High Court · 2025

Crl.O.P.No.869 of 2024IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 02.12.2025CORAM:THE HON'BLE MR. JUSTICE A.D.JAGADISH CHANDIRACrl.O.P.No.869 of 2024 and Crl.M.P.Nos.544 & 545 of 20241. P.Sushila Kanwar 2. Sunil Jain @ sonil Kumar 3. Sudir Jain @ Sudhir Kumar ... PetitionersVs.K.Devendran... RespondentCriminal Original Petition is filed under Section 482 Cr.P.C. to call for the records in C.C.No.779 of 2023 pending on the file of the XVIII Metropolitan Magistrate Court, Saidapet and quash the same.For petitioners:Mr.V.S.SenthilkumarFor respondent:Mr.R.C.Paul Kanagaraj- - - - -1/12 https://www.mhc.tn.gov.in/judis Crl.O.P.No.869 of 2024O R D E RThis Criminal Original Petition has been filed seeking to quash the proceedings in C.C.No.779 of 2023 pending on the file of the XVIII Metropolitan Magistrate Court, Saidapet, Chennai (for brevity “the Trial Court”).2.The case of the respondent/complainant is as follows:i)The complainant pledged his gold jewels weighing 66 gms., fixed with diamond and ruby stones and silver pooja items weighing 2 kgs. and 602 gms., worth Rs.6,00,000/-. On 14.09.2016, 16.11.2016, 16.04.2017 and 20.04.2017 respectively, he pledged them for a value of Rs.1,14,700/- with the 1st accused /pawn broker and the 2nd and 3rd accused are the persons doing the business along with the 1st accused.ii) The gold jewels as well as silver pooja items were prestigious and sentimental ornaments of his family and due to his financial emergency to pay fees for his children, he pledged the same. The complainant, who knew the 3rd accused, asked him to help in pledging the said jewels to any pawn broker known to him. The 3rd accused informed him that he along with the 1st and 2nd accused are carrying on the said business and he himself will advance the loan on the pledged items. Hence, the complainant pledged his gold jewels and silver articles with the petitioners/accused 1 to 3.2/12 https://www.mhc.tn.gov.in/judis Crl.O.P.No.869 of 2024iii) The complainant paid monthly interest till 20.07.2019 at the demand of the 2nd and 3rd accused. During the year 2019, the complainant approached the accused 1 to 3 to redeem his jewels and silver articles after arranging funds to pay the dues i.e., balance principal amount as well as interest, if any. The accused 1 to 3, citing one reason or other, evaded returning the jewels. The complainant repeatedly demanded for redemption of his jewels and silver articles and informed the accused 1 to 3 that if they fail to return the jewels and silver articles, he will be forced to take legal action. Thereafter, the 2nd and 3rd accused informed him that they have sold the golds jewels and silver articles.iv)When the complainant questioned as to how they can sell the same, the accused informed him that they will somehow try to return the same. The complainant visited the shop of the accused a number of occasions, but all his attempts to redeem the jewels went in vain.v)Hence, the complainant lodged a complaint before the Inspector of Police, Crime, E3 Teynampet Police Station and the police issued CSR No.183/2020 on 14.06.2020, but no action was taken. Hence, he gave a complaint to the Deputy Commissioner of Police, T.Nagar on 03.08.2020, where he was advised to file a criminal private complaint.3/12 https://www.mhc.tn.gov.in/judis Crl.O.P.No.869 of 2024vi)Therefore, a complaint was sent to the Commissioner of Police on 12.10.2020 and the same was received on 13.10.2020, but no action was taken. Subsequently, a complaint was given before the Court and the Court, under Section 156(3) Cr.P.C. in Crl.M.P.No.4860 of 2020, directed the Inspector of Police (Crime), E3 Teynampet Police Station, to register an FIR and file a final report. Even then, no action was taken by the police.vii) The accused 1 to 3 had indulged in cheating by not returning the items entrusted to them and have committed the offences under sections 406 and 420 IPC. Hence, the complainant filed the complaint against the petitioners for the offences under Sections 406 and 420 IPC which was taken cognizance by the Trial Court in C.C. No.779 of 2023.3.Mr.A.Kripakaran, learned counsel for the petitioners would submit that the petitioners are licensed pawn brokers in L.No.56/F3/2015-16 and they have been running the business according to the statutory conditions imposed by the authorities; the respondent voluntarily pledged the jewels and paid interest only on two occasions and thereafter, did not pay neither the principal nor the interest component; therefore, the petitioners, in due course of their business, sent intimation to him to his registered mobile number 88388 22719; even thereafter, the complainant neither paid interest nor the principal; while so, on 31.10.2018, the complainant had sent a 4/12 https://www.mhc.tn.gov.in/judis Crl.O.P.No.869 of 2024message to the petitioners stating that he will settle the issue before 20.11.2018; however, he did not turn up and therefore, the petitioners once again sent a message on 12.02.2019 to the respondent informing that the pledged items will be sold on or before 27.02.2019, if the loan amount is not paid; subsequently, another intimation was sent to the complainant on 19.07.2019, but, even then, he did not pay any amount; the respondent had earlier given a complaint to E3 Teynampet Police Sation and an enquiry was conducted in C.S.R. No.183 of 2020 on 14.06.2020 and finding that no offence was made out by the petitioners, the same was closed; the respondent again approached the Deputy Commissioner of Police, T.Nagar and the complaint was closed and subsequently, the respondent sent a complaint to the Commissioner of Police which was also closed and thereafter, the respondent approached the Judicial Magistrate under Section 156(3) Cr.P.C. and once again, the police did not proceed further since no case was made out. The learned counsel would further submit that even taking into consideration the entire averments in the charge sheet at their face value, the ingredients of the offences under Sections 406 and 420 cannot be made out as against the petitioners.5/12 https://www.mhc.tn.gov.in/judis Crl.O.P.No.869 of 20244.In support of this contention that the offences under Sections 406 and 420 IPC cannot co-exist and that criminal intention should be right from inception, the learned counsel for the petitioners would rely on the judgment in Delhi Race Club 1940 Ltd. and others vs. State of Uttar Pradesh and another1.5.Per contra, the learned counsel appearing for the respondent would submit that it is true that the respondent pledged the jewels with the accused/petitioners and there had been lapses on the part of the respondent in paying the interest; however, the petitioners had, without giving notice to the respondent, sold the jewels, thereby committing cheating and criminal breach of trust.6. Heard both sides and perused the materials available on record.7.It is not the case of the respondent that the petitioners induced him to pledge the jewels. The averments in the complaint also do not contain 1 (2024) 10 SCC 6906/12 https://www.mhc.tn.gov.in/judis Crl.O.P.No.869 of 2024any allegation that the petitioners had an intention to cheat the respondent right from inception. It is the respondent who had approached the petitioners to pledge his jewels based on which he had also received an amount of Rs.1,14,700/-. Since the respondent did not pay either the principal or interest component, the petitioners, after giving due notice to the respondent, sold the jewels in an auction. In the considered opinion of this Court, this is a clear case of civil dispute which has been given a criminal colour and the learned Magistrate, without properly appreciating the facts, has taken cognizance of the case for the offences under Sections 406 and 420 IPC, which is an abuse of process of law.8.While holding so, this Court is fortified by the judgment in Delhi Race Club 1940 Ltd. supra, wherein, it has been held in unequivocal terms that the offences under Section 406 and 420 cannot co-exist and that criminal intention should be from inception. The relevant portion of the said judgment is reproduced at the cost of verbosity:“Difference between criminal breach of trust and cheating35. This Court in its decision in S.W. Palanitkar v. State of Bihar [S.W. Palanitkar v. State of Bihar, (2002) 1 SCC 241 : 2002 SCC (Cri) 129] expounded the difference in the ingredients required for constituting of an offence of criminal breach of trust (Section 406 IPC) vis-à-vis the offence of cheating (Section 420). The relevant observations read as under : (SCC p. 246, paras 9-10)7/12 https://www.mhc.tn.gov.in/judis Crl.O.P.No.869 of 2024“9. The ingredients in order to constitute a criminal breach of trust are : (i) entrusting a person with property or with any dominion over property; (ii) that person entrusted : (a) dishonestly misappropriating or converting that property to his own use; or (b) dishonestly using or disposing of that property or wilfully suffering any other person so to do in violation (i) of any direction of law prescribing the mode in which such trust is to be discharged, (ii) of any legal contract made, touching the discharge of such trust.10. The ingredients of an offence of cheating are : (i) there should be fraudulent or dishonest inducement of a person by deceiving him, (ii)(a) the person so deceived should be induced to deliver any property to any person, or to consent that any person shall retain any property; or (b) the person so deceived should be intentionally induced to do or omit to do anything which he would not do or omit if he were not so deceived; and (iii) in cases covered by (ii)(b), the act of omission should be one which causes or is likely to cause damage or harm to the person induced in body, mind, reputation or property.”36. What can be discerned from the above is that the offences of criminal breach of trust (Section 406 IPC) and cheating (Section 420 IPC) have specific ingredients:In order to constitute a criminal breach of trust (Section 406 IPC)(1) There must be entrustment with person for property or dominion over the property, and(2) The person entrusted:(a) Dishonestly misappropriated or converted property to his own use, or(b) Dishonestly used or disposed of the property or wilfully suffers any other person so to do in violation of:(i) Any direction of law prescribing the method in which the trust is discharged; or(ii) Legal contract touching the discharge of trust (see : S.W. Palanitkar [S.W. Palanitkar v. State of Bihar, (2002) 1 SCC 241 : 2002 SCC (Cri) 129] ).Similarly, in respect of an offence under Section 420IPC, the essential ingredients are:(1) Deception of any person, either by making a false or misleading representation or by other action or by omission;(2) Fraudulently or dishonestly inducing any person to deliver any property, or8/12 https://www.mhc.tn.gov.in/judis Crl.O.P.No.869 of 2024(3) The consent that any person shall retain any property and finally intentionally inducing that person to do or omit to do anything which he would not do or omit (see: Harmanpreet Singh Ahluwalia v. State of Punjab [Harmanpreet Singh Ahluwalia v. State of Punjab, (2009) 7 SCC 712 : (2009) 3 SCC (Cri) 620] ).37. Further, in both the aforesaid sections, mens rea i.e. intention to defraud or the dishonest intention must be present, and in the case of cheating it must be there from the very beginning or inception.38. In our view, the plain reading of the complaint fails to spell out any of the aforesaid ingredients noted above. We may only say, with a view to clear a serious misconception of law in the mind of the police as well as the courts below, that if it is a case of the complainant that offence of criminal breach of trust as defined under Section 405IPC, punishable under Section 406IPC, is committed by the accused, then in the same breath it cannot be said that the accused has also committed the offence of cheating as defined and explained in Section 415IPC, punishable under Section 420 IPC.39. Every act of breach of trust may not result in a penal offence of criminal breach of trust unless there is evidence of manipulating act of fraudulent misappropriation. An act of breach of trust involves a civil wrong in respect of which the person may seek his remedy for damages in civil courts but, any breach of trust with a mens rea, gives rise to a criminal prosecution as well. It has been held in Hari Prasad Chamaria v. Bishun Kumar Surekha [Hari Prasad Chamaria v. Bishun Kumar Surekha, (1973) 2 SCC 823 : 1973 SCC (Cri) 1082] as under : (SCC p. 824, para 4)“4. We have heard Mr Maheshwari on behalf of the appellant and are of the opinion that no case has been made out against the respondents under Section 420 of the Penal Code, 1860. For the purpose of the present appeal, we would assume that the various allegations of fact which have been made in the complaint by the appellant are correct. Even after making that allowance, we find that the complaint does not disclose the commission of any offence on the part of the respondents under Section 420 of the Penal Code, 1860. There is nothing in the complaint to show that the respondent had dishonest or fraudulent intention at the time the appellant parted with Rs 35,000. There is also nothing to indicate that the respondents induced the appellant to pay them Rs 35,000 by deceiving him. It is further not the case of the appellant that a representation was made by the respondents to him at or before the time he paid the money to them and that at the 9/12 https://www.mhc.tn.gov.in/judis Crl.O.P.No.869 of 2024time the representation was made, the respondents knew the same to be false. The fact that the respondents subsequently did not abide by their commitment that they would show the appellant to be the proprietor of Drang Transport Corporation and would also render accounts to him in the month of December might create civil liability for them, but this fact would not be sufficient to fasten criminal liability on the respondents for the offence of cheating.”40. To put it in other words, the case of cheating and dishonest intention starts with the very inception of the transaction. But in the case of criminal breach of trust, a person who comes into possession of the movable property and receives it legally, but illegally retains it or converts it to his own use against the terms of the contract, then the question is, in a case like this, whether the retention is with dishonest intention or not, whether the retention involves criminal breach of trust or only a civil liability would depend upon the facts of each case.41. The distinction between mere breach of contract and the offence of criminal breach of trust and cheating is a fine one. 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.42. 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.43. 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.”(emphasis supplied)10/12 https://www.mhc.tn.gov.in/judis Crl.O.P.No.869 of 20249.In view of the above discussion, the impugned proceedings is liable to be quashed and it is accordingly quashed.10.As a sequitur, the criminal original petition is allowed. Consequently, connected miscellaneous petitions are closed.02.12.2025rap/vsi/raa/cadNeutral Citation:Yes/No11/12 https://www.mhc.tn.gov.in/judis Crl.O.P.No.869 of 2024A.D.JAGADISH CHANDIRA , J. rap /vsi/raa/cadTo 1. The XVIII Metropolitan MagistrateSaidapet, Chennai2.The Public Prosecutor High Court of MadrasCrl.O.P.No.869 of 202402.12.202512/12