Manish Jain & Anr vs State Of M. P. And Another

Regard being had to the similitude in the controversy involved in the present cases, the petitions were analogously heard and by a common order, they

are being disposed of by this Court. Facts of M.Cr.C.No.9776/2016 are narrated hereunder.

The present petition has been filed for quashment of proceedings arising out of Crime No.435/2012. The facts of the case reveal that the present

applicant Manish has filed a complaint case against non-applicant No.2 â€" Ashok Porwal alleging commission of offences under Sections 420, 406

and 409 of the Indian Penal Code, 1860 and based upon the orders passed by the Judicial Magistrate First Class, the police has registered a First

Information Report at Crime No.435/2012.

Learned counsel for the applicant has argued before this Court that it was the applicant Manish who has filed a complaint case and at his behest, First

Information Report was lodged and the dispute has been settled between the parties as it was dispute arising out of business transaction.

Earlier the applicant Manish and non-applicant No.2 Ashok were carrying out a business jointly and as dispute arose between the parties, they have

decided not to carry out business together and as the dispute was also in respect of division of the amount between the partners, alleging cheating and

forgery, a complaint was filed.

It has been further stated that after registration of FIR and during the pendency of the proceedings before the learned Judge, the matter was settled

amicably between the parties and the present applicant Manish who has filed the complaint does not want any action against the non-applicant No.2

Ashok.

Learned counsel for the non-applicant No.2 Ashok is also present and he has also stated fairly that Ashok has paid the money back to the complainant

and a compromise has arrived at between the parties. It has also been stated that dispute between the parties is purely of civil nature.

The apex Court in the case of Rashmi Jain Vs. State of Uttar Pradesh and Anr. reported in (2014) 13 SCC 553 in paragraph No.2 and 6 to 12 has

held as under:-

“2. By the impugned order, the High Court has declined to quash the proceedings initiated against the appellant on the ground that all the

submissions relate to disputed questions of fact which cannot be adjudicated upon by the Court under Section 482 CrPC. It is further observed that, at

this stage, only prima facie case is to be seen in the light of the law laid down by the Supreme Court in a number of judgments, namely, R.P Kapur v.

State Of Punjab. AIR 1960 SC 866, State of Haryana v. Bhajan Lal State of Haryana v. Bhajan Lal, 1992 Supp 1 SCC 335, State of Bihar v. P.P

Sharma 1992 Supp 1 SCC 222 and Zandu Pharmaceutical Works Ltd. v. Mohd. Sharaful Haque 2005 1 SCC 122. Relying upon the aforesaid

judgments, but without culling out the ratio of any of the aforesaid judgments, it has been observed by the High Court that the defence of the accused

cannot be considered at this stage. It has further been observed that “the applicants have got right of discharge under sections 239, 245(2) or

227/228 crpc, as the case may be through a proper application for the said purpose and the accused persons are free to take all the submissions in the

said discharge application before the trial court.â€​

To take the complaint out of the realm of a purely civil dispute, it is maliciously alleged in the complaint that when Respondent 2 approached the

appellant for payment, the appellant stated as follows:

“On 22-3-2009, the applicant met the accused in the market of Bazarganj Saraitareen and asked for his balance amount, but the accused in the

presence of two other persons flatly refused to pay the same and threatened the applicant that if he ever asked for the payment again he will be killed

and stated that you don't know me. I have not paid to the high and mighty people, who are you. I had to usurp your money and I had done so.

Thereafter she went in a car.â€​

In our opinion, the aforesaid averment has been made only to foist criminal liability on the appellant by converting a purely civil dispute into criminal

act, alleged to have been committed by the appellant. The allegations are absurd and outlandish on the face of it; firstly, the appellant is a lady, a

widow, who was not accompanied by anybody else at the time of the alleged occurrence; secondly, she, though being a resident of Delhi, misbehaved

with number of high and mighty parties with whom she had earlier transacted business at Moradabad. In our opinion, these are allegations which on

the face of it, cannot be taken seriously by any reasonable person. The High Court, in our opinion, has committed jurisdictional error in dismissing the

criminal petition filed by the appellant on the ground that it involves disputed questions of fact, which can only be gone into by the trial court.

The fact that the dispute involved between the parties is purely civil in nature and has, in fact, been admitted in the counteraffidavit filed on behalf

of Respondent 2. In Para 5.1, it has been stated as follows:

“5.1 That the contents of Para 5.1 are wrong. Hence denied. The complaint clearly disclose the commission of criminal offence. It is correct that

the dispute was initially pertaining to commercial one, however this commercial dispute has been converted into criminal one later on.â€​

Clearly, it is evident that the utterances which are attributed to the appellant have been inserted in the complaint with a malicious intent to convert a

purely civil dispute into a criminal offence.

In Anil Mahajan v. Bhor Industries Ltd. 2005 10 SCC 228, examining similar fact situation, this Court observed as follows: (SCC p. 231, para 6)

“6. The order of the Magistrate was challenged before the Court of Session. The learned Additional Sessions Judge, Pune, by order dated 19-10-

2001 has set aside the order of the Magistrate issuing process. It has been stated by the learned Additional Sessions Judge in the order that:

‘In this case there is no allegation that the accused made unlawful representation. Even, according to the complaint, they entered into memorandum

of understanding. Grievance seems to be that the accused failed to discharge obligations under the MoU. In the complaint, there was no allegation that

there was fraud or dishonest inducement on the part of the applicant and thereby the opponent parted with the property.’

Reliance has been placed, in that order, on various decisions of this Court holding that from mere failure 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. 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. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent, dishonest intention is shown at the

beginning of the transaction.â€​

In S.W Palanitkar v. State of Bihar 2002 1 SCC 241, this Court again observed as follows: (SCC pp. 246-47 & 250, paras 8, 11 & 21)

“8. Before examining respective contentions on their relative merits, we think it is appropriate to notice the legal position. Every breach of trust

may not result in a penal offence of criminal breach of trust unless there is evidence of a mental act of fraudulent misappropriation. An act of breach

of trust involves a civil wrong in respect of which the person wronged may seek his redress for damages in a civil court but a breach of trust with

mens rea gives rise to a criminal prosecution as well.

One of us (D.P Mohapatra, J.), speaking for the Bench, in Hridaya Ranjan Prasad Verma v. State of Bihar 2000 4 SCC 168 on facts of that case,

has expressed thus: ( SCC p. 177, para 15)

‘15. 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.’

It is clear from the allegations made in the complaint and the sworn statements that Appellant 1 Company entered into an agreement with

Respondent 2 on certain terms and conditions. It is alleged that Appellant 7 went to Patna and contacted Respondent 2 and induced him to enter into

an agreement assuring him of huge profit. At the time of arriving at such an agreement, none of the other appellants either met Respondent 2 or

induced him to enter into any agreement with a view to cheat him. The agreement was further renewed for a period of one year. It is not the case

that there was no supply of goods at all as it has come on record that there was supply of 400 tons of fertilizer, maybe it was far less than the required

quantity. The allegations made against the appellants other than Appellant 7 are very vague and bald. From the material that was placed before the

Magistrate, even prima facie, it cannot be said that there was conspiracy or connivance between the other appellants and Appellant 7. If the

appellants have committed breach of agreement, it is open to Respondent 2 to seek redressal in a competent court or forum to recover damages, if

permissible in law in case he had sustained any loss. In order to constitute an offence of cheating, the intention to deceive should be in existence at the

time when the inducement was made. It is necessary to show that a person had fraudulent or dishonest intention at the time of making the promise, to

say that he committed an act of cheating. A mere failure to keep up promise subsequently cannot be presumed as an act leading to cheating.â€​

Again in G. Sagar Suri v. State of U.P 2000 2 SCC 636, this Court observed as follows: (SCC p. 643, para 8)

“8. Jurisdiction under section 482 of the code has to be exercised with great care. In exercise of its jurisdiction the High Court is not to examine the

matter superficially. It is to be seen if a matter, which is essentially of a civil nature, has been given a cloak of criminal offence. Criminal proceedings

are not a short cut of other remedies available in law. Before issuing process a criminal court has to exercise a great deal of caution. For the accused

it is a serious matter. This Court has laid certain principles on the basis of which the High Court is to exercise its jurisdiction under section 482 of the

code. jurisdiction under this section has to be exercised to prevent abuse of the process of any court or otherwise to secure the ends of justice.â€​

In Bhajan Lal case, this Court enumerated the categories of cases, by way of illustration, wherein the High Court would be justified in exercising

its inherent power under section 487 crpc or article 226 of the constitution of india to prevent abuse of the process of court or to otherwise secure the

ends of justice. In para 102, these categories of cases are listed as under: (SCC pp. 378-79)

“(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) Where the allegations in the first information reportand other materials, if any, accompanying the FIR do not disclose a cognizable offence,

justifying an investigation by police officers under section 156(1) of the code except under an order of a Magistrate within the purview of Section

155(2) of the Code.

(3) Where the uncontroverted allegations made in theFIR or complaint and the evidence collected in support of the same do not disclose the

commission of any offence and make out a case against the accused.

(4) Where, the allegations in the FIR do not constitutea cognizable offence but constitute only a non-cognizable offence, no investigation is permitted

by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code.

(5) Where the allegations made in the FIR orcomplaint are so absurd and inherently improbable on the basis of which no prudent person can ever

reach a just conclusion that there is sufficient ground for proceeding against the accused.

(6) Where there is an express legal bar engrafted inany of the provisions of the Code or the concerned Act (under which a criminal proceeding is

instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing

efficacious redress for the grievance of the aggrieved party.

(7) Where a criminal proceeding is manifestly attendedwith 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 and personal grudge.â€​

In our opinion, the case pleaded by the petitioner, and as argued by Ms Indu Malhotra, squarely falls within the ambit of Propositions 5 and 7.

In view of the above, we are unable to uphold the order passed by the High Court, the same is hereby set aside. The appeal is allowed. The

petition filed by the appellant under Section 482 is allowed and the proceedings initiated based on the complaint are hereby quashed. The bail bonds of

the petitioner are discharged. Although this is a fit case where heavy costs should be imposed on Respondent 2, we refrain from doing so.â€​

In light of the aforesaid, as parties have entered into a compromise and by filing a complaint in respect of a dispute which is purely of civil nature was

being converted into a criminal offence, this Court is of the opinion that the prayer made by the complainant himself before this Court and in light of

the judgment delivered by the apex Court, deserves to be allowed and is accordingly allowed and the FIR registered at Crime No.435/2012 and all

proceedings in the Sessions Trial No.22/2017 pending before the Court of Additional Sessions Judge, Ratlam are hereby quashed.

This order shall govern the disposal of M.Cr.C.No.20497/2017 also.

Certified copy as per rules.