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IN THE HIGH COURT OF JHARKHAND AT RANCHI
ANIL KUMAR CHOUDHARY, J.
Tulsi Nowlakha Mirchandaney, Daughter of Dhala Daswani - Petitioner
Versus
The State of Jharkhand and Anr. - Opp. Parties
Cr.M.P. No. 3243 Of 2022
Decided On : 04-12-2023
Criminal Breach of Trust - Blue Dart Express Limited - Indian Penal Code, Section 406, Section 420 - The court discussed the essential ingredients of the offence of criminal breach of trust and the requirement to prove entrustment and dishonest intention. It highlighted the distinction between mere breach of contract and the offence of cheating, emphasizing the need to establish fraudulent or dishonest intention at the beginning of the transaction. The court also addressed the vicarious liability of directors when the company is the accused, emphasizing the requirement of sufficient incriminating evidence and criminal intent. The judgment concluded that the continuation of the criminal proceeding would amount to an abuse of process of law and quashed the entire criminal proceeding against the petitioner.
Fact of the Case:
The petitioner, a Director of Blue Dart Express Limited, sought to quash criminal proceedings arising from a complaint alleging criminal breach of trust and cheating. The complainant claimed that the company had not paid the full amount owed and misused a bank guarantee.
Finding of the Court:
The court found that the essential ingredients of the offence of criminal breach of trust were not established, and the mere breach of contract did not amount to cheating. It also held that the petitioner was not personally involved in the transactions and that the exercise of power under Section 319 of the Cr.P.C. before the commencement of the trial was a jurisdictional error.
Issues: The issues revolved around the allegations of criminal breach of trust and cheating, the involvement of the petitioner in the transactions, and the jurisdictional error in exercising power under Section 319 of the Cr.P.C.
Ratio Decidendi: The court emphasized the need to establish entrustment and dishonest intention for the offence of criminal breach of trust, the distinction between breach of contract and cheating, and the requirement of sufficient incriminating evidence and criminal intent for vicarious liability of directors. It also highlighted the jurisdictional limitation on exercising power under Section 319 of the Cr.P.C.
Final Decision: The court quashed the entire criminal proceeding arising from the complaint and the order adding the name of the petitioner, as it would amount to an abuse of process of law.
JUDGMENT :
1. Heard the parties.
2. This criminal miscellaneous petition has been filed invoking the jurisdiction of this Court under Section 482 Cr.P.C. with a prayer to quash the entire criminal proceeding arising out of Complaint Case No. 177 of 2020 including the order dated 14.06.2022 whereby the learned Sub-Divisional Judicial Magistrate, Jamshedpur took cognizance for the offence punishable under Sections 406/420 of the Indian Penal Code against the petitioner as well and also the quashing the order dated 21.02.2022 by which the learned Sub-Divisional Judicial Magistrate, Jamshedpur upon an application filed under Section 319 of the Cr.P.C. added the name of inter-alia the petitioner in the light of the statements of the inquiry witnesses and complainant.
3. The brief facts of the case is that the petitioner is the Director of Blue Dart Express Limited. M/s. Blue Dart Express Limited appointed the proprietorship firm of the complainant namely M/s. Vikash Enterprises as the pick-up and delivery agent for the said Courier Company after entering into an agreement in this respect on 30.06.2017. As per the claim of the complainant, M/s. Blue Dart Express Limited was to pay Rs.20,40,066/- to the said proprietorship firm of the complainant but M/s. Blue Dart Express Limited agreed to pay only Rs.13,80,772/- and ultimately paid Rs.2,00,000/- to the complainant. There is also allegation that M/s. Blue Dart Express Limited by way of cheating has misused the bank guarantee furnished by the complainant and did not returned the same to the complainant.
4. It is submitted by the learned counsel for the petitioner relying upon the Judgment of Hon’ble Supreme Court of India, in the case of M.N.G. Bharateesh Reddy Vs. Ramesh Ranganathan & Another, reported in (2022) SCC Online SC 1061, para 21 to 24 of which reads as under:-
22. In Anwar Chand Sab Nanadikar v. State of Karnataka6 a two-judge bench restated the essential ingredients of the offence of criminal breach of trust in the following words:
“7. The basic requirement to bring home the accusations under Section 405 are the requirements to prove conjointly (1) entrustment, and (2) whether the accused was actuated by the dishonest intention or not misappropriated it or converted it to his own use to the detriment of the persons who entrusted it. As the question of intention is not a matter of direct proof, certain broad tests are envisaged which would generally afford useful guidance in deciding whether in a particular case the accused had mens rea for the crime.”
23. In Vijay Kumar Ghai v. State of West Bengal, another two-judge bench held that entrustment of property is pivotal to constitute an offence under section 405 of the IPC. The relevant extract reads as follows:
“28. “Entrustment” of property under Section 405 of the Penal Code, 1860 is pivotal to constitute an offence under this. The words used are, “in any manner entrusted with property”. So, it extends to entrustments of all kinds whether to clerks, servants, business partners or other persons, provided they are holding a position of “trust”. A person who dishonestly misappropriates property entrusted to them contrary to the terms of an obligation imposed is liable for a criminal breach of trust and is punished under Section 406 of the Penal Code.”
24. None of the ingredients of the offence of criminal breach of trust have been demonstrated on the allegations in the complaint as they stand. The first respondent alleges that the Appellant caused breach of trust by issuing grossly irregular bills, which adversely affected his professional fees. However, an alleged breach of the contractual terms does not ipso facto constitute the of
The main legal point established in the judgment is that every breach of contract does not give rise to an offence of cheating, and the intention to cheat must be present at the very inception. The j....
The main legal point established is that the continuation of a criminal proceeding would amount to an abuse of process of law if there is no allegation of deception or criminal intent at the inceptio....
Deception and criminal intent at the inception of a transaction are crucial for establishing the offences of criminal breach of trust and cheating under the Indian Penal Code.
The judgment established that every breach of contract would not give rise to an offence of cheating and highlighted the necessity of deception at the very inception for the offence of cheating.
The judgment established that not every breach of contract amounts to a criminal offence and emphasized the importance of the presence of deception and dishonesty at the inception of a transaction to....
Fraudulent intent at the inception of a transaction is essential to establish cheating; mere breach of contract does not constitute a criminal offence.
Point of law : exercise powers under Section 482 CrPC, the complaint in its entirety shall have to be examined on the basis of the allegation made in the complaint/FIR/charge-sheet and the High Court....
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