SUPREME COURT OF INDIA
Dr. Dhananjaya Y. Chandrachud and A.S. Bopanna, JJ.
MNG Bharateesh Reddy – Appellant
Versus
Ramesh Ranganathan and another – Respondents
Criminal Appeal No. 1273 of 2022
Decided on 18-8-2022
(1) Penal Code, 1860 -- Ss. 415 and 420 -- cheating -- complainant worked as consultant for hospital -- consultancy agreement terminated -- allegation against hospital of improper billing in respect of surgical services rendered by complainant -- no practice of deception or dishonest intention on behalf of hospital -- ingredients of offence of cheating absent in averments of complaint -- case of cheating not made out -- at most, allegation alludes to civil dispute, namely, breach of terms of consultancy agreement. (2000) 4 SCC 168 and (2009) 14 SCC 696 relied on. [Para 18]
(2) Penal Code, 1860 -- S. 405 -- criminal breach of trust -- complainant worked as consultant in hospital -- allegations made against hospital for issuing grossly irregular bills adversely affecting his professional fees -- no element of entrustment prima facie established -- ingredients of offence of criminal breach of trust ex facie not made out. (2003) 10 SCC 521 and (2022) 7 SCC 124 relied on. [Para 23]
JUDGMENT
Chandrachud, J.
1. Leave granted.
2. This appeal arises from a judgment dated 12 July 2019 of a Single Judge of the High Court of Karnataka.
3. The first respondent was employed by BGS Apollo Hospital, Mysore, the second respondent “hospital”, as a Consultant Neurosurgeon on a monthly guaranteed fee of Rs. 50,000. He worked in that capacity from March 2004 until June 2014. A contract, styled as a Consultancy Agreement was entered into between the first respondent and the hospital on 1 April 2013 containing his terms of engagement. One of the terms of the engagement was that either party may terminate the agreement, with or without cause, by giving a prior notice of thirty days. On 3 June 2013, the management of the hospital enhanced the emoluments of the first respondent by assuring him a guaranteed monthly fee of Rs. 4,25,000.
4. Thereafter, differences arose between the first respondent and the management of the hospital. The first respondent wrote a letter dated 9 January 2014 to the appellant alleging that patients referred to him were being diverted to other doctors of the hospital at the enquiry and reception counter. Through the said letter, he also requested the appellant to take action against the erring staff members. The services of the first respondent were terminated on 30 May 2014 for inconsistent and unsatisfactory behavior in terms of the Consultancy Agreement. Aggrieved by his termination, the first respondent furnished a representation on 31 May 2014 to the Managing Director, Apollo Group of Medical Sciences highlighting gross irregularities in the billing of patients. In this representation, he also alleged that the appellant had been threatening and maligning him. On 2 June 2014, the first respondent wrote a letter to Director of Medical Services of the hospital requesting permission to treat patients till 30 June 2014, the end of his notice period.
5. On 10 October 2014, the first respondent filed a complaint under section 200 of the Code of Criminal Procedure 1973, being PCR No 2536 of 2014, before the First Additional Civil Judge (Junior Division) and Judicial Magistrate First Class, Mysore “JMFC” . In his complaint, the first respondent alleged that the Appellant misused his authority and terminated his services with an oblique and ulterior motive of defaming him. The JMFC by an order dated 3 March 2015 took cognizance under sections 120A, 405, 415, 420, 499, and 500 of the Indian Penal Code “IPC”. The order of the JMFC was challenged in revision under section 397, Code of Criminal Procedure 1973 before the IVth Additional Sessions Judge, Mysore.
6. The Additional Sessions Judge by an order dated 16 December 2015 set aside the order of the JMFC on the ground that the complaint did not disclose the ingredients of the offences of defamation or cheating. Moreover, the Additional Sessions Judge held that the JMFC was not competent to take cognizance of the offence punishable under section 420 of the IPC.
7. The order of the Additional Sessions Judge was called into question by the first Respondent before the High Court of Karnataka. The Single Judge by the impugned judgment dated 12 July 2019 held that no case was made out against the appellant under sections 499 and 500 of the IPC. However, the Court held that the material placed on record prima facie disclosed ingredients of offences under sections 405 and 420 of the IPC.
8. Notice was issued in these proceedings on 25 October 2019 in pursuance of which the first Respondent has appeared.
9. We have heard Mr Manan Kumar Misra, senior counsel for the appellant and Ms Radhika Gautam, counsel for the first respondent, who is the contesting party.
10. The issue which presents itself for determination in these proceedings is whether the ingredients of the offences of cheating and criminal breach of trust have been made out on the face of the complaint. Following the well settled principle of law, the contents of the complaint would have to be read in or
The main legal point established in the judgment is that the ingredients of the offences under sections 405 and 420 of the Indian Penal Code were not established based on the facts and circumstances ....
To establish cheating, intention must exist from the inception of the contract; non-payment allegations alone do not suffice, and charges under Sections 406 and 420 IPC cannot coexist.
Fraudulent intent at the inception of a transaction is essential to establish cheating; mere breach of contract does not constitute a criminal offence.
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