Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2015 Supreme(Raj) 1759

RAJASTHAN HIGH COURT AT JAIPUR BENCH
Prashant Kumar Agarwal, J.
Mukul Tiwari and Anr. - Appellant
Versus
State of Rajasthan and Anr. - Respondent
S. B. Criminal Misc. Petition No. 1833 of 2014.
Decided On : 21-08-2015

Advocates:
For the Petitioners:Lokesh Sharma, Advocate.
For the State: Jitendra Shrimali , P. P.
For the Complainant-Respondent No.2.:Ashok Singh Shekhawat, Advocate.

Mere failure to keep up a promise subsequently cannot be presumed as an act of cheating. Subsequent conduct of the accused is a relevant factor to infer fraudulent or dishonest intention, but it alone cannot establish cheating.

Headnote:
CRIMINAL MISC. PETITION - QUASHING OF FIR - SECTIONS 420, 467, 468 & 120-B IPC - BREACH OF CONTRACT - ESSENTIAL INGREDIENTS OF OFFENCES UNDER SECTIONS 406 & 420 IPC - SUBSEQUENT CONDUCT OF ACCUSED - INTENTION TO DECEIVE - MATERIAL FACT CONCEALMENT - DUTY OF PURCHASER TO ASCERTAIN POSSESSION OF SELLER - INTERPRETATION OF SECTIONS 405, 406, 415 & 420 IPC.
Fact of the Case:

Accused-petitioners sought to quash an FIR alleging cheating and criminal breach of trust, claiming the dispute was civil in nature. The complainant alleged that the petitioner entered into an agreement to sell land, received an advance, but failed to execute the sale deed and sold the land to a third party.
Finding of the Court:

The court found that the essential ingredients of offences under Sections 406 and 420 IPC were not made out against the petitioner. The court held that the amount paid by the complainant was not entrusted to the petitioner, and the subsequent sale to a third party did not establish a fraudulent or dishonest intention at the time of the initial agreement.
Issues: 1. Whether the acts of the petitioner constituted criminal breach of trust under Section 406 IPC? 2. Whether the petitioner's conduct amounted to cheating under Section 420 IPC?
Ratio Decidendi: 1. For an offence under Section 406 IPC, there must be criminal breach of trust as defined under Section 405 IPC, which requires entrustment of property and dishonest misappropriation or conversion. In this case, the amount paid by the complainant was not entrusted to the petitioner, and thus, the essential ingredient for criminal breach of trust was absent. 2. To establish cheating under Section 420 IPC, there must be an intention to deceive at the time of inducement. Subsequent conduct alone cannot be presumed as cheating. In this case, the court found no evidence of fraudulent or dishonest intention at the time of the agreement. The subsequent sale to a third party, though suspicious, was not sufficient to infer cheating.
Final Decision: The court allowed the petition and quashed the FIR, holding that the essential ingredients of offences under Sections 406 and 420 IPC were not made out against the petitioner.

Judgement Key Points

Key Points: - The essential ingredient for an offence under Section 406 IPC is entrustment of property and dishonest misappropriation or conversion; in this case, the amount paid was not entrusted to the accused (!) . - For Section 420 IPC, intent to deceive must exist at the time of inducement; mere subsequent failure to keep a promise cannot establish cheating, though subsequent conduct may be relevant to infer intent (!) . - The court quashed the FIR as essential ingredients of Sections 406 and 420 IPC were not made out against the petitioner (!) . - The agreement stated possession of the land by the petitioner, placing a duty on the purchaser to ascertain possession; concealment of possession facts was not sufficiently proven to establish fraud (!) . - Civil disputes can coexist with criminal proceedings; prima facie examination is enough at the quashing stage to determine if essential ingredients of an offence are disclosed (!) (!) . - The petition was allowed and FIR No. 94/2014 was quashed and set aside (!) . - The case references include legal standards from Md. Ibrahim & Ors. v. State of Bihar, Inder Mohan Goswami, State of Kerala v. Pareed Pillai, Anil Kumar v. Ajai Butail, and Anil Mahajan v. Bhor Industries Ltd (cited in arguments) (!) (!) . - Facts: alleged agreement to sell, advance paid, land later found in possession of others, and sale to a third party; petitioner’s conduct and possession orders discussed (!) (!) (!) . - The court emphasized that inability to prove entrustment or dishonest intent at the time of inducement defeats both Section 406 and Section 420 IPC at the prima facie stage (!) (!) . - The petition and stay were disposed of with a quashing of the FIR and investigation (!) .

What is the test to establish criminal breach of trust under Section 406 IPC in the context of an advance paid for land sale?

What is the role of a defendant’s subsequent conduct in proving or disproving cheating under Section 420 IPC?

What are the essential ingredients required to quash an FIR under Section 482 Cr.P.C. when allegations pertain to breach of contract or civil disputes?

JUDGMENT

1. - Heard learned counsel for the parties.

2. The accused-petitioners have filed this criminal misc. petition under Section 482 Cr.P.C. with a prayer to quash and set aside FIR No.94/2014 registered at Police Station Mantown, District Sawai Madhopur for the offences under Sections 420, 467, 468 & 120-B IPC mainly on the ground that the dispute between the parties at the most is of civil nature to which colour of criminality has been given. It is to be noted that as per factual report dated 7.7.2015 after investigation offences under Sections 420 & 406 IPC have been found to be made out against the accused-petitioner-Shri Mukul Tiwari only and, therefore, now it is to be seen whether aforesaid offences are in fact made out against the petitioner or not.

3. Brief relevant facts for the disposal of this petition are that aforesaid FIR came to be registered on 10.3.2014 at the instance of the complainant-respondent with the allegation that the petitioner-Shri Mukul Tiwari entered into agreement to sell with the respondent with regard to disputed land in lieu of a total amount of sale consideration of Rs. 17 lacs and Rs. 1 lac was received by him as advance from respondent on 11.3.2005 and in this regard an agreement to sell was also executed between the parties and as per the terms and conditions of the agreement remaining amount of sale consideration was to be paid at the time of execution and registration of the sale deed. It was further alleged in the FIR that when the respondent visited the site, it was found by him that it is in the possession of several other persons since a long time. It was further averred in the FIR that the petitioner entered into agreement to sell with the respondent without disclosing the fact that the land in dispute is in possession of other persons. It was also stated that subsequently petitioner sold the land in dispute by way of a registered sale deed to one Smt. Hema Devi W/o Pukhraj Meena on 28.10.2013 in lieu of sale consideration of Rs. 60 lacs.

4. It was submitted by the learned counsel for the petitioners that even if for the sake of arguments allegations made in the FIR are accepted at their face value and are taken to be true and correct in its entirety, even then at the most it is a case of breach of contract on the part of petitioner-Mukul Tiwari, but only by that reason criminal liability of any kind cannot be fastened upon the petitioner. According to learned counsel for the petitioners for an offence to be made out under Section 420 IPC, well settled legal position is that fraudulent and dishonest intention to deceive some person on the part of the accused is to be disclosed at the time when promise or representation was made and offence under this provision cannot be made out merely because the accused failed to keep his promise or representation later on. According to the learned counsel for the petitioners, it is a pure and simple case of breach of contract of sale which does not constitute offence of criminal breach of trust or cheating. According to him for an offence to be made out under Section 406 IPC, it is essential to show that some property was entrusted to the accused and he converted it for his own use, but in the present case no such allegation has been made even by the complainant himself. It was contended that merely because the petitioner-Mukul Tiwari obtained a part of sale consideration from the complainant and failed to execute registered sale deed in his favour and rather executed a registered sale deed in favour of a third party, it cannot be said that petitioner has deceived the complainant or committed offence of criminal breach of trust. It was also submitted that it was specifically mentioned in the agreement that the land in dispute is in possession of the petitioner and it is clear from all encumbrances and, therefore, it cannot be said that the petitioner concealed from the complainant the fact that the land in dispute is in possession of some othe

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