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IN THE HIGH COURT OF JHARKHAND AT RANCHI
SANJAY KUMAR DWIVEDI, J.
Rajendra Singh – Appellant
Versus
The State of Jharkhand and Another – Respondents
Cr.M.P. No. 638 of 2016
Decided on : 24-01-2024
[CRIMINAL LAW] - [CHEATING AND BREACH OF CONTRACT] - [Sections 405, 406, 419, 420 of IPC] - [The court discussed the essential ingredients of cheating and criminal breach of trust under the IPC, emphasizing that mere breach of contract does not constitute a criminal offense unless fraudulent intent is established from the outset. The court highlighted that the allegations did not demonstrate the necessary mens rea for cheating, leading to the conclusion that the dispute was civil in nature, warranting the quashing of the criminal proceedings.]
Fact of the Case:
The petitioners, landowners, entered into a development agreement with the complainant, who alleged that the petitioners fraudulently induced him to invest in a project based on false representations regarding land ownership. The complainant claimed to have paid substantial amounts but faced delays and non-compliance from the petitioners, leading to a criminal complaint alleging cheating and breach of trust.
Finding of the Court:
The court found that the allegations did not substantiate a case of cheating as there was no evidence of fraudulent intent at the time of the agreement. The court emphasized that the dispute was primarily civil, revolving around the breach of contract rather than criminal wrongdoing.
Issues: Whether the allegations of cheating and criminal breach of trust were substantiated, and whether the criminal proceedings should be quashed given the civil nature of the dispute.
Ratio Decidendi: The court reiterated that for a charge of cheating under Section 420 IPC, there must be proof of dishonest intention from the outset. A mere breach of contract does not suffice for criminal prosecution unless fraudulent intent is established. The court also referenced previous judgments that discourage converting civil disputes into criminal cases.
Final Decision: The court quashed the entire criminal proceeding, including the order taking cognizance, stating that the matter was civil in nature and should be resolved accordingly.
JUDGMENT :
SANJAY KUMAR DWIVEDI, J.
At the outset, it has been pointed out that the petitioner no.2 has left for his heavenly abode and in view of that this petition is confined to petitioner nos.1, 3 and 4.
2. Let name of petitioner no.2 be deleted from the array of the petitioners.
3. Heard Mr. R. S. Mazumdar, the learned Senior counsel appearing on behalf of the petitioners, Mr. Fahad Alam, the learned counsel appearing on behalf of the respondent State and Mr. Mahesh Tewari, the learned counsel appearing on behalf of the O.P.No.2.
4. This petition has been filed for quashing of the entire criminal proceeding including the order taking cognizance dated 26.08.2015 in connection with C. P. Case No.3012 of 2014, pending in the court of learned Judicial Magistrate, First Class, Dhanbad.
5. The complaint case has been filed alleging therein that the accused persons with criminal conspiracy among a previous themselves during first half of the year 2010 approached through accused No.5 Rakesh Ranjan (Partner) before the complainant and repeatedly induced the complainant to be agreed for Development Project of the land which the accused persons fraudulently described through false forged document of rent receipt and other documents of their land owned and acquired/ purchased by the grandfather of accused No. 1 to 4 (Plot No. 3045, 4046, 3047, 3048 and 3049 under Khata No. 53, Mouza Dhaiya, Mouza No. 6 within the P.S & District Dhanbad).
It is further alleged that the complainant being the Director of the company agreed to invest in the name of company for development project of the land. It is pertinent to mention herein that the accused No. 5, namely, Rakesh Ranjan and the complainant are the Director of the company, namely, India Pvt. Ltd., Divij-Infrastructure Jamshedpur. Accused Rakesh Ranjan was unable to provide fund for the company, but his greedy eye was over the personal property of the complainant. Hence, he repeatedly induced the complainant to agree for the project.
It is further alleged that the accused Rakesh Ranjan fraudulently represented that he has checked all the papers of land and the complainant agreed to the project as such one Registered Power of Attorney dated 22.09.2010 got executed between accused Rajendra Singh, Binod Kumar Singh, Ajay Singh and Bijay Pratap Singh and accused Rakesh Ranjan and the complainant. Subsequent 28.01.2011, registered Development Agreement got executed between parties.
It is further alleged that accused No. 1 to 4 took Rs. 99,000/- from the complainant after execution of development agreement. Thereafter the accused person one or other ground started avoiding execution of Development work, supply of original papers, etc. to the complainant. In March, 2012, the accused No. 1 to 4 sent a notice through their advocate for terminating the agreement dated 28.01.2011 and when the complainant enquired he came to learn that the accused persons need hard cash and they once again pressurized the complainant to give Rs. Sixty Lakhs in his personal capacity for continuing the agreement. Upon that the complainant simply said that he has no money in his personal capacity. However, Rs. 60 Lakhs was paid to the accused No. 1 to 4 and they executed a receipt thereof. Thereafter also they delayed the project.
It is further alleged that recently in September/ October, 2014, when the complaint went on to carry on project without assistant of accused No. 5 and collected copies of the documents of the land in question, it was detected that the accused No. 1 to 4 are owners of Plot No. 3045, 3046 and 3049, area 2.36 acres of Khata No. 53, but they fraudulently entered into agreement with respect to Plot No. 3047, 3048 and 3304 of Khata No. 237. In December, 2014, when the complainant went to the accused person Rakesh Ranjan he admits his guilt and hand over copies of Mutation Case No. 507(II)/2009-10 and the attested copy of money receipt. The accused No. 1 to 4 denied to return the money.
Criminal proceedings cannot be initiated for disputes that are purely civil in nature, and the High Court has the authority to quash such proceedings to prevent abuse of the legal process.
A mere commercial dispute, characterized by lack of initial dishonest intention, cannot constitute criminal offenses of cheating or breach of trust.
Fraudulent intent must be established for criminal liability in financial transactions, distinguishing between civil breaches of contract and criminal offenses like cheating.
Breaches of commercial agreements do not constitute criminal offenses unless fraudulent intent is established at the outset, reinforcing that civil disputes should not be converted into criminal matt....
Point of Law : Agreement was terminated by the complainant himself and the dispute before the Arbitrator was sought by the complainant himself. Therefore, there can be no question of an intention to ....
A mere breach of contract does not constitute a criminal offense of cheating unless there is evidence of fraudulent or dishonest intention from the outset of the agreement.
The court affirmed that a party only involved in a civil contract cannot face criminal liability unless it directly transacted or misappropriated funds, supporting the need for a clear distinction be....
Dishonest or fraudulent intention must be present at the inception of a transaction to establish offences of cheating and criminal breach of trust; mere breach of contract does not constitute a crimi....
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