling for any meeting and to declare
that they are the majority trustees and to grant permanent injunction not
to alienate the trust properties and not to interfere in the administration
of the trust. One of the defendants is the second respondent herein.
However, the said suit was withdrawn. Thereafter, the second respondent
filed suit in O.S.No.708 of 2020 on the file of District Munsif Court,
Coimbatore as against the petitioners for permanent injunction
restraining them from interfering with activities of the trust including
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carrying out banking activities and the same is pending. The first
petitioner also filed another suit in O.S.No.198 of 2023 on the file of IV
Additional Court, Coimbatore for partition subjecting the trust property,
The second respondent had also filed another suit in O.S.No.42 of 2023
on the file of the IV Additional District Court, Coimbatore, for declaring
that the trust is the absolute owner of the suit property and restraining
the petitioners from interfering with the suit property.
12. A perusal of the complaint filed by the second respondent
reveals that for the very same set of allegations, the said suit has been
filed and the same is pending for adjudication. After filing the suit, the
second respondent has lodged the present complaint on 14.12.2023.
Thus, it is clear that from 2019 onwards there is a dispute between the
trustees and all the accused persons are the trustees and the second
respondent is also one of the trustees of M/s.Vivekananda Institute of
Management Study, Public Charitable Trust as Coimbatore Education
Foundation Trust. The second respondent rightly approached the civil
court for the allegations levelled in the FIR. On the said allegations now
the first respondent has registered the FIR under Sections 406, 468 of
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IPC.
13. It is relevant to extract the provision under Section 405 of
I.P.C, reads as under :-
"405. Criminal breach of trust. 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 of 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".
14. Thus, it is clear that a criminal breach of trust involves the
following ingredients :-
a) a person should have been entrusted have
been entrusted with property, or entrusted with
dominion over property;
(b) that person should dishonestly
misappropriate or convert to his own use that
property, or dishonestly use or dispose of that
property or willfully suffer any other person
to do so;
(c) that 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
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the discharge of such trust. The following are
examples (which include the illustrations under
section 405) where there is 'entrustment' :
(i) An 'Executor' of a will, with reference
to the estate of the deceased bequeathed to
legatees.
(ii) A 'Guardian' with reference to a
property of a minor or person of unsound
mind.
(iii) A 'Trustee' holding a property in trust,
with reference to the beneficiary.
(iv) A 'Warehouse Keeper' with reference
to the goods stored by a depositor.
(v) A carrier with reference to goods
entrusted for transport belonging to the
consignor/consignee.
(vi) A servant or agent with reference to
the property of the master or principal.
(vii) A pledgee with reference to the goods
pledged by the owner/borrower.
(viii) A debtor, with reference to a
property held in trust on behalf of the
creditor in whose favour he has executed a
deed of pledge-cum-trust. (Under such a
deed, the owner pledges his movable
property, generally vehicle/machinery to
the creditor, thereby delivering possession
of the movable property to the creditor and
the creditor in turn delivers back the
pledged movable property to the debtor, to
be held in trust and operated by the
debtor).
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15. Therefore, in order to constitute the offence under Section 405
of IPC, it is essential that the prosecution must prove first of all the
accused was entrusted with some propety or with any dominion or power
over it. It has to be established further that in resepct of the property so
entrusted, there was dishonest misapprorpriation or dishonest conversion
or dishonest use or disposal in violation of a direction of law or legal
contract by the accused.
16. In the case on hand, as stated supra, all the accused and the
second respondent are the trustees of M/s.Vivekananda Institute of
Management Study, Public Charitable Trust as Coimbatore Education
Foundation Trust. The allegations itself is that there was lack of
transparency in the trust account and misappropriation regarding of
income and expenditure. Though there is an allegation of large scale
misappropriation of trust fund, there is absolutely no specific allegation
made to that effect. Therefore, these allegations do not attract the
offence under Section 405 of IPC punishable under Section 406 of IPC.
Further, there is already dispute between the trustees in respect of their
trusteeship and also their administration. Therefore, the trustees have
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made allegations as against each other which has resulted in the present
FIR in Cr.No.27 of 2023. Infact, the complaint was lodged after the
period of 13 years from the date of the alleged occurrence and there is
absolutely no explanation for such a humogenous delay in th lodgment of
the complaint. It is also pertinent to note that the present complaint was
lodged after institution of civil suits by the trustees against each other.
So far as the offence under Sections 420 of I.PC is concerned, it is
relevant to extract the essential ingredients of Section 415 of IPC: -
The essential ingredients of the offence of
'cheating' are : (i) deception of a person either by
making a false or misleading representation or by
other action 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 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.
The High Court has held that mere breach of a
contractual terms would not amount to cheating
unless fraudulent or dishonest intention is shown
right at the beginning of the transaction and in the
absence of an allegation that the accused had a
fraudulent or dishonest intention while making a
promise, there is no 'cheating'. The High Court has
relied on several decisions of this Court wherein
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this Court has held that dishonest intent at the time
of making the promise/inducement is necessary, in
addition to the subsequent failure to fulfil the
promise. Illustrations (f) and (g) to section 415
makes this position clear :
"(f) A intentionally deceives Z into a belief that A
means to repay any money that Z may lend to him
and thereby dishonestly induces Z to lend him
money, A not intending to repay it. A cheats."
"(g). A intentionally deceives Z into a belief that A
means to deliver to Z a certain quantity of indigo
plant which he does not intend to deliver, and
thereby dishonestly induces Z to advance money
upon the faith of such delivery. A cheats; but if A,
at the time of obtaining the money, intends to
deliver the indigo plant, and afterwards breaks his
contact and does not deliver it, he does not cheat,
but is liable only to a civil action for breach of
contract."
17. Therefore, the crux of the postulate is the intention of the
person who induces the victim of his representation and not the nature of
the transaction which would become decisive on discerning whether
there was commission of offence or not.
18. On perusal of the entire complaint, there is absolutely no
ingredients to attract the offence of cheating to punish the accused under
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Section 420 of IPC. Since there is no fraudulent or dishonest inducement
on the part of the accused to deliver any property by the second
respondent. In so far as, the offences under Sections 468 & 471 of IPC
are concerned, the Sections 468 & 471 is defined under Section 463 of
IPC. It is relevant to extract under Section 464 of IPC hereunder:-
464. Making a false document - A person is said
to make a false document or false electronic
record — First.—Who dishonestly or
fraudulently— (a) makes, signs, seals or
executes a document or part of a document; (b)
makes or transmits any electronic record or part
of any electronic record; (c) affixes any
electronic signature on any electronic record; (d)
makes any mark denoting the execution of a
document or the authenticity of the electronic
signature, with the intention of causing it to be
believed that such document or part of
document, electronic record or electronic
signature was made, signed, sealed, executed,
transmitted or affixed by or by the authority of a
person by whom or by whose authority he knows
that it was not made, signed, sealed, executed or
affixed; or Secondly.—Who without lawful
authority, dishonestly or fraudulently, by
cancellation or otherwise, alters a document or
an electronic record in any material part thereof,
after it has been made, executed or affixed with
electronic signature either by himself or by any
other person, whether such person be living or
dead at the time of such alteration; or Thirdly.—
Who dishonestly or fraudulently causes any
person to sign, seal, execute or alter a document
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or an electronic record or to affix his electronic
signature on any electronic record knowing that
such person by reason of unsoundness of mind
or intoxication cannot, or that by reason of
deception practised upon him, he does not know
the contents of the document or electronic record
or the nature of the alteration.
19. Thus, it is clear that it is necessary to execute a document with
the intention of causing it to be believed that such document inter alia
was made by the authority of a person by whom or by whose authority he
knows that it was not made. No allegations made in the complaint to
attract the offence under Sections 468 & 471 of IPC. Further, if what is
executed is not a false document, there is no forgery. If there is no
forgery, then neither Section 467 nor Section 471 of the Code are
attracted. Therefore, the entire allegations are civil in nature and the
same cannot be issued in the form of criminal proceedings. Hence, there
is no iota of material indicating the prima facie case to register the FIR
for the offence under Sections 406, 420. 468 and 471 of IPC.
20. In view of the above, the FIR in Cr.No.27 of 2023 cannot be
sustained as against the accused persons and it is liable to be quashed.
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Though, A1 and A2 alone have filed this petition to quash the FIR
registered in Cr.No.27 of 2023 in the interest of justice, this Court is
inclined to quash the FIR as against all the accused persons.
21. Accordingly, the FIR in Cr.No.27 of 2023 is hereby quashed
and this criminal original petition is allowed. Consequently, connected
miscellaneous petition is closed.
26.03.2025
Index : Yes/No
Neutral citation : Yes/No
Speaking/non-speaking order
kkd
To
1. The Inspector of Police,
DCB Police Station,
Coimbatore.
2.The Public Prosecutor,
High Court, Madras.
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G.K.ILANTHIRAIYAN, J.
kkd
26.03.2025
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