Dismissed

Stella Stephen v. State of Kerala

Kerala HC7 Dec 2016Crl.MC/3747/2016

Case brief

AI extract

What is this about?

The High Court quashed criminal proceedings against a petitioner who acted as a guarantor for her deceased husband's loan default. Finding that mere default by the primary borrower did not establish fraudulent intent or culpability for the guarantor, the court held the prosecution to be malicious and an abuse of process under Sections 406 and 420 IPC.

What did the court decide?

All further proceedings against the petitioner in C.C.No 691 of 2016 are quashed.

Stella Stephen Vs State of Kerala — Cheating and Forgery | Kerala HC (2016)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V

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WEDNESDAY, THE 7TH DAY OF DECEMBER 2016/16TH AGRAHAYANA, 1938

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Crl.MC.No. 3747 of 2016 ()

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CC. NO.691/2016 OF JUDICIAL FIRST CLASS MAGISTRATE COURT-III, THIRUVANANTHAPURAM. CRIME NO. 158/2003 OF CANTONMENT POLICE STATION, THIRUVANANTHAPURAM.

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PETITIONER/SECOND ACCUSED:

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STELLA STEPHEN, AGED 51 YEARS, W/O.LATE STEPHEN FERNANDEZ, TC 33/699-1, S.S. COTTAGE, KOCHUVELI, TITANIUM P.O., THIRUVANANTHAPURAM-695 021.

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BY ADVS.SRI.RAM MOHAN.G.,

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SRI.G.P.SHINOD, SRI.GOVIND PADMANAABHAN, SRI.AJIT G.ANJARLEKAR.

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RESPONDENTS/STATE, INVESTIGATING OFFICER:

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1. STATE OF KERALA, REPRESENTED BY ITS PUBLIC PROSECUTOR AT THE HIGH COURT OF KERALA, ERNAKULAM-682 031.

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2. THE SUB INSPECTOR CANTONMENT POLICE STATION, THIRUVANANTHAPURAM-695 001.

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....2/-

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Crl.MC.No. 3747 of 2016

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***** ADDL. R3 IMPLEADED

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3. INTEGRATED FINANCE COMPANY LTD., THIRUVANANTHAPURAM, KARIMPANAL STATUE AVENUE, STATUTE, THIRUVANANTHAPURAM, REPRESENTED BY ITS RECOVERY EXECUTIVE SHRI S. VINEETH BEN, S/O. SATHYA DAS, RESIDING AT ''ARADHANA'', AVITTOM ROAD, KANNAMMOOLA, MEDICAL COLLEGE P.O., THIRUVANANTHAPURAM.

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*** ADDL. R3 IS IMPLEADED AS PER ORDER DATED 06/10/2016 IN CRL.MA NO.10242/2016.**

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R1 & R2 BY PUBLIC PROSECUTOR SRI.AMJAD ALI. ADDL. R3 BY ADVS. SRI.V.ABRAHAM MARKOS, SRI.ABRAHAM JOSEPH MARKOS, SRI.ISAAC THOMAS, SRI.HARAN THOMAS GEORGE, SRI.GOVIND VIJAYAKUMARAN NAIR.

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THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON 07-12-2016, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:

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rs.

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Crl.MC.No. 3747 of 2016

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APPENDIX

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PETITIONER'S ANNEXURES:-

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ANNEXURE A : A CERTIFIED COPY OF THE FINAL REPORT IN CRIME NO.158 OF 2003 OF CANTONMENT POLICE STATION. ANNEXURE B CERTIFIED COPY OF THE CMP NO.1719/2003 BEFORE THE COURT OF THE JUDICIAL FIRST CLASS MAGISTRATE-II, THIRUVANANTHAPURAM.

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ANNEXURE C A CERTIFIED COPY OF THE FIR IN CRIME NO.158/2003 OF CANTONMENT POLICE STATION.

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RESPONDENT'S ANNEXURES:- NIL.

//TRUE COPY//

P.S. TO JUDGE

rs.

RAJA VIJAYARAGHAVAN.V, J

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----------------------------------------

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Crl.M.C. No.3747 of 2016

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-----------------------------------------

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Dated this the 7^th day of December, 2016

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O R D E R

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~~~~~~~~

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1.The petitioner herein is the 2^nd accused in C.C.No.691 of 2016 on the file of the Judicial Magistrate of First ClassIII, Thiruvananthapuram. Her husband, who is now no more, was arrayed as the first accused. The said proceeding has been instituted by the additional 3^rd respondent, a non-banking financial company engaged in money lending business.

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2.The allegation against the accused, briefly stated, is as follows :-

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The 1^st accused approached the additional 3^rd respondent and applied for a loan for purchasing a vehicle. After complying with all the procedural formalities the loan was disbursed. Towards security, the 1^st accused executed

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Crl.M.C.No.3747/2016

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a demand promissory note in favour of the financier. The petitioner herein stood as a guarantor. The 1^st accused was bound to repay the hire amount in 60 monthly installments. He paid 36 installments and thereafter committed default. Annexure-B complaint was consequentially preferred alleging commission of offence essentially under section 406 and 420 of the IPC. A reading of the complaint would reveal that the the 2^nd respondent had suffered a loss of Rs.4,18,202/- in the transaction .

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3.Heard the learned counsel appearing for the petitioner as well as the 3^rd respondent.

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4.The learned Counsel appearing for the petitioner submitted that the prosecution of the wife, for the default committed by her husband, who is now no more, consequent to an agreement for hire purchase, is a clear case of malicious and vexatious prosecution . According to

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the learned Counsel, the only act committed by the wife is that she had stood as a guarantor, which may attract a civil remedy, but by no stretch of imagination would drive her to face penal consequences. It is contended that there is nothing in the complaint which shows that the petitioner had fraudulent or dishonest intent at the inception.

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5.The learned counsel appearing for the 3^rd respondent refuted the submissions and contented that the offence will clearly be made out against the petitioner as well .

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6.I have considered the rival submissions and have gone through the materials on record.

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7.Admittedly the 1^st accused, who entered into the agreement with the financier is no more. There is no dispute with regard to the fact that the 1^st accused had remitted not less than 36 installments in terms of the hire purchase agreement. The role of the petitioner is that she

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had stood as a guarantor for her husband. The question is whether the same would attract the penal provisions as alleged .

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8.For the purpose of constituting an offence for criminal breach of trust and/or cheating, the ingredients thereof as contained in Sections 405 and 415 respectively must be borne out from the records.

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9.The punishment for criminal breach of trust as defined in section 405 of the IPC is provided in Section 406 of the IPC. Punishment for aggravated forms of criminal breach of trust is provided in Section 407 to Section 409.

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10.The terms of the section are very wide. It applies to one who is in any manner entrusted with property or dominion over property. The section provides inter alia, that if such a person dishonestly misappropriates or converts to his own use property entrusted to him, he commits criminal breach of trust. There are separate offences by which

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criminal breach of trust may be committed. This section

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requires:

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Entrusting any person with property or with dominion over property.

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That person entrusted (a) dishonestly misappropriates or converting to his own use that property; or (b) dishonestly using or disposing of that property or wilfully suffering any other person so to do in violation --

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(i) of any direction of law prescribing the mode in which such trust is to be discharged, or

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(ii) of any legal contract made touching the discharge of such trust.

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11.In Onkar Nath Mishra and Others v. State (NCT of

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Delhi) and Another [2008 (2) SCC 561], the Apex Court has held that in the commission of the offence of criminal breach of trust, two distinct parts are involved. The first consists of the creation of an obligation in relation to the property over which dominion or control is acquired by the accused. The second is misappropriation or dealing with

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the property dishonestly and contrary to the terms of the obligation created.

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12.By no stretch of imagination can it be held that the vehicle was entrusted with the dominion or control of the petitioner or that the petitioner had misappropriated the same dishonestly and contrary to the terms of the obligation. The petitioner was just the guarantor for the loan amount and nothing more .

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13.In so far cheating is concerned, the offence cannot be said to be made out unless the following ingredients are satisfied:

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i) deception of a person either by making a false or misleading representation or by other action or omission;

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(ii) fraudulently or dishonestly inducing any person to deliver any property; or

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(iii) To 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.'

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14.For the purpose of constituting an offence of cheating,

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the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. Even in a case where allegations are made in regard to failure on the part of the accused to keep his promise, in absence of a culpable intention at the time of making initial promise being absent, no offence under S.420 of the Indian Penal Code can be said to have been made out. A guilty intention is an essential ingredient of the offence of cheating. In other words 'mens rea' on the part of the accused must be established before he can be convicted of an offence of cheating.

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15.In the present case, looking at the allegations in the complaint and also in the final report on the face of it, I am of the view that the ingredients of the offence are totally non existent. Excepting the bald allegations that

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the petitioner was a surety for the loan amount, there is not even a semblance of allegation attracting the offence The mere fact that the 1^st accused did not repay the loan will not make the petitioner culpable .

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16..On a perusal of the complaint and the final report, I have no doubt in my mind that the allegations levelled in the complaint and the charge-sheet, on the face of it, does not constitute or disclose any offence as alleged. I have no hesitation in my mind that if the prosecution is permitted to continue, it will be a clear case of abuse of powers of the Court. A frustrated financier, who was unable to realize the amount from the borrower, cannot be permitted to indulge in giving vent to his vindictiveness through a criminal proceeding against the wife of the borrower.

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17.In the aforesaid circumstances, I am of the considered view that the continuance of proceedings as against the

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petitioner is an abuse of process of law. This petition will stand allowed. All further proceedings against the petitioner in C.C.No 691 of 2016 on the file of the Judicial Magistrate of the First Class-III, Thiruvananthapuram are quashed .

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Sd/RAJA VIJAYARAGHAVAN.V. JUDGE

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ps/2/12/16

Stella Stephen v. State of Kerala

Case brief

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Stella Stephen v. State of Kerala

Case brief

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