For the offence of cheating under Section 420 IPC, there must be clear evidence of dishonest intention at the inception of a transaction. Mere investment disputes without such intent do not constitute a criminal offense.

JUDGMENT :

SANJEEV NARULA, J.

1. The present petition filed under Sections 482 and 483 of the Code of Criminal Procedure, 1973 [“CrPC”] seeks setting aside of the order dated 1^st December, 2011, passed by the Metropolitan Magistrate, Rohini Court, Delhi, in the proceedings arising from FIR No. 297/2008 dated 20^th May, 2008, registered under Sections 406 and 420 of the Indian Penal Code, 1860 [“IPC”] at P.S. Prashant Vihar, Delhi, as well as all consequential proceedings emanating therefrom. By the impugned order, the Metropolitan Magistrate, while rejecting the cancellation report filed under Section 173 of CrPC, summoned the Petitioner for the offence punishable under Section 420 of IPC.

Factual Matrix

2. Upon perusal of the record, the facts are summarised as follows:

2.1. A complaint under Section 156(3) of CrPC was filed by Sushila Gupta (the Complainant/Respondent No. 2) before the Metropolitan Magistrate. The Complainant alleged that she had issued a cheque of INR 25,000/- (bearing No. 852507) to Suraj Garg, the Petitioner, a Chartered Accountant, towards professional services, which, she alleges, were never rendered. She further alleged that she had advanced an additional sum of INR 1,00,000/-, by way of two cheques (one bearing No. 852510 dated 1^st September, 2005 and the other bearing No. 852511 dated 2^nd September, 2005) drawn on Bank of Punjab, each of INR 50,000/-, to the Petitioner for his assistance in financial matters and for investment in shares through MLB Capital Pvt. Ltd., a broker of the National Stock Exchange; however, neither were the shares credited in her DEMAT Account, nor was the amount returned.

2.2. On 17^th April, 2006, a notice was sent to the Petitioner, with a copy thereof to MLB Capital Pvt. Ltd., but no response was received. Subsequently, MLB Capital Pvt. Ltd. clarified that the Petitioner was neither a director of the company nor associated with M/s Share-in-Shares.

2.3. On 14^th May, 2008, on the basis of the 156(3) complaint, the Magistrate directed registration of an FIR under Sections 406 and 420 IPC at P.S. Prashant Vihar, Delhi. During investigation, the Complainant and her husband, Mukesh Gupta, were examined. They stated that they had been investing in shares through the Petitioner and, in that connection, the aforenoted three cheques were issued in 2005. The Petitioner, when interrogated, admitted to having received the cheque of INR 25,000/- as professional fees, but denied receipt of the two cheques of INR 50,000/- each. It later emerged that the two cheques in question had been credited to the account of M/s Share-in-Shares, a proprietorship concern of late Brij Lal Garg, father of the Petitioner.

2.4. During investigation, late Brij Lal Garg, proprietor of M/s Share-in- Shares, stated that one Narayan Kumar Jha, a supervisor in his firm, was the authorised signatory of the concern. On 28^th May, 2010, Narayan Kumar Jha was interrogated. He disclosed that the business of M/s Share-in-Shares had closed in 2007, but prior to that, the Complainant and her husband had been transacting with the firm in shares. According to him, on 1^st September, 2005, two cheques of INR 50,000/- each were received towards the Complainant’s Margin Deposit Account, and the amounts were duly credited. However, by the close of the financial year 2005-06, the funds stood transferred to the Complainant’s running account. By that stage, the firm had ceased trading in shares. He further stated that, at the time of closure, amounts of INR 6,078.45 and INR 92,188.35 were due from the Complainant and her husband respectively, against which certain shares remained withheld. The investigation, therefore, indicated that the Complainant and her husband had in fact invested through M/