NIRBHAY TREHAN v. VIKAS KUMAR

section 482 of the CrPC. In this regard, the learned counsel has relied upon the ratio laid down by the Supreme Court in the case of “State of Haryana Vs. Bhajan Lal” 1992 Suppl (1) SCC 335 and “Neeharika Infrastructure (P) Ltd Vs. State of Maharashtra” LL 2021 SC 211. 6) I have heard learned counsel for the parties and perused the pleadings of the parties. 7) Petitioners, in this petition, have challenged the complaint filed against them by the respondents alleging commission of offences under Section 420, 406, 506 RPC Before coming to the grounds of challenge urged in the petition, it is to be noted that in the instant case, the proceedings in the impugned complaint have been stayed at the 5 initial stage vide interim order dated 08.02.2019 so it is only if the petitioners succeed in showing to this Court that the allegations made in the impugned complaint do not disclose commission of any offence against them that this Court would invoke its jurisdiction under Section 561-A Jammu and Kashmir Cr.

PC to quash the proceedings. 8) The Supreme Court in the case of Madhavrao Jiwaji Rao Scindia v. Sambhajirao Chandrojirao Angre [(1988) 1 SCC 692], has laid down the law as regards quashment of proceedings under Section 482 Cr. P. C. Para 7 of the judgment is relevant to the context and the same is reproduced as under:

The legal position is well-settled that when a prosecution at the initial stage is asked to be quashed, the test to be applied by the court is as to whether the uncontroverted allegations as made prima facie establish the offence. It is also for the court to take into consideration any special features which appear in a particular case to consider whether it is expedient and in the interest of justice to permit a prosecution to continue. This is so on the basis that the court cannot be utilised for any oblique purpose and where in the opinion of the court chances of an ultimate conviction is bleak and, therefore, no useful purpose is likely to be served by allowing a criminal prosecution to continue, the court may while taking into consideration the special facts of a case also quash the proceeding even though it may be at a preliminary stage.

9) From the foregoing enunciation of law on the subject, it is clear that it is only if uncontroverted allegations made in the impugned complaint do not establish commission of any offence by the petitioners that the prosecution against them can be quashed.

These 6 principles have been reiterated and reaffirmed by the Supreme Court in the case of Bhajan Lal (Supra) and Neeharika Infrastructure (Supra) 10) The primary contention of the petitioners is that contents of the impugned complaint do not disclose commission of any offence against them, inasmuch as the transaction between the petitioners and respondent is purely of civil nature that has been given a criminal flavour by respondent while lodging the impugned complaint. 11) On the other hand, learned counsel for the respondent has vehemently argued that the conduct of the petitioners has remained deceitful and fraudulent right from the inception, therefore, they are not only accountable under civil law but they are also criminally liable. 12) In order to test the merits of these contentions, the legal position on the subject needs to be noticed and appreciated. 13) The petitioners are alleged to have committed offences under Section 420,406 and 506 of RPC. In order to attract the ingredients of Section 420 RPC, there has to an element of cheating on the part of the accused.

Cheating has been defined in Section 415 RPC. To constitute offence under Section 420 RPC, there must be a fraudulent or dishonest inducement on the part of a person and thereby the other party must have parted with his property. To establish an offence under Section 420 RPC, it must be shown that there was a fraudulent and dishonest intention at the time of commission of the offence and that the person practicing deceit had obtained the property by 7 fraudulent inducement and willful representation. Mere breach of contract cannot give rise to a criminal prosecution for cheating unless fraudulent, dishonest intention is shown at the beginning of the transaction i.e., at the time when the offence is alleged to have been committed. 14) The Supreme Court in the case of Hridaya Ranjan Prasad Verma v. State of Bihar, (2000) 4 SCC 168, has observed that it is the intention which is the gist of the offence and in order to hold a person guilty of cheating, it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise.

15) Again, in Alpic Finance Ltd vs P. Sadasivan And Anr,(2001) 3 SCC 513, the Supreme Court held that „an honest man entering into a contract is deemed to represent that he has the present intention of carrying it out but if, having accepted the pecuniary advantage involved in the transaction, he fails to pay his debt, he does not necessarily evade the debt by deception’. Thus, it is necessary to show that a person had fraudulent or dishonest intention at the time of making of promise, to say that he committed an act of cheating. 16) “Dishonestly” has been defined in Section 24 of RPC to mean deliberate intention to cause wrongful gain or wrongful loss and when, with such intention, deception is practised and delivery of property is induced, then the offence under Section 420 RPC can be said to have been committed. 8 17) So far as offence under Section 406 RPC is concerned, it provides punishment for criminal breach of trust, which has been defined in Section 405 of RPC, and the same 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 willfully suffers any other person so to do, commits “criminal breach of trust”. 18) From a perusal of the aforesaid provision, it is clear that it entails misappropriation or conversion of another‟s property for one‟s own use with a dishonest intention. Cheating, as defined under Section 415 of the RPC, also involves the ingredient of having dishonest and fraudulent intention which is aimed at inducing the other party to deliver a property to a specific person.

Thus, both the Sections postulate „dishonest intention‟ as a pre-condition for even prima facie establishing the commission of said offences. It is only if ingredients postulated in Sections 405 and 415 of the RPC are made out from the contents of the impugned complaint that offences under Section 420 and 406 RPC can be said to have been disclosed. 19) The Supreme Court in the case of M/S Indian Oil Corporation vs. M/S NEPC India Ltd. & Ors (2006) 6 SCC 736, has laid down the principles which guide the Courts in ascertaining as to whether 9 allegations regarding a commercial dispute would give rise to a criminal action apart from the civil remedy. These principles are reproduced as under: (i) A complaint can be quashed where the allegations made in 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 the case alleged against the accused.

For this purpose, the complaint has to be examined as a whole, but without examining the merits of the allegations. Neither a detailed inquiry nor a meticulous analysis of the material nor an assessment of the reliability or genuineness of the allegations in the complaint, is warranted while examining prayer for quashing of a complaint. (ii) A complaint may also be quashed where it is a clear abuse of the process of the court, as when the criminal proceeding is found to have been initiated with malafides/malice for wreaking vengeance or to cause harm, or where the allegations are absurd and inherently improbable. (iii) The power to quash shall not, however, be used to stifle or scuttle a legitimate prosecution. The power should be used sparingly and with abundant caution. (iv)The complaint is not required to verbatim reproduce the legal ingredients of the offence alleged. If the necessary factual foundation is laid in the complaint, merely on the ground that a few ingredients have not been stated in detail, the proceedings should not be quashed.

Quashing of the complaint is warranted only where the complaint is so bereft of even the basic facts which are absolutely necessary for making out the offence. (v) A given set of facts may make out : (a) purely a civil wrong; or (b) purely a criminal offence; or (c) a civil wrong as also a criminal offence. A commercial transaction or a contractual dispute, apart from furnishing a 10 cause of action for seeking remedy in civil law, may also involve a criminal offence. As the nature and scope of a civil proceedings are different from a criminal proceeding, the mere fact that the complaint relates to a commercial transaction or breach of contract, for which a civil remedy is available or has been availed, is not by itself a ground to quash the criminal proceedings. The test is whether the allegations in the complaint disclose a criminal offence or not. 20) From the foregoing enunciation of law on the subject, it is clear that the mere fact that complaint relates to a commercial transaction or breach of contract, for which a civil remedy is available, is not by itself a ground to quash the criminal proceedings.

It is only if it is shown that the complaint even if taken at its face value does not disclose commission of any offence or if it is found that criminal proceedings have been initiated with malafides/malice for wreaking vengeance that the same can be quashed. 21) In the light of the aforesaid legal position, let us now analyze the contents of the impugned complaint. The contention of the respondent-complainant is that he was engaged as agent by the petitioners for supervising the construction of godown of Food Corporation of India at Sangrama, Tehsil Sopore District Baramulla. It has been contended that in this regard he placed orders for purchase of building material and also engaged labourers, masons and carpenters but the petitioners did not make payment to these suppliers or labourers. The respondent-complainant has placed on record bills/vouchers to show that supply orders were issued 11 procurement of building material.

All these bills and vouchers are in the name of M/S Kash-ind Agro Infra Services which is the firm belonging to the petitioners. None of these vouchers or bills are in the name of -respondent-complainant. Thus if at all there is transaction relating to purchase of building material, the same as per the documents placed on the record by the respondent-complainant, is between the petitioners and the suppliers. The respondent-complainant has nowhere stated in the complaint that he was asked by the petitioners to make any payment to these supplies on their behalf and later on they did not liquidate the said amount. The case set up by the respondent-complainant is that he placed orders on behalf of the petitioners who did not pay the cost of the material to the suppliers. If at all there has been any default on the part of the petitioners to make the payment the same is towards the suppliers and not towards the respondent-complainant who has not even alleged that he has made any payment on behalf of the petitioners.

In his preliminary statement recorded before the trial court, the respondent-complainant has clearly stated that he has not paid any amount to the suppliers. 22) As already noticed, in order to commit an offence under Section 420 RPC, there must be fraudulent inducement on the part of the accused as a consequence whereof the complainant must have parted with his property. In this case, the respondent-complainant has not parted with any property at all. If at all any property has been parted with it is suppliers who have done it and not the complainant. 12 Therefore the offence under Section 420 RPC is not made out against the petitioners qua the respondent-complainant. The suppliers or labourers/masons have not filed any complaint against the petitioners. 23) Apart from the above, in order to commit an act of deception or fraud, which is gist of both the offences i.e., offence under Section 420 and 406 of the RPC, the complainant must have been dishonestly induced to deliver the property.

As already noted the respondent- complainant has not delivered any property at all to the petitioners. To deceive is to induce a man to believe that a thing is true which is false and which the person practicing the deceit knows or believes to be false. This intention of deception or fraud must be existent at the time of commission of the offence. In the impugned complaint, it has been clearly averred by the respondent-complainant that the petitioners turned around and took a summersault and avoided payment of dues to the suppliers and the laborers. This means that at the inception, the petitioners did not have a deceitful intention, but they avoided to make payments to the suppliers/labourers only later on. If a person fails to liquidate his liability, it does not necessarily mean that he has committed the offence of cheating or criminal breach of trust. I am supported in my aforesaid view by the judgment of the Supreme Court in Alpic Finance Ltd(supra).

Para 10 of the aforesaid judgment is relevant to the context and the same is reproduced as under: “10. The facts in the present case have to be appreciated in the light of the various decisions of this Court. When somebody suffers injury to 13 his person, property or reputation, he may have remedies both under civil and criminal law. The injury alleged may form the basis of civil claim and may also constitute the ingredients of some crime punishable under criminal law. When there is dispute between the parties arising out of a transaction involving passing of valuable properties between them, the aggrieved person may have a right to sue for damages or compensation and at the same time, law permits the victim to proceed against the wrongdoer for having committed an offence of criminal breach of trust or cheating. Here the main offence alleged by the appellant is that the respondents committed the offence under Section 420 IPC and the case of the appellant is that the respondents have cheated him and thereby dishonestly induced him to deliver property.

To deceive is to induce a man to believe that a thing is true which is false and which the person practising the deceit knows or believes to be false. It must also be shown that there existed a fraudulent and dishonest intention at the time of commission of the offence. There is no allegation that the respondents made any willful misrepresentation. Even according to the appellant, the parties entered into a valid lease agreement and the grievance of the appellant is that the respondents failed to discharge their contractual obligations. In the complaint, there is no allegation that there was fraud or dishonest inducement on the part of the respondents and thereby the respondents parted with the property. It is trite law and common sense that an honest man entering into a contract is deemed to represent that he has the present intention of carrying it out but if, having accepted the pecuniary advantage involved in the transaction, he fails to pay his debt, he does not necessarily evade the debt by deception.” 24) Relying upon the ratio laid down in Alpic Finance Ltd (supra), the Supreme Court in the case of Anil Mahajan vs.

Bhor Industries Ltd. and another, (2005) 10 SCC 228, has held that from a mere 14 denial of a person to keep up promise subsequently, a culpable intention right at the beginning, that is, when he made the promises cannot be presumed. The Court went on to observe that a distinction has to be kept in mind between mere breach of contract and the offence of cheating. It depends upon the intention of the accused at the time of inducement. The subsequent conduct is not the sole test. The Supreme Court further observed that mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent dishonest intention is shown at the beginning of the transaction and that substance of complaint is to be seen. Mere use of the expression “cheating” in the complaint is of no consequence. 25) From the foregoing enunciation of law on the subject, it is clear that dishonest or fraudulent intention, which is gist of offence of criminal breach of trust and cheating, has to be from the inception of the transaction, which in the instant case is missing.

26) It appears that respondent has filed the impugned complaint to pressurize the petitioners to settle scores with them and has given civil transaction between them a criminal colour. The Supreme Court in the case of M/S Indian Oil Corporation(supra), has, while deprecating the tendency of business circles to convert civil disputes in criminal cases, observed as under: “(13) While on this issue, it is necessary to take notice of a growing tendency in business circles to convert purely civil disputes into criminal cases. This is obviously on account of a 15 prevalent impression that civil law remedies are time consuming and do not adequately protect the interests of lenders/creditors. Such a tendency is seen in several family disputes also, leading to irretrievable break down of marriages/families. There is also an impression that if a person could somehow be entangled in a criminal prosecution, there is a likelihood of imminent settlement.

Any effort to settle civil disputes and claims, which do not involve any criminal offence, by applying pressure though criminal prosecution should be deprecated and discouraged (14) While no one with a legitimate cause or grievance should be prevented from seeking remedies available in criminal law, a complainant who initiates or persists with a prosecution, being fully aware that the criminal proceedings are unwarranted and his remedy lies only in civil law, should himself be made accountable, at the end of such misconceived criminal proceedings, in accordance with law.” 27) Recently, the Supreme Court in the case of Mitesh Kumar J. Shah vs. The State of Karnataka & Ors. 2021 SCC Online SC 976, has expressed its disapproval for imparting criminal colour to a civil dispute merely to take advantage of a relatively quick relief granted in a criminal case in contrast to a civil dispute. The Court further went on to observe that such an exercise is nothing but an abuse of the process of law which must be discouraged in its entirety.

28) Coming to the offence under Section 506 of RPC i.e., criminal intimidation, it is to be noted here that in the impugned complaint, neither any specific allegations nor any details as regards threats alleged to have been extended by the petitioners to the respondent 16 have been given. On the basis of these vague allegations in the impugned complaint, it cannot be stated that the offence under Section 506 RPC is disclosed against the petitioners. 29) In view of the forgoing discussion, it is a fit case where this Court should exercise its powers under Section 561-A of J&K Cr. P. C to prevent the abuse of process of law and to secure the ends of justice. 30) Accordingly, the petition is allowed and the impugned complaint and the proceeding emanating there from are quashed. Srinagar, 22 .04.2022 “Aasif” (SANJAY DHAR) JUDGE Whether the order is speaking: Yes/No Whether the order is reportable: Yes/No