Arun Kumar Srivastava & Anr. vs The State Of Bihar

“4.2.

Learned counsel for the petitioners has submitted, referring to the judgment of the Hon’ble Supreme Court, in the case of Rikhab Birani and Another Versus State of Uttar Pradesh and Another, reported in 2025 SCC OnLine 823, that non-payment of money or disregard to and violation of contractual terms does not constitute a criminal offence. Learned counsel for the petitioners has also referred to the judgments of the Hon’ble Supreme Court, in the case of Lalit Chaturvedi v. State of U.P., reported in 2024 SCC OnLine SC 171, and in the case of Mohd. Ibrahim v. State of Bihar, reported in (2009) 8 SCC 751. He has placed reliance on paragraph 18 of the judgment in the case of Mohd. Ibrahim (supra), wherein the Hon’ble Supreme Court has, referring to section 420 of the IPC, observed that the offence under the said Section requires the following ingredients to be satisfied, which is reproduced hereinbelow: -

“18.

Let us now examine whether the ingredients of an offence of cheating are made out. The essential ingredients of the offence of “cheating” are as follows:

(i)

deception of a person either by making a false or misleading representation or by dishonest concealment or by any other act or omission;

(ii)

fraudulent or dishonest inducement of that person to either deliver any property or to consent to the retention thereof by any person or to intentionally induce that person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived; and

(iii)

such act or omission causing or is likely to cause damage or harm to that person in body, mind, reputation or property.”

4.3.

Learned counsel for the petitioners has also submitted that in the case of Delhi Race Club (1940) Ltd. v. State of U.P., reported in (2024) 10 SCC 690, the Hon’ble Supreme Court has highlighted the fine distinction between the offences of criminal breach of trust and cheating observing that the two are antithetical in nature and cannot coexist simultaneously. Police Officers and courts must carefully apply their minds to determine whether the allegations genuinely constitute the specific offence alleged.

4.4.

It has further been submitted, referring to the judgment of the Hon’ble Supreme Court, in the case of Kunti v. State of U.P., reported in (2023) 6 SCC 109, that the Hon’ble Supreme Court has observed that 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 a promise will not be enough to initiate criminal proceedings. Thus, the dishonest intention on the part of the party, who is alleged to have committed the offence of cheating, should be established at the time of entering into the transaction with the complainant, otherwise the offence of cheating is not established or made out.

8.

At this stage, this Court deems it appropriate to refer to the judgment of the Hon’ble Supreme Court, in the case of Usha Chakraborty v. State of W.B., reported in (2023) 15 SCC 135, wherein dealing with similar issue, it has been observed in paragraphs 8, 9, 10, 11 and 12, as under: -

8.

In Paramjeet Batra v. State of Uttarakhand [Paramjeet Batra v. State of Uttarakhand, (2013) 11 SCC 673 : (2012) 4 SCC (Cri) 76], this Court held : (SCC p. 676, para 12)

“12.

While exercising its jurisdiction under Section 482 of the Code the High Court has to be cautious. This power is to be used sparingly and only for the purpose of preventing abuse of the process of any court or otherwise to secure ends of justice. Whether a complaint discloses a criminal offence or not depends upon the nature of the facts alleged therein. Whether essential ingredients of criminal offence are present or not has to be judged by the High Court. A complaint disclosing civil transactions may also have a criminal texture. But the High Court must see whether a dispute which is essentially of a civil nature is given a cloak of criminal offence. In such a situation, if a civil remedy is available and is, in fact, adopted as has happened in this case, the High Court should not hesitate to quash the criminal proceedings to prevent abuse of process of the court.”

9.

In Vesa Holdings (P) Ltd. v. State of Kerala [Vesa Holdings (P) Ltd. v. State of Kerala, (2015) 8 SCC 293 : (2015) 3 SCC (Cri) 498] , it was held that : (SCC pp. 297-98, para 13)

“13.

It is true that a given set of facts may make out a civil wrong as also a criminal offence and only because a civil remedy may be available to the complainant that itself cannot be a ground to quash a criminal proceeding. The real test is whether the allegations in the complaint disclose the criminal offence of cheating or not. In the present case there is nothing to show 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 420IPC. In our view the complaint does not disclose any criminal offence at all. The criminal proceedings should not be encouraged when it is found to be mala fide or otherwise an abuse of the process of the court. The superior courts while exercising this power should also strive to serve the ends of justice. In our opinion in view of these facts allowing the police investigation to continue would amount to an abuse of the process of the court and the High Court committed an error in refusing to exercise the power under Section 482 of the Criminal Procedure Code to quash the proceedings.”

10.

In Kapil Aggarwal v. Sanjay Sharma [Kapil Aggarwal v. Sanjay Sharma, (2021) 5 SCC 524 : (2021) 2 SCC (Cri) 634], this Court held that Section 482 is designed to achieve the purpose of ensuring that criminal proceedings are not permitted to generate into weapons of harassment.

11.

In the decision in State of Haryana v. Bhajan Lal [State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335 : 1992 SCC (Cri) 426], a two-Judge Bench of this Court considered the statutory provisions as also the earlier decisions and held as under : (SCC pp. 378-79, para 102)

“102.

… (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 report and 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 the FIR 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 constitute a 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 or complaint 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 in any of the provisions of the Code or the Act concerned (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 attended with 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.”

12.

In Neeharika Infrastructure (P) Ltd. v. State of Maharashtra [Neeharika Infrastructure (P) Ltd. v. State of Maharashtra, (2021) 19 SCC 401], a three-Judge Bench of this Court laid down the following principles of law : (SCC pp. 444-45, para 13)

“13.

From the aforesaid decisions of this Court, right from the decision of the Privy Council in Khawaja Nazir Ahmad [King Emperor v. Khwaja Nazir Ahmad, 1944 SCC OnLine PC 29 : (1943-44) 71 IA 203], the following principles of law emerge:

13.1.

Police has the statutory right and duty under the relevant provisions of the Code of Criminal Procedure contained in Chapter XIV of the Code to investigate into cognizable offences;

13.2.

Courts would not thwart any investigation into the cognizable offences;

13.3.

However, in cases where no cognizable offence or offence of any kind is disclosed in the first information report the Court will not permit an investigation to go on;

13.4.

The power of quashing should be exercised sparingly with circumspection, in the ‘rarest of rare cases’. (The rarest of rare cases standard in its application for quashing under Section 482CrPC is not to be confused with the norm which has been formulated in the context of the death penalty, as explained previously by this Court);

13.5.

While examining an FIR/complaint, quashing of which is sought, the court cannot embark upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR/complaint;

13.6.

Criminal proceedings ought not to be scuttled at the initial stage;

13.7.

Quashing of a complaint/FIR should be an exception and a rarity than an ordinary rule;

13.8.

Ordinarily, the courts are barred from usurping the jurisdiction of the police, since the two organs of the State operate in two specific spheres of activities. The inherent power of the court is, however, recognized to secure the ends of justice or prevent the above of the process by Section 482CrPC.

13.9.

The functions of the judiciary and the police are complementary, not overlapping;

13.10.

Save in exceptional cases where non-interference would result in miscarriage of justice, the Court and the judicial process should not interfere at the stage of investigation of offences;

13.11.

Extraordinary and inherent powers of the Court do not confer an arbitrary jurisdiction on the Court to act according to its whims or caprice;

13.12.

The first information report is not an encyclopaedia which must disclose all facts and details relating to the offence reported. Therefore, when the investigation by the police is in progress, the court should not go into the merits of the allegations in the FIR. Police must be permitted to complete the investigation. It would be premature to pronounce the conclusion based on hazy facts that the complaint/FIR does not deserve to be investigated or that it amounts to abuse of process of law. During or after investigation, if the investigating officer finds that there is no substance in the application made by the complainant, the investigating officer may file an appropriate report/summary before the learned Magistrate which may be considered by the learned Magistrate in accordance with the known procedure;

13.13.

The power under Section 482CrPC is very wide, but conferment of wide power requires the court to be cautious. It casts an onerous and more diligent duty on the court;

13.14.

However, at the same time, the court, if it thinks fit, regard being had to the parameters of quashing and the self-restraint imposed by law, more particularly the parameters laid down by this Court in R.P. Kapur [R.P. Kapur v. State of Punjab, 1960 SCC OnLine SC 21 : AIR 1960 SC 866] and Bhajan Lal [State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335 : 1992 SCC (Cri) 426], has the jurisdiction to quash the FIR/complaint; and

13.15.

When a prayer for quashing the FIR is made by the alleged accused, the court when it exercises the power under Section 482CrPC, only has to consider whether or not the allegations in the FIR disclose the commission of a cognizable offence and is not required to consider on merits whether the allegations make out a cognizable offence or not and the court has to permit the investigating agency/police to investigate the allegations in the FIR.”

“10.

It goes without saying that if an investigating agency after thorough investigation submits final report exonerating accused persons, the said report may not be treated as waste paper. Once such report is submitted, the learned Magistrate at the time of differing with the police report is required to assign succinct reason.. Since in the order impugned, no reason has been assigned, the Court is satisfied that order impugned is liable to be set aside, particularly; in view of nature of accusation, as has been levelled in the complaint petition.”