IMPORTANT POINTS
For quashing the order framing charge the High Court should not examine quality or quantity of evidence.
Mere breach of a promise, agreement or contract does not constitute the offence of the criminal breach of trust.
Civil disputes like breach of contractual obligations should not be criminalized.

Headnote:(a) Code of criminal Procedure, 1973 – Sections 228 and 482 – Framing of charge and quashing thereof – Framing of charge is at initial stages of trial and based on prima facie satisfaction of court about the offence – Therefore for quashing the same High Court should not examine quality or quantity of evidence – Enquiry must be limited to a prima facie examination. (Para 11)
       1977 CriLJ 1606 – Relied upon
       (b) Indian Penal Code, 1860 – Sections 405 and 406 – Difference between simple payment/investment of money and entrustment of money or property – Mere breach of a promise, agreement or contract does not constitute the offence of the criminal breach of trust u/s 405 – Instantly respondent no. 2 gave a loan to appellant – It is not entrustment of property attracting sections 405 and 406. (Para 12, 13)
       (c) Indian Penal Code, 1860 – Sections 415 and 420 – Distinction mere breach of contract and cheating – Depends upon fraudulent inducement and mens rea – Instantly appellant not able to repay the loan for respondent 2 has filed summary civil suit – Held, mere inability of appellant to return the loan amount cannot give rise to criminal prosecution for cheating – Civil disputes like breach of contractual obligations should not be criminalized. (Para 14, 15)
       (2000) 4 SCC 168; (2012) 10 SCC 303 – Relied upon
       (d) Administration of justice – Judicial propriety – Courts should restrain from making such general observations at initial stage of the criminal proceeding, as they may have had a bearing on the adjudication of the trial. (Para 17)
       Facts of the case:
       The respondent no. 2-complainant is the director of a money lending company transferred Rs. 27,00,000/- as a loan, which was to be repaid by the appellant within a year with interest. Thereafter, the appellant has not repaid the amount back to the respondent no. 2. Respondent no. 2 when approaching appellant for repayment was threatened with dire consequences. Thereafter, the respondent no. 2 filed a complaint based on which the FIR bearing was filed under Section 406, 409, 417, 420, 294(b) and 506(2) of IPC. The appellant preferred an application under Section 482 of the Cr.P.C for the quashing of the FIR.
       The charge sheet came to be filed against the appellant under Sections 406, 420 and 417 of IPC. The appellant filed an application seeking amendment of the prayer in Criminal Miscellaneous Application wherein he sought for the inclusion of prayer seeking to quash and set aside the charge sheet and the charges framed by the Metropolitan Magistrate and all further proceeding carried out in Criminal Case no. 388/2012 pending before the Additional Metropolitan Magistrate.
       The High Court dismissed the quashing petition preferred by the appellant and directed the trial court to complete the trial within three months.
       Finding of the Court:
       Civil disputes like breach of contractual obligations should not be criminalized.
       The observations made in paragraphs 42 and 43 of the impugned judgment stand expunged.
       Result: Appeal allowed.

JUDGMENT :

N.V. Ramana, J.

Leave granted.

2. The present appeal is preferred against the impugned judgment, dated 12.04.2018, passed by the High Court of Gujarat, in Criminal Miscellaneous Application No. 4033 of 2012, wherein the High Court has dismissed appellant's application seeking quashing of the order framing the charges dated 04.12.2013 by the Additional Chief Metropolitan Magistrate in Criminal Case No. 388 of 2012.

3. It is pertinent to note the facts giving rise to the appeal in a detailed manner. The respondent no. 2-complainant is the director of a money lending company by the name of Dharshan Fiscal Pvt. Ltd. The appellant, who is a retired bank employee, approached the complainant's company in the month of January 2008 for a loan of Rs. 27,00,000/-. Accordingly, the respondent no. 2 transferred the funds as a loan, which was to be repaid by the appellant within a year with interest. Thereafter, the appellant has not repaid the amount back to the respondent no. 2. Further, respondent no. 2 alleged that when he approached the appellant, he was threatened by the appellant with dire consequences. Thereafter, the respondent no. 2 filed a complaint based on which the FIR bearing I/C.R. No. 22/2012, dated 25.01.2012, was filed before the Kagdapith Police Station, Ahmedabad, against the present appellant under Section 406, 409, 417, 420, 294(b) and 506(2) of IPC. On 23.02.2012, the appellant was enlarged on bail by the High Court after being arrested on 29.01.2012. The appellant preferred an application under Section 482 of the Cr.P.C for the quashing of the FIR bearing I/C.R No. 22/2012.

4. The charge sheet No. 28 of 2012 dated 01.03.2012, came to be filed against the appellant under Sections 406, 420 and 417 of IPC. Pursuant to the same, the Magistrate issued summons. The appellant alleged that on 04.12.2013, he was given a copy of the said charge sheet, and that the charges were framed by the Metropolitan Magistrate on the same day in a blank sheet without giving him an opportunity of being heard, as the appellant was unaccompanied by any counsel. The appellant alleges that the same was in violation of Section 239 of the Criminal Procedure Code.

5. In light of the aforesaid developments, the appellant filed an application seeking amendment of the prayer in Criminal Miscellaneous Application no. 4033 of 2012 wherein he sought for the inclusion of prayer seeking to quash and set aside the charge sheet no. 28/2012 in FIR No. I/C.R No. 22/2012 and the charges framed by the Metropolitan Magistrate vide order dated 04.12.2013 and all further proceeding carried out in Criminal Case no. 388/2012 pending before the Additional Metropolitan Magistrate.

6. It is pertinent to note that, simultaneously respondent no. 2 had preferred a summary suit in Summary Civil Suit no. 928/2011 seeking the recovery of Rs. 33,46,225/- which was inclusive of the interest upon the principal amount. The same was admitted on 25.04.2011 and is still pending before the City Civil Judge, Ahmedabad.

7. Vide order dated 12.04.2018, the High Court dismissed the quashing petition preferred by the appellant and directed the trial court to complete the trial within three months. The High Court further went on to observe that, prima facie an offence of cheating under Section 420 is made out but charge under Section 406 pertaining to criminal breach of trust is not applicable in the given factual scenario. However, the High Court did not remove the charges under Section 406 and observed that no case has been made out to get the charge quashed. Aggrieved by the aforesaid dismissal, the appellant has preferred the present Special Leave Petition.

8. The counsel on behalf of the appellant has urged that a perusal of the complaint would reveal that the allegations as contained in the complaint are civil in nature and the requisite averments so as to make out a case of cheating are absent. Hence, prima facie does not disclose the commission of the alleged offence. Moreover,

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2019 Supreme(SC) 337

SUPREME COURT OF INDIAN.V. Ramana, Mohan M. Shantanagoudar, JJ.Satishchandra Ratanlal Shah - AppellantVs.State of Gujarat and Another - RespondentsCriminal Appeal No. 9 of 2019 (Arising out of SLP (Crl.) No. 5223 of 2018)Decided On : 03-01-2019

Cases Referred (3)

SUPREME COURT OF INDIA
N.V. Ramana, Mohan M. Shantanagoudar, JJ.
Satishchandra Ratanlal Shah - Appellant
Vs.
State of Gujarat and Another - Respondents
Criminal Appeal No. 9 of 2019 (Arising out of SLP (Crl.) No. 5223 of 2018)
Decided On : 03-01-2019