Manipur High Court
Shri Sunil Kumar Sethi vs The State Of Manipur Represented By The ... on 18 July, 2024
KHOIROM Digitally signed by
IN THE HIGH COURT OF MANIPUR
KHOIROM
BIPINCHAN BIPINCHANDRA
Date: 2024.07.18
SINGH
DRA SINGH 17:50:36 +05'30' AT IMPHAL
CRIL. PETITION NO. 20 OF 2017
Shri Sunil Kumar Sethi, aged about 47 years, S/o
Mahavir Sethi, resident of Thangal Bazar, P.O. Thangal
Bazar, P.S. City, District, Imphal West, Manipur.
.... Petitioner
- Versus -
1. The State of Manipur represented by the Principal
Secretary (Home), Government of Manipur, P.O &
P.S. Imphal, District: Imphal West, Manipur.
2. The Officer-in-Charge, City Police Station, Imphal
West, P.O Thangal Bazar, P.S. City, District :
Imphal West, Manipur.
3. Shri, Sunil Kumar Patni, aged about unknown
years, S/O Kailash Patni, resident of Thangal
Bazar, P.O Thangal Bazar, P.S. City, District :
Imphal West, Manipur.
.... Respondents
BEFORE
HON'BLE MRS. JUSTICE GOLMEI GAIPHULSHILLU
For the petitioner : Mr. L. Shashibhushan, Senior Advocate
For the respondents : Mr. Samarjit Hawaibam, Public Prosecutor
Mr. H. Kenajit, Advocate
Date of hearing : 07.06.2024
Date of judgment &
order : 18.07.2024
Cril. Petition No. 20 of 2017 Page 1
JUDGEMENT & ORDER
(CAV)
[1] Heard Mr. L. Shashibhushan, learned senior counsel
appearing for the petitioner; Mr. Samarjit Hawaibam, learned PP
appearing for the State and Mr. H. Kenajit, learned counsel
appearing for the respondent No. 3 at length.
[2] The present petition has been filed by the petitioner
challenging the legality, correctness and propriety in registration
of the FIR with a prayer for quashing and setting aside of FIR No.
97(7)2016 of City Police Station, Imphal, Manipur dated
06.07.2016 registered by respondent No. 2 against the petitioner
under Sections 34 r/w 406, 420 and 506 of IPC even though no
offence was made out.
For easy reference and for convenience, the above
mentioned Sections are extracted herein below:
"406. Punishment for criminal breach of trust -
Whoever commits criminal breach of trust shall be
punished with imprisonment of either description for a
term which may extend to three years, or with fine, or
with both.
420. Cheating and dishonesty inducing delivery of
property -
Whoever cheats and thereby dishonestly induces the
person deceived to deliver any property to any person, or
to make, alter or destroy the whole or any part of a
valuable security, or anything which is signed or sealed,
and which is capable of being converted into a valuable
security, shall be punished with imprisonment of either
description for a term which may extend to seven years,
and shall also be liable to fine.
Cril. Petition No. 20 of 2017 Page 2
506. Punishment for criminal intimidation -
Whoever commits, the offence of criminal intimidation
shall be punished with imprisonment of either description
for a term which may extend to two years, or with fine, or
with both;
If threat be to cause death or grievous hurt, etc. - And if
the threat be to cause death or grievous hurt, or to cause
the destruction of any property by fire, or to cause an
offence punishable with death or (imprisonment for life),
or with imprisonment for a term which may extend to
seven years, or to impute, unchastity to a woman, shall
be punished with imprisonment of either description for a
term which may extend to seven years, or with fine, or
with both."
[3] The case of the petitioner is that he was running a
retail medicine shop namely, "M/S Kanchan Medical Store" at
Thangal Bazar. But, his father was diagnosed to be suffering from
Parkinson aliment. Due to his father's illness, his family has shifted
to Jaipur and the petitioner has been settling between Imphal and
Jaipur and decided to wound up all his business interest at Imphal
and shift base to Jaipur except the share portion of the property
including the residential building jointly recorded in the name of
his father and his 2 (two) brothers exclusively belonging to them.
Further due to his father's illness, the petitioner was managing the
affairs of the family.
[4] The learned counsel for the petitioner submits that
the respondent No. 3, who is the complainant in FIR Case no.
97(7) 2016 City P.S. u/s 406/420/506/34 of IPC, is a close friend
of the petitioner and also running a retail outlet of 'Peter England'.
He, further, submits that the respondent No. 3 proposed to the
Cril. Petition No. 20 of 2017 Page 3
petitioner to buy his father's share in the property including the
building situated at Thangal Bazar, Imphal by taking advantage of
the petitioner's situation but, the petitioner refused it on the
ground that he has got an emotional attachment with the property
and the place but the respondent No.3 kept in insisting the
proposal and even threatened the petitioner.
[5] The learned counsel for the petitioner, further,
submits that while the petitioner was at Jaipur, a team of
Rajasthan Police personnel visited his residence at Jaipur on
25.07.2016 inquiring about him with an intent to cause arrest of
him but, when the aforesaid police personnel came looking for him
he was not at Jaipur. On subsequent enquiry, the petitioner came
to know that the respondent No. 3 has filed an application to the
Director General of Police, Manipur by falsely alleging that the
petitioner took money from him for doing business and in return,
he would be paid interest. Over a period of time i.e. between
05.12.2014 till 04.07.2015, he made total cash payment amounting to
Rs. 1,52,00,000/- (Rupees one crore fifty two lakhs) only and the
petitioner paid a sum of Rs. 32,65,600/- (Rupees thirty two lakhs sixty
five thousand and six hundred) only by way of interest between the period
from 02.01.2015 till 28.03.2015 and thereafter, he failed to make
payment to the respondent No. 3. He, further, submits that the
petitioner has strongly and vehemently denied the allegations of
the respondent No. 3 of lending any sum of amount to him on the
Cril. Petition No. 20 of 2017 Page 4
assurance of giving interest. Further, it is submitted by the learned
counsel for the petitioner that the allegation was not supported by
any document or documents to substantiate his allegation.
[6] The learned counsel for the petitioner contended
that the application filed with the DGP, Manipur was forwarded to
the SP, Imphal West, Manipur who in turn endorsed the same to
the respondent No. 2 for taking up necessary action in the matter.
On the basis of the said endorsement, the respondent No. 2
registered the FIR Case No. 97(7) 2016 City P.S. u/s
406/420/506/34 of IPC against the petitioner without application
of his mind. He, further, contended that the FIR case was filed by
way of pressure tactics by the respondent No. 3 to part with the
share portion of the property and building belonging to his father
when all his allurement to win over the petitioner has failed. He,
further, submits that the allegation made in the complaint is false
and they are all figmentation of the respondent No. 3 and further
submitted that the petitioner has never indulged in any illegal
business for sales of Tobacco, Gutka etc. as alleged by the
respondent No. 3.
[7] The learned counsel for the petitioner, further,
submits that even assuming but not admitting that if the petitioner
was engaged in the business for sales of Tobacco, Gutka etc.
which is banned in the State of Manipur, the respondent No.3 too
Cril. Petition No. 20 of 2017 Page 5
is liable to be prosecuted by the State for indulging in business
which is against the law of the land. He, further, contended that
the FIR case was filed by the respondent No. 3 in connivance with
the respondent No. 2 to extort money from him which he never
borrowed and used it as a pressure tactics by the respondent No.
3 to part with the share properties. He, further, submits that
complaint regarding non-payment of interest or principal amount,
even if taken at the face value does not constitute offence u/s
420/406 but breach of contract.
[8] The respondent No. 3 filed affidavit-in-opposition
stating that he has denied all the allegations made by the
petitioner in the present petition. He, further, submits that the
present petition is not maintainable, as there is specific provision
with the inherent power of the High Court in the Cr.P.C.
[9] The learned counsel for the respondent No. 3,
further, submitted that the petitioner is narrating a concocted
story not to return the amount of Rs. 1.52 Crore taken from him
by deceiving/cheating and when asked him to pay back the said
amount, he had threatened him with dire consequences. He,
further, submits that the registration of the FIR after his complaint
to the O.C., City P.S can be known after and are to make proper
investigation and the coming of the Rajasthan Police to the
petitioner's place must be a part of the investigation. He, further,
Cril. Petition No. 20 of 2017 Page 6
submits that the petitioner cannot raise the nature of the
transaction and its fulfillment of the income tax Act and mere
denial of not taking the sum cannot proved the innocence of the
petitioner, as he has left Manipur since February, 2016 and has
been staying at Jaipur. Thus, on trail of the petitioner, his wife
made an application to the OC of the Mahesh Nagar P.S, Jaipur in
helping her to track down the petitioner in his Jaipur residence.
He, further, submits that the petitioner had merely taken the
names of some persons with whom he was doing the tobacco,
gutkha business but never informed the place in which he was
doing business. If he had known the business of the petitioner in
Manipur and if he had not promise of the interest, he would have
never lent the said huge amount of money. Thus, the act of the
petitioner is a clear case of cheating and breach of trust.
[10] The learned counsel for the respondent No. 2 submits
affidavit-in-opposition on behalf of respondent No. 2 stating that
he has denied all the allegations made by the petitioner
categorically that the filling of the complaint (in connection) with
FIR No. 97(7)2016, City P.S was motivated and the registration of
FIR is perverse, abuse of process of law and requires to be set
aside. He further submits that the petitioner has not put forth any
reasonable ground for invoking the jurisdiction of the Hon'ble High
Court to quash the FIR.
Cril. Petition No. 20 of 2017 Page 7
[11] The learned counsel for the respondent No. 2,
further, submits that mere disclosure of the cognizable offence is
sufficient for registration and investigation. Disobeying the
provisions and rules under Income Tax Act, if any, by a person,
cannot mean that such person did not give certain sums to
another person. Any disobedience or violation of the provisions of
Income Tax Act has to be dealt with under the same. The alleged
transactions is to be supported by documents as required by the
Income Tax Act are not relevant for the consideration of quashing
or not quashing an FIR.
[12] The learned counsel for the respondent No. 2,
further, submits that the petitioner is alleging the respondent No.
2 without any evidence and material, that the FIR was filed by
respondent No. 3 in connivance with respondent No. 2. He,
further, submits that the police have nothing to do with when a
person is desirous of either filing an FIR or not. The only matter to
be considered at the time of registration of FIR is whether the FIR
discloses cognizable offence or not. Truth of the matter and
consequences thereof has to be dealt with in the investigation and
the trial. Further, he submits that it is too absurb for the petitioner
to blame a police officer for registering an FIR against him and
that too, on the basis of written report disclosing cognizable
offence as per law. He, further, submits that the sale of tobacco,
gutka etc., were not completely banned in the years 2014 and
Cril. Petition No. 20 of 2017 Page 8
2015 mentioned in the FIR by the respondent No. 3 as complaint
of the FIR case, the same was allowed on fulfillment of some
criteria and procedures as per rule and law but banned was
imposed only recently in the State. The matter of ban has to be
dealt with under relevant law.
[13] He, further, submits that offence of cheating and
deception, document is not the sole material for the proof of the
same but can also be proved by oral or other evidences.
Moreover, criminal breach of trust can also be proved by
evidences other than documentary evidence. Further submits that
a person can be liable both under the Criminal Law and the Civil
law, availability of having remedy under civil proceedings is not
bar to seek remedy under criminal proceedings.
[14] The learned counsel for the respondent No. 2
submitted that the petitioner while alleging that there is no
document to show that took any sum of money from respondent
No. 3, he himself has also failed to show any documents for the
allegations made by him. Accordingly, the FIR was registered and
investigation was set into motion. He, further, submits that the
O.C. of a police station is bound by the laws and has to investigate
under Cr.P.C., if there is disclosure of cognizable offence in the
FIR, as there are many cases taking cognizance for
misappropriating huge sums and cheating the people thereby
Cril. Petition No. 20 of 2017 Page 9
converting the huge sums to their own use. He, further, submits
that as per the FIR, the respondent No. 3 entrusted his money
but, the petitioner after paying interest for some months
converted to his own use and fled away even after ensuring of the
payment by an arbitrator, Mr. Suresh Jain.
[15] The learned counsel for the respondent No. 2,
further, submits that the set of facts specified in the FIR are
different from the claim of the petitioner. Filling of written report
by the respondent No. 3 in connection with the FIR case cannot
mean that the written report was malafide or with malice or with
ulterior motive for wreaking vengeance on the petitioner due to
personal grudge instead the petitioner should clearly established
the malafide, malice, ulterior motive for wreaking vengeance and
personal grudge for quashing the FIR. He, further, submits that in
compliance of Sec -154(1) of the Code, the Police Officer cannot
embark upon an enquiry as to whether the information given by
the informant is reliable and genuine or otherwise and refuse to
register a case. And also, the O.C. of a police station is obliged to
register a case and then proceed for investigation under Section
156 subject to the proviso of Sec-157 of the Code. Indeed, a
noticeable feature of the scheme under chapter XIV of the Code, a
Magistrate is kept in the picture at all stages of the investigation
but he is not authorized to interfere with the actual investigation
Cril. Petition No. 20 of 2017 Page 10
or to direct the police how that the investigation is to be
conducted.
[16] The learned counsel for the respondent No. 2,
further, submitted that it is well settled that if an offence is
disclosed, the Court will not normally interfere with an
investigation into the case and will permit the investigation to be
completed and if, however, the materials do not disclose an
offence, no investigation should be permitted.
[17] The learned counsel for the petitioner relied upon
the following judgments in support of his case;
1. Pepsi Foods Ltd. And Anr v. Special Judicial
Magistrate & Ors - [1998] 5 SCC 749.
2. P.N. Poddar v. State of Maharashtra & Ors. -
[2007] 15 SCC 705.
3. Hridaya Ranjan Prasad Sharma v. State of
Bihar - [2000] 4 SCC 168.
4. Uma Shankar Gopalika v. State of Bihar -
[2005] 10 SCC 336.
5. Binod Kumar v. State of Bihar - [2014] 10
SCC 663.
6. Madhavrao Jiwajirao Scindia v. Sambhajirao
Chandrajirao Angre - [1988] 1 SCC 692.
7. Vesa Holdings (P) Ltd v. State of Kerala -
[2015] 8 SCC 293.
8. Satishchandra Ratanlal Shah v. State of
Gujarat - [2019] 9 SCC 148.
9. Kapil Agarwal v. Sanjay Sharma - [2021] 5
SCC 524.
10. BLS Infrastructure Ltd. v. Rajwant Singh-
[2023] 4 SCC 326.
Cril. Petition No. 20 of 2017 Page 11
[18] The learned counsel for the respondent Nos. 2 & 3
relied upon the following judgments in support of their case:
1. State of Telangana v. Habib Abdullah Jeelani -
[2017] 2 SCC 779.
2. State of Kerala v. Kerala Rare Earth & Mineral
Ltd. - [2016] 6 SCC 323.
3. Homi Rajvansh v. State of Maharashtra -
[2014] 12 SCC 556.
4. Sesami Chemicals (P) Ltd. v. State of
Meghalaya - [2014] 16 SCC 711.
5. Lalita Kumari v. Govt. of U.P. and Ors., -
[2014] 2 SCC 1.
6. State of Haryana & Ors v. Bhajan Lal & Ors. -
[1992] Supp. (1) SCC 335.
[19] Have gone through the citations made by both
parties, but in the instant case, the above citations relied upon by
the respondent Nos. 2 & 3 are not reliable.
[20] After hearing both the learned counsels for the
parties and also after hearing the rival contentions put forth by
the learned counsels for the parties and also after perusal of the
materials on records, I am of the view that the point for
consideration to discuss in the present case is whether the
complaint filed by the respondent No. 3 and subsequent
registration of the FIR by the respondent No. 2, can make out a
case under Sections 406, 420, 506 and 34 IPC.
Cril. Petition No. 20 of 2017 Page 12
As per the complaint made by the respondent No. 3,
the contents thereof is that the petitioner borrowed a sum of Rs.
1,52,00,000/- (Rupees one crore and fifty two lakhs) from the
respondent No. 3 with an assured interest of 6.5% per lac rupees
+ marginal profits (dividends) in the years 2014, 2015 and as
agreed, an interest amount of Rs. 32,65,600/- (Rupees thirty two
lakh) is paid to the respondent No. 3 by the petitioner up to April,
2015. Thereafter, the petitioner failed to pay the interest amount.
But, after some time, the petitioner introduced Mr. Suresh Jain to
the respondent No. 3 to act as an arbitrator to settle the matter
between the petitioner and respondent No. 3. However, when the
respondent No. 3 approached the petitioner and the said Suresh
Jain, the said duo response with an unpleasant manner and
refused to pay any money and threatened the respondent No. 3
with dire consequences. Hence, he filed the complaint against the
said duo.
[21] But, on further perusal of the complaint as well as
the FIR copy, the complainant did not file any supporting
documents in the complaint.
For reference and for convenience, the contents of
the complaint are extracted herein below:
Cril. Petition No. 20 of 2017 Page 13
"To
The Director General of Police
Manipur Police Headquater
"Government of Manipur
Imphal West - 001
MN INDIA
Date : 23 October 2015
Ref. : SP/IW/MP/Case001
Subject: Fraudulent and cheating
done by Mr. Sunil Sethi.
Dear Sir,
I would like to bring to your attention a fraudulent
case in which an individual named Mr. Sunil Sethi (s/o.
Shri Mahavir ji Sethi), Kanchan Medicos, Thangal Bazar,
Opp. Kasturi Building, Imphal West, Manipur has deceived
me by taking money for doing a business and in return I
would get interest. I gave him the large sum of money
based on trust, friendship and being a member of the
community. The sum was given to him against no
securities.
Mr. Sunil Sethi demanded all the payment in cash
and mentioned that he is doing a business with two other
individuals namely, 1) Mr. Kishore from Kanglatombi and
2) Mr. Satyanarayan from Kolkata. He mentioned that Mr.
Kishore looks after the purchase and distribution of
finished products viz Tobacco, Gutka etc. and Mr.
Satyanarayan was the source of purchase. Mr. Sunil
claimed that his role in the entire business was that of
investor, financier and interacting with key business
stakeholders.
Over a period of time (December 2014 till July
2015). I have borrowed and invested a sum of Rs.
15200000 (India Rupees one crore fifty two thousand
only) in Mr. Sunil and return I was assured an interest of
6.5% per lac rupees+marginal profits (dividend). The
payment was made to him in cash accordingly.
Timeline 001 : Payment made to Mr. Sunil Sethi
Date Payment Made to Amount
05/12/2014 Sunil Sethi (S/o Shri Rs. 1600000.00
15/01/2015 Mahavir Ji Sethi) Rs. 2400000.00
21/01/2015 Kanchan Mewdicos, Rs. 2400000.00
20/03/2015 Thangal Bazar, Opp. Kasturi Rs. 4000000.00
04/07/2015 Building Rs. 4800000.00
Total Rs. 15200000,00
Cril. Petition No. 20 of 2017 Page 14
During the course of investment, I had requested
him numerous times to make me meet his business
partners, but at each stanced he came up with some
excuse or the other. He even gave me the contact I
stumbled upon the fact that the numbers given by him
(Mr. Sunil Sethi) were his Rajasthan and Kolkata
numbers. This is when my suspicion started.
Mr. Sunil Sethi, in order to conceal his scam,
made timely interest payment till April 2015 and post April
2015, no interest was received.
Timeline 2 : Interest received
Date Month Amount
02/01/2015 January Rs. 272400.00
24/02/2015 February Rs. 1121600.00
28/03/2015 March Rs. 1121600.00
2015 April Rs. 750000.00
2015 May Due
2015 June Due
2015 July Due
2015 August Due
2015 September Due
2015 October Due
Total Rs. 3265600.00
On asking him for interest post April, Mr. Sunil
mentioned that the interest for May, June, July & August
would be paid together since the rainy season had begun
and no business activities is being carried out. While the
delay was being burdened, I came to know that there
were investors also into the business. I came to know
from the other investors that Mr. Sunil had sought the
money citing the similar business plan to them. But, when
interest was not being received, all the parties were
getting restless.
September passed and October entered, yet no
interest was received. On trying to reach Mr. Sunil, it
turned out he was no more in Imphal and his store staffs
had no clue about his presence. Rumour spread in the
market area that he has run away with large sum of
money. After an approximate period of 10 days he
resurfaced and confessed that he has spent the money in
meeting his personal needs.
When the situationl out of hand, he introduced
another individual Mr. Suresh Jain into the scene. Mr.
Suresh Jain was acting as an arbitrary and ensured
payment settlement to all parties that the invested in Mr.
Sunil Sethi. It was remuored that after a through round of
argument and negotiation, Mr. Suresh Jain settled the
payment for one party and has openly stated that he
would not be required to settle for any other parties.
Cril. Petition No. 20 of 2017 Page 15
I went to the arbitrator and Mr. Sunil Sethi to ask
for my invested principal amount and the interest amount
to be received till October 2015. The duo approached me
in a very unpleasant manner and refused to pay me any
money. This continued for 15 days. Mr. Suresh Jain,
dictated that I would not receive any payment. He
mentioned no logical explanation to his settlement and
tempted on stating that I do not need any settlement.
Mr. Suresh Jain, then out on took a very condescending
approach and starting saying that I could do whatever I
want, I could go to who ever I pleased but no one can
take out the money from him in order to threaten me, in
the afternoon of 20 October 2015. Mr. Suresh Jain had
sent two individuals to my shop. The individuals informed
my shop staffs that I be prepared to face consequences,
if I do not back out from the claim.
Also in view of the approach taken up by Mr.
Suresh Jain, I am under the impression that if anything
happens to me or to anyone in my family in and out of
my living premises, the most likely responsible culprit may
be booked as stated.
Therefore, I earnestly request your immediate
attention in taking legal action against Mr. Suresh Jain
(for sending unidentified and unwanted individuals to
threaten me) and the culprits involved along with Mr.
Sunil Sethi for cheating me. I pray that you would look
into this matter urgently.
Treated as an OE of Case FIR No.
97(7)2016 City PS U/s 380 IPC.
Sd/-
OC City PS
Dt. 5/07/2016
Yours faithfully,
Sd/-
Sunil Patni"
[22] In this situation, it is observed that except for stating
that the petitioner has cheated the respondent No. 3 by failing to
pay the assured interest amount, no details have been mentioned
in the complaint to attract the criminal jurisdiction for registering
FIR against the petitioner, simply mentioning of cheating for not
paying the assured interest amount made in the complaint is not
enough but, there must be some concrete satisfaction of the I.O.
Cril. Petition No. 20 of 2017 Page 16
concerned for registering the FIR. In the circumstances,
registration of FIR either bailable or non-bailable with proper
scrutiny of mind is required. The Hon'ble Supreme Court in "Inder
Mohan Goswami & Anr. V. State of Uttaranchal & Ors. (2007) 12
SCC 1 at Para No. 54 observed that -
"54. As far as possible, if the Court is of the opinion
that a summon will suffice in getting the appearance of
the accused in Court, the summon or the bailable
warrants should be preferred. The warrants with bailable
or non-bailable should never be issued without proper
scrutiny of facts and complete application of mind, due to
the extremely serious consequences and ramifications
which ensue on issuance of warrants. The Court must
very carefully examine whether the criminal complaint or
FIR has not been filed with an oblique motive."
[23] Mention is made here that as per the submission of
the learned counsel for the respondent No. 3, the petitioner
borrowed the said amount of money from the respondent No. 3
for doing business and with a promise to pay interest for the said
borrowed money with marginal profits and as per the respondent
No. 3, the petitioner paid interest for some time. Assuming the
submission made by the respondent No. 3 is true, this shows the
trust between the two parties.
[24] On further perusal of the rival contentions made by
the parties and the materials placed before this Court, it is evident
that the litigation, if any, is purely on account of breach of
agreement between the two parties. In "Sarabjit Kaur V. Station
Cril. Petition No. 20 of 2017 Page 17
of Punjab & Anr." (2023) 5 SCC 360", the Hon'ble Supreme Court
at Para No. 13 observed that -
"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 No. 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
only that the name of the appellant was mentioned. On
the first complaint, the only request was for return of the
amount paid by respondent No. 2. When the offence was
made out on the basis of the first complaint, the second
complaint was filed with which was not there 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 of pressurize parties to settle civil disputes.
Whenever 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."
[25] In "Vijay Kumar Ghai V. State of W.B. (2022) 7 SCC
124", the Hon'ble Supreme Court at Para Nos. 36 - 39 observed
that -
"36. As observed and held by this Court in R.K.
Vijayasarathy Vs. Sudha Seetharam, the ingredients to
constitute an offence under Section 420 are as follows:
(i) A person must commit the offence of cheating
under Section 415; and
(ii) The person cheated must be dishonestly induced
to :
(a) Delivery property to any person; or
Cril. Petition No. 20 of 2017 Page 18
(b) Make, alter or destroy valuable security or
anything signed or sealed and capable of being
converted into valuable security. Thus,
cheating is an essential ingredient for an act to
constitute an offence under Section 420 IPC.
37. The following observation made by the Court in
Uma Shankar Gopalika V. State of Bihar with almost
similar facts and circumstances may be relevant to note
at this stage : (SCC pp 338-39. Para 6-7)
"6. Now the question to be examined by us is
as to whether on the facts disclosed in the petition
of the complaint any criminal offence whatsoever
is made out much less offences under Section
420/120-B IPC. The only allegation in the
complaint petition against the accused persons is
that they assured the complainant that when they
receive the insurance claim amounting to Rs.
4,20,00, they would pay a sum of Rs. 2,60,000 to
the complainant out of that but the same has
never been paid........ It was pointed out on behalf
of the complainant that the accused fraudulently
persuaded the complainant to agree so that the
accused persons may take steps for moving the
consumer forum in relation to the claim of Rs.
4,20,000. 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 was nowhere been stated that at the very
inception that there was intention on behalf of the
accused persons to cheat which is a condition
precedent for an offence under Section 420 IPC.
7. In our view petition of complaint does not
disclose any criminal offence at all much less any
offence either under Section 420 or Section 120-B
IPC and the present case is a case of purely civil
dispute between the parties for which remedy lies
before a civil court by filing a properly constituted
suit. In our opinion, in view of these facts allowing
the police investigation to continue would amount
to an abuse of the process of court and to prevent
the same it was just and expedient for the High
Court to quash the same by exercising the powers
under Section 482 CrPC which it has erroneously
refused."
Cril. Petition No. 20 of 2017 Page 19
38. There can be no doubt that a mere breach of
contract is not in itself a criminal offence and gives rise to
the civil liability of damages. However, as held by this
Court in Hridaya Ranjan Prasad Verma V. State of Bihar,
the distinction between mere breach of contract and
cheating, which is criminal offence, is a fine one. While
breach of contract cannot give rise to criminal prosecution
for cheating, fraudulent or dishonest intention is the basis
of the offence of cheating. In the case at hand, complaint
filed by respondent 2 does not disclose dishonest or
fraudulent intention of the appellants.
39. In Vesa Holdings (P) Ltd. V. State of Kerala, this
Court made the following observation : (SCC pp. 297- 98,
para 13).
"13. It is true that a given set of facts may
make out a civil wrong as also a criminal offence
and only because a civil remedy may be available
to the complainant that itself cannot be ground to
quash a criminal proceeding. The real test is
whether the allegations in the criminal disclose the
criminal offence of cheating or not. In the present
case, there is nothing to show 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.
In our view, the complaint does not disclose any
criminal offence at all. Criminal proceedings should
not be encouraged when it is found to be mala
fide or otherwise an abuse of the process of the
court. The superior courts while exercising this
power should also strive to serve the ends of
justice. In our opinion, in view of these facts
allowing the police investigation to continue would
amount to an error in refusing to exercise the
power under Section 482 CrPC to quash the
proceedings."
[26] In Criminal Appeal No. 660 of 2024 arising out of
SLP (Crl) No. 13485 of 2023, the Hon'ble Apex Court observed
that -
"This Court, in a number of judgments, has
pointed out the clear distinction between a civil wrong in
the form of breach of contract, non-payment of money or
disregard to and violation of the contractual terms; and a
criminal offence under Section 420 and 406 of the IPC.
Cril. Petition No. 20 of 2017 Page 20
Repeated judgments of this Court, however, are
somehow overlooked, and are not being applied and
enforced. We will be referring to these judgments. The
impugned judgment dismisses the application filed by the
appellants under Section 482 of the Cr.P.C. on the ground
of delay/laches and also the factum that the chargesheet
had been filed on 12.12.2019. This ground and reason is
also not valid."
As pointed out the distinction between a civil wrong
in the form of breach of contract, non-payment of money or
disregard to and violation of contract terms and criminal offence
under Section 420 and 406 of the IPC, in the instant case, the
Hon'ble Supreme Court set aside the order of the High Court
dismissing the application filed by appellants under Section 482 of
CrPC on the ground of delay/laches and in this regard, has
referred to a series of judgments rendered by it :
"In "Mohammed Ibrahim & Ors. V. State of Bihar & Anr."
this Court had referred to Section 420 of the IPC to
observe that in order to constitute an offence under the
said Section, this following ingredients are to be satisfied
:-
"18. Let us now examine whether the ingredients of an
offence of cheating are made out. The essential
ingredients of the offence of "cheating" are as
follows:
(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
Cril. Petition No. 20 of 2017 Page 21
(iii) Such act or omission causing or is likely to
cause damage or harm to that person is
body, mind, reputation or property.
19. Constitute an offence under Section 420, there
should not only be cheating, but as a consequence of
such cheating, the accused should have dishonestly
induced the person deceived.
(i) to deliver any property to any person, or
(ii) to make, alter or destroy wholly or in part
a valuable security (or anything signed or
sealed and which is capable of being
converted into a valuable security)."
Similar elucidation by this Court in "V.Y. Jose and Another
v. State of Gujarat and Another." Explicitly stats that a
contractual dispute or breach of contract per se should
not lead to initiation of a criminal proceeding. The
ingredient of 'cheating', as defined under Section 415 of
the IPC, is existence of a fraudulent or dishonest intention
of making initial promise or representation thereof, from
the very beginning of the formation of contract. Further,
in the absence of the averments made in the complaint
petition wherefrom the ingredients of the offence can be
found out, the High Court should not hesitate to exercise
its jurisdiction under Section 482 of the Cr.P.C. Section
482 of the Cr.P.C. saves the inherent power of the High
Court, as it serves a salutary purposes viz. a person
should not undergo harassment of litigation for a number
of years, when no criminal offence is made out. It is one
thing to say that a case has been made out for trial and
criminal proceedings should not be quashed, but another
thing to say that a person must undergo a criminal trial
despite the fact that no offence has been made out in the
complaint. This Court in V.Y. Jose (supra) placed reliance
on several earlier decisions in 'Hira Lal Hari Lal Bhagwati
v. CBI", "Indian Oil Corporation v. NEPC India Ltd." , "Vir
Prakash Sharma v. Anil Kumar Agarwal" and "All Cargo
Movers (I) (P) Ltd. V. Dhanesh Badarmal Jain".
[27] Having gone through the above reproduced
judgments of the Hon'ble Apex Court and its observations made
therein, it is made clear that it can be applied in the instant case,
Cril. Petition No. 20 of 2017 Page 22
as it is a clear case that the respondent No. 3's grievance is
regarding failure of the appellant's to pay the outstanding amount
with interest in spite of the respondent No. 3's repeated demands
i.e. after the month of April, 2015. As per the complaint, the
petitioner had paid interest till the month of April, 2015. Assuming
that the assertion made in the complaint is correct, but even then
a criminal offence under Section 420 of IPC is not established in
the absence of deception by making false and misrepresentation,
dishonest concealment or any other act of omission, or
inducement of the complainant to deliver at the time of agreement
being entered. The complaint was just a prayer made to the police
for recovery of money borrowed from the appellants and for
criminal action. The police does not have the power to recover
money or act as a civil court for recovery of money. The act of the
petitioner and transaction made between the parties cannot result
in an offence of cheating and criminal breach of trust
simultaneously, for the offence of cheating prior dishonest
intention must exist at the inception of transaction, whereas, in
case of criminal breach of trust there must exist a relationship
between the parties whereby one party entrust another with the
property as per law. Hence, dishonest intention comes later.
However, in the instant case, no details and particulars are given
in the form of reliable documents and when and on which date
and place, the threats were given without the said details and
Cril. Petition No. 20 of 2017 Page 23
particulars, it is apparent that this allegation of threat have been
made only with an intent to activate police missionary for recovery
of money.
[28] Accordingly, it is observed that it is for the
respondent No. 3 to file civil suit and initiation of the criminal
process for oblique purposes, is bad in law and amounts to abuse
of process of law.
[29] In view of the aforesaid discussion, the present
petition is allowed quashing of the FIR No. 97(7)2016 of City
Police Station, Imphal, Manipur and resultant proceedings.
Accordingly, the FIR No. 97(7)2016 of City Police
Station, Imphal, Manipur and its resultant proceedings are
quashed.
[30] With the above finding and direction, this petition is
disposed of. No order to as costs.
[31] Furnish extract copies of this order to all the parties.
JUDGE
FR/NFR
Lucy/Bipin
Cril. Petition No. 20 of 2017 Page 24
