The central legal point established in the judgment is that to establish an offence under S.420 of the Indian Penal Code, a dishonest intention to cheat is essential, and mere default in payment does not suffice.

M. Sasidharan Nambiar, J.

1. Petitioners are the accused in CC 216/2009 on the file of Chief Judicial Magistrate Court, Ernakulam, taken cognizance for the offence under S.420 of Indian Penal Code on Annexure - A5 private complaint filed by second respondent. Petition is filed under S.482 of Code of Criminal Procedure to quash the cognizance taken on Annexure - A7 final report for the offence under S.420 of Indian Penal Code as well as Annexure - A8 order passed by the learned Magistrate, in a petition filed by the second respondent under S.451 of Code of Criminal Procedure. Second respondent filed Annexure - A5 complaint before the Chief Judicial Magistrate, Ernakulam against the petitioners alleging that they committed offence under S.420 of Indian Penal Code. Learned Magistrate sent the complaint for investigation under S.156(3) of Code of Criminal Procedure, based on which Annexure - A6 FIR was prepared and crime No. 1666/2009 of Ernakulam Central Police Station was registered. After investigation Annexure - A7 final report was filed which was taken cognizance by the learned Magistrate. When JCB, which was purchased by the first petitioner on the financial assistance of the second respondent was seized, both the first petitioner and the second respondent sought interim custody of the JCB under S.451 of Code of Criminal Procedure. By Annexure - A8 order interim custody was granted to the second respondent. Case of the petitioners is that even if the entire allegations in Annexure - A5 complaint as well as the case in Annexure - A7 final report are accepted, an offence under S.420 of Indian Penal Code is not attracted and therefore, continuation of the proceedings is only an abuse of process of the Court.

2. Learned counsel appearing for the petitioners and second respondent were heard.

3. Annexure - A5 complaint discloses the case of the second respondent. According to the second respondent company, first petitioner approached the company to purchase a JCB on hire purchase agreement and second respondent agreed to give financial assistance and first petitioner as principal loanee and petitioners 2 to 4 as guarantors executed a hire purchase agreement agreeing to pay the value of JCB in 36 equal monthly instalments of Rs.41,560/- each and the JCB was purchased and last instalment is to be paid on or before 28/02/2011. It is alleged that though first petitioner paid four monthly instalments, he defaulted subsequent monthly instalments and when second respondent contacted the first petitioner on 07/02/2009 at his residence, he agreed to settle the over dues on or before 15/03/2009. It is alleged that after 31/03/2008 no vehicle tax was paid and RC book was surrendered before the company and insurance taken on 05/11/2007 expired on 04/11/2008 and insurance policy was not renewed and when the representative of the company contacted the first petitioner, he agreed to renew the insurance policy and agreed to pay vehicle tax and still it was not done. On 06/02/2009 second respondent company sent a notice to the first petitioner to pay instalment dues amounting to Rs.3,03,793.72, namely the amount payable in seven defaulted instalments. It is alleged that first petitioner did not turn up and therefore, on 17/03/2009 company sent a notice recalling the entire loan amount advanced as the first petitioner failed to pay the instalments and clause 4(a) of the hypothecation Agreement enables the company to take steps to recall the loan and forfeit the vehicle and it was intimated to the first petitioner. It is also contended that meanwhile, the first petitioner issued a cheque dated 13/04/2009 for Rs.12,90,000/- and when it was presented, the same was dishonoured for want of sufficient funds and in spite of notice, the amount was not paid and therefore, proceedings under S.138 of Negotiable Instruments Act is initiated as ST 1978/2009. It is claimed that the intention of the petitioners is to dismantle the vehicle and thereby cheat the