Arun Kumar and Another vs State of Punjab and Another

T.P.S. Mann, J.—The petitioners are seeking quashing of FIR No. 114 dated 12.4.2002 registered at PS Focal Point, Ludhiana for offences under Sections 406, 420, 506 and 120-B IPC.

FIR was registered on the basis of an application submitted by Yadwinder Singh respondent No. 2 with the allegations that on 20.2.2001, the petitioners along with Chetna Sehgal entered into an agreement with him to sell the property measuring 500 sq. yards situated at Phase-II, Focal Point, Dhandari Kalan, Ludhiana for Rs. 23,95,000/-. Out of the said amount, Rs. Six lakhs was received as earnest money by them. It was further agreed that the sale-deed would be executed on or before 20.8.2001. However, on 20.8.2001 none of the proposed vendors appeared before Sub-Registrar, Ludhiana to executed the sale-deed. Later on, the complainant learnt that the aforementioned vendors were trying to sell the land to Pardeep Mittal and Sarita Mittal. It was also alleged that on 24.12.2001, a sale-deed was executed by the petitioners in favour of Pardeep Mittal and Sarita Mittal for an amount of Rs. eight lacs whereas in the earlier agreement to sell in favour of the complaint, the price of the property was fixed at Rs. 23,95,000/-. The complainant alleged that by under-valuing the property, the accused had been able to avoid stamp duty, thus, causing loss to State exchequer. On the basis of the aforementioned allegations, FIR was registered.

In State of Haryana v. Bhajan Lal, 1991 (1) RCR (Crl.) 383, the Hon''ble Supreme Court evolved certain illustrative guidelines for quashing of a complaint/FIR/criminal proceeding thus :-

(1) Where the allegations made in the first information report or 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 a case against the accused.

(2) ....

(3) ....

(4) ....

(5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever each a just conclusion that there is sufficient ground for proceeding against the accused.

(6) ....

(7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private or personal grudge.

These were later reiterated and followed by the Apex Court in a series of judgments with some minor additions/alternations here and there depending upon the facts and circumstances of the case. The Court went a step further in Madhavrao Jiwajirao Scindia v. Sambhajirao Chandrojirao Angre and others, 1988 (1) RCR 565 (SC), to hold that Court process could not be allowed to be used for oblique purpose and that it was for the Court to consider whether it was in the interest of justice to allow a criminal prosecution to continue. It said :-

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 utilized for any oblique purpose and where in the opinion of the Court chances of an ultimate conviction are 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.

The Court is, thus, fully competent to quash criminal proceedings u/s 482 Cr. P.C. where the matter is essentially of civil nature and has been given cloak of criminal offence.

From the simple reading of the allegations made in the FIR it is apparent that it was a case of breach of contract, which may not give rise to an offence of cheating. Dishonoring of commitment and avoiding of contract would give rise to civil liability. In H.R. Verma v. State of Bihar, AIR 2000 SC 2341, Hon''ble the Supreme Court, while dealing with a similar question held :-

In determining the question it has to be kept in mind that the distinction between mere breach of contract and the offence of cheating is a fine one. It depends upon the intention of the accused at the time of inducement which may be judged by his subsequent conduct but for this subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, that is the time when the offence is said to have been committed. Therefore, it is the intention which is the gist of the offence. 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. From his mere failure to keep up promise subsequently such a culpable intention right at the beginning, that is, when he made the promise cannot be presumed.

The crux of the matter is the intention of person, who induces the victim by his representation and not the nature of prosecution, which would be decisive in determining whether there was a commission of offence or not ?

In Shashi Partap Singh v. State of U.P., 2001 (4) RCR (Crl.) 148, the Court quashed the complaint in almost a similar case as the present one by holding that breach of trust would give rise to a case of purely civil nature and no offence of cheating could be made out.

In the instant case no doubt there is no allegation that the possession was also delivered to the complainant but by simply not executing the sale-deed in the stipulated period it cannot be said that the applicant committed cheating as there is nothing in the complaint to show that the intention of applicant from the very beginning was fraudulent or dishonest. The complaint''s allegations make out a case of breach of contract. In case the applicant failed to perform the part of his contract the remedy to the complaint was to file a civil suit for specific performance. Thus, the dispute between the parties was of purely civil nature and criminal complaint was not maintainable.

The petition is accordingly accepted. FIR No. 114 dated 12.4.2002 registered at P.S. Focal Point, Ludhiana u/Ss. 406, 420, 506 and 120-B IPC and all proceedings taken thereunder are quashed.

Petition allowed.