Rakesh Kumar @ Karmali @ Kamli vs State Of Jharkhand

Anil Kumar Choudhary, J

Heard the parties.

This criminal miscellaneous petition has been filed invoking the jurisdiction of this Court under Section 528 of B.N.S.S., 2023 with the prayer to quash the entire criminal proceeding including the order dated 25.07.2024 passed by the learned Judicial Magistrate 1st Class-XXXI, Ranchi in G.R. No. 1606 of 2024 arising out of Sukhdeo Nagar P.S. Case No. 297 of 2022 whereby the learned Judicial Magistrate 1st Class-XXXI, Ranchi has taken cognizance of the offence punishable under Section 406 and 420 of the Indian Penal Code basing upon the charge sheet submitted by the police in the said case.

The allegation against the petitioner is that the petitioner took loan of Rs.6,64,926/- from the informant but did not repay the loan and though the father of the petitioner assured the informant that he will ensure that the loan amount with interest thereon is returned to the informant but he as well as the petitioner left their residence withoutgiving any information.

On the basis of the written report submitted by the informant police registered Sukhdeo Nagar P.S. Case No. 297 of 2022 and took up investigation of the case. After completion of investigation police submitted charge sheet against the petitioner for having committed the said offences. Basing upon the same, Judicial Magistrate 1st Class-XXXI, Ranchi has taken cognizance of the offences.

Learned counsel for the petitioner relied upon the judgment of the Hon'ble Supreme Court of India in the case of Lalit Chaturvedi & Ors. vs. State of Uttar Pradesh & Anr. passed in SLP (Crl.) No. 13485 of 2023 wherein, the Hon'ble Supreme Court of India has reiterated the settled principle of law that contractual dispute or breach of contract per se should not lead to initiation of a criminal proceeding.

Learned counsel for the petitioner next relied upon the judgment of this Court in the case of Puran Chandra Poddar vs. The State of Jharkhand & Anr. passed in Cr.M.P. No. 332 of 2022 dated 30.10.2023 and submits that in that case, this Court relied upon the judgment of the Hon'ble Supreme Court of India in the case of Sarabjit Kaur vs. State of Punjab & Another reported in (2023) 5 SCC 360 para-13 of which reads 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 Respondent 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 Respondent 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 FIR was registered was filed nearly three years after the last date fixed for registration of the sale deed. Allowing the proceedings to continue would be an abuse of process of the court."(Emphasis supplied)

wherein the Hon'ble Supreme Court of India has reiterated the settled principle of law that unless fraudulent or dishonest intention is shown right at the beginning of the transaction, a breach of contract willnot give rise to a criminal prosecution.

It is then submitted by the learned counsel for the petitioner that in that case, this Court relied upon the judgment of the Hon'ble Supreme Court of India in the case of Uma Shankar Gopalika vs. State of Bihar & Anr. reported in (2005) 10 SCC 336, paragraph No.6 of which reads as under:-

"6.Xxxx xxxx xxxx It is well settled 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 the present case it has nowhere been stated 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." (Emphasis supplied)

wherein, it has been held by the Hon'ble Supreme Court of India that in order to constitute the offence of cheating, the accused must play deception since the very inception and if the intention to cheat has developed later on, the same cannot amount to cheating.

It is further submitted by the learned counsel for the petitioner that in that case, this Court relied upon the judgment of the Hon'ble Supreme Court of India in the case of Satishchandra Ratanlal Shah vs. State of Gujarat & Anr. reported in (2019) 9 SCC 148, paragraph Nos.11 and 13 of which reads as under:-

"11. Having observed the background principles applicable herein, we need to consider the individual charges against the appellant. Turning to Section 405 read with Section 406 IPC, we observe that the dispute arises out of a loan transaction between the parties. It falls from the record that Respondent 2 knew the appellant and the attendant circumstances before lending the loan. Further it is an admitted fact that in order to recover the aforesaid amount, Respondent 2 had instituted a summary civil suit which is still pending adjudication. The law clearly recognises a difference between simple payment/investment of money and entrustment of money or property. A mere breach of a promise, agreement or contract does not, ipso facto, constitute the offence of the criminal breach of trust contained in Section 405 IPC without there being a clear case of entrustment.

Now coming to the charge under Section 415 punishable under Section 420 IPC. In the context of contracts, the distinction between mere breach of contract and cheating would depend upon the fraudulent inducement and mens rea. (See Hridaya Ranjan Prasad Verma v. State of Bihar [Hridaya Ranjan Prasad Verma v. State of Bihar, (2000) 4 SCC 168: 2000 SCC (Cri) 786]) In the case before us, admittedly the appellant was trapped in economic crisis and therefore, he had approached Respondent 2 to ameliorate the situation of crisis. Further, in order to recover the aforesaid amount, Respondent 2 had instituted a summary civil suit seeking recovery of the loan amount which is still pending adjudication. The mere inability of the appellant to return the loan amount cannot give rise to a criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, as it is this mens rea which is the crux of the offence. Even if all the facts in the complaint and material are taken on their face value, no such dishonest representation or inducement could be found or inferred."(Emphasis supplied)

wherein, the Hon'ble Supreme Court of India has held that mere inability of the accused to return the loan amount cannot give rise to a criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction.

It is next submitted by the learned counsel for the petitioner that there is no allegation against the petitioner of playing deception since the very inception nor there is any allegation of dishonest misappropriation of any entrusted property hence, neither the offence punishable under Section 406 of the Indian Penal Code nor the offence punishable under Section 420 of the Indian Penal Code is made out against the petitioner. It is next submitted by the learned counsel for the petitioner that there is an inordinate delay in lodging the FIR, as though transaction took place between 28.12.2013 to 17.01.2014 much more than 3 year thereafter, which is the period of limitation to file the money suit; the FIR was lodged on 15.07.2022. It is then submitted that this false case has been foisted by giving a cloak of criminal case to a purely civil dispute, where claim is barred by limitation. Hence, it is submitted that the prayer as made in this criminal miscellaneous petition be allowed.

The learned Spl. P.P. and the learned counsel for the opposite party no.2 on the other hand vehemently opposes the prayer. Learned counsel for the opposite party no.2 relied upon the judgment of the Hon'ble Supreme Court of India in the case of Punit Beriwala vs. The State of NCT of Delhi & Ors. reported in 2025 INSC 582 and submits that the Hon'ble Supreme Court of India in that case has reiterated the settled principle of law that delay in registration of the FIR for offences punishable with imprisonment of more than three years cannot be the basis of interdicting a criminal investigation and the delay will assume importance only when the complainant fails to give a plausible explanation and whether the explanation is plausible or not has to be decided by the trial court only after recording of the evidence.

Learned counsel for the opposite party no.2 next relied upon the judgment of this Court in the case of Satish Kumar @ Satish Swarnkar & Anr. vs. The State of Jharkhand & Anr. reported in 2024:JHHC:15737 wherein, this Court relied upon the judgment of the Hon'ble Supreme Court of India in the case of Mohammad Wajid & Another Vs. State of U.P. and Others, in Criminal Appeal No. 2340 of 2023 decided on 08.08.2023, reported in (2023) 5 Supreme 601, wherein, in paragraph no.33 the Hon'ble Supreme Court of India has reiterated the settled principle of law that delay in registration in the FIR cannot be a ground for quashing the FIR.

It is next submitted by the learned Spl. P.P. and the learned counsel for the opposite party no.2 that the materials in the record are sufficient to constitute both the offences punishable under Sections 420 and 406 of the Indian Penal Code. It is, therefore, submitted that this criminal miscellaneous petition being without any merit be dismissed.

Having heard the submissions made at the Bar and after going through the materials available in the record, it is pertinent to mention here that the only allegation against the petitioner is that the petitioner is not returning the loan taken by him from the informant. Admittedly, the recovery of loan is barred by limitation. There is no allegation against the petitioner of playing deception since the beginning of the transaction between the parties.

In view of the settled principle of law as already indicated above in the foregoing paragraphs of this Judgment; in the absence of this essential ingredient to constitute the offence of cheating, that accused must play deception since the very inception, this Court is of the considered view that even if the entire allegations made against the petitioner are considered to be true in its entirety, still the offence punishable under Section 420 of the Indian Penal Code is not made out.

So far as the offence punishable under Section 406 of the Indian Penal Code is concerned, it is a settled principle of law that mere breach of a promise, agreement or contract does not ipso facto constitute the offence of criminal breach of trust. There is no allegation against the petitioner of dishonest misappropriation of any entrusted property. In the absence of the same, this Court is of the considered view that even if the entire allegations made against the petitioner are considered to be true in its entirety, still the offence punishable under Section 406 of the Indian Penal Code is not made out.

In view of the discussions made above, as neither the offence punishable under Section 406 of the Indian Penal Code nor the offence punishable under Section 420 of the Indian Penal Code is made out against the petitioner even if the entire allegations made against the petitioner are considered to be true in its entirety, therefore, this Court is of the considered view that continuation of the criminal proceeding against the petitioner will amount to abuse of process of law. Therefore, this is a fit case where the entire criminal proceeding including the order dated 25.07.2024 passed by the learned Judicial Magistrate 1st Class-XXXI, Ranchi in G.R. No. 1606 of 2024 arising out of Sukhdeo Nagar P.S. Case No. 297 of 2022 be quashed and set aside qua the petitioner.

Accordingly, the entire criminal proceeding including the order dated 25.07.2024 passed by the learned Judicial Magistrate 1st Class-XXXI, Ranchi in G.R. No. 1606 of 2024 arising out of Sukhdeo Nagar P.S. Case No. 297 of 2022 is quashed and set aside qua the petitioner.

In the result, this criminal miscellaneous petition is allowed.