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Judgment
Rakesh Ranjan Prasad, J.—Initially this application was filed for quashing of the F.I.R. of Sakchi P.S. Case No. 103 of 2012 (G.R. No. 1421 of 2012), instituted under Sections 406 and 420 of Indian Penal Code, against the petitioners Subsequently, through an interlocutory application bearing I.A. No. 1265 of 2012, charge-sheet, submitted in the case, and also the order dated 3.8.2012 under which cognizance of the offences punishable under Sections 406 and 420 of Indian Penal Code was taken, have been sought to be quashed. Before adverting to the submissions advanced on behalf of the parties, the case as has been made out in the F.I.R., needs to be taken notice of.
It is the case of the informant that the informant used to have trading of shares with M/s. Ashika Stock Broking Limited, to which these petitioners are the Directors, who always showed loss in every transaction of the share At the same time, they do not use to give share notes to the informant.
Further allegation is that the petitioners dishonestly got 19000 shares of Satyam Computer transferred in their own Accounts Similarly, 750 shares of Tata Steel were deposited in their Accounts after getting it transferred dishonestly from the DEMAT Account of the informant. Those shares were worth Rs. 30,00,000/- That apart, the informant on misrepresentation made by the petitioners issued five cheques each of Rs. 10,00,000/- in total of Rs. 50,00,000/- which the petitioners got it deposited in their Accounts. The said amount was never returned by the petitioners to the informant though the informant had asked the petitioners repeatedly to return the same. At one point of time, they had promised to return a sum of Rs. 80,00,000/- which they were owing to the informant but they did not do so.
On such allegation a case was registered as Sakchi P.S. Case No. 103 of 2012 under Sections 406 and 420 of Indian Penal Code against the petitioners.
Mr. Rajendra Krishna, learned counsel appearing for the petitioners, submits that the petitioners have taken franchisee of M/s. Ashika Stock Broking Limited a registered broker with stock exchange regulated by SEBI, and have been running business in the name of M/s. Kewalka Securities Private Limited, as sub-broker and therefore the petitioners being Directors of M/s. Kewalka Securities Private limited had to do business through the broker and as such it is wrong on the part of the informant to say that the petitioners are the Directors of M/s. Ashika Stock Broking Limited Since the petitioners were not the brokers, they had no occasion to handle the DEMAT Account of the informant.
He would further submit that the allegation made against the petitioners that they got the shares transferred from the DEMAT Account of the informant and his wife to their own Accounts gets falsified from the enclosure of the F.I.R. which would go to show that 19000/ shares of Satyam Computer were transferred from the DEMAT Account of the informant to the DEMAT Account bearing No. 1203450000626109 which belongs to none other than the informant''s wife-Renu Devi which is evident from Annexure-3 Similarly, 750 shares of Tata Steel were transferred from the informant''s DEMAT Account to his wife''s DEMAT Account. This fact during investigation was found to be correct by the Investigating Officer Thus, when the allegation made in the F.I.R. gets demolished from the documents of the informant itself any prosecution against the petitioners on the said allegation would be abuse of the process of law.
Further, it was submitted that so far other part of the allegation concerning transfer of money to the extent of Rs. 50,00,000/- from the Account of M/s. Jayshree Enterprises to the Accounts of the petitioners is concerned, it does not make out any case of cheating or misappropriation, as admittedly cheques had been issued by the informant in favour of the petitioners Moreover, that allegation of obtaining cheques from the informant on making misrepresentation is quite false As a matter of fact, the informant was owing money to the petitioners and, therefore, the informant in order to discharge the debt issued cheques of Rs. 50,00,000/- which the petitioners got it deposited in their Accounts Learned counsel further submits that even this allegation has been found to be false by the Investigating Officer during investigation. In spite of that charge-sheet has been submitted on the premise that during investigation it has transpired that the Informant had given a sum of Rs. 1,87,70,000/- to the petitioners for purchasing shares for the informant but the shares were purchased in other names Even if this allegation is taken to be true, it does not come within the offence of criminal liability rather makes out a case of civil liability and, thereby the entire criminal proceeding including the order taking cognizance is fit to be set aside.
As against this, Mr. Sachin Kumar, learned counsel appearing for the opposite party no. 2, submits that though the petitioners are the Directors of M/s. Kewalka Securities Private Limited, a sub-broker, working under M/s. Ashika Stock Broking Limited, a broker registered under stock exchange regulated by SEBI, but all transactions were being made through the petitioners who did not follow the instruction for purchasing the shares which fact gets established from the information received from M/s. Ashika Stock Broking Limited informing therein that no transaction has been made by the petitioners Learned counsel further submits that during investigation the allegation that the petitioners did not purchase shares as per the instruction has been found to be correct and that the petitioners in presence of the witnesses had made promise to return the money but they did not return the money and thereby the case is certainly made out under Sections 406 and 420 of Indian Penal Code. In support of his submission, learned counsel has referred to a decision rendered in a case of R. Venkatakrishnan Vs. Central Bureau of Investigation, . Thus, it was submitted that the criminal proceeding never warrants to be quashed under the circumstances stated above.
Having heard learned counsel for the parties and on perusal of records, it does appear that in the F.I.R., allegation was made that these petitioners fraudulently got the shares of Satyam Computer and Tata Steel transferred from the DEMAT Account of the informant to their own Accounts but this allegation gets falsified from the documents annexed with the F.I.R. showing that those shares on transfer have been deposited in the DEMAT Account of the informant''s wife Moreover, the Investigating Officer has also found this allegation to be false. At the same time, the investigating Officer did not find any culpability of the petitioners over the allegation relating to deposit of Rs. 50,00,000/ in the Accounts of the petitioners. However, in course of investigation, it has found that a sum of Rs. 1,87,70,000/- had been given by the informant for purchasing shares but those shares either were not purchased or were purchased in the name of some others.
Thus the question does arise as to whether the allegation, though it was not there in the F.I.R. but has transpired in course of investigation, constitutes any offence u/s 420 of Indian Penal Code.
The offence of cheating has been defined u/s 415 of the Indian Penal Code which reads as follows.
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 persons 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 that person in body, mind reputation or property, is said to ''cheat''.
From its reading it appears that following ingredients should necessarily be there for constituting offence of cheating.
(1) there should be fraudulent or dishonest inducement of a person by deceiving him.
(2) (a) the person so deceived should be induced to deliver any property to any persons, or to consent that any person shall retain any property or
(b) the person so deceived should be intentionally induced to do or omit to do anything which he would not do or omit if he were not so deceived.
(3) in cases covered by 2(b) the Act or omission should be one which causes or is likely to cause damage or harm to the person induced in bodily or reputation or property.
Thus, the first element necessary for constituting the offence of cheating is a deception of the informant by the accused. Unless there is deception, the offence of cheating never gets attracted. After deception has been practiced the persons deceived should get induced to do or omit to do something. Then, the question arises as to what is the deception?.
In the ordinary sense deception has in it the element of misleading or making a person believe something that is false or inculcating of one so that he takes the false as true, the unreal as existent the spurious as genuine and it is also necessary that deception should be right from the beginning of the contract. Applying the principle constituting a criminal offence of cheating in context of the allegation it does appear that first element of deception constituting an offence of cheating is lacking as nothing seems to be there in the charge-sheet do indicate about the informant being deceived by the petitioners in any manner.
At this stage, it would be appropriate to refer a case of Iridium India Telecom Ltd. Vs. Motorola Incorporated and Others, whereby the Hon''ble Supreme Court taking notice of Section 415 of the Indian Penal Code has been pleased to hold that deception is a necessary ingredient for the offence of cheating under both parts of the Section.
It has been further observed that there is a growing tendency in business circle to convert purely civil dispute into criminal cases. This is obviously on account of the prevalent impression that civil law remedies are time consuming and do not adequately protect the interest of lenders/creditors. Such tendency is seen in several family dispute also leading to irretrievable brake down of marriages/families. There is also an impression that if a person could somehow be entangled into a criminal prosecution, there is likelihood in imminent settlement. It has emphatically been said by the Hon''ble Supreme Court in the said decision that any effort to settle civil dispute and claims which do not involve any criminal offence by applying pressure through criminal prosecution should be deprecated and discouraged.
As I have already observed that necessary ingredients are lacking constituting offence of cheating, it be recorded that no offence of cheating is made out even if the entire allegations which got transpired during investigation are taken to be true.
Coming to the other aspect of the matter, it is to be considered as to whether any offence is made out u/s 406 of Indian Penal Code. Criminal breach of trust has been defined in Section 405 of the Indian Penal Code which reads as under:
Criminal breach of trust-Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or willfully suffers any other person so to do, commits "criminal breach of trust".
On reading of the said provision, it does appear that if a person is entrusted with property or entrusted with dominion of property which property if that person misappropriates or converts to his own use dishonestly, that constitutes offence u/s 405 of Indian Penal Code.
In other words, the provision, as referred to above, firstly consists of creation of obligation in relation to the property over which dominion or control is acquired by the accused. The second is misappropriation or dealing with the property dishonestly contrary to the terms of the obligation created. In this respect, I may refer to a decision rendered in a case of Jaikrishnadas Manohardas Desai and Another Vs. The State of Bombay, , wherein it has been observed as follows-
To establish a charge of criminal breach of trust, the prosecution is not obliged to prove the precise mode of conversion, misappropriation or misapplication by the accused of the property entrusted to him or over which he has dominion. The principal ingredient of the offence being dishonest misappropriation or conversion which may not ordinarily be a matter of direct proof, entrustment of property and failure, in breach of an obligation, to account for the property entrusted, if proved, may in the light of other circumstances, justifiably lead to an inference of dishonest misappropriation or conversion Conviction of a person for the offence of criminal breach of trust may not, in all cases, be founded merely on his failure to account for the property entrusted to him, or over which he has dominion, even when a duty to account is imposed upon him but where he is unable to account which is untrue, an inference of misappropriation with dishonest intent may readily be made.
Thus, from the observation made by the Hon''ble Supreme Court, it can be said that in all cases, criminal breach of trust may not be founded merely on his failure to account for the property entrusted, rather one can be held to be guilty only when misappropriation is made with dishonest intent.
Here in the instant case, what has been found during investigation, is that the petitioners in spite of being given huge money for purchasing shares, did not purchase as per instruction rather allegedly did purchase in the name of others. Therefore, at this stage whether the petitioners had dishonest intention or not cannot be determined rather it is to be established during evidence. Presently, keeping in view the materials collected during investigation, it can be said that a case prima facie seems to be made out u/s 406 of Indian Penal Code.
Accordingly, the order, under which cognizance has been taken against the petitioners u/s 406 of Indian Penal Code, never warrants to be quashed.
However, that part of the order dated 3.8.2012, under which cognizance of the offence has been taken against the petitioners u/s 420 of Indian Penal Code, is hereby quashed for the reasons stated above.
In the result, this application stands allowed but in part. However, any observation given for the purpose of disposal of the case may not be prejudicial to the case of the parties.