High Court
Case Details
Applicant :- Surya Prakash Dubey And Another Opposite Party :- State Of U.P. Thru. Prin. Secy. Home Lko. And Another Counsel for Applicant :- Vishnu Kumar Srivastava Counsel for Opposite Party :- G.A. Hon'ble Shree Prakash Singh,J. Heard counsel for the applicants, learned A.G.A. for the State and perused the record. Instant application has been filed with the prayer to set aside the entire criminal proceedings of Case Crime No. 541 of 2023 under sections- 409, 420 and 120B IPC P.S. Vibhuti Khand District-Lucknow, quash the chargesheet no. 01 of 2024 dated 20.09.2024 and to stay the operation, implementation and the consequential action thereof arising out in concerned with impugned chargesheet alongwith further proceedings of case. The contentions put forth by counsel for the applicants is that an FIR was lodged on 20.10.2023 bearing case crime no. 541 of 2023 under section 406 and 420 of IPC P.S. Vibhuti Khand District-Lucknow, thereafter, the matter was investigated and chargesheet was filed under sections 409, 420 and 120B of IPC. He submits that the applicants are alleged to have involved in committing offence, being the Directors of the company for a limited period of time i.e. the applicant no. 1 has remained from 16.03.2022 to 15.07.2023 and applicant no. 2 has remained from 30.11.2021 to 19.02.2023. He further submits that the Investigating Officer has filed the chargesheet and the learned trial court has taken cognizance under sections 409, 420 and 120B IPC and thereafter, process was issued though, the settled proposition of law has been ignored as is rendered in the case of Delhi Race Club (1940) Ltd V. State of Uttar Pradesh & Another reported in Air OnLine 2024 SC 612 and has referred paragraph nos. 27, 30 and 31 of the judgment, which read as under:- "27. 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 405 of IPC, punishable under Section 406 of IPC, 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 415 of the IPC, punishable under Section 420 of the IPC.
30. 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. 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. 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.
31. At the most, the court of the Additional Chief Judicial Magistrate could have issued process for the offence punishable under Section 420 of the IPC i.e. cheating but in any circumstances no case of criminal breach of trust is made out. The reason being that indisputably there is no entrustment of any property in the case at hand. It is not even the case of the complainant that any property was lawfully entrusted to the appellants and that the same has been dishonestly misappropriated. The case of the complainant is plain and simple. He says that the price of the goods sold by him has not been paid. Once there is a sale, Section 406 of the IPC goes out of picture. According to the complainant, the invoices raised by him were not cleared. No case worth the name of cheating is also made out." Placing reliance on the aforesaid, he submits that the offences under sections 406 and 420 IPC cannot run simultaneously as the breach of trust is the event that if any property is entrusted and the same was dishonestly misappropriated or converted to the own use of such person dishonestly or he dispossess that property in violation of any direction of prescribed law and so far as the offence defined under section 415 IPC is that by deceiving any person fraudulently or dishonestly, induces the person so deceived to deliver any property to any person, which clearly indicates that so far as the offence under section 415 IPC is concerned, the fraudulent act creeps from very inception whereas, the criminal breach of trust come to the later-stage i.e. after the property being entrusted and thereafter, the same is misappropriated. He added that so far as the present matter is concerned, the allegation is that the depositors have deposited the certain amount and that has been misappropriated by the applicants, therefore, the offence under section 420 IPC would not attract in the present matter. Concluding his arguments, he submits that since the learned trial court has taken cognizance for both the offences under sections 420 and 409 of IPC in the same breath and issued the process, therefore, the same vitiates in the eyes of law as that goes against the settled proposition of law, thus, submission is that the summoning order and order of cognizance maybe set- aside. On the other hand, learned A.G.A. appearing for the State has opposed the contentions aforesaid, but he has failed to dispute the settled proposition of law as enunciated in the case of Delhi Race Club(Supra). Considering the submissions of counsel for the parties, this Court reaches to the conclusion that the learned trial court has taken cognizance and issued process under section 409 and 420 of IPC in the same breath and as per the settled law, the same is not permitted, therefore, matter requires consideration. Let notice be issued to opposite party no. 2, returnable at an early date. Steps be taken within a week. If steps are taken, office shall proceed accordingly. List/put up this matter in fourth week of September, 2025. In the meantime, the State as well as opposite party no. 4 may file their counter affidavits. Till the next date of listing, the criminal proceedings of Case Crime No. 541 of 2023 under sections- 409, 420 and 120B IPC P.S. Vibhuti Khand District-Lucknow shall remain stayed, so far as the present applicants are concerned. Order Date :- 14.8.2025 Mayank
Applicant :- Surya Prakash Dubey And Another Opposite Party :- State Of U.P. Thru. Prin. Secy. Home Lko. And Another Counsel for Applicant :- Vishnu Kumar Srivastava Counsel for Opposite Party :- G.A. Hon'ble Shree Prakash Singh,J. Heard counsel for the applicants, learned A.G.A. for the State and perused the record. Instant application has been filed with the prayer to set aside the entire criminal proceedings of Case Crime No. 541 of 2023 under sections- 409, 420 and 120B IPC P.S. Vibhuti Khand District-Lucknow, quash the chargesheet no. 01 of 2024 dated 20.09.2024 and to stay the operation, implementation and the consequential action thereof arising out in concerned with impugned chargesheet alongwith further proceedings of case. The contentions put forth by counsel for the applicants is that an FIR was lodged on 20.10.2023 bearing case crime no. 541 of 2023 under section 406 and 420 of IPC P.S. Vibhuti Khand District-Lucknow, thereafter, the matter was investigated and chargesheet was filed under sections 409, 420 and 120B of IPC. He submits that the applicants are alleged to have involved in committing offence, being the Directors of the company for a limited period of time i.e. the applicant no. 1 has remained from 16.03.2022 to 15.07.2023 and applicant no. 2 has remained from 30.11.2021 to 19.02.2023. He further submits that the Investigating Officer has filed the chargesheet and the learned trial court has taken cognizance under sections 409, 420 and 120B IPC and thereafter, process was issued though, the settled proposition of law has been ignored as is rendered in the case of Delhi Race Club (1940) Ltd V. State of Uttar Pradesh & Another reported in Air OnLine 2024 SC 612 and has referred paragraph nos. 27, 30 and 31 of the judgment, which read as under:- "27. 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 405 of IPC, punishable under Section 406 of IPC, 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 415 of the IPC, punishable under Section 420 of the IPC.
30. 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. 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. 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.
31. At the most, the court of the Additional Chief Judicial Magistrate could have issued process for the offence punishable under Section 420 of the IPC i.e. cheating but in any circumstances no case of criminal breach of trust is made out. The reason being that indisputably there is no entrustment of any property in the case at hand. It is not even the case of the complainant that any property was lawfully entrusted to the appellants and that the same has been dishonestly misappropriated. The case of the complainant is plain and simple. He says that the price of the goods sold by him has not been paid. Once there is a sale, Section 406 of the IPC goes out of picture. According to the complainant, the invoices raised by him were not cleared. No case worth the name of cheating is also made out." Placing reliance on the aforesaid, he submits that the offences under sections 406 and 420 IPC cannot run simultaneously as the breach of trust is the event that if any property is entrusted and the same was dishonestly misappropriated or converted to the own use of such person dishonestly or he dispossess that property in violation of any direction of prescribed law and so far as the offence defined under section 415 IPC is that by deceiving any person fraudulently or dishonestly, induces the person so deceived to deliver any property to any person, which clearly indicates that so far as the offence under section 415 IPC is concerned, the fraudulent act creeps from very inception whereas, the criminal breach of trust come to the later-stage i.e. after the property being entrusted and thereafter, the same is misappropriated. He added that so far as the present matter is concerned, the allegation is that the depositors have deposited the certain amount and that has been misappropriated by the applicants, therefore, the offence under section 420 IPC would not attract in the present matter. Concluding his arguments, he submits that since the learned trial court has taken cognizance for both the offences under sections 420 and 409 of IPC in the same breath and issued the process, therefore, the same vitiates in the eyes of law as that goes against the settled proposition of law, thus, submission is that the summoning order and order of cognizance maybe set- aside. On the other hand, learned A.G.A. appearing for the State has opposed the contentions aforesaid, but he has failed to dispute the settled proposition of law as enunciated in the case of Delhi Race Club(Supra). Considering the submissions of counsel for the parties, this Court reaches to the conclusion that the learned trial court has taken cognizance and issued process under section 409 and 420 of IPC in the same breath and as per the settled law, the same is not permitted, therefore, matter requires consideration. Let notice be issued to opposite party no. 2, returnable at an early date. Steps be taken within a week. If steps are taken, office shall proceed accordingly. List/put up this matter in fourth week of September, 2025. In the meantime, the State as well as opposite party no. 4 may file their counter affidavits. Till the next date of listing, the criminal proceedings of Case Crime No. 541 of 2023 under sections- 409, 420 and 120B IPC P.S. Vibhuti Khand District-Lucknow shall remain stayed, so far as the present applicants are concerned. Order Date :- 14.8.2025 Mayank