Naveen Bhatt vs State Of Uttarakhand And Another
2022 Latest Caselaw 3024 UK

     HIGH COURT OF UTTARAKHAND AT NAINITAL

            Criminal Misc. Application No. 1669 of 2022

Naveen Bhatt                                                   .....Applicant.
                                      Versus
State of Uttarakhand and another                               .... Respondents
Present :
Mr. Sanjay Bhatt, Advocate, for the applicant.
Mr. Pratiroop Pande, A.G.A, with Mr. Pramod Tiwari, Advocate, for the applicant.



                               JUDGEMENT

Hon'ble Sharad Kumar Sharma, J.

In the present C-482 Application, the present applicant, who is the named accused person in FIR No. 0008 of 2022, which was got registered at Police Station Maneri, District Uttarkashi, has put a challenge to the Criminal Case No. 774 of 2022, State Vs. Naveen Bhatt, pending consideration before the Court of Chief Judicial Magistrate, District Uttarkashi, relating to the offences, which are punishable under Sections 420 and 406 of the IPC, along with the order of cognizance / summoning dated 24th August, 2022.

2. Before venturing to deal with the arguments, which had been extended by the learned counsel for the applicant, this Court feels it apt to refer to the legislative intend of Sections 406 and 420 of the IPC, on which, the cognizance have been taken against the applicant by the Court, where the criminal trial proceedings are pending consideration.

3. Section 406 of the IPC, for the purposes of brevity, is extracted hereunder, along with the provisions contained under Section 420 of the IPC :-

"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 dishonestly 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."

4. The very intention of Section 406 of the IPC, is that it intends to take a punitive action against the accused person, when there is a "criminal breach of trust". Secondly, the provisions contained under Section 420 of the IPC, it relates to "cheating and dishonestly inducing person to delivery of property".

5. These two provisions are quite explicit and clear in their basis intention, that there has to be a breach of trust, for establishment of an offence under Section 406 and for the purposes under Section 420 of the IPC, there has had to be an inducement to deliver a property.

6. In the case at hand, which stood initiated, as a consequence of an agreement, which was entered into between the parties on 15th October 2019, it contained various references to the terms and conditions for fulfilment of the project, for which, the contract was entered into, which was inter se being between the parties, that has also defined as a scope of work for the purposes of construction of six cottages, one yoga centre, reception, building, restaurant and kitchen at Malla Bhatwari, Uttarkashi. The dimension of the expected construction under the terms of contract was given therein, and particularly, there have been an inter se settlement between the parties, as to what will be the modalities of payment of advances towards the work to be performed, for which, the contract of 5th October, 2019, was executed.

7. In order to fortify his argument, the learned counsel for the applicant has particularly referred to the terms and conditions relating to the payment terms, contained in the agreement, which is extracted hereunder :-

"Payment Terms:-

1. 40% advance along with the formal Work- order

2. 20% Completion of the wall frame

3. 30% Initialization of finishing

4. 10% Completion of work"

8. The complainant /respondent, on being dissatisfied with regard to the work performance, under the terms of agreement, and particularly, the act of wrongful billing by the respondent while taking advances, without

even getting the work completed, and with regard to the fabrication of structures, it was alleged in the FIR, which was registered against the present applicant on 3rd March, 2022, that there was a breach of trust; because the covenants of the terms of agreement of 15th October, 2019, itself was apparently breached under a bona fide assurance which was extended by the present applicant for undertaking the work as per the terms of the contract, and since being a recipient of the money having acquired monetary gains, due to be paid under the terms of the contract under a false assurance of completion of work, this would apparently be a breach of trust of a settled and admitted terms of an agreement, when splitting of the amount which would have been to be paid in terms of the contract was availed even prior to the actual culmination of work.

9. The learned counsel for the applicant submits the very noble idea, that Section 420 of the IPC, would not be made out against the present applicant in the absence of there being an entrustment, there cannot be any cheating at all.

10. The factum of entrustment of valuables itself is apparent from the terms of the agreement and the set of allegations which had been levelled in the FIR, to the effect, that the amount of money, which was already received by the present applicant was even without actually completing the work under the terms of the contract, hence, it will amount to that the act of entrustment takes place, as soon as the advances are received by the applicant for the purposes of completion of the work under the contract. The birth of

entrustment is at the stage when under the terms of the contract, the money is received, prior in time even without completion of work and after receipt of the money, if the work is not completed, then it will amount to be a breach of trust of not completing the work despite of having received the money, which would termed as to be a valuable security.

11. Even if the FIR is taken into consideration, while it refers to the terms of the contract, and particularly, as per the allegation levelled in Clause 11 of the FIR, that despite of not completing the work within the stipulated time frame under the agreement, and still having received the amount by playing fraud under the trust created to complete the work and having not complied with the said condition, this Court is of the view, that the offence under Section 406 of the IPC itself would be made out because the entrustment created by way of receipt of money of Rs.19.56 lacs, and not completing the work under the terms of the contract, it will very well fall to be under Sections 406 and 420 of the IPC.

12. The investigation was carried and a chargesheet, being,\ Chargesheet No. 9 of 2022 dated 13th June, 2022, was submitted against the applicant. The Investigating Officer, while making reference to the terms of agreement has also made an observation, that after carrying out the investigation, after examination of as many as four witnesses, the work as per the terms of the agreement was not completed despite of the proved fact, that the applicant under a false impression of completing the work has already taken the money in excess, to the quantum of work done and, hence, the Investigating

Officer, has observed that Section 406, would be apparently made out, because once he is the recipient of money without even completing the work, the breach of trust is apparent on the fact of it to bring the act under Section 406 of the IPC.

13. On this submission of the chargesheet, the cognizance has been taken by the Court of Chief Judicial Magistrate, Uttarkashi, by registration of Criminal Case No. 774 of 2022, for the offences under Sections 420 and 406 of the IPC.

14. Even if, the summoning order itself is taken into consideration, the Court of Chief Judicial Magistrate, Uttarkashi, while summoning the applicant to put in appearance on 14th September, 2022, had taken into consideration the fact as to what implication would the terms of agreement lead to, when he was already a recipient of money under the terms of agreement, which itself would be treated as to be a document of trust.

15. Having received the money and having not completed the work, will itself amount to be a fraudulent inducement to deprive a person of his entrustment of delivery of property, which would be herein, a money which has exchanged hands even prior to the completion of work, under the schedule of payment, as it was agreed between the parties, under the terms of the agreement.

16. On the other hand, the learned Government Advocate has argued that for the purposes of Sections 405 to

be read with Sections 406 and 420 of the IPC, the intention is also to be looked into by the Court. The fraudulent inclination, to deprive a person could be apparently culled out from the FIR, as well as from the chargesheet itself, because this was not only an isolated incident rather there have been number of other incidents also, which itself reflects the very intention, an aptitude of the applicant, that he is habitual in indulging himself in the commission of the offences under Sections 406 and 420 of the IPC.

17. It has been argued by the learned Government Advocate, that for the purposes of Section 406 IPC, which deals with an aspect of breach of trust, which could be very well established, in the instance case, when the address which was given in the agreement was ultimately found to be a wrongful address, where the applicant was not actually residing and that itself reflected the clever intention of the applicant of causing a breach of trust, by making himself to be not approachable on the address given in the agreement, because ultimately later on, it revealed that he was evicted from the address, which was given in the agreement.

18. It was further argued by the learned Government Advocate, that as per the terms of the agreement of 15th October, 2019, where the schedule of payment was prescribed and described, the third instalment, which was to be paid, was for the purposes of initialization for finishing of the work that too was even received before the actual completion of the work, and it remained uncompleted till the FIR was registered.

19. In order to answer the aforesaid arguments, the learned counsel for the applicant had made reference to a judgment reported in (2009) 14 SCC 696, Dalip Kaur and others Vs. Jagnar Singh and another, which too, was emanating from the terms of the contract, whether the act complained of had an ingredient of fraudulent or dishonest inducement, that aspect is very well apparent in the instant case too owing to the reasons, which have been already explained above.

20. The learned counsel for the applicant, particularly has referred to the basic ingredients for the purposes of establishment of an offence, as to what would amount to be a breach of trust as defined under Section 405 of the IPC and what would be the cheating as defined under Section 415 of the IPC.

21. In fact, if para 10 and 11 of the said judgment are taken into consideration, which is extracted hereunder, that, in itself would be an answer to the argument, extended by the learned counsel for the applicant.

"10. The High Court, therefore, should have posed a question as to whether any act of inducement on the part of the appellant has been raised by the second respondent and whether the appellant had an intention to cheat him from the very inception. If the dispute between the parties was essentially a civil dispute resulting from a breach of contract on the part of the appellants by non-refunding the amount of advance the same would not constitute an offence of cheating. Similar is the legal position in respect of an

offence of criminal breach of trust having regard to its definition contained in Section 405 of the Indian Penal Code. {See Ajay Mitra v. State of M.P. [(2003) 3 SCC 11]}.

11. There cannot furthermore be any doubt that the High Court would exercise its inherent jurisdiction only when one or the other propositions of law, as laid down in R. Kalyani v. Janak C. Mehta & Ors. [(2009 (1) SCC 516] is attracted, which are as under:

"(1) The High Court ordinarily would not exercise its inherent jurisdiction to quash a criminal proceeding and, in particular, a First Information Report unless the allegations contained therein, even if given face value and taken to be correct in their entirety, disclosed no cognizable offence.

(2) For the said purpose, the Court, save and except in very exceptional circumstances, would not look to any document relied upon by the defence.

(3) Such a power should be exercised very sparingly. If the allegations made in the FIR disclose commission of an offence, the court shall not go beyond the same and pass an order in favour of the accused to hold absence of any mens rea or actus reus.

(4) If the allegation discloses a civil dispute, the same by itself may not be a ground to hold that the criminal proceedings should not be allowed to continue.""

22. In fact, that case too was considering the impact of the receipt of an amount, which remain unrefunded, which was an amount given in advance and it constituted to be an act of cheating similar to that of the position, which was dealt with by the Hon'ble Apex Court in yet another judgment reported in (2003) 3 SCC 11, Ajay Mitra Vs. State of M.P.

23. Lastly, it has been argued by the learned counsel for the applicant, that if the FIR and the contents of the chargesheet are taken into consideration, it amounts to be a civil dispute, because there was a breach of the terms of the contract and the parties ought to have their recourses by resorting to the civil remedies.

24. Even if this argument of the learned counsel for the applicant, has been answered by the judgment of Dalip Kumar (Supra), as relied by him in para 11, wherein, the Hon'ble Apex Court, while limiting the exercise of powers by the High Courts in the exercise of its inherent jurisdiction under Section 482 of the Cr.P.C., has extracted the ambit of exercise of power from the principle which had been laid down by the judgment of the Hon'ble Apex Court in (2009) 1 SCC 516, R. Kalyani Vs. Janak C. Mehta, and particularly, the reference may be had to para 15, as to what would be the ambit and the scope of exercise of powers by the High Court under Section 482 of the Cr.P.C.

25. In its Sub-para 4 of Para 11 Dalip Kaur (Supra) is an answer to the argument of the learned counsel for the applicant, that merely because of the fact, the FIR has a blend of a civil dispute which was even if was arising out of an agreement or a work contract will in itself not make the controversy as to be a civil dispute which could be exclusively to be agitated before the Civil Court, because a breach of the terms of the contract and inducement to receive an amount in advance, without completing the work agreed under the contract, will satisfy the parameters of Sections 406

and 420 of the IPC, and that is why, the Hon'ble Apex Court has specifically observed even a civil dispute, may have a blend of criminality in an act complained of and the following exception has been carved out by the Hon'ble Apex Court in para 11, which has been extracted above.

26. There is another reason for not to accept the argument as it has been extended by the learned counsel for the applicant. This Court is of the view, that the Legislature when it has incorporated Section 482 of the Cr.P.C., it was not an unfettered powers, which has been given to the High Court, to invariably venture into all cases irrespective of its factual controversy which may be involved in it, and that is why, Section 482 of the Cr.P.C. has been commenced with the word "savings'. Savings means that exercise of powers under Section 482 of the Cr.P.C., would be in a rarest of the rare cases and that too in an exception which calls for exercise of inherent powers.

27. While exercising the powers under Section 482 of the Cr.P.C., merely a reasonable apprehension or an accusation made in the FIR, they have not required to be scrutinized or embarked upon by the High Court, to test it on the pedestal of its factual appreciation of evidence, which has been attempted to by the learned counsel for the applicant by referring to the terms of the agreement and the gravity to which level the work was completed under the agreement of 15th October, 2019.

28. The Hon'ble Apex Court in a judgment reported in (2008) 8 SCC 781, Monica Kumar (Dr.) and another Vs. State of Uttar Pradesh and others, has laid down that the High Court, should be very conscious and careful, and should sparingly exercise its powers in its inherent exercise of jurisdiction under Section 482 of the Cr.P.C., particularly where it requires an appreciation of evidence, because often if, the High Court ventures into a factual appreciation, it may have a catastrophic effect on the future litigation between the parties in settlement of their controversies finally. It is apparently only intended to protect an abuse of process, which as per the opinion of this Court, and particularly, under the set of allegations levelled in the FIR, initiation of the proceedings under Sections 406 and 420 of the IPC, as against the present applicant, under the set of allegations of misappropriation of taking advances without actual completion of work and its ultimate investigation, which has been sought to be done by conducing the trial will not be an abuse of process of law Court in any manner of whatsoever, to call for any interference under Section 482 of the Cr.P.C..

29. In view of the reasonings assigned above, I do not find any merit in the C482 Application and the same is accordingly dismissed.

(Sharad Kumar Sharma, J.) 20.09.2022 Shiv