F. EDISON & ANR vs THE STATION HOUSE OFFICER

The petitioners are the fifth and the sixth accused in the case registered as Crime No.34/2018 of the Kunnamkulam police station under

Sections 420 and 406 IPC. They seek the protection envisaged under Section 438 of the Code of Criminal Procedure, 1973 in the event of arrest

by the police in the case.

The prosecution case can be briefly stated as follows: The petitioners are the partners of the firm by name Desamangalam Rubber Estate. On

15.08.2015, the de facto complainant and his son entered into an agreement with the petitioners for purchasing 94 acres and 19 cents of property

belonging to the firm in their favour for a consideration of thirty crores rupees. The defacto complainant paid a total amount of eight crores and

fifteen lakhs rupees to the petitioners as advance towards sale consideration. Inspite of a lawyer notice sent to them, the petitioners and other

partners did not register sale deed in respect of the property in the name of the de facto complainant and his son. They also did not repay the

amount of advance received by them. Thus, they cheated the de facto complainant and his son.

Heard the learned counsel for the petitioners and the learned Public Prosecutor. Perused the case diary. Heard also the learned counsel for the

de facto complainant who has filed petition for impleading him in the bail application.

The sum and substance of the allegation against the petitioners is that they entered into an agreement with the de facto complainant and his son

for sale of the property owned by the firm of which they were partners and they received eight crores and fifteen lakhs rupees as advance towards

sale consideration, but they did not not register sale deed in favour of the de facto complainant and his son in respect of the property and that they

also did not repay the amount of advance received by them and thus they committed the offences of criminal misappropriation and cheating. The

dispute relating to the transaction alleged in the case is essentially a civil dispute. At the time of hearing, learned counsel for the petitioners

submitted that the de facto complainant has instituted a suit in the civil court concerned on the basis of the sale agreement and the property which is

the subject matter of agreement has been attached as per the order of the civil court. The correctness of this submission is not disputed by the

learned counsel for the de facto complainant.

The offence of cheating is defined in Section 415 IPC. It reads thus:

-- Cheating:- Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any

person, or to consent that any person shall retain any property or intentionally induces the person so deceived to do or omit to do anything which

he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to the person in body,

mind, reputation or property, is said to ""cheat"".

Illustration (g) to section 415 of the Indian Penal Code which defines the offence of cheating reads as follows :

A intentionally deceives Z into a belief that A means to deliver to Z a certain quantity of indigo plant which he does not intend to deliver, and

thereby dishonestly induces Z to advance money upon the faith of such delivery, A cheats; but if A, at the time of obtaining the money, intends to

deliver the indigo plant, and afterwards breaks his contract and does not deliver it, he does not cheat, but is liable only to a civil action for breach

of contract"".

Section 420 IPC reads as below:

420.-- Cheating and dishonestly inducing delivery of property. Whoever cheats and thereby dishonestly induces the person deceived to deliver

any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and

which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend

to seven years, and shall also be liable to fine.

The primary ingredient of the offence of cheating is deception played by the accused by fraudulently or dishonestly inducing the person so

deceived to do or omit to do something or to deliver any property to any person etc. ""Fraudulently"" is defined in Section 25 of the IPC as the

doing of a thing with intent to defraud. ""Dishonestly"" is defined in Section 24 of the IPC as doing anything with the intention of causing wrongful

gain to one person or wrongful loss to another person. A dishonest intention cannot be inferred from the mere fact of a subsequent breach of

promise. 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 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 (See Hridaya Ranjan

Prasad Verma v. State of Bihar : AIR 2000 SC 2341).

Distinction between mere breach of contract and cheating would depend upon the intention of the accused at the time of alleged inducement. If it

is established that the intention of the accused was dishonest at the very time when he made a promise and entered into a transaction with the

complainant to part with his property or money, then the liability is criminal and the accused is guilty of the offence of cheating. On the other hand,

if all that is established that a representation made by the accused has subsequently not been kept, criminal liability cannot be foisted on the

accused and the only right which the complainant acquires is the remedy for breach of contract in a Civil Court. Mere breach of contract cannot

give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown at the beginning of the transaction (See International

Advanced Research Centre for Powder Metallurgy and New Materials (ARCI) v. Nimra Cerglass (P) Ltd. : (2016) 1 SCC 348).

In the instant case, at the time when the agreement for sale was executed, it could have in no event been termed dishonest so as to hold that the

de facto complainant was cheated of the amount of advance sale consideration. At any rate, whether the petitioners intended or not to execute sale

deed in respect of the property in favour of the de facto complainant is a matter to be proved at the time of trial from the entire circumstances of

the transaction.

The question whether breach of contract of an agreement for sale would constitute an offence under Section 406 or Section 420 of the Indian

Penal Code arose in Dalip Kaur v. Jagnar Singh : AIR 2009 SC 3191. In that case, the Hon''ble Supreme Court has held as follows:

If the dispute between the parties was essentially a civil dispute resulting from a breach of contract on the part of the appellants by non refunding

the amount of advance the same would not constitute an offence of cheating. Similar is the legal position in respect of an offence of criminal breach

of trust having regard to its definition contained in S.405 of the Indian Penal Code"".

In the aforesaid circumstances, prima facie, the dispute relating to the transaction involved in the case appears to be essentially a civil dispute.

Custodial interrogation of the petitioners appears to be not necessary to have an effective investigation in the case. The prosecution has no case

that the petitioners have got criminal antecedents. In these circumstances, I am of the view that the discretion of the Court can be exercised in

favour of the petitioners to grant them pre-arrest bail.

Learned counsel for the de facto complainant would submit that the first petitioner and some other persons entered into the office of the de

facto complainant and threatened him and they tried to snatch away the documents relating to the transaction. Learned counsel would submit that if

the petitioners are enlarged on bail, they would intimidate the de facto complainant and other witnesses in the case. On granting bail to the

petitioners, appropriate conditions can be imposed to avoid such contingencies.

In the result, the application is allowed and it is ordered as follows:

1) The petitioners shall be released on bail on executing a bond for Rs.1,00,000/- (Rupees one lakh) each with two sureties each for the like

amount in the event of their arrest by the police in Crime No. 34/2018 of Kunnamkulam Police Station.

2) The petitioners shall appear before the investigating officer between 9 a.m and 11 a.m on all Saturdays for a period of three months from the

date of their release on bail.

3) The petitioners shall not influence or intimidate the de facto complainant and other prosecution witnesses. They shall not make any attempt to

tamper with the evidence in the case.

4) The petitioners shall not leave the State of Kerala without the prior permission of the jurisdictional Court.

5) The petitioners shall appear before the investigating officer as and when directed in writing to do so.

6) The petitioners shall produce their passport in the Magistrate''s Court concerned within three days from the date of their release on bail. If they

have no passport, they shall file an affidavit to that effect in the Magistrate''s Court concerned within that period.

7) If the petitioners violate any of the conditions of bail, the Magistrate''s Court concerned is at liberty to cancel the bail in accordance with law.