IMPORTANT POINT
A simple breach of contract would not constitute an offence under Section 406 or Section 420, IPC.

JUDGMENT

S.B. Sinha, J.—

1. Leave granted.

2. Whether breach of contract of an agreement for sale would constitute an offence under Section 406 or Section 420 of the Indian Penal Code is the question involved herein.

3. It arises in the following factual background:

Appellant is the owner of some agricultural lands. He entered into an agreement for sale with the respondent No.2 agreeing to sell 13 acres of land at the rate of Rs.4,70,000/- per acre. Allegedly, respondent No.2 is said to be a property dealer. He paid a sum of Rs.7,00,000/- towards advance to the appellant. A sum of Rs.14,20,000/- was furthermore paid to the appellant within a period of seven months from the date of execution of the said sale agreement.

4. Inter alia, on the premise that the second respondent was unable to pay the balance amount of consideration, the appellant executed a deed of sale in favour of Balbir Singh and Mohinder Singh. Whereas the case of the appellant is that it was at the instance of the respondent No.2, the said deed of sale was executed, the latter contends that the appellant did so without calling upon him to pay the balance amount and as such he committed an offence under Section 406 and Section 420 of the Indian Penal Code. Pursuant to or in furtherance of the agreement dated 12.05.2006, the appellant paid a sum of Rs.7,20,000 to the respondent No.2 at the time of cancellation of agreement of sale. Appellant furthermore stated that another agreement was entered into on or about 10.6.2006 pursuant whereto the parties have agreed to cancel the agreement of sale itself and it was furthermore agreed that in the event the appellant fails to refund the amount, the respondent will take recourse to law.

5. Appellants in this Special Leave Petition, in no uncertain terms, stated that they were ready and willing to pay the amount on due date.

6. Indisputably, the respondent No.2 lodged a first information report on or about 7.9.2006, inter alia, alleging :

“... we got a call from Surjit Singh, who said us to come tomorrow i.e. 12.05.2006 to execute the sale deed and if they could not execute the sale deed they will return our money. We again reached Tapa Mandi on 12.05.2006. The above said accused were called at the home of Shri Harbans Singh & they said that they don’t want to sell their land, so you take your money back. After this we & accused persons came at Tapa Mandi where cancellation deed was executed & accused have returned us Rs.7,80,000/- & remaining amount of Rs.14,20,000/- was promised to return till 10.06.2006 & it was also written, if accused persons could not return Rs.14,20,000/- till 10.06.2006, the agreement to sell will remain intact and amount of Rs.7,80,000/- given by the accused will be forfeited in favour of the complainant. The accused persons did not return the money of Rs.14,20,000/- till 10.06.2006, so we reached at their home at village Khokhar on 10.06.2006. The accused has promised us to give that amount on 20.06.2006. But accused still did not return the amount, when we reached on 20.06.2006 to take our money, we came to know that accused have sold the land which was subject matter of the agreement, to Balbir Singh, Mohinder Singh sons of Mohar Singh son of Rulia Singh etc. R/o village Tanola, District Sangrur and got the sale deed executed in their favour on 10.05.2006. After that, we got a copy of registry with the help of an Advocate & we came to know that the land subject matter of agreement with us was sold. After that, one application was given to sub-registrar, Rampura Phul on 23.06.2006 to mark my presence and again on 26.06,2006 one application was given to mark my presence being holiday on 24/25.06.2006 & marked my presence. We have taken the amount with us to get the sale deed executed. Accused neither returned our amount of Rs.22,00,000/- nor executed the sale deed in our favour. Accused has committed fraud with us and grabbed our Rs.22.0 lacs & rather threatening to kill us if we have taken an