Rakesh Kumar Verma and Others vs Ravi Kumar

S. Ravindra Bhat, J.—The petition was heard finally with consent of counsel for the parties.

In these proceedings u/s 482 of the Code of Criminal Procedure, petitioner seeks the quashing of proceedings initiated, though a complaint filed

by the respondent. The brief facts are that the petitioner awarded a contract to the respondent/complainant, for rehabilitation and expansion work.

The total value of the contract was Rs. 5,67,300/-. The work order was issued on 15.1.2003. The complainant alleged that the petitioner/accused

in spite of agreeing to pay 30% of the amount in advance working out to Rs. 1,48,000/- and effect further payments, failed to do so. He further

alleged that the petitioner took advantage of the contract and got the work agreed to by the parties, executed. On the strength of these allegations,

the complaint was filed before the Magistrate on 31.1.2004.

The complainant/respondent, deposed as CW-1 at the pre-summoning stage and exhibited certain documents. These included the work

order/rukka and a letter signed by the petitioner accused on 15.1.2003. In the course of the evidence, the complainant alleged that the petitioner

did not pay the amounts as per the agreement or on the dates stipulated. It was further alleged that the accused petitioner continued making false

assurances. On the basis of the deposition, and the complaint a summoning order was issued by the Magistrate.

It is contended on behalf of the petitioner that the disputes between the parties are purely in a commercial nature having no element or

ingredients of any offence. It was also contended by counsel that the respondent intentionally and mischievously suppressed information that he had

received an amount of Rs. 1,88,000/- during the subsistence of the contract, which was terminated on account of unsatisfactory work. It was

contended that the petitioner was constrained to award balance work to some one else. In spite of this, the respondents preferred to initiate

criminal proceedings which were wholly unwarranted.

Learned Counsel for the petitioner relied upon the averments in the complaint and submitted that the respondent studiously concealed that any

amounts were received in the course of the contract period or also as to the manner in which the work in question had been executed and whether

it was satisfactory.

Learned Counsel relied upon the judgment reported as Hari Prasad Chamaria Vs. Bishun Kumar Surekha and Others, and submitted that mere

breach of contract could not give rise to criminal prosecution and that an aggrieved party has recourse to civil proceedings for recovery of amounts

due. He also relied upon the decision in Pepsi Foods Ltd. and Another Vs. Special Judicial Magistrate and Others, for the proposition that before

issuing a summoning order, upon a complaint, the Magistrate has to take the overall circumstances as alleged in the complaint and satisfy himself

that the basic ingredients are necessary to constitute the offence were made out. It was submitted that in the facts of this case, the conduct of the

respondent/complainant in completely withholding information as to the amounts paid and trying to give a criminal colour to a civil dispute,

necessitates exercise of inherent jurisdiction.

Learned Counsel for the respondent contended by placing reliance upon the counter affidavit filed on 7.3.2006, a copy of which was also

handed over during the course of the proceedings that the petitioner/accused did not pay the amounts in time; as a result the complaint was

justified. Counsel contended that although there is no denial about having received the sum of Rs. 1,88,000/-, yet out of that, an amount of Rs.

73,000/- had to be adjusted by the complainant for having spent monies towards purchase of materials.

Learned Counsel contended that the petitioner never had the intention of releasing the amounts in time as was evident from the fact that the

contract was subsequently awarded to some one else.

In Pepsi Food (supra) the Supreme Court held as follows:

Summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a mater of course. It is not that the

complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the

Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He has to

examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and would that be sufficient

for the complainant to succeed in bringing charge home to the accused. It is not that the Magistrate is a silent spectator at the time of recording of

preliminary evidence before summoning of the accused. The Magistrate has to carefully scrutinise the evidence brought on record and may even

himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then

examine if any offence is prima facie committed by all or any of the accused.

The Court, on the basis of the materials placed before it concluded that the evidence of cheating had not been made out and quashed the

summoning order issued by the Magistrate.

In the present case, the question is whether the complaint and the evidence led, read as a whole, would have persuaded the Court to issue the

summoning order as it did. Both the complaint and the deposition of the complainant mention that a contract was entered into between the parties

as per which upon the execution of agreed works, the complainant was to be paid Rs. 5,67,300/-. He further deposed that as per his calculation a

sum of Rs. 4,92,982/- was outstanding from the accused petitioner. However, beyond these general allegations nothing further was stated.

Hari Prasad Chamaria is an authority for the proposition that even if all the allegations are taken together, the Court has to see whether the

offence alleged is made out. The basic ingredient of cheating is dishonesty and a fraudulent intention at the time of entering into the transaction. The

Court held that if a vital element was missing, complaint is not maintainable. Likewise, the decision reported as S.N. Palanitkar and Ors. v. State of

Bihar and Anr. 2001(4) CrI.L.J 4765 the Supreme Court again re-emphasised that the necessary ingredients of cheating are that the presence of

fraudulent and dishonest inducement of a person, delivery of property on account of the inducement, etc. The Court had relied upon the previous

decision reported as Hridaya Ranjan Prasad Verma and Ors. v. State of Bihar and Anr. (2000) 4 SC 168, which outlined the distinction between

the mere breach of contract and the offence of cheating. The Court held as follows:

On a reading of the section it is manifest that in the definition there are set forth two separate classes of acts which the person deceived may be

induced to do. In the first place he may be induced fraudulently or dishonestly to deliver any property to any person. The second class of acts set

forth in the section is the doing or omitting to do anything which the person deceived would not do or omit to do if he w ere not so deceived. In the

first class of cases the inducing must be fraudulent or dishonest. In the second class of acts, the inducing must be intentional but not fraudulent or

dishonest.

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.

In the present case the complaint and the deposition of the respondent read as a whole no where bring out the element of inducement and the

deception on the part of the petitioner accused at the time of entering into contract, much less any dishonest motive. It is an undisputed position that

the petitioner had paid Rs. 1,88,000/- in performance of the contract to the respondent. Though this has not been mentioned in the complaint,

there is some indirect indication to that effect. This can be gathered from the statement of CW-1 that a sum of Rs. 4,72,000/- was due and

payable. Taken in its totality the complaint and deposition of CW-1 point to a pure commercial and civil dispute with no element of criminality as

alleged against the petitioner.

The Supreme Court has time and again in its judgments, including in G. Sagar Suri and Another Vs. State of U.P. and Others, held that the

Courts must be vary of being used as tools by exercising a criminal jurisdiction, since off late civil litigants are seeking to settle scores or using the

criminal law machinery to resolve civil disputes.

In view of the above findings, I am satisfied that the summoning order and the proceedings initiated by the respondents are liable to be

quashed. Criminal Complaint Case No. CC-620/2004 pending before the Metropolitan Magistrate, Karkardooma Courts and all further

proceedings are hereby quashed.

The petition is allowed in the above terms.