Allowed

Jolly Paul v. State of Kerala

Kerala HC19 Oct 2009Crl.MC/1386/2003

Case brief

AI extract

What is this about?

The Kerala High Court quashed a complaint filed under Sections 406 and 420 IPC regarding alleged breach of trust and cheating by former partners. The single-judge bench held that the allegations were vague, inconsistent, and failed to establish entrustment or deception required by law.

What did the court decide?

Complaint Annexure A is quashed; proceedings against petitioners based on the complaint are dropped.

Jolly Paul Vs State of Kerala — Quashing and FIR | Kerala HC (2009)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT :

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THE HONOURABLE MRS. JUSTICE K.HEMA

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MONDAY, THE 19TH OCTOBER 2009 / 27TH ASWINA 1931

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Crl.MC.No. 1386 of 2003()

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------------------------CC.1242/2002 of JUDL. MAGISTRATE OF FIRST CLASS COURT,CHALAKUDY

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PETITIONERS: ACCUSED NOS.1 & 2:

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JOLLY PAUL, AGED 44 YEARS, W/O. K.K.PAUL, KALAPPARAMBATHU HOUSE, CHALAKKUDY.

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K.K.PAUL, AGED 53 YEARS, S/O. K.K.KUNJIPALU, KALAPPARAMBATHU HOUSE, CHALAKKUDY.

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BY ADV. SRI.PEEYUS A.KOTTAM

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RESPONDENTS: STATE/COMPLAINANT:

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STATE OF KERALA, REPRESENTED BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM.

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U.C.THOMAS, AGED 58 YEARS, S/O. CHERIYAKUTTY, ULLATTIKULAM HOUSE, CHALAKKUDY.

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ADV. SRI.KOSHY GEORGE FOR R2

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PUBLIC PROSECUTOR

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THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON 19/10/2009, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:

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K.HEMA, J.

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-------------------------------Crl.M.C.No.1386 of 2003

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Dated this the 19^th day of October, 2009

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ORDER

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This petition is filed to quash the complaint filed against petitioner by second respondent herein, alleging breach of trust and cheating, under Sections 406 and 420 I.P.C.

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According to the complainant, the accused were Managing partner and partner in the 'Kalpaka Chits and Loans'. They are husband and wife. Upto 1992, the complainant was the Managing Partner and the firm was conducting business in curies etc. Later, the first and the second accused opined that they wished to conduct the business by themselves. All the other partners agreed to this and 19 partners retired from partnership on 30/12/1992, leaving the first accused alone to continue the business. On that day, the partnership was dissolved and

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the complainant voluntarily retired from the partnership. (In paragraph 15, an inconsistent allegation is made that the first and second accused were jointly conducting the business since 30/12/1992).

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On 30/12/1992 the second accused executed an agreement and the first and the second accused took over the business. As per the agreement executed by the second accused, it was agreed that certain amount under the various heads be returned and the entire liability was taken up by the second accused. After taking over the business, the properties which were in the name of the firm, were sold including the building in which the business was conducted. The business is now being conducted in a rented house. The present allegation is that the properties of the partnership firm were being used for their own needs and those were disposed of dishonestly and this is done to defeat the creditors.

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Crl.M.C.No.1386 of 2003

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The amounts towards kuri which are liable to be

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paid to the subscribers were not returned even after expiry of the term. Even documents were also not returned and thereby accused committed misappropriation. When the subscribers approached the accused to return the amount, etc, they disowned their liability and made them believe that the earlier partners had the liability to pay the same. All these are done for wrongful gain of the accused and for causing wrongful loss to the complainant. The second accused is bound to act in terms of the agreement. But both the accused have committed breach of trust.

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The accused are liable to pay the money, which was paid by the complainant towards the kuri. Since the term expired, the amount is retained by the accused without any reason, thereby they committed misappropriation. For the criminal breach of trust committed by the second accused, the first accused also has a role and the first

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accused is bound to return the said amount which is collected. The first and second accused are “equally and severally responsible” for the offence committed. They cheated complainant and took over the partnership firm with the intention to have wrongful gain and executed an agreement with such intention. Thereby they have committed offences under Sections 406 and 420 I.P.C.

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The cause of action arose on 28/7/2001, when the accused called the complainant and told the complainant that he has to discharge the liability of the partnership, and if he is not discharging such liability, the creditors would be brought to his house and made to reside there and thereby criminally threatened the complainant. It also arose on 29/7/2001, the date on which the accused promised to pay the money which was liable to be paid to the complainant and thereafter.

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Crl.M.C.No.1386 of 2003

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The learned counsel for the petitioner submitted

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that no offence, either under Sections 406 or Section 420 I.P.C. is made out as per the allegations in the complaint.

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The cause of action itself arose, according to the complainant, as per paragraph 16 of the complaint, on the date on which the accused threatened the complainant stating that the complainant has the liability to pay off the debts, etc and also on the date on which the accused promised to pay the money which is liable to be paid to the complainant. The learned counsel for the respondents argued that the complaint has to be read as a whole and in which event, it will be disclosed that both the offences are made out. Therefore, the complaint cannot be quashed, it is submitted.

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In the light of the arguments advanced I have gone through the allegations in the complaint. On such perusal, I find that allegations in the complaint on the

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relevant aspects are not only vague but in some places, inconsistent also. It is stated in paragraph 6 that both the accused had taken over the partnership business at the same time. But it also appears from the allegations in the complaint that only first accused had taken over the partnership business (vide paragraph 4). It is stated therein that 19 partners had voluntarily retired from partnership leaving the first accused alone.

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At the same time in paragraph 6, it is stated that the partnership was taken over on the basis of an agreement executed by the second accused. It is alleged in paragraph 12 that the offence of criminal breach is committed by the second accused, but the first accused also has a share in the same. In what manner, he is liable is not specifically stated. Curiously, it is also alleged in paragraph 12 that the first and the second accused are “equally and severally responsible” for the commission of offence.

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Crl.M.C.No.1386 of 2003

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In paragraph 10 an allegation is made that the agreement executed by the second accused is still in force and the second accused has a “statutory charge” to act in accordance with the agreement. It is further alleged that the first accused was aiding the second accused. There is nothing in the entire complaint to show that at any point of time any property was “entrusted with either the first or the second accused”. It is only stated that the partnership business was taken over by the accused on the basis of an agreement executed by the second accused on 30/12/1992.

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It appears that this is a case where there was a partnership business conducted by 20 partners and out of these partners, 19 have retired and the partner left behind was conducting the business on the basis of an agreement. Question of entrustment of property may not arise, since the complainant has no case that such business was being conducted on behalf of the complainant or other partners or

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that there was an agreement by which the accused has to act only in accordance with the agreement which is executed etc.

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It is also stated in paragraph 2 that the partnership business is being conducted by both the accused as Managing partner and the partner. At the same time in subsequent paragraphs, allegations made are to the effect that the second accused is running the business and the first accused is only helping her and that the offence of criminal breach of trust was committed by the second accused and that first accused has also a share, etc.

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A reading of Section 405 shows that to constitute offence of criminal breach of trust, there must not only be an entrustment of the property or with a dominion over the property but it must be established that accused have dishonestly used or disposed of that property in violation of any direction or any legal contract, express or implied,

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which is made touching the discharge of such trust. On a reading of the whole complaint, I could not come across any allegation which will constitute an entrustment or any other ingredients of the offences allegedly committed.

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There is nothing in the complaint to attract any of the ingredients of Section 405 and allegation relating to the basic element required for the offence under Section 406 namely, “entrustment” is absolutely absent in complaint. An argument is raised by learned counsel for respondents that paragraph 12 of the complaint specifically refers to entrustment of an installment of the kuri of which the complainant is the subscriber, but the amount was not paid to him after the expiry of the kuri term. Thereby the accused have committed criminal breach of trust. On going through paragraph 12, I find that there is absolutely no allegation that any amount was “entrusted” by the complainant with the accused.

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It is only stated that by the expiry of the term of kuries, the complainant is entitled to get the amount. Such allegations will not suffice to infer that any amount was “entrusted” with the complainant. The complainant was only stating about his entitlements to get some amount. It is also alleged that such amount was retained by the accused and thereby there is dishonest misappropriation from the side of the accused. I do not understand how from these allegations, the court can infer or presume that an offence under Section 405 is attracted. Merely on the allegation that a person is entitled to get back an amount, the court cannot presume or infer that there is breach of trust.

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Now coming to the allegation of cheating also, I do not find any allegations in the complaint, which will constitute an offence under Section 420 I.P.C. The offence of cheating is defined under Section 415 of I.P.C. But none

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of the allegations in the complaint would disclose any of the ingredients of the offence under Section 415 I.P.C. A bare allegation that the accused “cheated” will not be sufficient for the court to proceed against him under Section 415 I.P.C. The element of deception, intentional inducement etc would be necessary to constitute an offence.

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On a reading of the complaint as a whole, it only appears that the accused did not act in terms of an agreement which was allegedly executed by second accused. The mere violation of an agreement may not be sufficient to attract an offence under Section 420 or 406 I.P.C. Apart from this, even going by the allegations in the complaint, it appears to be a case in which a new partnership is constituted and the complainant retired voluntarily from the earlier partnership firm which was run by the accused as well as the complainant along with a few others. In short, the allegations in the complaint are not

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only vague with respect to the ingredients of the offence alleged but, those are also inconsistent and in such circumstances, in the interest of justice and to prevent abuse of process of court, I find that the complaint is liable to be quashed.

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In the result the following order is passed:-

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1. The complaint, Annexure A is quashed and petitioners shall not be proceeded against on basis of Annexure-A complaint.

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1. The proceedings initiated against the petitioners, on the basis of Annexure -A shall be dropped.

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This petition is allowed.

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K.HEMA, JUDGE

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skj.

Jolly Paul v. State of Kerala

Case brief

What is this about?

What did the court decide?

Jolly Paul v. State of Kerala

Case brief

What is this about?

What did the court decide?

What the court decided

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