Fraudulent or dishonest inducement is a crucial element in establishing cheating under IPC sections 415 and 420.

ORDER :

1. Petitioner is a member of the Kerala Legislative Assembly (MLA) from Pala constituency, having been elected in September 2019. He is facing prosecution as C.C. No. 118/2021 on the files of the Judicial First Class Magistrate Court-VIII, Ernakulam for the offences punishable under Sections 406, 417 and 420 of the Indian Penal Code, 1860 (for short ‘IPC’). He seeks to quash all further proceedings in the above said criminal case.

2. The prosecution is based on a complaint filed by the second respondent alleging offences punishable under Sections 406, 417, 418, 420 and 423 of IPC. The learned Magistrate however took cognizance only for the offences under sections 406, 417 and 420 of IPC.

3. According to the complainant, the accused had cheated him by dishonestly and, without any intention to repay, borrowed an amount of Rs. 2 Crores in the year 2010 and failed to repay the amount except for Rs. 25,00,000/-. When the defacto complainant insisted on re-payment, he induced the complainant to enter into an agreement on 19.11.2013 promising to repay the outstanding amount of Rs. 3,25,00,000/- (inclusive of Rs. 25,00,000/- already paid) on two separate dates and induced confidence in him by furnishing security in the form of immovable property and also issued four cheques. Since the amount was not repaid as promised, the said agreement was later renewed on 12.12.2014 and again on 12.02.2015, and the earlier cheques were replaced with new cheques for the aforementioned amount. The complainant also alleges that when the cheques were sent for collection, they were dishonoured with the memo that “drawers signature differs” for which cases under the Negotiable Instruments Act 1881 were filed. When the asset declaration of the accused for the election was verified, it was realised that there was a subsisting mortgage on the property offered as security. It was further realised that proceedings had been initiated against that property by the Bank in 2013. The complainant also alleged that the accused is now understood to be facing prosecution in 12 other criminal cases, most of which are for dishonouring of cheques and also that all his properties are pledged and huge amounts are due to all banks. According to the complainant, the series of acts reveal that the accused had the intention to cheat from the very beginning. Thus, the accused is alleged to have committed the offences punishable under Sections 406 and 420 of IPC.

4. Sri. Deepu Thankan, the learned counsel for the petitioner contended that the prosecution is inherently an abuse of the process of court since, even if the allegations are assumed to be correct, the same would only reveal a civil dispute. It was further stated that cheating as defined under law requires fraudulent or dishonest intention from the very beginning and since, the relationship between the petitioner and the defacto complainant arises out of an agreement, the attempt of the complainant is only to create a facade of a criminal offence in respect of a dispute of a civil nature. The learned counsel further submitted that if the complainant has a grievance, it has to be agitated before the Civil Courts, and the initiation of the criminal complaint is a mala-fide act, warranting interference under Section 482 of Cr.P.C. The learned counsel also submitted that considering the petitioner's position, the complainant's attempt becomes even more glaring. Various decisions were also referred to by the learned Counsel which shall be adverted to later.

5. Adv. V. Sethunath, the learned counsel appearing on behalf of the 2nd respondent, contended that petitioner had fraudulently and without any intention to repay induced the defacto complainant to lend a large amount of Rs. 2 Crores in the year 2010. When the amount was not being repaid and when 2nd respondent was about to initiate legal proceedings, petitioner offered to execute an agreement offering to repay the amount and even volunteered to provide security in the