Nandini Thimmaiah Vs Assan Das Bhagwani

NANDINI THIMMAIAH W/O AMIT DOULAT LUTHARIA AGED ABOUT 44 YEARS R/A NO. 17, BEAU MONDE APARTMENT FLAT NO. 101, 1^ST BENSON CROSS ROAD BENGALURU - 560 046.

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…PETITIONER

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(BY SRI. PRABHULING NAVADIG, SENIOR ADVOCATE FOR SRI. ARUN GOVINDRAJ, ADVOCATE)

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AND:

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ASSAN DAS BHAGWANI S/O LATE MERARAM BHAGWANI AGED ABOUT MAJOR YEARS R/A FLATNO. 1303, ‘A’ BLOCK BRIGADE GATEWAY OPP, SHERATON HOTEL RAJAJINAGAR, BANGALORE - 560 055. (HE HAS EXPIRED ON 18/02/2022)

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Digitally signed by CHANDANA B M Location: High Court of Karnataka

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1(A) MOHINI BHAGWANI W/O LATE ASSAN DAS BHAGWANI

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AGED ABNOUT 68 YEARS

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1(B) SAMEER BHAGWANI S/O LATE ASSAN DAS BHAGWANI

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AGED ABOUT 29 YEARS.

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BOTH R-1(A) & R-1(B) ARE R/A FLATNO. 1303, ‘A’ BLOCK BRIGADE GATEWAY OPP, SHERATON HOTEL RAJAJINAGAR, BANGALORE - 560 055.

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(AMENDED CARRIED OUT AS PER ORDER DATED: 24.03.2025)

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…RESPONDENTS

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(BY SMT. YOVINI RAJESH ROHRA, ADVOCATE)

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THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA R/W SECTION 482 OF CPC, PRAYING TO QUASH THE COMPLIANT DTD. 21.03.2017 FILED BY THE RESPONDENT IN P.C.R.NO. 4693/2017 (ANNX-A) AND QUASH THE ORDER DTD. 26.05.2018 PASSED BY IV ADDITIONAL CHIEF JUDICIAL MAGISTRATE, BANGALORE (NOW BEFORE THE III ADDITIONAL CHIEF JUDICIAL MAGISTRATE, BANGALORE) TAKING COGNIZANCE OF THE OFFENCES PUNISHABLE UNDER SECTION 403, 405 AND 420 READ WITH SECTION 34 OF IPC IN P.C.R.NO. 4693/2017 AND THEREBY ISSUING PROCESS AND REGISTRATION OF C.C.NO. 15069/2018 (ANNX-B) AND ETC.

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THIS PETITION IS BEING HEARD AND RESERVED ON 24.03.2025 COMING ON FOR PRONOUNCEMENT OF ORDERS THIS DAY, THE COURT MADE THE FOLLOWING:-

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CORAM: HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR

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CAV ORDER

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In this criminal petition, petitioner seeks for the following

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reliefs:-

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“a. Quash the complaint dated 21.03.2017 filed by the Respondent in P.C.R. No.4693/2017 (Annexure - A);

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b. Quash the order dated 26/05/2018 passed by IV Additional Chief Judicial Magistrate, Bangalore (now before the III Additional Chief Judicial Magistrate, Bangalore) taking cognizance of the offences punishable under Section 403, 405 and 420 read with Section 34 of IPC in P.C.R. No.4693/2017 and thereby issuing process and registration of C.C. No.15069/2018 (Annexure - B); and

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c. Quash the entire proceedings in C. C. No. 15069/2018 pending against the Petitioner for the offences punishable under Section 403, 405 and 420 read with Section 34 of IPC before the (Annexure - B & B1); or

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d. Grant such other relief/s as this Hon'ble Court deems fit, in favour of the Petitioner, to meet the ends of Justice.”

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Heard learned Senior counsel for the petitioner and learned

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counsel for the respondents and perused the material on record.

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Briefly stated, the facts giving rise to the present petition as contended by the petitioner are as under:

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The petitioner is arraigned as accused No.3 in the impugned proceedings in C.C.No.15069/2018 pending on the file of III ACJM, Bangalore, arising out of a private complaint in PCR No.4693/2017 filed by the respondent – complainant before the Trial Court for the alleged offences punishable under Sections 403, 405 and 420 r/w Section 34 of the IPC. In the impugned proceedings, one Anand M. Patel is arraigned as accused No.1 while the petitioner’s husband Mehul J. Patel is arraigned as accused No.2. It is contended that the marriage between the petitioner and her husband – accused No.2 was dissolved by a decree for divorce by mutual consent dated 05.10.2023 passed in M.C.No.5675/2023 by the Family Court, Bengaluru. By the impugned order dated 26.05.2018, the Trial Court took cognizance of the alleged offences against the petitioner – accused No.3, who is before this Court seeking quashing of the

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impugned order and proceedings as well as the complaint filed against her and for other reliefs.

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Learned Senior counsel for the petitioner would reiterate various contentions urged in the petition and referred to the material on record in order to contend that in addition to the fact that there was a long, unexplained and inordinate delay of more than three years on the part of the respondent in filing the complaint dated 10.04.2017 in relation to alleged transactions as against the petitioner – accused No.3, the impugned complaint contains vague, bald, omnibus and general allegations, which do not disclose the commission of the alleged offences by the petitioner. It is contended that the necessary ingredients constituting the offences punishable under Sections 403, 405 and 420 by the petitioner are not made out against her and the entire complaint is primarily directed against accused Nos.1 and 2 and the petitioner being wife of accused No.2 has been unnecessarily dragged into the impugned proceedings. It was also submitted that the respondent – complainant had already instituted civil proceedings against the petitioner and other accused in a civil suit in O.S.No.3039/2017 in respect of the very same subject matter and the impugned proceedings seeking to give a criminal colour/texture/flavor to the civil dispute between the parties is impermissible in law and

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deserve to be quashed. It was further submitted that offences of cheating and criminal breach of trust or antithesis to one another and the impugned proceedings qua petitioner - accused No.3 after having already instituted other criminal proceedings also as against accused Nos.1 and 2 are not maintainable and deserve to be quashed.

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4.1 Learned Senior counsel would also invited my attention to the impugned order dated 26.05.2018 passed by the Trial Court in order to contend that neither proper nor cogent reasons have been assigned by the Trial Court before passing the impugned nonspeaking and unreasoned order without considering total lack of any material as against the petitioner in respect of whom the impugned proceedings deserve to be quashed. In support of his submissions, learned Senior Counsel placed reliance upon the following judgments:

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(i) Anand Kumar Mohatta Vs. State (NCT of Delhi), Department of Home and another - (2019) 11 SCC 706; (ii) Prof. R.K.Vijayasarathy and another Vs. Sudha Seetharam and another - (2019) 16 SCC 739;

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(iii) Delhi Race Club (1940) Limited and another Vs. State of Uttara Pradesh and others - (2024) 10 SCC 690;

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(iv) Siddharth Rai Vs. State of Karnataka and another - Crl.P.No.7180/2018 dated 13.07.2023.

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Per contra, learned counsel for the respondents would support the impugned order and the proceedings and submits that there is no merit in the petition and that the same is liable to be dismissed.

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I have given my anxious consideration to the rival submissions and perused the material on record.

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Before adverting to the rival contentions, it would be necessary to extract the entire complaint in PCR No.4693/2017, which reads as under:

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“1) That the address for purposes of service of summons, notices, etc to the Complainant is as stated above in the cause title and also that of his advocates, namely (i) Rajesh Chander Kumar (ii) Yovini Rajesh (iii) Gautham Adithya (iv) Deepa Rani (v) Ravindra at Chanderkumar & Associates, 504, Floor, Oxford Towers, 139, Kodihalli, Old Airport Road, Bangalore - 560 008.

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2) That the address for the purposes of service of summons, notices, etc to all the Accused is as stated in the cause title above.

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3) That the Complainant states that he is an elderly gentleman and a respectable citizen who is known to all the three Accused as family friends since years. The Complainant states that all the three Accused are related to each other, Accused Nos.1 and 2 being cousins and Accused No.3 being the wife of Accused No.2.

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4) The Complainant states that around 2011-12, the Accused Nos.1 and 2 approached the Complainant for financial assistance in form of hand loan to purchase some agricultural land bearing Gat No.329/3/4 and Old Gat No.375 situated at Mann, Tal Munshi, Dist Pune. The Complainant states that both Accused Nos.1 and 2 represented to the Complainant that the same will be returned in a years' time with simple interest as per the running rate of interest offered by banks those days.

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5) The Complainant states that believing that the Accused Nos.1 and 2 were genuinely entering into the said transaction and having bona fide interests to borrow and return the money, the Complainant got induced and offered to help both Accused Nos. 1 and 2 financially on terms intentioned above.

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6) The Complainant states that in order to make believe the Complainant further that the transaction was genuine and that both the Accused Nos.1 and 2 were having good prospects to buy the said land and thereafter make profits by using the land or selling the same further as a business proposition, both the Accused Nos.1 and 2 took the Complainant physically to the land in question at Pune and showed the same to the Complainant.

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7) The Complainant states that he had no reason to doubt or disbelieve the intentions of both the Accused Nos.1 and 2 for entering into the transactions mentioned above since he was a good friend and trusted both the Accused Nos.1 and 2 The Complainant states that taking undue advantage of the Complainant's trust, making him believe that the transactions proposed are genuine, further by taking him to the site at Pune and showing him the land, both the Accused Nos.1 and 2 actively, consciously with deliberate intention of inducing the Complainant to part with money as hand loan also showed to the

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Complainant, a draft Sale. Agreement proposed to be entered into by both the Accused Nos.1 and 2 with one Mr. MK Gowtham Chand on one hand as Purchasers and one Mr. Popat Vavle as Vendor on the other hand, for the purchase of the said land.

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8) The Complainant states that acting upon the request of both the Accused Nos.1 and 2, and believing both of them to be straightforward and honest with the Complainant, as having no mala fide intentions, the Complainant got induced into giving a hand loan of Rs.8.44,00,000/-(Rupees Eight Crores and Forty Four Lakhs Only) to Accused Nos.1 and 2, in cash and in parts, over a period of time from 2011 to 2013. The complainant states that it is pertinent to mention that the Complainant was further given a copy of the Sale Deed dated 6^th September 2012 by both the Accused Nos. 1 and 2 having entered upon between the Accused Nos.1 and 2 along with Mr.M K Gawtham Chand on one hand as Purchasers and one Mr. Popat Vavle as Vendor on the other hand, for the purchase of the said land.

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9) The Complainant states that being much older in age and both the wing Accused Nos.1 and 2 being much younger, further being a good family friend and well wisher, he was happy he was rendering help to both Accused Nos.1 and 2 in coming up in life and creating wealth. The Complainant states that it is for this reason, that the Complainant did not enter into any formal documentation with the Accused Nos.1 and 2 stating any strict terms and conditions, and the contract was purely oral that within a year or so, the Accused Nos.1 and 2 will return the said amount given in hand loan with simple interest.

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10) The Complainant sates that to this shock and surprise, though the above mentioned Agreement was entered into on 6^th September, 2012 and time being essence of contract and sale to

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be completed within 12 months, the Accused Nos.1 and 2 did not complete the transaction in time. The Complainant states that he was continuing to follow up the said transaction with the Accused Nos.1 and 2. The Complainant states that both the Accused Nos.1 and 2 were to purchase the said land along with the said Mr. MK Gowtham Chand for total consideration of Rs.37,70,00,000/- (Rupees Thirty Seven Crores and Seventy Lakhs Only) and had represented to the Complainant from the inception in 2011 that both the Accused Nos.1 and 2 had already arranged for amount of Rs.30 crores and would require financial help from the Complainant only upto an amount of Rs.7 to 8 crores. The Complainant states that having being induced to believe that both the Accused Nos.1 and 2 have arranged for Rs.30 crores, which again was not difficult for the Complainant to believe inasmuch as both Accused Nos.1 and 2 hail from rich background and have financially sound parents/elders/ family members, the Complainant parted with such huge amount of over Rs.8 crores in various parts as and when request requested by both the Accused Nos. 1 and 2 as mentioned above. The Complainant states that not even for a moment, Accused Nos.1 and 2 showed any difficulty in arranging for the money of Rs.30 crores for the purchase of the said land, hence the Complainant was made to believe that the help of Rs.8 crores was just for one year and that they will overcome the shortcoming very soon and return the same to the Complainant with simple interest.

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11) The Complainant states that neither the Accused No.1 nor Accused No.2 returned the said amount given by hand loan in 2013 and kept promising under some pretext or the other, that the transaction has got delayed and that the same will be completed in another few months' time. The Complainant states that throughout 2013-14 he kept up his patience with both

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Accused Nos.1 and 2 and even though both of them were meeting the Complainant on regular basis since all were friends, the matter was simply dragged into the Complainant believing that the transaction will soon be completed and thereafter his money will be returned.

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12) The Complainant states that in March 2014, since it was over six months' from the date on which both the Accused Nos. 1 and 2 should have returned the money and did not do so, the Complainant insisted that the same should be in writing inasmuch as he was aged and lest something should happen to him, his wife and son should have some legal document to recover the amount from the Accused Nos.1 and 2. The Complainant states that in this background and context, the Accused Nos.1 and 2 represented to the Complainant that there is one more Agreement dated 9^th August, 2012 wherein the Accused No.2 is to get 45% share like the Agreement dated 6^th September, 2012 wherein the Accused No.2 is to get 33-34% share and that both the Accused Nos. 1 and 2 will return the hand loan to the Complainant by transferring these shares in part/ whole lieu of the said liability. However, the Complainant states that both the Accused Nos. 1 and 2 represented that in order to do so, the Complainant will have to pay a further sum of Rs.5 crores.

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13) The Complainant states that it is pertinent to mention at this juncture that the Accused No.2 introduced to the Complainant, the Accused No.3 who was then the fiancée of Accused No.2 and now wife. The Complainant states that the Accused Nos.1 and 2, this time along with Accused No.3 jointly and severally started inducing the Complainant that the Complainant needs to help them out inasmuch as the Accused Nos.2 and 3 are young and about to get married, further they will work out the deal and return the money. The Complainant states

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that further all the three Accused induced the Complainant and emotionally blackmailed him into believing that they will make crores of rupees by selling the said land and that if the Complainant invests another Rs.5 crores as hand loan to be given to all the three Accused, their land transaction will go through and they are all willing to share their profits in return of the said hand loan.

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14) The Complainant states that particularly the Accused No.3 being a young lady like a daughter to the Complainant, kept calling him 'uncle', and 'like father figure', and fooled him into believing that all the three Accused are innocent and honest in their transactions. The Complainant states that all the three Accused, having made the Complainant believe that further sum of Rs.5 crores when given as hand loan to all the three Accused, would solve the problems of the Accused and that all three of them will lead of comfortable life, especially the Accused Nos.2 and 3, who can begin a good married life; the Complainant got induced and he gave a further sum of Rs.5 crores as hand loan to Accused Nos. 2 and 3 in parts, from 18th to 20th March, 2014 via RTGS. The Complainant states particularly that the hand loan of Rs.8,44,00,000/- having been given in cash from time to time and not yet been returned, he did not want further cash transactions therefore paid the second hand loan this time to all the three Accused, via bank transactions all recorded and evidenced in respective accounts.

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15) The Complainant states that accordingly the Complainant paid to all three Accused a total amount of Rs.13,44,00,000/(Rupees Thirteen Crores and Forty Four Lakhs Only) i.e., Rs.8,44,00,000/- + Rs.5,00,00,000/- totaling to Rs. 13,44,00,000/towards hand loans which all the three Accused are jointly and

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severally liable to repay to the Complainant as per terms and conditions mentioned above, with simple interest. :

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16) The Complainant states that in this background, since the Complainant insisted that the transactions should be in writing, the Accused No.2 entered into a Memorandum of Understanding dated 19th March, 2014, referring to the abovementioned transactions for purchase of land and promising to transfer to the Complainant, share of 20% from his share of 45% in Agreement dated 9^th August, 2012 and also entire share of 33-34% from his share in Agreement dated 6th September, 2012. The Complainant states that the transaction never took place and he kept up his patience with the false promises given by all the three Accused from time to time till 2015. The Complainant states that thereafter he told all the three Accused that they should return his hand loans irrespective of the said land transaction taking place or not, inasmuch as he had given the hand loans to help all the three Accused and the land transaction was not a condition precedent to return the said hand loans. The Complainant states that at this juncture, he got to know the true colours of all the three Accused, that all three of them had fooled the Complainant into believing that the said land transaction was a genuine one and that all three Accused had already arranged for Rs.30 crores whereas the truth of the matter was that they had not done so, and that all the Accused, especially Accused Nos.1 and 2 from inception had mala fide intentions of inducing and extracting hand loans from the complainant for wrongful gains. Furthermore, the Complainant states that the Accused Nos.1 and 2 along with Accused No.3 also from the inception, with the mala fide intention of cheating the Complainant induced him to part with further hand loan. The Complainant states that smelling something is fishy, the Complainant states that he insisted that all three Accused

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enter into a written contract with him for the return of the said hand loan of over Rs.13 crores, independent of the fact whether the land crores transaction takes place or not. The Complainant categorically states that he made it clear to all the three Accused that he was no interested in any land and that he agreed to take the shares of land in return of the amounts given in hand loan by him out of no choice and upon insistence of all the three Accused; and that the land transaction now being doubtful, all the three Accused must make an independent document for return of the said hand loans, overriding earlier MOU dated 19^th March, 2014.

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17) The Complainant states that accordingly, on 28^th January, 2015 the Accused No.2 entered into another Memorandum of Understanding with the Complainant giving details of the loan transactions between the parties and wherein the first amount of Rs.8,44,00,000/- was acknowledged and promised to be returned by 31 March, 2015. The Complainant states that it was an understanding amongst all the three Accused and the Complainant that only Accused No.2 will enter into the said MOU dated 28th January, 2015 and issue 2 blank cheques as collateral security to return the amount towards first hand loan inasmuch as the, Accused Nos.1 and 3 cannot show the said amount in their accounts for taxation and other purposes. The Complainant states further that since the second hand loan was done via RTGS and is in bank transactions, there was no need to document the same. Hence, the Complainant states that though all the three of you are jointly and severally liable to return to the Complainant both the hand loans. totaling to Rs.13,44,00,000/with interest, he got induced into believing that documentation of MOU with Accused No.2 alone should be done and only to the extent of first hand loan amount, to facilitate accounting of all

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three Accused, though the understanding was that the Accused Nos. 1 and 3 are not relieved from the said liabilities.

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18) The Complainant states that all three Accused were to return the hand loans by 31^st March, 2015 and none of them paid the said amounts, either in part or full, and the Complainant has been desperately following up the recovery of this his amounts of hand loans.

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19) The Complainant states that throughout 2016 also he kept following up the recovery of his hand loans from all three Accused, but in vain. The Complainant states that it was only recently on 23rd January, 2017 that Accused No.2 in part payment of the said hand loans of over Rs.13 crores, signed and issued a cheque bearing No.057677 dated 23 January, 2017 drawn on Axis Bank, Cox Town, Bangalore of Rs.3 crores in favour of the Complainant and to the shock and surprise of the Complainant, the same has been dishonoured for the reasons, 'Accounts Closed vide Axis Bank Memo dated 23^rd January, 2017 of Malleshwaram Branch, Bangalore. The Complainant states that the said cheque was issued in discharge of the liability of loans of over Rs.13 crores in part, particularly to be adjusted towards the second hand loan of Rs.5 crores paid to the account of Accused Nos.2 and 3 as follows through RTGS from bank account of the Complainant vide YES Bank, Gangapur Road, Bhilwara and Savings Account No: 002290700002724, the proof of which bank account statement for period 1 March, 2014 to 31 March, 2014 is produced herein:

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i. 18.03.2014: Rs.46,00,000/- paid by our client to account of third of you;

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ii. 19.03.2014: Rs.81,00,000/- paid by our client to account of third of you;

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iii. 19.03.2014 : Rs.80,00,000/- paid by our client to account of third of you;

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iv. 20.03.2014 :Rs.93,00,000/- paid by our client to account of third of you;

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v. 18.03.2014 :Rs.100,00,000/- paid by our client to account of second of you; &

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vi. 18.03.2014 :Rs.100,00,000/- paid by our client to account of second of you

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Total: Rs.5,00,00,000/- (Rupees Five Crores Only)

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20) The Complainant states that he was convinced that he has been cheated by all the three Accused since inception and that all three Accused with mala fide intention and criminal mind have deliberately induced the Complainant into parting with his hard earned money of over Rs.13 crores in the manner and modus operandi as stated above The Complainant states that all of the actions of the three Accused amounts to cheating, criminal breach of trust, criminal misappropriation of money, etc and various other offences punishable under the Indian Penal Code, 1860 for which the Complainant got issued a legal notice dated 18th February, 2017 to all three of the Accused separately, but on service they have replied evasively and not paid back a penny till date. Hence, the Complainant states the instant case is being filed in addition to another case u/s.138 NI Act separately before appropriate court of jurisdiction.

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21) The Complainant states that he has no other efficacious remedy than to approach this Hon'ble Court for relief in light of the fact that all the Accused have cheated him and deserve to be punished as per law.

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WHEREFORE, it is humbly prayed that this Hon’ble Court may kindly be pleased to take the present complaint on record and the same may kindly be registered by this Hon'ble Court further it is humbly prayed that this Hon'ble Court may kindly take cognizance of the instant complaint and issue summons to all the Accused, jointly and severally, try them and punish them by passing a judgment of conviction against each one of them for offences u/s.403 405 and 420 of Indian Penal Code, 1860, and sentencing them for the maximum term of punishment with imprisonment for 7 years including fine to a tune of over 3 crores of rupees, in the interests of justice.

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It is prayed accordingly.”

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A perusal of the impugned complaint will indicate that from paragraph No.4 upto paragraph No.12, the complainant makes allegations only as against accused No.2 and thereafter, general, bald, vague and omnibus allegations are made against the petitioner – accused No.3 on the premise that she was the wife of accused No.2; no specific instances or allegations of commission of any offences by the petitioner – accused No.3 are forthcoming in the impugned complaint, which are primarily/mainly directed only against accused Nos.1 and 2 and not against the petitioner - accused No.3. In fact, even according to the complaint, the Memorandum of Understanding (MoU) dated 19.03.2014 referred to in paragraph No.16 of the impugned complaint was allegedly entered into only

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between the complainant and accused No.2 and not by the petitioner

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– accused No.3. Further, the last alleged loan transaction of the complainant’s own showing was in March, 2014 and there is a long, huge, inordinate and unexplained delay of more than 3 years in filing the complaint without assigning any reasons as to why the impugned complaint had not been filed prior to the said date. Under these circumstances, I am of the view that the impugned complaint and proceedings qua petitioner – accused No.3 deserve to be quashed.

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A perusal of the aforesaid complaint will indicate that necessary ingredients constituting the alleged offences by the petitioner has not been made out in the impugned complaint; undisputedly, the petitioner is not a party to any of the agreements, MOUs etc., between the complainant and accused No.1 and 2 nor is she a signatory to any of the documentation between them and the complainant. It is a well settled position of law that in order to invoke the offence punishable under Section 420 of IPC, it is essential that the offence of cheating/intention to cheat ought to be established right from the inception; in the instant case, even as per the complaint, the alleged loan transaction between the complainant and accused Nos.1 and 2 commenced in the year 2011 and all allegations made therein are only against them without there being any whisper about the role

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or involvement of the petitioner in the alleged transaction; So also, the complaint does not point out or indicate that the petitioner had any mens rea to fraudulently induce the complainant to part with the loan amount in addition to the fact that there is neither any inducement by the petitioner nor any entrustment made to her so as to attract the offences punishable under Sections 403, 405 and 420 of IPC, whose ingredients are conspicuously absent in the impugned complaint and consequently, the impugned complaint and proceedings deserves to be quashed. In Prof.R.K.Vijayasarathy’s case supra , the Apex Court held as under:

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“9. Section 482 of the Code of Criminal Procedure saves the inherent power of the High Court to make orders necessary to secure the ends of justice. In Indian Oil Corpn. v. NEPC (India) Ltd., a two-Judge Bench of this Court reviewed the precedents on the exercise of jurisdiction under Section 482 of the Code of Criminal Procedure 1973 and formulated guiding principles in the following terms:(SCC p. 748, para 12)

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“12. * * *

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(i) A complaint can be quashed where the allegations made in 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 the case alleged against the accused. For this purpose, the complaint has to be examined as a whole, but without examining the merits of the allegations. Neither a detailed inquiry nor a meticulous analysis of the material nor an assessment of the reliability or genuineness of the allegations in the complaint, is warranted while examining prayer for quashing of a complaint.

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(ii) A complaint may also be quashed where it is a clear abuse of the process of the court, as when the criminal proceeding is found to have been initiated with mala fides/malice for wreaking vengeance or to cause harm, or where the allegations are absurd and inherently improbable.

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(iii) The power to quash shall not, however, be used to stifle or scuttle a legitimate prosecution. The power should be used sparingly and with abundant caution.

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(iv) The complaint is not required to verbatim reproduce the legal ingredients of the offence alleged. If the necessary factual foundation is laid in the complaint, merely on the ground that a few ingredients have not been stated in detail, the proceedings should not be quashed. Quashing of the complaint is warranted only where the complaint is so bereft of even the basic facts which are absolutely necessary for making out the offence.”

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10. The High Court, in the exercise of its jurisdiction under Section 482 of the Code of Criminal Procedure, is required to examine whether the averments in the complaint constitute the ingredients necessary for an offence alleged under the Penal Code. If the averments taken on their face do not constitute the ingredients necessary for the offence, the criminal proceedings may be quashed under Section 482. A criminal proceeding can be quashed where the allegations made in the complaint do not disclose the commission of an offence under the Penal Code. The complaint must be examined as a whole, without evaluating the merits of the allegations. Though the law does not require that the complaint reproduce the legal ingredients of the offence verbatim, the complaint must contain the basic facts necessary for making out an offence under the Penal Code.

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11. The first respondent has alleged in the complaint that the appellants have committed offences under Sections 405, 406, 415 and 420 read with Section 34 of the Penal Code. It would thus be necessary to examine the ingredients of the above offences

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and whether the allegations made in the complaint, read on their

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face, attract those offences under the Penal Code.

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12. Section 405 of the Penal Code reads thus:

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“ 405. Criminal breach of trust .—Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits “criminal breach of trust”.”

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13. A careful reading of Section 405 shows that the ingredients of a criminal breach of trust are as follows:

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13.1. A person should have been entrusted with property, or entrusted with dominion over property;

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13.2. That person should dishonestly misappropriate or convert to their own use that property, or dishonestly use or dispose of that property or wilfully suffer any other person to do so; and

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13.3. That such misappropriation, conversion, use or disposal should be in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract which the person has made, touching the discharge of such trust.

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14. Entrustment is an essential ingredient of the offence. A person who dishonestly misappropriates property entrusted to them contrary to the terms of an obligation imposed is liable for a criminal breach of trust and is punished under Section 406 of the Penal Code.

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15. Section 415 of the Penal Code reads thus:

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“ 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

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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”.”

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16. The ingredients to constitute an offence of cheating are as follows:

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16.1. There should be fraudulent or dishonest inducement of a person by deceiving him:

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16.1.1. The person so induced should be intentionally induced to deliver any property to any person or to consent that any person shall retain any property, or

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16.1.2. The person so induced should be intentionally induced to do or to omit to do anything which he would not do or omit if he were not so deceived; and

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16.2. In cases covered by 16.1.2. above, the act or omission should be one which caused or is likely to cause damage or harm to the person induced in body, mind, reputation or property.

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17. A fraudulent or dishonest inducement is an essential ingredient of the offence. A person who dishonestly induces another person to deliver any property is liable for the offence of cheating.

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18. Section 420 of the Penal Code reads thus:

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“ 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.”

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19. The ingredients to constitute an offence under Section 420 are as follows:

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19.1. A person must commit the offence of cheating under Section 415; and

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19.2. The person cheated must be dishonestly induced to

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(a) deliver property to any person; or

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(b) make, alter or destroy valuable security or anything signed or sealed and capable of being converted into valuable security.

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20. Cheating is an essential ingredient for an act to constitute an offence under Section 420.

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21. A court exercising its inherent jurisdiction must examine if on their face, the averments made in the complaint constitute the ingredients necessary for the offence. The relevant extract of the complaint filed by the first respondent is extracted below:

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“The accused person's son Mr Rajiv Vijayasarathy Ratnam started to transfer all his monies to different accounts and also transferred some monies belonging to him in the US to his parents, accounts in Bangalore, India and he also pleaded his wife i.e. complainant's daughter that he also wanted to divert some funds unto complainant's account in Bangalore… That Rajiv Vijayasarathy Ratnam diverted some of his monies to Accused 1 and 2 and the complainant…

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It is further pertinent to mention that the accident occurred on 5-2-2010 and money was transferred on 17-2-2010; the transfer was due to the insecurity at the behest of Mr Rajiv Vijayasarathy Rathnam; the money was not sought or required by the complainant.

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The complainant's daughter Ms Savitha Seetharam convinced the complainant to accept transfer of monies which was for the benefit of the accused person's son Mr Rajiv Vijayasarathy Ratnam and to hold it in trust for him and accordingly the son of the accused transferred monies on 172-2010 to the complainant's account Rs 20,00,000 (Rupees twenty lakhs only) … It is pertinent to mention that the accused person's son Mr Rajiv Vijayasarathy Ratnam insisted the complainant's and her husband to pay the said monies by way of cash to the accused persons including the interest … Mr Rajiv Vijayasarathy Ratnam sought for the return of the aforesaid monies i.e. of Rs 20,00,000.

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… The said monies were paid in cash as per the dicta of the accused person's son Mr Rajiv Vijayasarathy Ratnam has filed a false and frivolous suit …”

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(emphasis supplied)

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22. The condition necessary for an act to constitute an offence under Section 405 of the Penal Code is that the accused was entrusted with some property or has dominion over property. The first respondent has stated that the disputed sum was transferred by the son of the appellants of his own volition to her. The complaint clearly states that the amount was transferred for the benefit of the son of the appellants and that the first respondent was to hold the amount “in trust” for him. The complaint alleges that the money was transferred to the appellants “as per the dicta” of the son of the appellants. There is on the face of the complaint, no entrustment of the appellants with any property.

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23. The condition necessary for an act to constitute an offence under Section 415 of the Penal Code is that there was dishonest inducement by the accused. The first respondent admitted that the disputed sum was transferred by the son of the appellants to her bank account on 17-2-2010. She alleges that she transferred the money belonging to the son of the appellants at his behest. No act on part of the appellants has been alleged that discloses an intention to induce the delivery of any property to the appellants by the first respondent. There is thus nothing on the face of the complaint to indicate that the appellants dishonestly induced the first respondent to deliver any property to them. Cheating is an essential ingredient to an offence under Section 420 of the Penal Code. The ingredient necessary to constitute the offence of cheating is not made out from the face of the complaint and consequently, no offence under Section 420 is made out.

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24. In Binod Kumar v. State of Bihar certain amounts were due and payable to a contract worker. When the amount due was not paid due to a termination of the contract, the worker filed a criminal case against the appellant for criminal breach of trust. The appellants' petition under Section 482 of the Code of Criminal Procedure for quashing was dismissed by the High Court. A twoJudge Bench of this Court examined the ingredients of the offence and whether the complaint on its face disclosed the commission of any offence. This Court quashed the criminal proceedings holding thus : (SCC pp. 671-72, paras 14 & 18-19)

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“14. At this stage, we are only concerned with the question whether the averments in the complaint taken at their face value make out the ingredients of criminal offence or not. …

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* * *

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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. …

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19. Even if all the allegations in the complaint taken at the face value are true, in our view, the basic essential ingredients of dishonest misappropriation and cheating are missing. Criminal proceedings are not a shortcut for other remedies. Since no case of criminal breach of trust or dishonest intention of inducement is made out and the essential ingredients of Sections 405/420 IPC are missing, the prosecution of the appellants under Sections 406/120-B IPC, is liable to be quashed.”

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25. The suit for recovery of money was instituted by the son of the appellants against the first respondent in 2013. The complaint alleging offences under the Penal Code was filed by the

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first respondent belatedly in 2016. It is clear from the face of the complaint, that no amount was entrusted by the first respondent to either of the appellants and there was no dishonest inducement of the first respondent by the appellants to deliver any property. As stated by the first respondent in the complaint, the money belonged to the son of the appellants. It was transferred by the appellants' son to her on his own volition. The money was alleged to have been returned to the appellants on the instructions of their son. A plain reading of the complaint thus shows that the ingredients necessary for constituting offences under Sections 405, 415 and 420 of the Penal Code are not made out.

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26. The respondents have relied on the decision of this Court in Rajesh Bajaj v. State (NCT of Delhi) [Rajesh Bajaj v. State (NCT of Delhi). In that case, the Delhi High Court had quashed an FIR alleging an offence under Section 420 of the Penal Code on the ground that the complaint did not disclose the commission of any offence. Allowing the complainant's appeal, this Court held thus: (SCC p. 262, para 9)

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“9. It is not necessary that a complainant should verbatim reproduce in the body of his complaint all the ingredients of the offence he is alleging. Nor is it necessary that the complainant should state in so many words that the intention of the accused was dishonest or fraudulent. Splitting up of the definition into different components of the offence to make a meticulous scrutiny, whether all the ingredients have been precisely spelled out in the complaint, is not the need at this stage. If factual foundation for the offence has been laid in the complaint the court should not hasten to quash criminal proceedings during investigation stage merely on the premise that one or two ingredients have not been stated with details…”

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The decision does not advance the submission of the first respondent. As we have noted above, the complaint in the present case is bereft of the basic facts necessary to constitute

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the offences alleged under Sections 405, 406, 415 and 420 of the Penal Code.

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27. The learned Senior Counsel for the appellant contended that the actions of the first respondent constitute an abuse of process of the court. It is contended that the present dispute is of a civil nature and the first respondent has attempted to cloak it with a criminal flavour to harass the aged appellants. It is also contended that there is an undue delay in filing the complaint from which the present appeal arises, and this demonstrates the mala fide intention of the first respondent in filing the complaint against the appellants. The learned Senior Counsel for the appellants relied on the decision of this Court in State of Karnataka v. L. Muniswamy. In that case, the prosecution alleged that eight of the accused had conspired to kill the complainant. The Karnataka High Court quashed the proceedings on the ground that no sufficient ground was made out against the accused. A threeJudge Bench of this Court dismissed the appeal by the State with the following observations: (SCC p. 703, para 7)

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“7. … In the exercise of this wholesome power, the High Court is entitled to quash a proceeding if it comes to the conclusion that allowing the proceeding to continue would be an abuse of the process of the Court or that the ends of justice require that the proceeding ought to be quashed. The saving of the High Court's inherent powers, both in civil and criminal matters, is designed to achieve a salutary public purpose which is that a court proceeding ought not to be permitted to degenerate into a weapon of harassment or persecution. In a criminal case, the veiled object behind a lame prosecution, the very nature of the material on which the structure of the prosecution rests and the like would justify the High Court in quashing the proceeding in the interest of justice.”

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28. The jurisdiction under Section 482 of the Code of Criminal Procedure has to be exercised with care. In the exercise of its jurisdiction, a High Court can examine whether a matter

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which is essentially of a civil nature has been given a cloak of a criminal offence. Where the ingredients required to constitute a criminal offence are not made out from a bare reading of the complaint, the continuation of the criminal proceeding will constitute an abuse of the process of the court.

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29. In the present case, the son of the appellants has instituted a civil suit for the recovery of money against the first respondent. The suit is pending. The first respondent has filed the complaint against the appellants six years after the date of the alleged transaction and nearly three years from the filing of the suit. The averments in the complaint, read on its face, do not disclose the ingredients necessary to constitute offences under the Penal Code. An attempt has been made by the first respondent to cloak a civil dispute with a criminal nature despite the absence of the ingredients necessary to constitute a criminal offence. The complaint filed by the first respondent against the appellants constitutes an abuse of process of court and is liable to be quashed.

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30. For the above reasons, the appeal is allowed. The judgment of the High Court is set aside and the criminal proceedings arising from PCR 2116 of 2016 instituted by the first respondent against the appellants are quashed. We however clarify, that no opinion has been expressed on the merits of the pending civil suit filed by the son of the appellants for the recovery of money. The pending suit shall be disposed of in accordance with the law.”

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In the instant case, a perusal of the complaint referred to supra, is sufficient to come to the conclusion that there is complete and total want/lack of necessary ingredients constituting the alleged

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offences as against the petitioner – accused No.3 and as such, the impugned proceedings qua petitioner – accused No.3 deserves to be quashed on this ground also.

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The material on record also discloses that the complainant has already instituted civil proceedings against the petitioner – accused No.3 as well as accused Nos.1 and 2 in O.S.No.3039/2017 seeking recovery of money and for other reliefs and the said suit is pending adjudication even as on date. In addition thereto, civil proceedings in O.S.No.6892/2012 and O.S.No.265/2019 were disposed of by the civil court between the parties. Further, the complainant has also instituted the following criminal proceedings against accused No.2 in relation to subject matter/issue relating to the impugned complaint as hereunder:

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C.C.No.21182/2017 and nine below mentioned cases.

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a. C.C. No. 1800499 of 2017 pending on the file of the VIII M.M. Court, Hyderabad.

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b. C.C. No.3100477 of 2018 pending on the file of the Fast Track Magistrate - 2.

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c. C.C. No.7654 of 2018 pending on the file of the 36th A.C.M.M., Bengaluru.

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d. C.C. No.7657 of 2018 pending on the file of the 36th A.C.M.M., Bengaluru.

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e. C.C. No.3779 of 2018 pending on the file of the 19th A.C.M.M., Bengaluru.

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f. C.C. No.100 of 2016 pending on the file of the 8th A.C.M.M., Bengaluru.

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g. C.C. No.101 of 2016 pending on the file of the 8th A.C.�.�., Bengaluru.

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h. C.C. No.7842 of 2015 pending on the file of the 8th A.C.M.�., Bengaluru.

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i. C.C. No.3146/55/12 O.W. 280/2015 pending on the file of the Metropolitan Magistrate, 63rd Court, Andheri, Mumbai.”

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The aforesaid facts and circumstances will clearly indicate that the complainant has filed the impugned complaint seeking to give a criminal colour/flavor/texture to an essentially, predominantly and overwhelmingly civil dispute, particularly after having instituted other criminal proceedings as against accused Nos.1 and 2, thereby leading to the sole conclusion that the impugned complaint qua petitioner – accused No.3 on the sole premise that she happened to be the wife of accused No.2 at that point in time and is alleged to have received certain alleged sums of money, which is a subject matter of the pending civil suits is nothing but abuse of process of law warranting interference by this Court in the present petition.

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In Anand Kumar Mohatta’s case (supra), the Apex Court

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held as under:

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“14. First, we would like to deal with the submission of the learned Senior Counsel for Respondent 2 that once the chargesheet is filed, petition for quashing of FIR is untenable. We do not

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see any merit in this submission, keeping in mind the position of this Court in Joseph Salvaraj A. v. State of Gujarat [Joseph Salvaraj A. v. State of Gujarat, (2011) 7 SCC 59 : (2011) 3 SCC (Cri) 23] . In Joseph Salvaraj A , this Court while deciding the question whether the High Court could entertain the Section 482 petition for quashing of FIR, when the charge-sheet was filed by the police during the pendency of the Section 482 petition, observed : (SCC p. 63, para 16)

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“16. Thus, from the general conspectus of the various sections under which the appellant is being charged and is to be prosecuted would show that the same are not made out even prima facie from the complainant's FIR. Even if the charge-sheet had been filed, the learned Single Judge [Joesph Saivaraj A. v. State of Gujarat, 2007 SCC OnLine Guj 365] could have still examined whether the offences alleged to have been committed by the appellant were prima facie made out from the complainant's FIR, chargesheet, documents, etc. or not.”

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15. Even otherwise it must be remembered that the provision invoked by the accused before the High Court is Section 482 CrPC and that this Court is hearing an appeal from an order under Section 482 CrPC. Section 482 CrPC reads as follows:

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“ 482. Saving of inherent powers of the High Court .— Nothing in this Code shall be deemed to limit or affect the inherent powers of the High Court to make such orders as may be necessary to give effect to any order under this Code, or to prevent abuse of the process of any court or otherwise to secure the ends of justice.”

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16. There is nothing in the words of this section which restricts the exercise of the power of the Court to prevent the abuse of process of court or miscarriage of justice only to the stage of the FIR. It is settled principle of law that the High Court can exercise jurisdiction under Section 482 CrPC even when the discharge application is pending with the trial court [G. Sagar Suri v. State of

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U.P., (2000) 2 SCC 636, para 7 : 2000 SCC (Cri) 513. Umesh Kumar v. State of A.P., (2013) 10 SCC 591, para 20 : (2014) 1 SCC (Cri) 338 : (2014) 2 SCC (L&S) 237] . Indeed, it would be a travesty to hold that proceedings initiated against a person can be interfered with at the stage of FIR but not if it has advanced and the allegations have materialised into a charge-sheet. On the contrary it could be said that the abuse of process caused by FIR stands aggravated if the FIR has taken the form of a charge-sheet after investigation. The power is undoubtedly conferred to prevent abuse of process of power of any court.

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17. The second submission of the learned counsel for Respondent 2 is that Appellant 1 has fraudulently transferred the property which is the subject-matter of the agreement dated 3-61993, to his wife and has thereby committed criminal breach of trust. This charge is wholly untenable and rather extraordinary since the alleged fraudulent transfer of property by Appellant 1 to his wife, assuming it to be illegal, by no stretch of imagination can constitute the offence of a criminal breach of trust, since the property was not entrusted by Respondent 2 to the appellants. The property belonged to Appellant 1 and there was therefore no question of the appellants having been entrusted with their own property, and that too by the complainant, who had merely entered into a development agreement in respect of the property.

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18. Lastly, we find that the FIR and the charge-sheet essentially charged the petitioner for an offence under Section 406 IPC for retaining the amount of rupees one crore which was advanced to him by the respondents at the time of entering into the development agreement.

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Whether an offence under Section 406 made out.

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19. It is necessary to refer to Sections 405 and 406 IPC in order to ascertain, whether in the facts and circumstances of the present case, an offence under Section 406 is made out against the appellants.

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20. Sections 405 and 406 IPC read as follows:

¶267

“ 405. Criminal breach of trust .—Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits “criminal breach of trust”.

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Explanation 1.—A person, being an employer of an establishment whether exempted under Section 17 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952), or not who deducts the employee's contribution from the wages payable to the employee for credit to a Provident Fund or Family Pension Fund established by any law for the time being in force, shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said fund in violation of the said law, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid.

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Explanation 2.—A person, being an employer, who deducts the employees' contribution from the wages payable to the employee for credit to the Employees' State Insurance Fund held and administered by the Employees' State Insurance Corporation established under the Employees' State Insurance Act, 1948 (34 of 1948), shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said Act, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid.

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406. Punishment for criminal breach of trust .— Whoever commits criminal breach of trust shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both.”

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21. The essence of the offence lies in the use of the property entrusted to a person by that person, in violation of any direction of law or any legal contract which he has made during the discharge of such trust. In the present case, the amount of rupees one crore was paid by the respondent complainant to the appellants as an interest-free deposit on the signing of the agreement. It was liable to be refunded to the complainant simultaneously on handing over of possession of the area of the owner's share to the owner in the group housing complex vide Clause 30(b) of the agreement dated 3-6-1993.

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22. Two things are significant in the transaction between the parties. Firstly, that the occasion for returning the amount i.e. the developer handing over the possession of the area of the owner's share to the owner in the group housing complex, has not occurred. According to the appellants, the contract stands frustrated because no group housing can be legally built on 20, Feroz Shah Road, New Delhi since it falls in the Lutyens Bungalow Zone. Appellant 1 has therefore, terminated the contract. Further, the amount has been retained by him as a security because not only is there any handing over of constructed portion, the complainant has also got into partpossession of the property and has not handed it back. Also, the complainant has failed to get the property vacated from the tenant's possession.

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23. We, thus find that it is not possible to hold that the amount of rupees one crore which was paid along with the development agreement as a deposit can be said to have been

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entrustment of property which has been dishonestly converted to his own use or disposed of in violation of any direction of law or contract by the appellant. The appellants have not used the amount nor misappropriated it contrary to any direction of law or contract which prescribes how the amount has to be dealt with. Going by the agreement dated 3-6-1993, the amount has to be returned upon the handing over of the constructed area to the owner which admittedly has not been done. Most significantly Respondent 2 has not demanded the return of the amount at any point of time. In fact, it is the specific contention of Respondent 2 that he has not demanded the amount because the agreement is still in subsistence.

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24. We do not see how it can be contended by any stretch of imagination that the appellants have misappropriated the amount or dishonestly used the amount contrary to any law or contract. In any case, we find that the dispute has the contours of a dispute of civil nature and does not constitute a criminal offence.

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25. Having given our anxious consideration, we are of the view that assuming that there is a security deposit of rupees one crore and that he has misappropriated the dispute between the two parties can only be a civil dispute.

¶283

26. In Indian Oil Corpn. v. NEPC (India) Ltd., this Court observed as follows : (SCC p. 749, para 13)

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“13. … Any effort to settle civil disputes and claims, which do not involve any criminal offence, by applying pressure through criminal prosecution should be deprecated and discouraged.”

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The Court noticed a growing trend in business circles to convert purely civil dispute into criminal cases.

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27. We find it strange that the complainant has not made any attempt for the recovery of the money of rupees one crore except by filing this criminal complaint. This action appears to be mala fide and unsustainable.

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28. In State of Haryana v. Bhajan Lal , this Court has set out the categories of cases in which the inherent power under Section 482 CrPC can be exercised. Para 102 of the judgment reads as follows: (SCC pp. 378-79)

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“102. In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under Section 482 of the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised.

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(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.

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(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.

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(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.

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(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.

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(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.

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(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 Act concerned, providing efficacious redress for the grievance of the aggrieved party.

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(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.”

¶302

29. We are of the opinion that the present case falls under the 1st, 3rd and 5th category set out in para 102 of the judgment in Bhajan Lal. In such a situation, the High Court erred in dismissing the petition of the appellants filed under Section 482 CrPC. This was a fit case for the High Court to exercise its inherent power under Section 482 CrPC to quash the FIR.

¶303

30. It is necessary here to remember the words of this Court in State of Karnataka v. L. Muniswamy which read as follows : (SCC p. 703, para 7)

¶304

“7. … In the exercise of this wholesome power, the High Court is entitled to quash a proceeding if it comes to the conclusion that allowing the proceeding to continue would be an abuse of the process of the Court or that the ends of justice require that the proceeding ought to be quashed. The saving of

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the High Court's inherent powers, both in civil and criminal matters, is designed to achieve a salutary public purpose which is that a court proceeding ought not to be permitted to degenerate into a weapon of harassment or persecution. In a criminal case, the veiled object behind a lame prosecution, the very nature of the material on which the structure of the prosecution rests and the like would justify the High Court in quashing the proceeding in the interest of justice.”

¶308

31. We find that the prosecution is mala fide, untenable and solely intended to harass the appellants. We are fortified in view of the respondent not having made any attempt to recover the deposit of rupees one crore through a civil action.

¶309

32. We have, therefore, no hesitation in quashing the FIR and the charge-sheet filed against the appellants. Hence, FIR No. 0139 of 2014 dated 20-8-2014 and charge-sheet dated 3-8-2018 are hereby quashed.

¶310

33. For the aforesaid reasons, we hereby set aside the impugned judgment and order dated 2-2-2016 of the High Court of Delhi. Accordingly, the appeal is allowed along with the application filed by the appellants seeking amendment of main prayer.”

¶311

The aforesaid principles have been reiterated in Prof. R.K.Vijayasaraty’s case (supra) by the Apex Court. Under these circumstances, I am of the view that the impugned proceedings deserve to be quashed on this score also.

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A perusal of the impugned proceedings and complaint will indicate that the petitioner- accused No.3 is charged simultaneously with offences of criminal breach of trust and cheating which are

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antithesis and cannot stand together as held by the Apex Court in

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Delhi Race Club’s case (supra) as under:

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“35. This Court in its decision in S.W. Palanitkar v. State of Bihar : (2002) 1 SCC 241 expounded the difference in the ingredients required for constituting of an offence of criminal breach of trust (Section 406 IPC) vis-à-vis the offence of cheating (Section 420). The relevant observations read as under : (SCC p. 246, paras 9-10)

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“9. The ingredients in order to constitute a criminal breach of trust are : (i) entrusting a person with property or with any dominion over property; (ii) that person entrusted : (a) dishonestly misappropriating or converting that property to his own use; or (b) dishonestly using or disposing of that property or wilfully suffering any other person so to do in violation (i) of any direction of law prescribing the mode in which such trust is to be discharged, (ii) of any legal contract made, touching the discharge of such trust.

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10. The ingredients of an offence of cheating are : (i) there should be fraudulent or dishonest inducement of a person by deceiving him, (ii)(a) the person so deceived should be induced to deliver any property to any person, or to consent that any person shall retain any property; or (b) the person so deceived should be intentionally induced to do or omit to do anything which he would not do or omit if he were not so deceived; and (iii) in cases covered by (ii)(b), the act of omission should be one which causes or is likely to cause damage or harm to the person induced in body, mind, reputation or property.”

¶321

36. What can be discerned from the above is that the offences of criminal breach of trust (Section 406 IPC) and cheating (Section 420 IPC) have specific ingredients:

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In order to constitute a criminal breach of trust (Section 406 IPC)

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(1) There must be entrustment with person for property or dominion over the property, and

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(2) The person entrusted:

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(a) Dishonestly misappropriated or converted property to his own use, or

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(b) Dishonestly used or disposed of the property or

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wilfully suffers any other person so to do in violation of:

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(i) Any direction of law prescribing the method in

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which the trust is discharged; or

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(ii) Legal contract touching the discharge of trust

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(see : S.W. Palanitkar [S.W. Palanitkar).

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Similarly, in respect of an offence under Section 420IPC, the essential ingredients are:

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(1) Deception of any person, either by making a false or misleading representation or by other action or by omission;

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(2) Fraudulently or dishonestly inducing any person to deliver any property, or (3) The 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 (see: Harmanpreet Singh Ahluwalia v. State of Punjab [Harmanpreet Singh Ahluwalia v. State of Punjab).

¶338

37. Further, in both the aforesaid sections, mens rea i.e. intention to defraud or the dishonest intention must be present, and in the case of cheating it must be there from the very beginning or inception.

¶339

38. In our view, the plain reading of the complaint fails to spell out any of the aforesaid ingredients noted above. We may only say, with a view to clear a serious misconception of law in the mind of the police as well as the courts below, that if it is a case of the complainant that offence of criminal breach of trust as defined under Section 405IPC, punishable under Section 406IPC, is committed by the accused, then in the same breath it cannot be said that the accused has also committed the offence of cheating as defined and explained in Section 415IPC, punishable under Section 420IPC.

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39. Every act of breach of trust may not result in a penal offence of criminal breach of trust unless there is evidence of manipulating act of fraudulent misappropriation. An act of breach of trust involves a civil wrong in respect of which the person may seek his remedy for damages in civil courts but, any breach of trust with a mens rea, gives rise to a criminal prosecution as well. It has been held in Hari Prasad Chamaria v. Bishun Kumar Surekha as under : (SCC p. 824, para 4)

¶344

“4. We have heard Mr Maheshwari on behalf of the appellant and are of the opinion that no case has been made out against the respondents under Section 420 of the Penal Code, 1860. For the purpose of the present appeal, we would assume that the various allegations of fact which have been made in the complaint by the appellant are correct. Even after making that allowance, we find that the complaint does not disclose the commission of any offence on the part of the respondents under Section 420 of the Penal Code, 1860. There is nothing in the complaint to show that the respondent had dishonest or fraudulent intention at the time the appellant parted with Rs 35,000. There is also nothing to indicate that the respondents induced the appellant to pay them Rs 35,000 by deceiving him. It is further not the case of the appellant that a representation was made by the respondents to him at or before the time he paid the money to them and that at the time the representation was made, the respondents knew the same to be false. The fact that the respondents subsequently did not abide by their commitment that they would show the appellant to be the proprietor of Drang Transport Corporation and would also render accounts to him in the month of December might create civil liability for them, but this fact would not be sufficient to fasten criminal liability on the respondents for the offence of cheating.”

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40. To put it in other words, the case of cheating and dishonest intention starts with the very inception of the transaction. But in the case of criminal breach of trust, a person who comes into possession of the movable property and receives it legally, but illegally retains it or converts it to his own use against the terms of the contract, then the question is, in a case like this, whether the retention is with dishonest intention or not, whether the retention

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involves criminal breach of trust or only a civil liability would depend upon the facts of each case.

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41. The distinction between mere breach of contract and the offence of criminal breach of trust and cheating is a fine one. In case of cheating, the intention of the accused at the time of inducement should be looked into which may be judged by a subsequent conduct, but for this, the subsequent conduct is not the sole test. Mere breach of contract cannot give rise to a criminal prosecution for cheating unless fraudulent or dishonest intention is shown right from the beginning of the transaction i.e. the time when the offence is said to have been committed. Therefore, it is this intention, which is the gist of the offence.

¶351

42. Whereas, for the criminal breach of trust, the property must have been entrusted to the accused or he must have dominion over it. The property in respect of which the offence of breach of trust has been committed must be either the property of some person other than the accused or the beneficial interest in or ownership of it must be of some other person. The accused must hold that property on trust of such other person. Although the offence i.e. the offence of breach of trust and cheating involve dishonest intention, yet they are mutually exclusive and different in basic concept.

¶352

43. There is a distinction between criminal breach of trust and cheating. For cheating, criminal intention is necessary at the time of making a false or misleading representation i.e. since inception. In criminal breach of trust, mere proof of entrustment is sufficient. Thus, in case of criminal breach of trust, the offender is lawfully entrusted with the property, and he dishonestly misappropriated the same. Whereas, in case of cheating, the offender fraudulently or dishonestly induces a person by deceiving

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him to deliver any property. In such a situation, both the offences cannot co-exist simultaneously.

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44. At the most, the Court of the Additional Chief Judicial Magistrate could have issued process for the offence punishable under Section 420IPC i.e. cheating but in any circumstances no case of criminal breach of trust is made out. The reason being that indisputably there is no entrustment of any property in the case at hand. It is not even the case of the complainant that any property was lawfully entrusted to the appellants and that the same has been dishonestly misappropriated. The case of the complainant is plain and simple. He says that the price of the goods sold by him has not been paid. Once there is a sale, Section 406IPC goes out of picture. According to the complainant, the invoices raised by him were not cleared. No case worth the name of cheating is also made out.

¶358

45. Even if the Magistrate would have issued process for the offence punishable under Section 420IPC i.e. cheating, the same would have been liable to be quashed and set aside, as none of the ingredients to constitute the offence of cheating are disclosed from the materials on record.

¶359

46. It has been held in State of Gujarat v. Jaswantlal Nathalal: (SCC OnLine SC para 8)

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“8. The term “entrusted” found in Section 405IPC governs not only the words “with the property” immediately following it but also the words “or with any dominion over the property” occurring thereafter—see Velji Raghavji Patel v. State of Maharashtra. Before there can be any entrustment there must be a trust meaning thereby an obligation annexed to the ownership of property and a confidence reposed in and accepted by the owner or declared and accepted by him for the benefit of another or of another and the owner. But that does not mean that such an entrustment need conform to all the technicalities of the law of trust — see Jaswantrai Manilal

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Akhaney v. State of Bombay. The expression “entrustment” carries with it the implication that the person handing over any property or on whose behalf that property is handed over to another, continues to be its owner. Further the person handing over the property must have confidence in the person taking the property so as to create a fiduciary relationship between them. A mere transaction of sale cannot amount to an “entrustment”.”

¶365

47. Similarly, in CBI v. Duncans Agro Industries Ltd. [CBI v. Duncans Agro Industries Ltd. this Court held that the expression “entrusted with property” used in Section 405IPC connotes that the property in respect of which criminal breach of trust can be committed must necessarily be the property of some person other than the accused or that the beneficial interest in or ownership thereof must be in the other person and the offender must hold such property in trust for such other person or for his benefit. The relevant observations read as under : (SCC pp. 607608, para 27)

¶366

“27. In the instant case, a serious dispute has been raised by the learned counsel appearing for the respective parties as to whether on the face of the allegations, an offence of criminal breach of trust is constituted or not. In our view, the expression “entrusted with property” or “with any dominion over property” has been used in a wide sense in Section 405IPC. Such expression includes all cases in which goods are entrusted, that is, voluntarily handed over for a specific purpose and dishonestly disposed of in violation of law or in violation of contract. The expression “entrusted” appearing in Section 405IPC is not necessarily a term of law. It has wide and different implications in different contexts. It is, however, necessary that the ownership or beneficial interest in the ownership of the property entrusted in respect of which offence is alleged to have been committed must be in some person other than the accused and the latter must hold it on account of some person or in some way for his benefit. The expression “trust” in Section 405IPC is a comprehensive expression and has been used to denote various kinds of relationships like the relationship of trustee and beneficiary, bailor and bailee, master and servant, pledger and pledgee. When some goods are hypothecated by a person to another

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person, the ownership of the goods still remains with the person who has hypothecated such goods. The property in respect of which criminal breach of trust can be committed must necessarily be the property of some person other than the accused or the beneficial interest in or ownership of it must be in the other person and the offender must hold such property in trust for such other person or for his benefit. In a case of pledge, the pledged article belongs to some other person but the same is kept in trust by the pledgee.”

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(emphasis supplied)

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48. The aforesaid exposition of law makes it clear that there should be some entrustment of property to the accused wherein the ownership is not transferred to the accused. In case of sale of movable property, although the payment may be deferred yet the property in the goods passes on delivery as per Sections 20 and 24, respectively, of the Sale of Goods Act, 1930.

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“ 20. Specific goods in a deliverable state .—Where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made and it is immaterial whether the time of payment of the price or the time of delivery of goods, or both, is postponed.

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* * *

¶375

24. Goods sent on approval or “on sale or return” .— When goods are delivered to the buyer on approval or “on sale or return” or other similar terms, the property therein passes to the buyer— (a) when he signifies his approval or acceptance to the seller or does any other act adopting the transaction;

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(b) if he does not signify his approval or acceptance to the seller but retains the goods without giving notice of rejection, then, if a time has been fixed for the return of the goods on the expiration of such time, and, if no time has been fixed, on the expiration of a reasonable time.”

¶377

49. From the aforesaid, there is no manner of any doubt whatsoever that in case of sale of goods, the property passes to the purchaser from the seller when the goods are delivered. Once the property in the goods passes to the purchaser, it cannot be

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said that the purchaser was entrusted with the property of the seller. Without entrustment of property, there cannot be any criminal breach of trust. Thus, prosecution of cases on charge of criminal breach of trust, for failure to pay the consideration amount in case of sale of goods is flawed to the core. There can be civil remedy for the non-payment of the consideration amount, but no criminal case will be maintainable for it. [See : Lalit Chaturvedi v. State of U.P. and Mideast Integrated Steels Ltd. v. State of Jharkhand]

¶382

50. The case at hand falls in Category 1 as laid in Nagawwa referred to in para 17 of this judgment.

¶383

51. If it is the case of the complainant that a particular amount is due and payable to him then he should have filed a civil suit for recovery of the amount against the appellants herein. But he could not have gone to the Court of the Additional Chief Judicial Magistrate by filing a complaint of cheating and criminal breach of trust. It appears that till this date, the complainant has not filed any civil suit for recovery of the amount which according to him is due and payable to him by the appellants. He seems to have prima facie lost the period of limitation for filing such a civil suit.

¶384

52. In such circumstances referred to above, the continuation of the criminal proceeding would be nothing but abuse of the process of law.”

¶385

As held by the Apex Court in the aforesaid judgment, the complainant cannot allege the offences of criminal breach of trust and cheating in the very same breath and viewed from this angle also, the impugned proceedings deserve to be quashed.

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A perusal of the impugned order passed by the Trial Court taking cognizance of the offences as against the petitioner will indicate that the aforesaid aspects arising from the material on record which were available before the Trial Court have not been considered or appreciated before taking cognizance; in fact, the brief facts summarized by the Trial Court at paragraph No.2 of the impugned order do not even refer specifically to any allegations having been made as against the petitioner – accused No.3, against whom no material by way of sworn statement or documentary evidence was placed by the complainant. It follows therefrom that the impugned order passed by the Trial Court taking cognizance of the offences as against the petitioner and directing issuance of summons against her is opposed to facts and law and is arbitrary and illegal, warranting interference in the present petition.

¶390

In view of the aforesaid facts and circumstances, I am of the considered opinion that continuation of the impugned proceedings and complaint qua petitioner – accused No.3 would amount to an abuse of process of law warranting interference by this Court in the present petition and consequently, the impugned proceedings deserve to be quashed.

¶391