Allowed

Vikash Kumar v. the State of Jharkhand

Jharkhand HC9 Aug 2023Cr.M.P./860/2018

Case brief

AI extract

What is this about?

The High Court quashed criminal proceedings against the petitioner for cheating and criminal breach of trust arising from a failed friendly loan agreement. Holding that mere breach of contract without fraudulent intent at inception does not constitute an offence, the Court dismissed the charges under the IPC.

What did the court decide?

The entire criminal proceeding in C1 C.P. Case No.65 of 2015 and the order dated 15.09.2017 finding sufficient ground for proceeding against the petitioner for offences punishable under Sections 406,

Vikash Kumar Vs the State of Jharkhand — Cheque Dishonour | Jharkhand HC (2023)

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Cr. M.P. No.860 of 2018

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IN THE HIGH COURT OF JHARKHAND AT RANCHI Cr.M.P. No.860 of 2018

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------

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Vikash Kumar @ Bikash Kumar, aged about 42 years, Son of Sri Gopal Prasad, resident of Village- Ward No.5, Banglow Road, Jhumritilaiya, P.O. & P.S. Tilaiya, District- Koderma, StateJharkhand … Petitioner

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Versus

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The State of Jharkhand

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Daljit Singh Chhabra, son of Sri Nandlal Chhabra, resident of Cooperative Colony, Plot No.206, P.O. & P.S. Bokaro Steel City, … District- Bokaro, State- Jharkhand Opposite Parties

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For the Petitioner : Ms. Surabhi, Advocate For the State : Mr. Vineet Kr. Vashistha, Spl. P.P. ------ P R E S E N T

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HON’BLE MR. JUSTICE ANIL KUMAR CHOUDHARY

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By the Court:- Heard the parties.

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This Criminal Miscellaneous Petition has been filed invoking the jurisdiction of this Court under Section 482 of the Code of Criminal Procedure with a prayer to quash the entire criminal proceeding arising out of and in connection with C1 C.P. Case No.65 of 2015 pending in the court of learned Chief Judicial Magistrate, Bokaro and to quash the order dated 15.09.2017 passed by learned Chief Judicial Magistrate, Bokaro in C1 C.P. Case No.65 of 2015 whereby and where under the learned Magistrate has found sufficient ground for proceeding against the petitioner for having committed the offences punishable under Section 406, 420, 506, 34 of the Indian Penal Code.

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The brief facts of the case is that the petitioner took a friendly loan of Rs.10,00,000/- and an agreement was entered into between the parties and the petitioner also promised to give a shop of 180 sq. ft. but within the stipulated time, the petitioner could not pay back the money. The complainant/informant

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Cr. M.P. No.860 of 2018

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sent a notice to the petitioner through his advocate but even then the petitioner neither paid the money nor gave the shop. Upon the complaint of the complainant/informant being forwarded to police under Section 156 (3) Cr.P.C., police registered Bokaro Steel City P.S. Case No.372 of 2013. After investigation of the case, police submitted Final Form by stating that the dispute between the parties is a civil dispute. The complainant/informant filed a protest petition and on the basis of the statement on solemn affirmation and the statement of the two inquiry witnesses as well as the protest-cumcomplaint petition, learned Magistrate found sufficient ground for proceeding against the petitioner for having committed the offences punishable under Sections 406, 420, 506, 34 of the Indian Penal Code.

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Learned counsel for the petitioner submits that even if the allegations made in the complaint, statement on solemn affirmation of the complainant and the statement of the inquiry witnesses are considered to be true in its entirety still no offence punishable under the penal provisions of law is made out against the petitioner. It is next submitted that the dispute between the parties is purely a civil dispute. It is further submitted that this criminal case has been filed for wrecking vengeance. Learned counsel for the petitioner relies upon the judgment of this Court in the case of Ashok Agrawal & Others vs. The State of Jharkhand & Another passed in Cr.M.P. No.617 of 2021 dated 13.06.2023 wherein this Court relied upon the judgment of 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 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,

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Cr. M.P. No.860 of 2018

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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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wherein the Hon’ble Supreme Court of India has held that every breach of contract would not give rise to an offence of cheating and only in those cases where there was any deception played at the very inception then only the offence of cheating will be made out and if the intention to cheat has developed later on, the same cannot amount to cheating.

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In that case, this Court also relied upon the judgment of 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 read 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

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Cr. M.P. No.860 of 2018

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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 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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and submits that therein the Hon’ble Supreme Court of India has held that 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.

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Hence, it is submitted that the entire criminal proceeding arising out of and in connection with C1 C.P. Case No.65 of 2015 pending in the court of learned Chief Judicial Magistrate, Bokaro and the order dated 15.09.2017 passed by learned Chief Judicial Magistrate, Bokaro in C1 C.P. Case No.65 of 2015 whereby and where under the learned Magistrate has found sufficient ground for proceeding against the petitioner for having committed the offences punishable under Section 406, 420, 506, 34 of the Indian Penal Code, be quashed and set aside.

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Learned Spl.P.P. appearing for the State vehemently opposes the prayer for quashing the entire criminal proceeding arising out of and in connection with C1 C.P. Case No.65 of 2015 pending in the court of learned Chief Judicial Magistrate, Bokaro and the order dated 15.09.2017 passed by learned Chief Judicial Magistrate, Bokaro in C1 C.P. Case No.65 of 2015 whereby and where under the learned Magistrate has found sufficient ground for proceeding against the petitioner for having committed the offences punishable under

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Cr. M.P. No.860 of 2018

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Section 406, 420, 506, 34 of the Indian Penal Code and submits that this Cr.M.P. being without any merit be dismissed.

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Having heard the rival submissions made at the Bar and after going through the materials in the record, it is crystal clear 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. (supra) that as the money was taken admittedly as a friendly loan, hence, it cannot be said that the petitioner has made dishonest misappropriation of the same. In the absence of the essential ingredient of dishonest misappropriation of the entrusted property certainly by the petitioner, the offence punishable under Section 406 of Indian Penal Code is certainly not made out against the petitioner.

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So far as the offence punishable under Section 420 of Indian Penal Code is concerned, as has been reiterated by the Hon’ble Supreme Court of India in the case of Uma Shankar Gopalika vs. State of Bihar & Anr. (supra) , the deception played at the very inception is a sine qua non for the cheating and if the intention to cheat has developed later on, the same cannot amount to cheating.

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Now in this case, admittedly, the loan was given as a friendly loan. There is no material in the record to suggest that the petitioner had any intention to cheat at the time of taking the loan, hence, the offence punishable under Section 420 of the Indian Penal Code is not made out against the petitioner.

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In the absence of any alarm being caused or any criminal intimidation against the petitioner, the offence punishable under Section 506 of the Indian Penal Code is also not made out.

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Therefore, this Court is of the considered view that even if the allegations against the petitioner are treated to be true in its entirety still no offence punishable under the penal provisions is made out against the petitioner.

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Cr. M.P. No.860 of 2018

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Therefore, the continuation of criminal proceeding would amount to abuse of process of law and it is a fit case where in the interest of justice the entire criminal proceeding arising out of and in connection with C1 C.P. Case No.65 of 2015 pending in the court of learned Chief Judicial Magistrate, Bokaro and the order dated 15.09.2017 passed by learned Chief Judicial Magistrate, Bokaro in C1 C.P. Case No.65 of 2015 whereby and where under the learned Magistrate has found sufficient ground for proceeding against the petitioner for having committed the offences punishable under Section 406, 420, 506, 34 of the Indian Penal Code, as prayed for by the petitioner, be quashed and set aside.

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Accordingly, the entire criminal proceeding arising out of and in connection with C1 C.P. Case No.65 of 2015 pending in the court of learned Chief Judicial Magistrate, Bokaro and the order dated 15.09.2017 passed by learned Chief Judicial Magistrate, Bokaro in C1 C.P. Case No.65 of 2015 whereby and where under the learned Magistrate has found sufficient ground for proceeding against the petitioner for having committed the offences punishable under Section 406, 420, 506, 34 of the Indian Penal Code, is quashed and set aside.

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In the result, this Cr.M.P. stands allowed.

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(Anil Kumar Choudhary, J . )

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High Court of Jharkhand, Ranchi Dated the 09^th of August, 2023 AFR/ Animesh

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Vikash Kumar v. the State of Jharkhand

Case brief

What is this about?

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Vikash Kumar v. the State of Jharkhand

Case brief

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