Vincent Jagan v. Ishan Tigunait and others), under Section

3. The brief facts of the case are that the applicant no.1 is the son of applicant no.2 who is Managing Director of Himalaya International Institute of Ayurveda, Jhunsi, Prayagraj (hereinafter referred to as "Institute") and applicant no.3 is the Manager of the Institute. The genesis of the dispute arose on 05.11.2011 when the contract / agreement was entered between the applicants and opposite party no.2 for carrying out construction work in the Institute. In this agreement a total consideration that was agreed upon was Rs.32,11,000/-. In the said agreement paragraph 2 nos.7, 8 and 16 there was penalty clause mentioned, wherein, it has given that in case any default, the contractor-opposite party no.2 will be liable for penalty of Rs.10,000/- per week till the continuation of the default. The final date of completion of the project was 15.02.2012, however, there was delay in completion of the work. Thereafter, the applicants were given time to complete the work and, thereafter, the agreement was revised, wherein, the penalty for delay has been increased from Rs.10,000/- to Rs.20,000/- per week. However, the applicants have paid Rs.26,59,605/- towards the work already done. The work was not completed and opposite party no.2 has abandoned the project for which the applicants have hired another contractor to complete the project, and the applicants suffered a loss. Later on, opposite party no.2 entered into a settlement where opposite party no.2 had apologies for not completing the work, however, he gave a letter stating that there is nothing outstanding against the applicants towards the project. However, after two years opposite party no.2 had filed an application under Section 156(3) Cr.P.C. on 02.07.2014 alleging that there was some money outstanding and further made allegations against the applicants. After that Magistrate call for the police report in which the police had clearly stated that it is a purely civil dispute relating to the payment and there was no criminality involved. Thereafter, the said application was treated as complaint case and after recording statements under Sections 200 and 202 Cr.P.C. issued summons against the applicants on 16.08.2019, subsequently, due to non- appearance of the applicants Non Bailable Warrants were also issued against them. The applicants have challenged the summoning order as well as Non Bailable Warrants by means of the instant application.

4. Sri Aishwarya Pratap Singh, Advocate holding brief of Sri Harshit Pandey, learned counsel for the applicants submits that opposite party no.2 was the contractor and because of his conduct the applicants have suffered a loss. In fact in a settlement opposite party no.2 had written that nothing is outstanding still to extort extra money opposite party no.2 3 choose to initiate instant criminal proceedings in which the police has also given a report that there was no criminality involved. However, in spite of it the trial court has issued summon in a very mechanical manner without appreciating facts that there was no criminality involved. He further submits that there was no dispute that there is no outstanding amount. Even assuming that there was any outstanding against the applicants, the same could be recovered by initiating suit for recovery but no criminal proceedings can be initiated for the same. He further submits that the instant proceeding initiated by opposite party no.2 is nothing but a pure abuses of process of law.

5. Per contra, Sri Rahul Kumar, learned counsel appearing on behalf of opposite party no.2 submits that the outstanding payment has not been paid and hence opposite party no.2 had filed the criminal complaint. Sri Shashidhar Pandey, learned AGA appearing on behalf of the State has opposed the application.

6. Heard learned counsel for the parties and perused the record, apparently this relates to the contract where opposite party no.2 was a contractor and given a contract to construct a building for the applicants. However, the opposite party no.2 failed and could not complete the said project in time. Thereafter by amending the agreement, the time was extended to complete the work but the opposite party no.2 did not complete the same and the opposite party no.2 had abandoned the project. Thereafter, the applicants have given the contract to the third party for completion and in that he has suffered a loss. In fact, there was an agreement between the parties, wherein, opposite party no.2 had written apology and stated that there is nothing outstanding against the applicants.

7. The Hon'ble Supreme Court in the case of Vesa Holding P. Ltd. & Anr versus State of Kerala & Ors, reported in 2015 (8) SCC 293 has held as under:- 4 “8. From the decisions cited by the appellant, the settled proposition of law is that every breach of contract would not give rise to an offence of cheating and only in those cases breach of contract would amount to cheating where there was any deception played at the very inception. If the intention to cheat has developed later on, the same cannot amount to cheating. In other words for the purpose of constituting an offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. Even in a case where allegations are made in regard to failure on the part of the accused to keep his promise, in the absence of a culpable intention at the time of making initial promise being absent, no offence under Section 420 of the Indian Penal Code can be said to have been made out.

9. It is true that a given set of facts may make out a civil wrong as also a criminal offence and only because a civil remedy may be available to the complainant that itself cannot be a ground to quash a criminal proceeding. The real test is whether the allegations in the complaint disclose the criminal offence of cheating or not. In the present case there is nothing to show that at the very inception there was any intention on behalf of the accused persons to cheat which is a condition precedent for an offence under Section 420 IPC. In our view the complaint does not disclose any criminal offence at all. Criminal proceedings should not be encouraged when it is found to be malafide or otherwise an abuse of the process of the court. Superior courts while exercising this power should also strive to serve the ends of justice. In our opinion, in view of these facts allowing the police investigation to continue would amount to an abuse of the process of court and the High Court committed an error in refusing to exercise the power under Section 482 Criminal Procedure Code to quash the proceedings.”

8. The Hon'ble Supreme Court in the case of Sarabjit Kaur versus The State of Punjab & Anr. reported in 2023 (5) SCC 360 has held as under:- “13. A breach of contract does not give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction. Merely on the allegation of failure to keep up promise will not be enough to initiate criminal proceedings. From the facts available on record, it is evident that the respondent No.2 had improved his case ever since the first complaint was filed in which there were no allegations against the appellant rather it was only against the property dealers which was in subsequent complaints that the name of the appellant was mentioned. On the first complaint, the only request was for return of the amount paid by the respondent No.2. When the offence was made out on the basis of the first complaint, the second complaint was filed with improved version making allegations against the appellant as well which was not there in the earlier complaint. The entire idea seems to be to convert a civil dispute into criminal and put pressure on the appellant for return of the amount allegedly paid. The criminal Courts are not meant to be used for settling scores or pressurise parties to settle civil disputes. Wherever ingredients of criminal offences are made out, criminal courts have to take cognizance. The complaint in question on the basis of which F.I.R. was registered was filed nearly three years after 5 the last date fixed for registration of the sale deed. Allowing the proceedings to continue would be an abuse of process of the Court.”

9. The Hon'ble Supreme Court in the latest judgement of Saching Garg versus State of U.P. & ANR. passed in Criminal Appeal No. NIL of 2024 arising out of petition for Special Leave to Appeal (Criminal) No.4415 of 2023, delivered on 30.01.2024 has reiterated the above proposition of law.

10. However, the opposite party no.2 in this case, for the recovery of money had gone ahead and filed a criminal proceedings against the applicants just to extract some extra money, and put undue pressure in spite of settling the issues. The court concerned ignoring the police report in which it was clearly stated that it is a pure commercial dispute has issued summon against the applicants in a very mechanical manner.

11. The summoning order is absolutely illegal and contrary to the law laid down by the Supreme Court, hence, the summoning order dated

16.08.2019 as well as Non Bailable Warrant orders dated 01.01.2022 and

06.02.2024 passed by the Additional Chief Judicial Magistrate-V, Court No.7, Allahabad in Complaint Case No.995 of 2014 (Vincent Jagan v. Ishan Tigunait and others), under Section 406 IPC, Police Station Jhunsi, District Prayagraj, pending in the court of Additional Chief Judicial Magistrate, Court No.5, Allahabad and all consequential proceedings thereon and thereof are hereby quashed.

12. Accordingly, the instant application under Section 482 Cr.P.C. is allowed. Order Date :- 19.5.2025 I.A.Siddiqui IMRAN AHMAD SIDDIQUI High Court of Judicature at Allahabad

3. The brief facts of the case are that the applicant no.1 is the son of applicant no.2 who is Managing Director of Himalaya International Institute of Ayurveda, Jhunsi, Prayagraj (hereinafter referred to as "Institute") and applicant no.3 is the Manager of the Institute. The genesis of the dispute arose on 05.11.2011 when the contract / agreement was entered between the applicants and opposite party no.2 for carrying out construction work in the Institute. In this agreement a total consideration that was agreed upon was Rs.32,11,000/-. In the said agreement paragraph 2 nos.7, 8 and 16 there was penalty clause mentioned, wherein, it has given that in case any default, the contractor-opposite party no.2 will be liable for penalty of Rs.10,000/- per week till the continuation of the default. The final date of completion of the project was 15.02.2012, however, there was delay in completion of the work. Thereafter, the applicants were given time to complete the work and, thereafter, the agreement was revised, wherein, the penalty for delay has been increased from Rs.10,000/- to Rs.20,000/- per week. However, the applicants have paid Rs.26,59,605/- towards the work already done. The work was not completed and opposite party no.2 has abandoned the project for which the applicants have hired another contractor to complete the project, and the applicants suffered a loss. Later on, opposite party no.2 entered into a settlement where opposite party no.2 had apologies for not completing the work, however, he gave a letter stating that there is nothing outstanding against the applicants towards the project. However, after two years opposite party no.2 had filed an application under Section 156(3) Cr.P.C. on 02.07.2014 alleging that there was some money outstanding and further made allegations against the applicants. After that Magistrate call for the police report in which the police had clearly stated that it is a purely civil dispute relating to the payment and there was no criminality involved. Thereafter, the said application was treated as complaint case and after recording statements under Sections 200 and 202 Cr.P.C. issued summons against the applicants on 16.08.2019, subsequently, due to non- appearance of the applicants Non Bailable Warrants were also issued against them. The applicants have challenged the summoning order as well as Non Bailable Warrants by means of the instant application.

4. Sri Aishwarya Pratap Singh, Advocate holding brief of Sri Harshit Pandey, learned counsel for the applicants submits that opposite party no.2 was the contractor and because of his conduct the applicants have suffered a loss. In fact in a settlement opposite party no.2 had written that nothing is outstanding still to extort extra money opposite party no.2 3 choose to initiate instant criminal proceedings in which the police has also given a report that there was no criminality involved. However, in spite of it the trial court has issued summon in a very mechanical manner without appreciating facts that there was no criminality involved. He further submits that there was no dispute that there is no outstanding amount. Even assuming that there was any outstanding against the applicants, the same could be recovered by initiating suit for recovery but no criminal proceedings can be initiated for the same. He further submits that the instant proceeding initiated by opposite party no.2 is nothing but a pure abuses of process of law.

5. Per contra, Sri Rahul Kumar, learned counsel appearing on behalf of opposite party no.2 submits that the outstanding payment has not been paid and hence opposite party no.2 had filed the criminal complaint. Sri Shashidhar Pandey, learned AGA appearing on behalf of the State has opposed the application.

6. Heard learned counsel for the parties and perused the record, apparently this relates to the contract where opposite party no.2 was a contractor and given a contract to construct a building for the applicants. However, the opposite party no.2 failed and could not complete the said project in time. Thereafter by amending the agreement, the time was extended to complete the work but the opposite party no.2 did not complete the same and the opposite party no.2 had abandoned the project. Thereafter, the applicants have given the contract to the third party for completion and in that he has suffered a loss. In fact, there was an agreement between the parties, wherein, opposite party no.2 had written apology and stated that there is nothing outstanding against the applicants.

7. The Hon'ble Supreme Court in the case of Vesa Holding P. Ltd. & Anr versus State of Kerala & Ors, reported in 2015 (8) SCC 293 has held as under:- 4 “8. From the decisions cited by the appellant, the settled proposition of law is that every breach of contract would not give rise to an offence of cheating and only in those cases breach of contract would amount to cheating where there was any deception played at the very inception. If the intention to cheat has developed later on, the same cannot amount to cheating. In other words for the purpose of constituting an offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. Even in a case where allegations are made in regard to failure on the part of the accused to keep his promise, in the absence of a culpable intention at the time of making initial promise being absent, no offence under Section 420 of the Indian Penal Code can be said to have been made out.

9. It is true that a given set of facts may make out a civil wrong as also a criminal offence and only because a civil remedy may be available to the complainant that itself cannot be a ground to quash a criminal proceeding. The real test is whether the allegations in the complaint disclose the criminal offence of cheating or not. In the present case there is nothing to show that at the very inception there was any intention on behalf of the accused persons to cheat which is a condition precedent for an offence under Section 420 IPC. In our view the complaint does not disclose any criminal offence at all. Criminal proceedings should not be encouraged when it is found to be malafide or otherwise an abuse of the process of the court. Superior courts while exercising this power should also strive to serve the ends of justice. In our opinion, in view of these facts allowing the police investigation to continue would amount to an abuse of the process of court and the High Court committed an error in refusing to exercise the power under Section 482 Criminal Procedure Code to quash the proceedings.”

8. The Hon'ble Supreme Court in the case of Sarabjit Kaur versus The State of Punjab & Anr. reported in 2023 (5) SCC 360 has held as under:- “13. A breach of contract does not give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction. Merely on the allegation of failure to keep up promise will not be enough to initiate criminal proceedings. From the facts available on record, it is evident that the respondent No.2 had improved his case ever since the first complaint was filed in which there were no allegations against the appellant rather it was only against the property dealers which was in subsequent complaints that the name of the appellant was mentioned. On the first complaint, the only request was for return of the amount paid by the respondent No.2. When the offence was made out on the basis of the first complaint, the second complaint was filed with improved version making allegations against the appellant as well which was not there in the earlier complaint. The entire idea seems to be to convert a civil dispute into criminal and put pressure on the appellant for return of the amount allegedly paid. The criminal Courts are not meant to be used for settling scores or pressurise parties to settle civil disputes. Wherever ingredients of criminal offences are made out, criminal courts have to take cognizance. The complaint in question on the basis of which F.I.R. was registered was filed nearly three years after 5 the last date fixed for registration of the sale deed. Allowing the proceedings to continue would be an abuse of process of the Court.”

9. The Hon'ble Supreme Court in the latest judgement of Saching Garg versus State of U.P. & ANR. passed in Criminal Appeal No. NIL of 2024 arising out of petition for Special Leave to Appeal (Criminal) No.4415 of 2023, delivered on 30.01.2024 has reiterated the above proposition of law.

10. However, the opposite party no.2 in this case, for the recovery of money had gone ahead and filed a criminal proceedings against the applicants just to extract some extra money, and put undue pressure in spite of settling the issues. The court concerned ignoring the police report in which it was clearly stated that it is a pure commercial dispute has issued summon against the applicants in a very mechanical manner.

11. The summoning order is absolutely illegal and contrary to the law laid down by the Supreme Court, hence, the summoning order dated

16.08.2019 as well as Non Bailable Warrant orders dated 01.01.2022 and

06.02.2024 passed by the Additional Chief Judicial Magistrate-V, Court No.7, Allahabad in Complaint Case No.995 of 2014 (Vincent Jagan v. Ishan Tigunait and others), under Section 406 IPC, Police Station Jhunsi, District Prayagraj, pending in the court of Additional Chief Judicial Magistrate, Court No.5, Allahabad and all consequential proceedings thereon and thereof are hereby quashed.

12. Accordingly, the instant application under Section 482 Cr.P.C. is allowed. Order Date :- 19.5.2025 I.A.Siddiqui IMRAN AHMAD SIDDIQUI High Court of Judicature at Allahabad