Advance payments for sale agreements not entrustment for breach of trust; cheating needs dishonest intent at inception; nominee directors not vicariously liable without personal role; proceedings quashed under Section 482 CrPC.

JUDGMENT :

ANIL KUMAR CHOUDHARY, J.

Heard the parties.

2. This Criminal Miscellaneous Petition has been filed invoking the jurisdiction of this Court under Section 482 of the Code of Criminal Procedure with the prayer to quash and set aside the entire criminal proceeding arising out of Complaint Case C/1 No.1750 of 2017 including the order dated 20.12.2017 passed by learned Judicial Magistrate-1st Class, Jamshedpur whereby and where under the learned Judicial Magistrate-1st Class, Jamshedpur has found prima facie case for the offences punishable under Sections 420/406 of the Indian Penal Code against the petitioner.

3. The brief fact of the case is that the complainant booked two flats in a project of the co-accused company. The co-accused namely Mazhar and Mrityunjay Tiwari on behalf of the company negotiated with the complainant in respect of the purchase of the flats. The complainant paid Rs.14 lakhs, but only the brick work was done and beyond that the project did not proceed.

4. On the basis of the complaint, statement on solemn affirmation and the statement of the enquiry witnesses, the learned Judicial Magistrate-1st Class, Jamshedpur has found a prima facie case to proceed against all the accused persons of the case for the offences punishable under Section 406/420 of the Indian Penal Code and passed the summoning order.

5. Learned counsel for the petitioner submits that the case is fixed for appearance of the accused person and charge have not yet been framed. It is next jointly submitted by the learned counsel for the petitioner and the learned counsel for the opposite party no.2 that in the meanwhile, the accused persons of the case have paid Rs.64,08,513/- to the complainant that includes the Rs.40 lakhs given by the complainant and the interest thereon.

6. Learned counsel for the petitioner next relies upon the judgment of the Hon’ble Supreme Court of India in the case of Radheyshyam & Others vs. State of Rajasthan & Another reported in 2024 SCC OnLine SC 2311, para-12 of which reads as under:-

“12.xxxx In the present case, the appellants were not entrusted with any property by respondent no. 2 - complainant. The only delivery made was of part payment towards an Agreement to Sell between the parties. The amount paid towards consideration cannot be said to have been entrusted with the appellants by respondent no. 2. Additionally, merely because the appellants are refusing to register the sale, it does not amount to misappropriation of the advance payment. Since there was no entrustment of property, the offence of misappropriation of such property and thereby criminal breach of trust cannot be said to be made out.” (Emphasis supplied)

wherein it was held that the amount paid towards consideration cannot be said to have been entrusted with the accused person by the complainant and merely because the seller is refusing to register the sale, the same does not amount to misappropriation of the advance amount paid.

7. Learned counsel for the petitioner further relies upon the judgment of the Hon’ble Supreme Court of India in the case of Sunil Bharti Mittal vs. Central Bureau of Investigation reported in (2015) 4 SCC 609 paragraph-43 & 44 of which reads as under:-

43. Thus, an individual who has perpetrated the commission of an offence on behalf of a company can be made an accused, along with the company, if there is sufficient evidence of his active role coupled with criminal intent. Second situation in which he can be implicated is in those cas