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2018 Supreme(Mad) 2240
IN THE HIGH COURT OF JUDICATURE AT MADRAS
P.N. PRAKASH, J.
D. Madhavan - Petitioner
Vs.
State by Inspector of Police, Central Crime Branch, EDF III Team, Vepery, Chennai & Ors. - Respondents
Crl. O.P. No. 12979 of 2017 & Crl. M.P. No. 8446 of 2017
Decided On : 23-08-2018
For the Petitioner: Mr. K.M. Subheramaniam.
For the Respondents: Mrs. M. Prabhavathi, Additional Public Prosecutor, Mr. V. Chandra Prabhu.
The judgment establishes that the offence of cheating under Section 420 of the Indian Penal Code requires a fraudulent or dishonest intention at the beginning of the transaction, and mere breach of contract does not automatically constitute cheating.
Headnote:
Cheating - Criminal Complaint - Indian Penal Code, Section 420 - Summary
Fact of the Case:
The petitioner sought to quash the FIR against him, which was registered under Section 420 of the Indian Penal Code based on a complaint by the de facto complainant. The complaint alleged that the petitioner and his wife induced the complainant to invest in FOREX trading business, resulting in financial losses for the complainant.
Finding of the Court:
The court found that the petitioner had transferred his properties to the complainant and her father-in-law, and the exchange of emails indicated that the petitioner did not have the intention to cheat the complainant. The court also noted that the complainant had valid receipts for her investments and had reaped benefits from the business.
Issues: The key issue was whether the petitioner's actions amounted to cheating under Section 420 of the Indian Penal Code.
Ratio Decidendi: The court relied on the Supreme Court judgment in Anil Mahajan vs. Bhor Industries Ltd., emphasizing that mere breach of contract does not necessarily indicate fraudulent or dishonest intention at the beginning of the transaction, which is essential for establishing the offence of cheating.
Final Decision: The court quashed the FIR against the petitioner, concluding that the complaint was contrived and that the petitioner's actions did not demonstrate fraudulent or dishonest intention at the beginning of the transaction.
This Criminal Original Petition has been preferred seeking to call for the records in Cr. No.1583 of 2012 on the file of the first respondent police and quash the FIR against the petitioner.
2. On the complaint lodged by Prithi (de facto complainant), a case in S-12, Chitlapakkam P.S. Cr. No.1583 of 2012 was registered on 30.08.2012 against Madhavan (A1) and his wife Sivasri (A2), under Section 420 IPC. Subsequently, the said case has been transferred to the file of the Inspector of Police, Central Crime Branch, EDF III Team, Vepery, Chennai 600 007. Challenging the prosecution against him, Madhavan (A1) is before this Court.
3. Heard the learned counsel for the respective parties.
4. To appreciate the contention of Madhavan (A1), it may be relevant to extract the essence of the allegations in the complaint given by Prithi (de facto complainant) that formed the basis for registration of the FIR.
“My husband's childhood friend Madhavan did his MBA degree at Annamalai University where his wife Sivasri also studied and later, in the year 1996, they got married. After their marriage, they came to Chennai and stayed along with my husband in his sister's flat for some period. After about 2 months, they shifted their residence to a nearby flat at Radha Nagar, Chromepet. Both Madhavan and Sivasri Madhavan were employed in TVS Group at Chennai.
In the year 1999, Madhavan got his employment at Dubai and during 2001, Sivasri went to Dubai along with their son. In May 2000, I got married and we are blessed with a daughter Nethra aged 10 years and a son Baby Nithin who is 3 months old. In the year 2004, my husband Bagath Singh got employment in ETA Dubai. In 2005, I shifted to Dubai with my daughter Nethra to stay with my husband. I also got job in Dubai and was working in Khaleej Times from May 2005 and then, shifted to IIR Middle East, Institute for International Research, Dubai from November 2006 onwards.
In the month of February 2006, while myself and my husband met Madhavan and Sivasri at Dubai, they wanted to us invest our money in FOREX (foreign Exchange Currency) trading business. They told us that this investment only will yield the highest returns than any other business. Madhavan said that Sivasri and himself are closely linked with one of the biggest international trading investment company M/s. World Index Investment Ltd. situated at Sea Meadow House, Blackburne Highway, P.O. Box 116, Road Town, Tortola, British Virgin Islands. They also said that their company M/s. Convergis E-Commerce LLC, Dubai, are the introducing brokers and has full influence with M/s. Royal Index LLC., Dubai, which is the operational organisation in UAE for M/s. World Index Investments Ltd.. Because of the rosy picture given by Madhavan and Sivasri thinking that our hard earned money will fetch us highest returns, we decided to invest our hard earned money in the FOREX trade business through Madhavan and Sivasri.
. . . . She received a sum of Rs.2,50,000/- from my in-laws which is equivalent to 5000 USD. When she returned to Dubai, we paid the remaining 15,000 USD and in the month of May 2006, I entered into agreement in this regard and they issued a receipt dated 25.5.2006 for a sum of 20000 USD.
Fully believing that we are going to get high returns from their business slowly, we increased our investments from 20000 USD. After six months (i.e.) on 31.01.2007, we paid another 20000 USD to Madhavan and Sivasri and increased our investments to 40000 USD. Thereafter, on 31.01.2008, we gave another 20000 USD totalling to Rs.60000 USD. In the same way, gradually, we increased our investment, on 01.01.2008, our total investment was 81,000 USD. Till 31.1.2010, we had invested 129,600 USD. Finally, as on 30.06.2010, our investments with Madhavan and Sivasri was a sum of 129600/- USD. In the same way, Sivasri and Madhavan also collected 108595 AED (Dirhams-local UAE currency) equivalent to Rs.15,00,000/- for doing gold trade business which they said will give ver
