2011(1) Crimes 27 (Ori.)
ORISSA HIGH COURT
B.K. Patel, J.
Mukul Kumar Verma —Petitioner
versus
State of Orissa —Opp. Party
Criminal M.C. No. 1949 of 2008 with Crl. M.C. 2004 of 2009 and Cri. M.C. No. 661 of 2007
Decided on 19.5.2010

IMPORTANT POINT
An honest man entering into a contract is deemed to represent that he has the present intention of carrying it out but if, having accepted the pecuniary advantage involved in the transaction, he fails to pay his debt, he does not necessarily evade the debt by deception existence of dishonest intention is one of the essential ingredients in offence of cheating punishable under Section 420, I.P.C. as well as misappropriation punishable under Section 406, I.P.C.

Headnote:Indian Penal Code, 1860—Sections 420 and 406—Petition for quashing FIR registered for offences under—Orissa Small Industries Corporation provided financial help to petitioner accused for execution of orders to export garments—As per agreement the buyer in USA had transferred the export order in favour of OSIC—Though petitioners were alleged to be guilty of offences of cheating and criminal breach of trust but no averment that petitioners when entered into transactions with OSIC had dishonest intention—In terms of agreement OSIC had already instituted certificate proceedings for realization of dues—Criminal proceedings under Section 138 NI Act had also been instituted for bouncing of cheques which had been given post dated—No material to indicate that petitioners fraudulently or dishonestly induced OSIC to deliver property—No case of cheating or criminal breach of trust on part of petitioners was made out—FIR in proceedings in criminal court were liable to be quashed.

       Held: In the present case, there is absolutely no scope to assert that any of the petitioners was entrusted with any property, or any dominion over property as contemplated under Section 405 IPC. Even the materials on record do not support the main allegation of cheating under Section 415 IPC inasmuch as there is no material to indicate that the petitioners fraudulently or dishonestly induced the OSIC to deliver property. It is well settled that to deceive is to induce a man to believe that a thing is true which is false and which the person practising the deceit knows or believes to be false. It must also be shown that there existed a fraudulent and dishonest intention at the time of entering into the disputed transaction. There is no allegation that the petitioners made any wilful misrepresentation. Admittedly, the OSIC entered into a valid agreement and financial assistance was duly sanctioned. The grievance of the OSIC is that the petitioner M.K. Verma failed to discharge his contractual obligations. There is no allegation against any of the petitioners to have practised fraud or to have dishonestly induced the OSIC to provide financial assistance and thereby the OSIC disbursed loan. As has been observed in Anil Mahajan v. Bhor Industries Ltd. and another (supra), it is trite law and common sense that an honest man entering into a contract is deemed to represent that he has the present intention of carrying it out but if, having accepted the pecuniary advantage involved in the transaction, he fails to pay his debt, he does not necessarily evade the debt by deception existence of dishonest intention is one of the essential ingredients in offence of cheating punishable under Section 420, I.P.C. as well as misappropriation punishable under Section 406, I.P.C. It has been reiterated in V.Y. Jose & Anr. v. State of Gujarat & Anr., (2009) 42 OCR (SC) 488, that for the purpose of constituting an offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. Even in a case where allegations are made in regard to failure on the part of the accused to keep his promise, in absence of a culpable intention at the time of making initial promise being absent, no offence under Section 420 of the I. P.C. can be said to have been made out. It is well settled that where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused. High Court can exercise inherent power under Section 482, Cr.P.C. in order to prevent abuse of the process of Court or otherwise to secure the ends of justice for quashing the Criminal Proceeding. A matter which essentially involves dispute of a civil nature should not be allowed to be the subject matter of criminal offence, the latter being not a shortcut of executing a decree which is non-existent. The superior Courts with a view to maintain purity in the administration of justice, should not allow abuse of the process of Court. They have a duty in terms of Section 483 of the Cr.P.C. to supervise the functioning of the Trial Courts.

       In the present case, the OSIC having already instituted certificate proceeding for realization of dues payable under the disputed transaction and also having already instituted criminal proceeding under the N.I. Act in which no allegation of cheating or criminal breach of trust on the part of any of the petitioners was made, in the facts and circumstances of the case, institution and continuance of G.R. Case No.1728 of 1997 against the petitioners amount to abuse of process of Court. Therefore, in order to secure the ends of justice the criminal proceeding is liable to be quashed. (Para 21 and 22)