The
Indian Penal Code, 1860 – Section 420 - Mere failure to return the security deposit will not attract the offence of cheating.
If the complaint is read as a whole, the grievance of the complainant appears to be that the petitioner did not repay the amount of Rs.10,00,000/- inspite of the fact that he stopped supplying him the soft drink. This dispute between the petitioner and the complainant is essentially of a civil nature. Even if it is accepted that the petitioner was liable to repay the amount and that he did not repay the amount to the complainant, mere failure on his part in that regard will not attract the offence of cheating. Whether the entire amount of Rs.10,00,000/- is due from the petitioner to the complainant is a matter to be decided by the civil court. In these circumstances, the averments in the complaint, read as a whole, will not attract the offence of cheating which is punishable under Section 420 I.P.C. [Para 13]
The Indian Penal Code, 1860 – Sections 415 and 420 - Distinction between mere breach of contract and the offence of cheating.
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. 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 the promise subsequently such a culpable intention right at the beginning, that is, when he made the promise cannot be presumed.
Criminal Law - If a civil remedy is available, Court should not hesitate to quash criminal proceedings to prevent abuse of process of court.
Whether a complaint discloses a criminal offence or not depends upon the nature of facts alleged therein. Whether essential ingredients of criminal offence are present or not has to be judged from the facts alleged. A complaint disclosing a civil transaction may also have a criminal texture. What is to be considered is whether a dispute which is essentially of a civil nature is given a cloak of criminal offence. In such a situation, if a civil remedy is available, this Court should not hesitate to quash criminal proceedings to prevent abuse of process of court. [Para 15]
Referred to : Paramjeet Batra v. State of Uttarakhand, (2013) 11 SCC 673
The Code of Criminal Procedure, 1973 - Section 482 - Where the ingredients required to constitute the offences alleged are not made out from a bare reading of the complaint, the continuation of the criminal proceedings will constitute an abuse of the process of the court.
The jurisdiction under Section 482 of the Code has to be exercised with care. In the exercise of its jurisdiction, this Court can examine whether a matter which is essentially of a civil nature has been given a cloak of a criminal offence. Where the ingredients required to constitute the offences alleged are not made out from a bare reading of the complaint, the continuation of the criminal proceedings will constitute an abuse of the process of the court. True, while exercising its jurisdiction under Section 482 of the Code, this Court has to be cautious. This power is to be used sparingly and only for the purpose of preventing abuse of the process of any court or otherwise to secure ends of justice. [Para 14]
Facts of the Case
The basic grievance of the complainant is that the petitioner has not repaid the amount of Rs.10,00,000/- given as security deposit. Even as per the allegations in the complaint, the amount of Rs.10,00,000/- was given by the complainant to the petitioner as security deposit for appointing the complainant as the distributor of the soft drink in two districts. There is no specific allegation in the complaint that the petitioner did not appoint the complainant as the distributor of the soft drink in the two districts after receiving the amount from him. There is also no allegation in the complaint that the petitioner did not supply at all soft drink to the complainant. The allegation in the complaint is only to the effect that the petitioner did not supply the soft drink as per the order given by the complainant. Even if it is accepted that the complainant had given an amount of Rs.10,00,000/- to the petitioner, whether repayment of the aforesaid amount by the petitioner to the complainant had become due is a matter which could be decided by the civil court on interpretation of the terms in the agreement between the two parties. The dispute between the petitioner and the second respondent/complainant is essentially of a civil nature and that the complainant has given it a cloak of criminal offence. The facts alleged in the complaint, if considered as a whole, do not attract the offence punishable under Section 420 I.P.C. Continuation of the proceedings against the petitioner would be an abuse of process of court.
R. NARAYANA PISHARADI, J.
Crl.M.C.No.3479 of 2015
Dated this the 27th day of May, 2019
AGAINST THE ORDER/JUDGMENT IN CC
2525/2012 of JUDICIAL MAGISTRATE OF FIRST CLASS ,TIRUR CRIME NO. 77/2012 OF
Tirur Police Station , Malappuram
P. Subash Chandran v. State of Kerala
PETITIONER/ACCUSED:
BY ADV. SRI.BIJU BALAKRISHNAN
RESPONDENTS/STATE
AND DE FACTO COMPLAINANT: BY ADV.
SMT.N.DEEPA SRI.E.C.BINEESH PUBLIC PROSECUTOR
O R D E R
The
petitioner is the accused in the case C.C.No.2525/2012 pending before the Court
of the Judicial First Class Magistrate-I, Tirur. The petition is filed by him
to quash the proceedings in the case, by invoking the power of this Court under
Section 482 of the Code of Criminal Procedure, 1973 (hereinafter referred to as
'the Code').
2. The
prosecution against the petitioner was initiated on the basis of the complaint
filed by the second respondent before the Court of the Judicial First Class
Magistrate-I, Tirur which was forwarded to the police under Section 156(3) of
the Code for investigation. On the basis of the aforesaid complaint, Crime
No.77/2012 (Annexure-A2) of Tirur police station was registered against the
petitioner for the offence punishable under Section 420 of the Indian Penal
Code. After completing the investigation, the police filed Annexure-A3 final
report (charge sheet) against the petitioner for the aforesaid offence. The
learned Magistrate has taken cognizance of the offence and numbered the case as
C.C.No.2525/2012.
3. The
material allegations in the complaint (Annexure-A1) filed by the second
respondent (hereinafter referred to as 'the complainant') against the
petitioner are as follows: The petitioner made the complainant to believe that
he is the distributor of the soft drink by name “Pep Up Black Label” and that
the complainant would be appointed as the distributor of the aforesaid drink in
Malappuram District if he gave Rs.5,00,000/- as security deposit. On the basis
of this representation made by the petitioner, the complainant gave him an
amount of Rs.5,00,000/- as security deposit. The petitioner also told the
complainant that distributors for the drink were not available in Kozhikode
District and he demanded an amount of Rs.5,00,000/- as security deposit for
appointing the complainant as the distributor of the drink in Kozhikode
District. Thus, the complainant gave a total amount of Rs.10,00,000/- as
security deposit for appointing him as the distributor of the drink in
Malappuram and Kozhikode Districts. On many occasions, the petitioner did not
use to supply soft drink as per the order given by the complainant. The
complainant had told the petitioner that if he did not supply the drink as per
the order given, it could not be sold by him. Even then, the petitioner did not
send the complainant the stock required for supply in the aforesaid two
districts. Then, the complainant demanded the petitioner to return the amount
of Rs.10,00,000/- given as security deposit. However, the petitioner did not
repay the amount of Rs.10,00,000/- to the complainant and he has cheated the
complainant.
4. Heard
learned counsel for the petitioner and the learned Public Prosecutor and also
the learned counsel for the second respondent/complainant.
5. Learned
counsel for the petitioner contended that the allegations in the complaint are
not true and that the petitioner is not liable to pay any amount to the
complainant and that the dispute between him and the complainant is essentially
of a civil nature. Learned counsel for the petitioner also contended that the
real intention of the complainant is to extract money from him with the help of
the police.
6. On
the other hand, learned counsel for the second respondent/complainant contended
that whether the petitioner had any dishonest intention or not is a matter to
be decided after adducing evidence in the case and the proceedings against the
petitioner cannot be quashed at the threshold.
7. The
allegation against the petitioner is that he has committed the offence
punishable under Section 420 I.P.C. It would thus be necessary to examine the
ingredients of the above offence and whether the allegations made in the
complaint, read on their face, attract that offence.
8. Section
415 of the Indian Penal Code reads as follows:
"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
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".
9. The
ingredients to constitute an offence of cheating are as follows: (i) there
should be fraudulent or dishonest inducement of a person by deceiving him; (ii)
(a) 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 (b) 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
(iii) in cases covered by (ii) (b) 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. A fraudulent or dishonest inducement is an
essential ingredient of the offence of cheating.
10. Section
420 of the Indian Penal Code reads as follows:
"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."
11.
The ingredients to constitute an offence under Section 420 I.P.C are the
following: (i) a person must commit the offence of cheating under Section 415
I.P.C; and (ii) the person cheated must be dishonestly induced to (a) deliver
property to any person; or (b) make, alter or destroy valuable security or
anything signed or sealed and capable of being converted into valuable
security. Cheating is an essential ingredient for an act to constitute the
offence under Section 420 I.P.C.
12. It
has to be kept in mind that there is distinction between mere breach of
contract and the offence of cheating. 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. 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 the promise
subsequently such a culpable intention right at the beginning, that is, when he
made the promise cannot be presumed.
13. The
basic grievance of the complainant is that the petitioner has not repaid the
amount of Rs.10,00,000/- given as security deposit. Even as per the allegations
in the complaint, the amount of Rs.10,00,000/- was given by the complainant to
the petitioner as security deposit for appointing the complainant as the
distributor of the soft drink in two districts. There is no specific allegation
in the complaint that the petitioner did not appoint the complainant as the
distributor of the soft drink in the two districts after receiving the amount
from him. There is also no allegation in the complaint that the petitioner did
not supply at all soft drink to the complainant. The allegation in the
complaint is only to the effect that the petitioner did not supply the soft
drink as per the order given by the complainant. Even if it is accepted that
the complainant had given an amount of Rs.10,00,000/- to the petitioner,
whether repayment of the aforesaid amount by the petitioner to the complainant
had become due is a matter which could be decided by the civil court on
interpretation of the terms in the agreement between the two parties. If the
complaint is read as a whole, the grievance of the complainant appears to be
that the petitioner did not repay the amount of Rs.10,00,000/- inspite of the
fact that he stopped supplying him the soft drink. This dispute between the
petitioner and the complainant is essentially of a civil nature. Even if it is
accepted that the petitioner was liable to repay the amount and that he did not
repay the amount to the complainant, mere failure on his part in that regard
will not attract the offence of cheating. Whether the entire amount of
Rs.10,00,000/- is due from the petitioner to the complainant is a matter to be
decided by the civil court. In these circumstances, I am of the considered view
that the averments in the complaint, read as a whole, will not attract the
offence of cheating which is punishable under Section 420 I.P.C.
14. The
jurisdiction under Section 482 of the Code has to be exercised with care. In
the exercise of its jurisdiction, this Court can examine whether a matter which
is essentially of a civil nature has been given a cloak of a criminal offence.
Where the ingredients required to constitute the offences alleged are not made
out from a bare reading of the complaint, the continuation of the criminal
proceedings will constitute an abuse of the process of the court. True, while
exercising its jurisdiction under Section 482 of the Code, this Court has to be
cautious. This power is to be used sparingly and only for the purpose of
preventing abuse of the process of any court or otherwise to secure ends of
justice.
15. Whether
a complaint discloses a criminal offence or not depends upon the nature of
facts alleged therein. Whether essential ingredients of criminal offence are
present or not has to be judged from the facts alleged. A complaint disclosing
a civil transaction may also have a criminal texture. What is to be considered
is whether a dispute which is essentially of a civil nature is given a cloak of
criminal offence. In such a situation, if a civil remedy is available, this
Court should not hesitate to quash criminal proceedings to prevent abuse of
process of court (See Paramjeet Batra v. State
of Uttarakhand: (2013) 11 SCC 673).
16. In
the instant case, this Court is satisfied that the dispute between the
petitioner and the second respondent/complainant is essentially of a civil
nature and that the complainant has given it a cloak of criminal offence. The
facts alleged in the complaint, if considered as a whole, do not attract the
offence punishable under Section 420 I.P.C. Continuation of the proceedings
against the petitioner would be an abuse of process of court.
17. Consequently,
the petition is allowed. The entire proceedings against the petitioner in the
case C.C.No.2525/2012 pending before the Court of the Judicial First Class
Magistrate-I, Tirur, which are based on Annexure- A3 final report, are hereby
quashed.
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