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Judgment
None appeared on behalf of O.P. No. 2, despite several opportunities given on earlier occasions. However, learned counsel for the petitioner and the learned A.P.P. for the State are present.
The instant application has been filed on behalf of the petitioner for quashing of the order dated 23.12.2016 passed by the learned Chief Judicial Magistrate, Lakhisarai by which cognizance came to be taken against the petitioner under Sections 420, 406 and 120(b) of the Indian Penal Code in connection with Complaint Case No. 846 of 2012.
As per the allegation, on 10.07.2012, one Ajit Kumar Mishra, came to the complainant/informant and desired to purchase iron bars for a major project being undertaken by him at Madhupur. The complainant/informant disclosed the prevailing price of the iron bars and informed the accused that the material could be dispatched immediately upon payment. Although the complainant/informant initially insisted upon payment in cash and was reluctant to accept a cheque, the accused repeatedly requested that the iron bars be supplied against the cheque and assured the complainant/informant that the cheque would be honoured. The accused also spoke to Balaji's C&F agent, Kamal Agarwal (petitioner), over the telephone, who allegedly assured the complainant/informant regarding the payment. Relying upon the said assurance, the complainant/informant dispatched the iron bars to the address furnished by the accused at Madhupur through various trucks. The total value of the iron bars so supplied was approximately Rs. 50,06,450/-. Believing that the cheque issued by the accused would be duly honoured, the complainant/informant deposited the cheque with the State Bank of India on 27.07.2012. However, on 28.07.2012, the cheque was dishonoured and returned unpaid with the endorsement of insufficient funds. The accused allegedly admitted that the amount had not been deposited in his account due to certain circumstances and repeatedly sought further time, giving assurances that the payment would be made.
Learned counsel for the petitioner has submitted that the petitioner has been falsely implicated in this case, the entire allegation is against the co-accused Ajit Kumar Mishra, who was the signatory to the cheque while as per the complaint petition itself, the only allegation against the present petitioner is that he told the complainant/informant that he would be a guarantor for the payment of entire iron bars and upon such assurance, four trucks of iron bars were sent to the address which was stated by the Ajit Kumar Mishra. Learned counsel for the petitioner has further submitted that in the facts and circumstances of the case, no case against the petitioner would be made out. Referring to the judgment of Hon’ble Supreme Court in the case of State of Haryana Vs. Bhajanlal reported in 1992 Supp (1) SCC 335, learned counsel for the petitioner has submitted that the present case squarely falls within the Category Nos. 1 and 7 of the said judgment. Learned counsel for the petitioner has further submitted that the present prosecution against the petitioner is attended with malice and personal vendetta. Learned counsel for the petitioner has also placed reliance on the judgment passed by a Co-ordinate Bench of this Court in the case of Minar International Ltd. & Anr. Vs. The State of Bihar & Anr. reported in 2017 (4) PLJR 431 and has referred to the following paragraphs, which reads as under:-
“12.I have heard learned counsel for the parties and perused the record.
13.The offences under which cognizance has been taken are of “cheating” punishable under Section 420 of the IPC and “criminal breach of trust” punishable under Section 406 of the IPC. In the background of the allegations made, it is to be seen as to whether these offences are made out against the petitioners or not.
14.In so far as, the offence punishable under Section 420 of the IPC is concerned, it reads as under:—
“420.Cheating and dishonestly inducing delivery of property.—-Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.”
15.From a reading of Section 420 of the IPC, it would be manifest that it requires not only “cheating” but also dishonest inducement to delivery of property.
16.The offence of “cheating” has been defined under Section 415 of the IPC, which is reproduced as under:
“415.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 person 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”.”
17.It is well established principle of law that every breach of contract or civil dispute under a contract or an agreement does not amount to the offence of “cheating”. A breach of contract would amount to “cheating” only in those cases where there was any deception played at the very inception. The subsequent events in this regard are not important.
18.In G.V. Rao v. L.H.V. Prasad & Ors. [(2000) 3 SCC 693] : [(2000) 3 PUR (SC) 137], while examining the offence of “cheating” the Supreme Court held:“This part speaks of intentional deception which must be intended not only to induce the person deceived to do or omit to do something but also to cause damage or harm to that person in body, mind, reputation or property. The intentional deception presupposes the existence of a dominant motive of the person making the inducement. Such inducement should have led the person deceived or induced to do or omit to do anything which he would not have done or omitted to do if he were not deceived The further requirement is that such net or omission should have caused damage or harm to body, mind, reputation or property”.
19.In Hridaya Ranjan Pd. Verma & Ors. v. State of Bihar & Anr. [(2000) 4 SCC 168] : [(2000) 3 PLJR (SC) 137], highlighting the importance of intention of the accused at the time of inducement for attracting the offence of “cheating” the Supreme Court observed:“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”.
20.In Uma Shankar Gopalika v. State of Bihar & Anr.[(2005) 10 SCC 336], the Supreme Court held:“… 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”.
21.In V.Y. Jose & Anr. v. State of Gujarat & Anr. [(2009) 3 SCC 78] : [(2009) 2 PUR (SC) 1] held as under:—
“An offence of cheating cannot be said to have been made out unless the following ingredients are satisfied : .
(i)deception of a person either by making a false or misleading representation or by other action or omission;
(ii)fraudulently or dishonestly inducing any person to deliver any property; or to consent that any person shall retain any property and finally intentionally inducing that person to do or omit to do anything which he would not do or omit.
For the purpose of constituting an offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. Even in a case where allegations are made in regard to failure on the part of the accused to keep his promise, in the absence of a culpable intention at the time of making initial promise being absent, no offence under Section 420 of the Penal Code, 1860 can be said to have been made out.”
22.In the said case, the Supreme Court further held as under:
“There exists a distinction between pure contractual dispute of a civil nature and an offence of cheating. Although breach of contract per se would hot come in the way of initiation of a criminal proceeding, there cannot be any doubt whatsoever that in absence of the averments made in the complaint petition wherefrom the ingredients of an offence can be found out, the court should not hesitate.to exercise its jurisdiction under Section 482 of the Code of Criminal Procedure.
We may reiterate that one of the ingredients of cheating as defined in Section 415 of the Penal Code is existence of an (sic fraudulent or dishonest) intention of making initial promise or existence thereof from the very beginning of formation of contract.”
23.Reiterating the principle of law that every breach of contract would not give rise to an offence of “cheating” in Vesa Holdings Private Ltd. & Anr. v. State of Kerala & Ors. [(2015) 8 SCC 293] : [(2015) 3 PLJR (SC) 22], the Supreme Court held:“…the settled proposition of law is 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 other words for the purpose of constituting an offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. Even in a case where allegations are made in regard to failure on the part of the accused to keep his promise, in the absence of a culpable intention at the time of making initial promise being absent, no offence under Section 420 of the Penal Code, 1860 can be said to have been made out”.”
Learned counsel for the petitioner has further placed reliance upon the decision in the case of Rabindra Nath Tiwari & Anr. v. The State of Bihar & Anr. reported in 2014 (4) PLJR 424 and in the case of Vir Prakash Sharma v. Anil Kumar Agarwal & Anr. reported in (2007) 7 SCC 373 and has submitted that these judgments have been passed on similar issue as in the case of Minar International Ltd. & Anr. Vs. The State of Bihar & Anr. reported in 2017 (4) PLJR 431. Learned counsel for the petitioner has further submitted that continuation of present prosecution against the petitioner would be an abuse of the process of the Court as the same is attended with malice, personal vendetta and vexatious in nature.
Learned APP for the State has opposed the prayer of the petitioner.
Heard the parties and perused the records.
Considering the facts and circumstances of the case as well as the fact that petitioner was nowhere involved in the entire episode and has been made accused only on the basis of oral assurance. Moreover, the petitioner is not signatory to the cheque in question and no cognizance has been taken against him under Section 138 of Indian Penal Code. Consequently, the order taking cognizance dated 23.12.2016, passed by the learned Chief Judicial Magistrate, Lakhisrai, is hereby quashed as against the petitioner only.
Accordingly, the application stands allowed.
However, further proceeding with respect to other co-accused may continue.