Telangana High Court

Smt. Sonal Thakrar, vs The State Of Telangana, on 7 August, 2025

Author: Juvvadi Sridevi

Bench: Juvvadi Sridevi

     THE HONOURABLE SMT JUSTICE JUVVADI SRIDEVI

              CRIMINAL PETITION No.6615 OF 2023

O R D E R:

This Criminal Petition is filed by the petitioners-

accused Nos.3, 6 & 7 seeking to quash the proceedings

against them in C.C.No.4557 of 2020 pending on the file

of the learned XII Additional Chief Metropolitan

Magistrate at Hyderabad, registered for the offences

under Sections 420, 406 read with Section 34 of the

Indian Penal Code (for short 'IPC').

02. Heard Sri Sharad Sanghi, learned counsel for

the petitioners-accused and Smt.S.Madhavi, learned

Assistant Public Prosecutor for the State-respondent

No.1. No representation on behalf of the unofficial

respondent No.2. Perused the record.

03(a). Brief facts of the case are that M/s.Gharonda

Builders and Developers represented by the accused

No.2, along with other partners, had taken up a new

venture named Gharonda Bhoopal in the premises

bearing No. 6-1-280 & 6-1-280/E and part D at

Padmaraonagar, Secunderabad entered into

unregistered preliminary General Power of Attorney-cum-

Development agreement with Bhoopal Family, he also

obtained the necessary permissions from Greater

Hyderabad Municipal Corporation, Water works Dept etc.,

and started receiving booking orders for flats.

03(b). Subsequently, the accused No.2 constructed

residential complexes for Bhoopal family members and

invested Rs.1.75 Crores towards part consideration for

purchase of plots and brought in his family friend a

Canadian Citizen Mr.Aditya Chandra Jha to pay the

balance consideration of Rs.6.0 Crores towards purchase

of plot and was instrumental in facilitating the plot to be

registered in the name of Mr.Aditya Chandra Jha in

December, 2014 vide sale deed No.1891 of 2014 dated

08.12.2014. The accused No.2 has entered into an

agreement with Mr. Aditya Chandra Jha to repay Rs.6

crores soon and take back the procession of the plot for

construction of Gharonda Bhoopal Complex as per the

original planning. The accused No.2 assured the

complainant's association to start the construction soon

and deliver the flats at the earliest.

03(c). Subsequently, the complainant and others

came to know that the land was sold and registered to a

group of people in the recent past i.e. on 30.04.2019 by

secrete understanding between all the concerned parties,

totally ignoring the complainant's association members.

The complainant also informed that some of the sufferers

have already approached the CCS Police in the year,

2015 and submitted their written complaints. The

complainant requested to recover their money from

Ghoranda Builders and Developers.

04(a). Learned counsel for the petitioners submitted

that the petitioners have no involvement whatsoever in

the alleged offences and that there is no element of

dishonest, or fraudulent intention on the part of the

petitioners-accused Nos.3, 6 & 7 to cheat the

complainant. It is contended that the police have filed the

charge sheet without conducting proper investigation and

that there is no incriminating material available on record

against the petitioners-accused Nos.3, 6 & 7. The

allegations levelled against the petitioners are purely civil

in nature, and the complainant is attempting to give a

criminal colour to a civil dispute. It is further submitted

that the offences under Sections 406 and 420 of IPC are

mutually exclusive in nature and cannot co-exist

simultaneously. The learned counsel also filed the copy

of orders passed by this Court in Criminal Petition

Nos.3573, 3576, and 3577 of 2019, whereby the criminal

proceedings initiated against the petitioners-accused

Nos.3, 6 & 7 were quashed vide Orders dated

18.10.2023.

04(b). With the above submissions, learned counsel

while praying for the quashment of criminal proceedings

relied upon a decision of the Hon'ble Supreme Court in

Sunil Bharti Mittal v. Central Bureau of Investigation1

wherein it was held at Paragraph No.42 that:

"42. No doubt, a corporate entity is an artificial person which acts through its officers, directors, managing director, chairman etc. If such a company commits an offence involving mens rea, it would normally be the intent and action of that individual who would act on behalf of the company. It would be more so, when the criminal act is that of conspiracy. However, at the same time, it is the cardinal principle of criminal jurisprudence that there is no vicarious liability unless the statute specifically provides so."

05. On the other hand, learned Assistant Public

Prosecutor appearing for the State-respondent No.1

contended that there are triable issues and factual

aspects to be examined by the learned trial Court and it is

not a fit case to quash the proceedings against the

petitioners at this juncture and the matter is to be decided

after conducting trial by the learned trial Court and prayed

to dismiss this Criminal Petition.

06. Having regard to the submissions advanced

on either side and upon perusal of the material available

(2015) 4 Supreme Court Cases 609

on record, it is evident that the entire set of allegations

pertains to the conduct of the accused No.2, who is

representing accused No.1-company. It is the specific

case of the petitioners-accused Nos.3, 6 & 7 that they

had retired as partners from the accused No.1-company

in the year 2018 itself, whereas the alleged offence is

said to have occurred in the year 2019. Significantly,

there is no reference to any overt act or specific role

attributable to the petitioners-accused Nos.3, 6 & 7 in the

entire charge sheet. Moreover, the petitioners-accused

Nos.3, 6 & 7 occupation is not reflected as that of

'partners' in the said company, rather it has been shown

as 'housewife' in the charge sheet. Therefore, there is no

material placed by the prosecution to substantiate that

the petitioners-accused Nos.3, 6 & 7 are the partners of

the accused No.1-company at the relevant point of time.

07. It is further evident from the record that

several criminal cases have been registered against the

accused No.2. However, it is not the case of the

complainant that any amounts were specifically entrusted

to the petitioners-accused Nos.3, 6 & 7. The case of the

complainant, as evident from the record, is primarily

against the accused No.1-company with respect to the

alleged flat transactions. It is also pertinent to note that

this Court has earlier quashed certain criminal

proceedings initiated by the different complainants therein

over same set-of-facts against the petitioners-accused

Nos.3, 6 & 7 herein, vide Orders dated 18.10.2023

passed in Criminal Petition Nos.3573, 3576 & 3577 of

2019.

08. It is to be noted that, admittedly, the

complainant became aware of the alleged offence on

30.04.2019. However, the first information report came to

be registered only on 30.07.2019 i.e. after delay of nearly

three months. There is no plausible explanation, or

justification forthcoming from the complainant for such

delay in lodging the complaint, which casts a serious

doubt on the veracity of the allegations and the

genuineness of the prosecution case.

09. It is apposite to refer a decision in Delhi Race

Club (1940) Ltd., v State of UP2, wherein it was held at

Paragraph No.30 that:

"30......There is a distinction between criminal breach of trust and cheating. For cheating, criminal intention is necessary at the time of making a false or misleading representation i.e., since inception. In criminal breach of trust, mere proof of entrustment is sufficient. Thus, in case of criminal breach of trust, the offender is lawfully entrusted with the property, and he dishonestly misappropriated the same. Whereas, in case of cheating, the offender fraudulently or dishonestly induces a person by deceiving him to deliver any property. In such a situation, both the offences cannot co-exist simultaneously."

10. Further, in Rikhab Birani and another v

State of UP 3 it was held by the Honourable Supreme

Court at Paragraph Nos.2, 6, 12, 13, 14, 20 that:

"2. The appellants, Rikhab Birani and Sadhna Birani, had entered into an oral agreement to sell Roti Godown No. 28/27, Birhana Road, Kanpur, Uttar Pradesh, to respondent No.2, Shilpi Gupta,

2024 INSC 626

2025 SCC OnLine SC 823

for a consideration of ₹1,35,00,000/- (Rupees one crore thirty five lakhs only) in June, 2020.

6. It is the case of the appellants, Rikhab Birani and Sadhna Birani, that they had suffered losses of ₹45,00,000/- (Rupees forty five lakhs only) on account of the failure of respondent No. 2, Shilpi Gupta, and her husband, in paying the sale consideration amount and abiding by the oral agreement; hence, they are not liable to refund or pay any amount to respondent No.2, Shilpi Gupta. It is the accepted position that neither the appellants, Rikhab Birani and Sadhna Birani, nor respondent No. 2, Shilpi Gupta, initiated any civil proceedings. On the other hand, respondent No.2, Shilpi Gupta, approached the Court of the Metropolitan Magistrate, Kanpur Nagar, for registration of a First Information Report1 by taking recourse to the provisions of Section 156(3) of the Code of Criminal Procedure, 1973.

However, by the detailed and reasoned order dated 26.04.2022, the Metropolitan Magistrate, Kanpur Nagar, dismissed the application under Section 156(3) of the Cr.P.C. holding that this is a civil matter and no criminal offence is made out.

12. Thereupon, the appellants, Rikhab Birani and Sadhna Birani, preferred a petition under Section 482 of the Cr.P.C. before the High Court,

which was dismissed by the High Court, vide the impugned order dated 09.05.2024, notwithstanding the aforesaid facts, stating that at that stage, only a prima facie case was to be seen in the light of the law laid down by this Court.

13. We are constrained to pass this detailed speaking order, as it is noticed that, notwithstanding the law clearly laid down by this Court on the difference between a breach of contract and the criminal offence of cheating, we are continuously flooded with cases where the police register an FIR, conduct investigation and even file chargesheet(s) in undeserving cases.

14. During the last couple of months, a number of judgments/orders have been pronounced by this Court, especially in cases arising from the State of Uttar Pradesh, deprecating the stance of the police as well as the courts in failing to distinguish between a civil wrong in the form of a breach of contract, non-payment of money or disregard to and violation of contractual terms; and a criminal offence under Sections 420 and 406 of the IPC, the ingredients of which are quite different and requires mens rea at the time when the contract is entered into itself to not abide by the terms thereof.

20. In yet another case, again arising from criminal proceedings initiated in the State of Uttar Pradesh, this Court was constrained to note recurring cases being encountered wherein parties repeatedly attempted to invoke the jurisdiction of criminal courts by filing vexatious complaints, camouflaging allegations that are ex facie outrageous or are pure civil claims. These attempts must not be entertained and should be dismissed at the threshold. Reference was made to a judgment of this Court in Thermax Limited and Others v K.M. Johny and Others, which held that courts should be watchful of the difference between civil and criminal wrongs, though there can be situations where the allegation may constitute both civil and criminal wrongs. Further, there has to be a conscious application of mind on these aspects by the Magistrate, as a summoning order has grave consequences of setting criminal proceedings in motion. Though the Magistrate is not required to record detailed reasons, there should be adequate evidence on record to set criminal proceedings into motion. The Magistrate should carefully scrutinize the evidence on record and may even put questions to the complainant/investigating officer etc. to elicit answers to find out the truth about the allegations. The summoning order has to be passed when the complaint or chargesheet

discloses an offence and when there is material that supports and constitutes essential ingredients of the offence. The summoning order should not be passed lightly or as a matter of course."

11. The offences that are registered against the

petitioners-accused Nos.3, 6 & 7 are under Sections 420,

406 of IPC. Section 406 of IPC Criminal Breach of Trust,

deals with dishonestly misusing property entrusted to

someone, where the person is in a position of trust. It is

about violating a duty or obligation associated with the

property. Section 420 of IPC deals with cheating and

focuses on deceiving someone to induce them to deliver

property or consent to the retention of property, typically

involving fraud or dishonest inducement. It is about

making a false representation or inducing someone to

believe in something false. Cheating requires the

element of deception, while criminal breach of trust

requires a trust relationship and dishonestly using

property entrusted.

12. In case of cheating, the intention of the

accused at the time of inducement should be looked into

which may be judged by a subsequent conduct, but for

this, the subsequent conduct is not the sole test. Mere

breach of contract cannot give rise to a criminal

prosecution for cheating unless fraudulent or dishonest

intention is shown right from the beginning of the

transaction i.e. the time when the offence is said to have

been committed. Therefore, it is this intention, which is

the gist of the offence. Whereas, for the criminal breach

of trust, the property must have been entrusted to the

accused or he must have dominion over it. The property

in respect of which the offence of breach of trust has

been committed must be either the property of some

person other than the accused or the beneficial interest in

or ownership' of it must be of some other person. The

accused must hold that property on trust of such other

person. Although the offence, i.e. the offence of breach

of trust and cheating involve dishonest intention, yet they

are mutually exclusive and different in basic concept. In

such a situation, both the offences cannot co-exist

simultaneously, as they are anti-thetical of each other and

cannot dwell together in the same set-of-facts.

13. In State of Haryana and others v.

Ch.Bhajan Lal and others 4 the Hon'ble Supreme Court

held that:

"In the exercise of the extra-ordinary power under Article 226 or the inherent powers under Section 482 of the Code of Criminal Procedure, the following categories of cases are given 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 channelised and inflexible guide 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;

1992 SCC (SUPP) 1 335

(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 FIR do not constitute a cognizable offence but constitute only a non-cognizable 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 mala fide 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."

14. In the present case, as discussed hereinabove, it

is evident from the material available on record that the

petitioners-accused Nos.3, 6 & 7 were not partners of the

accused No.1-company as on the date of the alleged

offence, and there is no material to indicate any element of

cheating or fraudulent intention attributable to them. The

charge sheet remained silent with respect to any specific

role, overt act, or involvement of the petitioners-accused

Nos.3, 6 & 7 in the commission of the alleged offence. The

principal allegations are confined solely to the accused No.2.

Even assuming that the allegations in the charge sheet to be

true in their entirety, they do not, on the face of it, constitute