Penal Code, 1860 — Ss. 420, 415 — Cheating — Mens rea at inception — Not made out To attract S. 420 IPC, there must be fraudulent or dishonest intention at the time of making the promise/representation. On a plain reading of the complaint, no allegation (even implied) of intentional deception or dishonest/fraudulent intention at the inception of the partnership or at the time of inducing investment was disclosed. Mere allegation that the accused later sold the partnership property to a third party does not satisfy the requirement of “cheating and dishonest inducement to deliver property”. Held, offence under S. 420 IPC not made out; continuation of proceedings on that count amounts to abuse of process.

A. Penal Code, 1860 — Ss. 420, 415 — Cheating — Mens rea at inception — Not made out

• To attract S. 420 IPC, there must be fraudulent or dishonest intention at the time of making the promise/representation.

• On a plain reading of the complaint, no allegation (even implied) of intentional deception or dishonest/fraudulent intention at the inception of the partnership or at the time of inducing investment was disclosed.

• Mere allegation that the accused later sold the partnership property to a third party does not satisfy the requirement of “cheating and dishonest inducement to deliver property”.

• Held, offence under S. 420 IPC not made out; continuation of proceedings on that count amounts to abuse of process.

B. Penal Code, 1860 — Ss. 406, 405 — Criminal breach of trust — Entrustment & dishonest misappropriation — Not made out

• For S. 406 IPC, complainant must show:
  (i) Entrustment of property; and
  (ii) Dishonest misappropriation or conversion in breach of such entrustment.

• Complaint does not disclose how the disputed property was “entrusted” to the appellant, nor how it was subsequently dishonestly misappropriated.

• Partnership deed (01-10-1976) showed the land originally belonged to the appellant, who agreed to bring it into the firm; supplementary deed (03-04-1981) clearly recorded that, on expiry of FCI lease (01-06-1993), the land with constructions would revert to the appellant.

• Complainant having concurred in reversion under supplementary deed cannot approbate and reprobate by later alleging misappropriation of the same property.

• Held, ingredients of S. 406 IPC not satisfied.

C. Penal Code, 1860 — Ss. 406 vs 420 — Mutual exclusivity of factual foundation

• Relying on Delhi Race Club (1940) Ltd. v. State of U.P., (2024) 10 SCC 690, SC reiterates:

  • In criminal breach of trust, property is lawfully entrusted and later dishonestly misappropriated.

  • In cheating, the property is obtained ab initio by deception/fraudulent inducement.

• The two offences are conceptually distinct and antithetical; both cannot ordinarily co-exist on the same factual substratum.

• Complaint simultaneously invoking both Ss. 406 and 420, without clear factual foundation for either, was held legally unsustainable.

D. Criminal Procedure Code, 1973 — S. 482 — Quashing of complaint — Bhajan Lal categories

• Power under S. 482 CrPC can be exercised where:

  • Allegations, even if taken at face value, do not constitute any offence; or

  • Proceedings are manifestly attended with mala fides or used for private vendetta (State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335, para 102, applied).

• Here, even if all averments in the complaint are accepted as true, no prima facie offence under Ss. 406/420 IPC is made out.

• Given the existing civil proceedings (Title Suit No. 160 of 2012 for setting aside sale deed and related reliefs) and the nature of the dispute, the criminal complaint was held to be a misuse of the criminal process to exert pressure.

• Held, case squarely falls within Bhajan Lal categories; complaint and all consequential proceedings liable to be quashed.

E. Criminal law vs civil disputes — Parallel remedies — Abuse of process

• Though there is no absolute bar on simultaneous civil and criminal proceedings, where the dispute is essentially civil in nature and no criminal ingredients are disclosed, criminal law cannot be used as a coercive tool for enforcing civil rights.

• Complainant already pursuing civil remedy for declaration, cancellation of sale deed and injunction.

• In absence of mens rea/entrustment satisfying penal provisions, criminal prosecution cannot be permitted to continue.

F. Misuse of criminal justice system — Need for vigilance

• Referring to Vishal Noble Singh v. State of U.P., 2024 SCC OnLine SC 1680, Court notes increasing tendency to misuse criminal process for vested interests and oblique motives.

• Courts must be vigilant to nip such prosecutions in the bud, especially where serious allegations are made but not substantiated.

• Present complaint found to be mala fide and vindictive; continuation would result in undue harassment and unwarranted strain on criminal courts.

G. APEX COURT HELD 

• Impugned order of Gauhati High Court (13-02-2018) set aside.

• Complaint Case No. 3230c of 2013 dated 19-09-2013 and all consequent proceedings before SDJM (I), Kamrup, Gauhati quashed.

• Appeal allowed.