S.B. Goenka vs Rajendra Prasad Agarwalla

R.C. Patnaik, J.—The petitioner, a Director of Messrs Foods, Fats and Fertilisers Limited, a company registered under the Companies Act. 1956, has filed this writ application for quashing the criminal proceeding instituted against him u/s 420 of the Penal Code by the opposite party.

The company specialises in the manufacture of special types of fats, fertilisers and especially of an oil made out of mango kernel. It needs a large quantity of mango kernels and acquires the same from various parts of the country through its agents and brokers. One Govindaram of Messrs Govindaram Nichaldas & Co., a company of brokers, acted as the commission agent of the petitioner. As per the allegations contained in the complaint petition, in the second week of September. 1978 the petitioner and Govindaram placed an order for supply of mango kernels at the rate of Rs. 750.00 per M. T. - F. O. R. Tadepalligudem (where the factory of the petitioner is located). It is alleged that the petitioner had assured the -opposite party that the kernels could be booked under the Hundi covering approximately 70 per cent of their value and the balance 30 per cent would be paid after the goods reached the destination, On the aforesaid terms, a conr tract was entered into between the parties. In pursuance of the said contract, the opposite party despatched 460 bags of mango kernel in two consignments. It is alleged that the petitioner honoured the Hundis and paid the entire amount to the extent of 70 per cent of their value but did not pay the balance of 30 per cent intentionally. The opposite party thereupon lodged the complaint alleging commission of offence u/s 420 of the Penal Code.

Mr. G. Rath appearing for the petitioner submits that the allegations contained in the complaint petition did not constitute an offence of cheating and a breach of contract or failure to keep promise does not amount to an offence. He submits that inability of the party to honour the conract can be due to various causes. There can be bona fide dispute between the parties. The party alleged to have committed the offence could hiniself have suffered on account of breach of promise by the complainant. He submits that taking of cognizance of an offence on the allegation contained in the complaint petition has been misconceived. In State of Kerala Vs. A. Pareed Pillai and Another, , Khanna, J., delivering opinion of the Court said (Para 16):

To hold a person guilty of the offence of cheating, it has to be shown that his intention was dishonest at the time of making the promise. Such a dishonest intention cannot be inferred from the mere fact that he could not subsequently fulfil the promise.

Every breach of contract does not constitute an act of cheating. Dishonest intention could not be inferred from the mere fact that the petitioner did not subsequently fulfil the promise. There was no material before the Magistrate on which he could be satisfied that the petitioner had any dishonest intention at the time of the alleged promise or inducement. The dispute was purely of a civil nature. The proceeding initiated was clearly an abuse of the process of Court and on the facts alleged no process ought to have been directed to be Issued against the petitioner. Relying on the dictum of their Lordships of the Supreme Court in Sardar Trilok Singh and Others Vs. Satya Deo Tripathi, , I quash the proceeding.

In the result the revision is allowed.