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CASE NO.: Appeal (crl.)  980 of 2007

PETITIONER: Veer Prakash Sharma

RESPONDENT: Anil Kumar Agarwal & Anr.

DATE OF JUDGMENT: 01/08/2007

BENCH: S.B. Sinha & Harjit Singh Bedi

JUDGMENT: J U D G M E N T [Arising out of SLP (Crl.) No. 2272 of 2006] S.B. SINHA,  J :

1.      Leave granted.          2.      The parties hereto entered into a contract for sale and purchase of  welding rods.  Appellant allegedly did not pay some amount due from him  towards supply of the said article.  He issued two cheques for a sum of Rs.  3,559/- and Rs. 3,776/- in the year 1983.  The said cheques were  dishonoured.  Alleging that by reason of such act, the appellant has  committed offences under Sections 406, 409, 402 and 417 of the Indian  Penal Code, a complaint petition was filed by the First Respondent in the  Court of Special Judicial Magistrate, Rampur which was marked CC No.  132 of 1986.  The principal allegation made therein against the appellant  reads as under:

\023That applicant, regarding these cheques and  payment of money, wrote several times to accused  and also sent his representative.  But he kept on  making excuses in making payment.  At last he  told on 19.12.1985 that he had issued fabricated  cheques knowingly with an intention to cheat him  and grab his money.  He would not pay his money,  he is free to take any action, whatever he likes.\024

3.      In his statement under Section 200 of the Code of Criminal Procedure,  Respondent No. 1 alleged:

\023...Both the Cheques were, thus, dishonoured.  I  also wrote to accused regarding dishonour of  Cheques, even I, myself, visited him and also sent  to my Representative, but the accused kept on  making excuses for making the payment.  At last,  on 19.12.1985, he told that he had knowingly  issued these false and fabricated Cheques only to  deceive and grab his money.  He further told that  he shall never pay back his money.  You can do  whatever you like.  I went to lodge the Report, but  Thana Officials did not note down the Report.\024

4.      One of the witnesses Shri Rajendra Kumar Saxena in his statement  alleged:

       \023I was working as Supervisor in Hira

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Electronics during 1983.  Accused Vir Prakash has  purchased Electric Rods from the company worth  Rs. 3599.33 P and Rs. 3776.73 P.  Money was paid  later on through Bank Cheques both cheques were  dishonored by Bank.  When accused was later on  asked for the payment of the amount taken accused  refused to pay and said that he had knowingly  issued the fabricated cheques to deceive and grab  the money.  You can do what you like.\024

5.      Another witness A. Khalik also made similar statements which were  recorded in the following terms:

       \023Stated on oath that I was an employee of  Hira Electronics since 1983.  Accused Vir Prakash  has purchased articles worth Rs. 3599.33 P and Rs.  3776.73 P. in 1983 for which payment was made  through Bank.  Both cheques issued by the accused  were dishonored. On when reminder for payment  is made to the accused then he said that \023I have  knowingly issued the fabricated cheques to cheat  him and grab his money.  I will not pay.\024

6.      Cognizance was taken against the appellant.  He was summoned.  An  application was filed by him on 25.08.1987 for quashing of the said criminal  proceeding before the High Court.  A learned Single Judge of the Allahabad  High Court by reason of the impugned order dated 3.01.2006 while refusing  to exercise his jurisdiction stated:

\023As the allegations against the applicant are factual  in nature, that cannot be adjudicated in the present  application, there is no ground for quashing  criminal proceedings.  Stay order, if any, stands  vacated.  The trial court is directed to conclude the  trial expeditiously.\024

7.      The principle underlying exercise of jurisdiction by the High Court  under Section 482 of the Code of Criminal Procedure is now well-settled  viz. that the allegations contained in the complaint petition even if given face  value and taken to be correct in its entirety do not disclose an offence or not  is the question.   

8.      The dispute between the parties herein is essentially a civil dispute.   Non-payment or under-payment of the price of the goods by itself does not  amount to commission of an offence of cheating or criminal breach of trust.   

       No offence, having regard to the definition of criminal breach of trust  contained in Section 405 of the Indian Penal Code can be said to have been  made out in the instant case.   

       Section 405 of the Indian Penal Code reads, thus:

\023Whoever, 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".\024

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       Neither any allegation has been made to show existence of the   ingredients of the aforementioned provision nor any statement in that behalf  has been made.                    Ordinarily, bouncing of a cheque constitutes an offence under Section  138 of the Negotiable Instruments Act.  No complaint thereunder had been  taken.   

9.      We are, therefore, left only with the question as to whether in a  situation of this nature any offence of cheating can be said to have been   made out.   

       Section 415 of the Indian Penal Code defines cheating to mean:

\023Whoever, 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 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".

       In Hridaya Ranjan Prasad Verma and Others v. State of Bihar and  Another [(2000) 4 SCC 168], this Court held: \02314. On a reading of the section it is manifest that  in the definition there are set forth two separate  classes of acts which the person deceived may be  induced to do. In the first place he may be induced  fraudulently or dishonestly to deliver any property  to any person. The second class of acts set forth in  the section is the doing or omitting to do anything  which the person deceived would not do or omit to  do if he were not so deceived. In the first class of  cases the inducing must be fradulent or dishonest.  In the second class of acts, the inducing must be  intentional but not fraudulent or dishonest. 15. In determining the question it has to be kept in  mind that the distinction between mere breach of  contract and the offence of cheating is a fine one.  It depends upon the intention of the accused at the  time to inducement which may be judged by his  subsequent conduct but for this subsequent  conduct is not the sole test. Mere breach of  contract cannot give rise to criminal prosecution  for cheating unless fraudulent or dishonest  intention is shown right at the beginning of the  transaction, that is the time when the offence is  said to have been committed. Therefore it is the  intention which is the gist of the offence. To hold a  person guilty of cheating it is necessary to show  that he had fraudulent or dishonest intention at the  time of making the promise.  From his mere failure  to keep up promise subsequently such a culpable  intention right at the beginning, that is, when he  made the promise cannot be presumed.\024         [See also Indian Oil Corpn. v. NEPC India Ltd. and Others  (2006) 6  SCC 736]

       The ingredients of Section 420 of the Indian Penal Code are as  follows :

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       i)      Deception of any persons;         ii)     Fraudulently or dishonestly inducing any person to deliver any                   property; or         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.   

       No act of inducement on the part of the appellant has been alleged by  the respondent.  No allegation has been made that he had an intention to  cheat the respondent from the very inception.   

       What has been alleged in the complaint petition as also the statement  of the complainant and his witnesses relate to his subsequent conduct.  The  date when such statements were allegedly made by the appellant had not  been disclosed by the  witnesses of the complaints.  It is  really absurd to  opine that any such statement would be made by the appellant before all of  them at the same time and that too in his own district.  They, thus, appear to  be wholly unnatural.   

       In law, only because he had issued cheques which were dishonoured,  the same by itself would not mean that he had cheated the complainant.   Assuming that such a statement had been made, the same, in our opinion,  does not exhibit that there had been any intention on the part of the appellant  herein to commit an offence under Section 417 of the Indian Penal Code.

10.     Furthermore, admittedly, their residences are in different districts.   Whereas the appellant is a resident of the district of Ajamgarh, the  respondent is a resident of the district of Rampur.  Cheques were admittedly  issued by the appellant at his place.  There is nothing on record to show that  any part of the cause of action arose within the jurisdiction of the court  concerned.  Even if such statements had been made, the same admittedly  have been made only at the place where the appellant resides. The learned  Magistrate, therefore, had no jurisdiction to issue the summons.  [See  Mosaraf Hossain Khan v. Bhagheeratha Engg. Ltd. and Others, (2006) 3  SCC 658]

11.     For the reasons aforementioned, the impugned judgment is set aside.   The order taking cognizance is quashed.  The appeal is allowed.  In the facts  and circumstances of the case, no offence is made out.