Allowed

Ram Kripal Singh Construction Pvt. Ltd. v. the State of Jharkhand

Jharkhand HC10 Oct 2023Cr.M.P./398/2023

Case brief

AI extract

What is this about?

This court quashed criminal proceedings for cheating and criminal breach of trust filed against petitioners by a contractor for non-payment of dues. The court held the dispute was civil in nature, lacking fraudulent intent at the transaction's inception, and continuing it would be an abuse of process.

What did the court decide?

The entire criminal proceeding, including the order dated 08.06.2022 passed by the Judicial Magistrate, Jamshedpur in C-1 Case No.435 of 2020, is quashed and set aside.

Ram Kripal Singh Construction Pvt. Ltd. Vs the State of… — Quashing and FIR | Jharkhand HC (2023)

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Cr.M.P. No.398 of 2023

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IN THE HIGH COURT OF JHARKHAND AT RANCHI Cr.M.P. No. 398 of 2023

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Ram Kripal Singh Construction Pvt. Ltd., hereby represented through its Director Ranjan Kumar

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Ram Kripal Singh, s/o late Bacha Singh, aged about 86 years

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Ranjan Kumar, s/o Ram Kripal Singh, aged about 47 years

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Amar Nath Jha, s/o Upendra Jha, aged about 50 years

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Raghubar Jee @ Raghuvar Jee, s/o Naval Kishor Singh, aged about 29 years

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Rinku Kumar Singh, s/o Binod Kumar Singh, aged about 38 years

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All 1 to 6 are resident of 702, 7^th Floor, Panchwati Plaza, Kutchery Road, P.O. – G.P.O. & P.S.- Kotwali, Dist. Ranchi834001

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.... Petitioners

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Versus

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The State of Jharkhand

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New Surya Construction, a proprietorship firm, represented by its proprietor Rupesh Kumar Singh, s/o late Rana Ranveer Singh, resident of Adarsh Colony, Road No.2, Holding No.30, Namda Basti, P.O. + P.S.- Golmuri, Town-Jamshedpur, Dist.Singhbhum East-831003

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Opp. Parties

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P R E S E N T

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HON’BLE MR. JUSTICE ANIL KUMAR CHOUDHARY

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For the Petitioners : Mr. Arun, Advocate For the State : Mr. Pankaj Kumar, P.P. For O.P. No.2 : Mr. Onkar Nath, Advocate …..

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By the Court:-

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Heard the parties.

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This criminal miscellaneous petition has been filed invoking the

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jurisdiction of this Court under Section 482 Cr.P.C. with a prayer

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Cr.M.P. No.398 of 2023

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for quashing the entire criminal proceeding including the order dated 08.06.2022 passed by the learned Judicial Magistrate 1^st Class, Jamshedpur in C-1 Case No.435 of 2020 by which the learned Judicial Magistrate 1^st Class, Jamshedpur has found prima facie case for the offence punishable under Sections 406 and 420 of Indian Penal Code against the petitioners and ordered for issue of summons to the petitioners.

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The brief facts of the case is that the petitioner no.1 is the company of which the petitioner no.2 is the Chairman, petitioner no.3 is Director, petitioner no.4 is Chief Finance Officer, petitioner no.5 is Site in-charge and petitioner no.6 is Site Engineer. The allegation against the petitioners is that they engaged the complainant-company for the work of cutting and filling of earth at a particular site as a sub-contractor in the year 2015 to 2019 by giving work order. They paid the bills of the complainant company up to January, 2019 from 2015 but thereafter, they are not paying the bill amount of Rs.2,16,25,799/-.

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It is submitted by the learned counsel for the petitioners that the transaction between the petitioner no.1 and the complainant was purely business transaction and the schedule completion of the date of work was 31.03.2018 but the complainant did not complete the same within the stipulated time. It is further submitted by the learned counsel for the petitioners that on the repeated request of the complainant, the complainant was given ample opportunity by the petitioner no.1 for completion of the work but despite that the performance of the complainant was not up to the mark and

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Cr.M.P. No.398 of 2023

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lastly the petitioners engaged other agencies. It is next submitted by the learned counsel for the petitioners that the petitioners paid to the complainant a sum of Rs.4,87,83,445/- against the total quantity of earth work measuring 7,55,178.02 cubic metre and the petitioner no.1 has paid Rs.2,18,09,988/- to other agencies for earth work measuring 3,57,540.79 cubic metre. Relying upon the judgment of Hon’ble Supreme Court of India in the case of Hridaya Ranjan Prasad Verma vs. State of Bihar reported in (2000) 4 SCC 168 , paragraph no. 15 of which reads as under:-

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“15. 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.”

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It is submitted by the learned counsel for the petitioners that the

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Hon’ble Supreme Court of India has held that mere failure to keep up a promise will not give rise to culpable intention of the accused right at the beginning.

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Learned counsel for the petitioners next relied upon the judgment of Hon’ble Supreme Court of India in the case of Anil Mahajan vs. Bhor Industries Ltd. reported in (2005) 10 SCC 228 , paragraph no. 8 of which reads as under:-

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Cr.M.P. No.398 of 2023

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“8. The substance of the complaint is to be seen. Mere use of the expression “cheating” in the complaint is of no consequence. Except mention of the words “deceive” and “cheat” in the complaint filed before the Magistrate and “cheating” in the complaint filed before the police, there is no averment about the deceit, cheating or fraudulent intention of the accused at the time of entering into MOU wherefrom it can be inferred that the accused had the intention to deceive the complainant to pay. According to the complainant, a sum of Rs 3,05,39,086 out of the total amount of Rs 3,38,62,860 was paid leaving balance of Rs 33,23,774. We need not go into the question of the difference of the amounts mentioned in the complaint which is much more than what is mentioned in the notice and also the defence of the accused and the stand taken in reply to notice because the complainant's own case is that over rupees three crores was paid and for balance, the accused was giving reasons as above-noticed. The additional reason for not going into these aspects is that a civil suit is pending inter se the parties for the amounts in question.”

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and submits that there is no allegation against the petitioners of having deceived the complainant since the inception.

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It is then submitted by the learned counsel for the petitioners that the dispute between the parties is basically of civil nature and a cloak of criminal colour has been given and the continuation of the same will amount to abuse of process of law. Hence, it is submitted that the entire criminal proceeding including the order dated 08.06.2022 passed by the learned Judicial Magistrate 1^st Class, Jamshedpur in C-1 Case No.435 of 2020 be quashed and set aside.

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Learned Public Prosecutor and the learned counsel for the opposite party no.2 on the other hand vehemently opposes the prayer for quashing the entire criminal proceeding including the order dated 08.06.2022 passed by the learned Judicial Magistrate 1^st Class, Jamshedpur in C-1 Case No.435 of 2020 and submits that

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the contents of the complaint, statement of solemn affirmation of the complainant and the statement of inquiry witnesses is sufficient to constitute the offence punishable under Section 406 and 420 of Indian Penal Code and therefore, the learned Judicial Magistrate 1^st Class, Jamshedpur has not committed any illegality in finding prima facie case for the offence punishable under Sections 406 and 420 of Indian Penal Code against the petitioners. Hence, it is submitted that this criminal miscellaneous petition being without any merit be dismissed.

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Having heard the submissions made at the Bar and after going through the materials in the record, it is pertinent to mention here that it is a settled principle of law as has been held by the Hon’ble Supreme Court of India in the case of Uma Shankar Gopalika vs. State of Bihar & Anr. reported in (2005) 10 SCC 336 , paragraph

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no. 6 of which reads as under :-

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6. Xxxx xxxx xxxx 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.” (Emphasis supplied)

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that every breach of contract would not give rise to an offence of

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cheating and only in those cases breach of contract would amount to cheating; where there was any deception played at the very

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Cr.M.P. No.398 of 2023

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inception. If the intention to cheat has developed later on, the same will not amount to cheating.

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It is also a settled principle of law that if the property entrusted to an accused is used by him, mere retention of that property would not amount to dishonest misappropriation of the property as has been held by the Hon’ble Supreme Court of India in the case of Satish Chandra Ratanlal Shah vs. State of Gujarat & Anr. reported in (2019) 9 SCC 148 , paragraph nos. 11 to 13 of which reads as under:-

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“11. Having observed the background principles applicable herein, we need to consider the individual charges against the appellant. Turning to Section 405 read with Section 406 IPC, we observe that the dispute arises out of a loan transaction between the parties. It falls from the record that Respondent 2 knew the appellant and the attendant circumstances before lending the loan. Further it is an admitted fact that in order to recover the aforesaid amount, Respondent 2 had instituted a summary civil suit which is still pending adjudication. The law clearly recognises a difference between simple payment/investment of money and entrustment of money or property. A mere breach of a promise, agreement or contract does not, ipso facto, constitute the offence of the criminal breach of trust contained in Section 405 IPC without there being a clear case of entrustment.

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12. In this context, we may note that there is nothing either in the complaint or in any material before us, pointing to the fact that any property was entrusted to the appellant at all which he dishonestly converted for his own use so as to satisfy the ingredients of Section 405 punishable under Section 406 IPC. Hence the learned Magistrate committed a serious error in issuing process against the appellant for the said offence. Unfortunately, the High Court also failed to correct this manifest error.

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13. Now coming to the charge under Section 415 punishable under Section 420 IPC. In the context of contracts, the distinction between mere breach of contract and cheating would depend upon the fraudulent inducement and mens rea. (See Hridaya Ranjan Prasad Verma v. State of Bihar [Hridaya Ranjan Prasad Verma v. State of Bihar, (2000) 4 SCC 168: 2000 SCC (Cri) 786]) In the case before us, admittedly the appellant was trapped in economic crisis and therefore, he had approached Respondent 2 to ameliorate the situation of crisis. Further, in order to recover the aforesaid amount, Respondent 2 had

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instituted a summary civil suit seeking recovery of the loan amount which is still pending adjudication. The mere inability of the appellant to return the loan amount cannot give rise to a criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, as it is this mens rea which is the crux of the offence. Even if all the facts in the complaint and material are taken on their face value, no such dishonest representation or inducement could be found or inferred.” (Emphasis supplied)

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It is also a settled principle of law that in order to establish the offence punishable under Section 406 of Indian Penal Code the following ingredients are to be established :-

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(i) Mens rea

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(ii) There must be dishonest misappropriation or conversion to one’s own use, or use in violation of a legal direction or of any legal contract

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(iii) The accused dishonestly used or disposed of the property.

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Now coming to the facts of the case, there is absolutely no allegation of any dishonest misappropriation of the entrusted property by the petitioners. The only allegation in terms of the agreement is that the petitioners did not pay the amount due to the complainant. Under such circumstances, this Court has not hesitation in holding that the offence punishable under Section 406 of the Indian Penal Code is not made out.

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So far as the offence punishable under Section 420 of the Indian Penal Code is concerned, the essential ingredients of the said offence is :-

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(i) Deception of a person either by making a false or misleading representation or by dishonest concealment or by any other act or omission,

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(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

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(iii) Such act or omission causing or is likely to cause damage or harm to that person in body, mind, reputation or property

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as has been held by the Hon’ble Supreme Court of India in the

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case of Mohammed Ibrahim & Ors. vs. State of Bihar & Anr., reported in (2009) 8 SCC 751.

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Now coming the facts of the case, there is no allegation of any deception of the complainant-opposite party no.2 or his company by the petitioners since the very inception rather it is the admitted case of the complainant itself as is evident from the answer to the question from the court in the solemn affirmation of the complainant that all the dues of the complainant up to January, 2019 has already been paid. So in the absence of any specific allegation against the petitioners of any dishonest intention at the very inception and also for the absence of other ingredients of Section 420 of the Indian Penal Code, as mentioned in this judgment, this Court has no hesitation in holding that the offence punishable under Section 420 of the Indian Penal Code is not made out either.

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Cr.M.P. No.398 of 2023

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The Hon’ble Supreme Court of India has time and again taken note of the fact that the proceedings before the criminal courts are used for settling scores or to pressurize parties to settle civil dispute as has been observed by the Hon’ble Supreme Court of India in the case of Mohammed Ibrahim & Ors. vs. State of Bihar

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& Anr. (supra) in para -8 of which reads as under:-

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“8. This Court has time and again drawn attention to the growing tendency of the complainants attempting to give the cloak of a criminal offence to matters which are essentially and purely civil in nature, obviously either to apply pressure on the accused, or out of enmity towards the accused, or to subject the accused to harassment. Criminal courts should ensure that proceedings before it are not used for settling scores or to pressurise parties to settle civil disputes. But at the same time, it should be noted that several disputes of a civil nature may also contain the ingredients of criminal offences and if so, will have to be tried as criminal offences, even if they also amount to civil disputes. (See G. Sagar Suri v. State of U.P. [(2000) 2 SCC 636 : 2000 SCC (Cri) 513] and Indian Oil Corpn. v. NEPC India Ltd. [(2006) 6 SCC 736 : (2006) 3 SCC (Cri) 188] ) Let us examine the matter keeping the said principles in mind.” (Emphasis supplied)

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Now coming to the facts of the case, this Court is of the considered view that the essential ingredients to constitute criminal offence i.e. mens rea is absent. The dispute between the parties is basically a civil dispute but in the absence of any ingredients to constitute the offence under Section 406 and 420 of Indian Penal Code in respect of which, the learned Judicial Magistrate 1^st Class, Jamshedpur has found prima facie case, this Court is of the considered view that continuation of the entire criminal proceeding including order dated 08.06.2022 passed by the learned Judicial Magistrate 1^st Class, Jamshedpur in C-1 Case No.435 of 2020 will amount to abuse of process of law and this is a fit case where in the interest of justice the entire criminal

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10 Cr.M.P. No.398 of 2023

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proceeding including the order dated 08.06.2022 passed by the learned Judicial Magistrate 1^st Class, Jamshedpur in C-1 Case No.435 of 2020 be quashed and set aside.

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Accordingly, the entire criminal proceeding including the order dated 08.06.2022 passed by the learned Judicial Magistrate 1^st Class, Jamshedpur in C-1 Case No.435 of 2020 is quashed and set aside.

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In the result, this criminal miscellaneous petition is allowed.

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(Anil Kumar Choudhary, J.)

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High Court of Jharkhand, Ranchi Dated the 10^th October, 2023 AFR/Sonu-Gunjan/-

Ram Kripal Singh Construction Pvt. Ltd. v. the State of Jharkhand

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Ram Kripal Singh Construction Pvt. Ltd. v. the State of Jharkhand

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