T.M. Hassan Pillai, J.

1. Criminal prosecution has been launched against the petitioners, who are accused Nos. 1 and 2 in C.C. No. 607 of 1999 on the file of Judicial 1st Magistrate Court 1, Hosdrug, by the first respondent filing Annexure A complaint against them and the criminal proceedings thus initiated are sought to be quashed invoking the powers of this Court under S.482 Cr. P.C. which is to be exercised sparingly and with circumspection and that too in rarest of rare cases.

2. The gist of the allegation made in the complaint is that they committed offence punishable under S.420 read with S.34 IPC. The allegations made against them in Annexure A complaint are stated in the Crl. M.C. and therefore it is unnecessary to state before considering the legal principles the precise allegations made against the petitioners by the first respondent in Annexure A complaint. Criminal proceedings are sought to be quashed on the ground that the allegations made in 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 petitioners. The transaction referred to in the complaint is of civil nature and court below ought not have taken cognizance of the offence alleged to have committed by them in Annexure A.

3. The offence alleged to have been committed by the petitioners is punishable under S.420 IPC and the necessary ingredients of offence of cheating defined in S.415 of the Indian Penal code are --

(1) deception of any person;

(2)(a) fraudulently or dishonestly inducing that person

(i) to deliver any property to any person, or

(ii) to consent that any person shall retain any property; or

(b)intentionally inducing that person to do or omit to do anything which he would not do or omit if he were not so deceived and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property.

4. The apex Court has held in Hridayaranjan Prasad Verma v. State of Bihar (2000 (4) SCC 168) that it is manifest on a reading of S.415 that in the definition there are set forth two separate classes of acts which the person deceived may be induced to do. In the first place he may be induced fraudulently or dishonestly to deliver any property to any person. The second class of acts set forth in the section is the doing or omitting to do anything which the person deceived would not do or omit to do if he were not so deceived. In the first class of cases the inducing must be fraudulent or dishonest. In the second class of acts, the inducing must be intentional but not fraudulent or dishonest. The following observation made by the apex Court in the above cited decision is to be extracted here:

"15. In determining the question it has to be kept in mind that the distinction between mere breach of contract and the offence of cheating is a fine one. It depends upon the intention of accused at the time of inducement which may be judged by his subsequent conduct but for this subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, that is the time when the offence is said to have been committed. Therefore, it is the intention which is the gist of the offence. To hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise. From his mere failure to keep up promise subsequently such a culpable intention right at the beginning, that is, when he made the promise cannot be presumed."

5. The apex Court laid down the law in G. V. Rao v. L. H. V. Prasad (2000 (3) SCC 693) thus:

"4. "Cheating" is defined in S.415 of the Indian Penal Code which provides as under:

"415. Cheating -- Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any pers