Ajay Mahtha Vs the State of Jharkhand

( 2026:JHHC:4360 )

IN THE HIGH COURT OF JHARKHAND AT RANCHI Cr.M.P. No.4598 of 2022

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Ajay Mahtha @ Ajay Kumar Mahatha, aged about 42 years, son of Sri Bhutnath Mahtha, resident of Village Bandhgora, P.O. Satanpur, P.S. Pindrajora, District Bokaro (Jharkhand) … Petitioner

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Versus

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The State of Jharkhand,

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Roushan Kumar Singh, son of Ramanand Singh, resident of Dewki Tower, Ashiyana Garden, Phase-II, (Extension), Chira Chas, P.O. & …

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P.S. Chas, District-Bokaro (Jharkhand)

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Opposite Parties

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For the Petitioner : Mr. Rama Kant Tiwari, Advocate For the State : Mr. Vineet Kumar Vashistha, Spl.P.P. For the O.P. No.2 : Md. Faiyaz Alam, Advocate Mr. Lukesh Kumar, Advocate Mr. Sidharth Sudhanshu, Advocate ------

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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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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 the prayer to quash the entire criminal proceeding arising out of Chas P.S. Case No.373 of 2022 registered for the offences punishable under Sections 406 and 420 of the Indian Penal Code, pending in the Court of learned S.D.J.M., Bokaro.

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It is submitted by the learned counsel for the petitioner that the investigation of this case is still going and the charge-sheet has not yet been submitted. It is next submitted that the allegations against the

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petitioner is that the petitioner took Rs.11,00,000/- as advance to sell the land for Rs.28,65,000/- and, thereafter, he also took Rs.4,00,000/- in cash for construction of boundary wall over the land to be sold and when the informant insisted for construction of the boundary wall, the petitioner returned Rs.4,00,000/- to the informant and told him to construct the boundary wall himself but as yet he has not executed the sale deed and he is delaying the same on one pretext or the other.

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Learned counsel for the petitioner relying upon the judgment passed by this Court in the case of Saloni Salvi Vs. The State of Jharkhand & Another reported in 2025:JHHC:31503, wherein this Court has relied upon the judgment of the Hon’ble Supreme Court of India in the case of Uma Shankar Gopalika vs. State of Bihar & Another reported in (2005) 10 SCC 336, paragraph-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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and submits that therein the Hon’ble Supreme Court of India has reiterated the settled principle of law 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 and if the intention to cheat has developed later on, the same cannot amount to cheating.

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Learned counsel for the petitioner further submits that in that case this Court also relied upon the judgment of the Hon’ble Supreme Court of India in the case of Binod Kumar & Others vs. State of Bihar & Another reported in (2014) 10 SCC 663 paragraph-18 of which reads as under:-

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“18. In the present case, looking at the allegations in the complaint on the face of it, we find that no allegations are made attracting the ingredients of Section 405 IPC. Likewise, there are no allegations as to cheating or the dishonest intention of the appellants in retaining the money in order to have wrongful gain to themselves or causing wrongful loss to the complainant. Excepting the bald allegations that the appellants did not make payment to the second respondent and that the appellants utilised the amounts either by themselves or for some other work, there is no iota of allegation as to the dishonest intention in misappropriating the property. To make out a case of criminal breach of trust, it is not sufficient to show that money has been retained by the appellants. It must also be shown that the appellants dishonestly disposed of the same in some way or dishonestly retained the same. The mere fact that the appellants did not pay the money to the complainant does not amount to criminal breach of trust.” (Emphasis supplied)

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wherein the Hon’ble Supreme Court of India held that to make out

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a case of criminal breach of trust, it is not sufficient to show that money has been retained by the accused person. It must also be shown that the accused person dishonestly disposed of the same in some way or dishonestly retained the same.

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It is next submitted that in this case there is no allegation against the petitioner of dishonest misappropriation of any property entrusted or dishonestly disposing of any property entrusted, hence the offence punishable under Section 406 of the Indian Penal Code is not made out.

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It is next submitted by the learned counsel for the petitioner that this Court in that case also relied upon the judgement of the Hon’ble

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Supreme Court of India in the case of Satishchandra Ratanlal Shah Vs. State of Gujarat and Another reported in (2019) 9 SCC 148 , wherein the Hon’ble Supreme Court of India has observed that the mere inability of the accused person 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.

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It is next submitted by the learned counsel for the petitioner that this Court in that case also relied upon the judgement passed by the Hon’ble Supreme Court of India in the case of Radheyshyam & Others vs. State of Rajasthan & Another reported in 2024 SCC OnLine SC 2311 , para12 of which reads as under:-

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“12.xxxx In the present case, the appellants were not entrusted with any property by respondent no. 2 - complainant. The only delivery made was of part payment towards an Agreement to Sell between the parties. The amount paid towards consideration cannot be said to have been entrusted with the appellants by respondent no. 2. Additionally, merely because the appellants are refusing to register the sale, it does not amount to misappropriation of the advance payment. Since there was no entrustment of property, the offence of misappropriation of such property and thereby criminal breach of trust cannot be said to be made out.” (Emphasis supplied)

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wherein, the Hon’ble Supreme Court of India has reiterated the settled principle of law that the amount paid towards consideration cannot be said to have been entrusted with the accused person by the complainant and merely because the seller is refusing to register the sale, it does not amount to misappropriation of the advance amount paid.

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Learned counsel for the petitioner next submits that this Court in that case further relied upon the judgment of the Hon’ble Supreme Court

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of India in the case of Dalip Kaur and Others v. Jagnar Singh and

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Another , reported in (2009) 14 SCC 696 , para-10 of which reads as under:-

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“10. The High Court, therefore, should have posed a question as to whether any act of inducement on the part of the appellant has been raised by the second respondent and whether the appellant had an intention to cheat him from the very inception. If the dispute between the parties was essentially a civil dispute resulting from a breach of contract on the part of the appellants by non-refunding the amount of advance the same would not constitute an offence of cheating. Similar is the legal position in respect of an offence of criminal breach of trust having regard to its definition contained in Section 405 of the Penal Code. (See Ajay Mitra v. State of M.P. [(2003) 3 SCC 11 : 2003 SCC (Cri) 703] )” (emphasis supplied)

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wherein the Hon’ble Supreme Court of India has reiterated the

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settled principle of law that if the dispute between the parties was essentially a civil dispute resulting from a breach of contract on the part of the accused persons by non-refunding the amount of advance the same would not constitute an offence of cheating.

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Learned counsel for the petitioner next submitted that in view of the settled principle of law, even if the entire allegations made against the petitioner are considered to be true in their entirety, still neither the offence punishable under Section 420 of the Indian Penal Code nor the Offence punishable under Section 406 of the Indian Penal Code is made out; hence, it is submitted that the prayer as prayed for in this Cr.M.P. be allowed.

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Learned Spl.P.P. appearing for the State and the learned counsel for the opposite party No.2 on the other hand vehemently oppose the prayer of the petitioner made in the instant Cr.M.P and submit that if the allegations made against the petitioner in the FIR are considered to be

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true in their entirety, then both the offences punishable under Section 420 as well as the offence punishable under Section 406 of the Indian Penal Code is made out. Hence, it is submitted 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 carefully going through the materials available in the record, it is pertinent to mention here that it is a settled principle of law that unless the accused persons have the intention to cheat since the very inception, the offence of cheating will not be made.

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Now coming to the fact of the case the admitted case of the informant is that the petitioner has taken Rs.11,00,000/- in advance and another Rs.4,00,000/- for construction of the boundary wall, which Rs.4,00,000/- admittedly the petitioner has returned. There is no allegation against the petitioner of playing any deceptions since the very inceptions rather the case of the informant is related to breach of contract. 14. Under such circumstances, this Court is of the considered view that even if the allegations made against the petitioner are considered to be true in their entirety still the offence punishable under Section 420 of the Indian Penal Code is not made out.

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So far as the offence punishable under Section 406 of the Indian Penal Code is concerned, as already indicated above, two essential ingredients to constitute the offence punishable under Section 406 of the Indian Penal Code are: (i) there must be an entrustment and (ii) there must be misappropriation or conversion to one’s own use, or use in

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violation of a legal direction or of any legal contract as has been held by the Hon’ble Supreme Court of India in the case of Ram Narayan Popli Vs. Central Bureau of Investigation reported in (2003) 3 SCC 641 .

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Now coming to the facts of the case, there is no allegation against the petitioner of dishonest misappropriation of any entrusted property. In absence of the same, this Court has no hesitation in holding that even if the entire allegations made against him are considered to be true, still the offence punishable under Section 406 of the Indian Penal Code is not made out.

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Moreover, it is apparent from the record that the investigation of this case is going on for a long time since 11.11.2022, but the charge-sheet has not yet been submitted.

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In view of the discussions made above, since neither the offence punishable under Section 406 of the Indian Penal Code nor the offence punishable under Section 420 of the Indian Penal Code is made out against the petitioner even if the entire allegations made against him are considered to be true in their entirety, hence, this Court is of the considered view that the continuation of this criminal proceeding against the petitioner will amount to abuse of process of law, therefore, this is a fit case where the entire criminal proceeding arising out of Chas P.S. Case No.373 of 2022 registered for the offences punishable under Sections 406 and 420 of the Indian Penal Code, pending in the Court of learned S.D.J.M., Bokaro, Pakur, be quashed and set aside against the petitioner.

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