Insufficient evidence of dishonest intent or misappropriation negates criminal charges under Sections 406 and 420 IPC, emphasizing the necessity of proving criminal intent in such transactions.

JUDGMENT

Meenakshi Madan Rai, J. - Aggrieved by the acquittal of the Respondent No.1 herein, in Criminal Appeal No.01 of 2018, Ramesh Sharma v. State of Sikkim under Section 406 and Section 420 of the INDIAN PENAL CODE , 1860 (for short, the “IPC”), by the Learned Sessions Judge, Special Division-II, Sikkim at Gangtok, vide Judgment dated 27.08.2018, having reversed the finding of Conviction of the Learned Judicial Magistrate, Chungthang, North Sikkim, in G.R. Case No.327 of 2015, State of Sikkim v. Ramesh Sharma vide Judgment dated 28.12.2017, this Appeal has arisen.

2.(i) On 07.01.2015, the Appellant herein lodged Exhibit 16, the First Information Report (for short, the “FIR”), before the Sadar Police Station, which was registered as FIR No.08 of 2015, dated 07.01.2015 under Sections 420 and 406 of the IPC against the Respondent No.1. The Appellant reported that the Respondent No.1, in the month of March, 2013, had informed him that Loan could be availed from the Syndicate Finance Pvt. Ltd., Mumbai, for the incomplete Hotel Project of his son with marginally lower rate of interest than the Nationalized Banks as also liberal moratorium period. The Respondent No.1 being known to the Appellant’s close relative and having handled the Hotel Loan Project of his relative’s wife, the Appellant agreed to the proposal. Pursuant thereto, for the said purpose the Respondent No.1 took a total sum of Rs.42,70,000/- (Rupees forty two lakhs and seventy thousand) only, in two tranches by executing two Money Receipts, the first comprising of Rs.12,70,000/- (Rupees twelve lakhs and seventy thousand) only, in March, 2013, and the second being a sum of Rs.30,00,000/- (Rupees thirty lakhs) only, in August, 2013 as “Promoter’s Capital Contribution.” That, the Appellant suspected that the Respondent No.1, instead of investing the money for the required purpose, invested it in “Nirmal Bang Broking House” of which he was a Franchisee, for his personal benefit. Despite repeated requests, the Respondent No.1 refused to return his money. On 04.11.2014, the Appellant warned the Respondent No.1 that should he fail to return his money, he would be compelled to take necessary legal action against him. Thereupon, on 07.11.2014, the Respondent No.1 executed Exhibit 1, an Agreement, wherein he promised to pay the Appellant, the aforestated amount in three installments towards which, he issued three post-dated Cheques, dated 30.12.2014, 15.02.2015 and 31.03.2015, drawn on IDBI Bank and AXIS Bank. The first Cheque was deposited by the Appellant in his Account in the Central Bank of India, Gangtok Branch, but the Cheque was dishonoured by the said Bank on account of “insufficiency of funds” in the Respondent No.1’s Account, hence the FIR. The matter was endorsed to the Investigating Officer (for short, the “I.O.”) P.W.19 for investigation, on completion of which, Charge-Sheet was submitted against the Respondent No.1 under Section 420 and Section 406 of the IPC.

(ii) The Learned Trial Court framed Charge against the Respondent No.1 under Sections 406 and 420 of the IPC, to which he pleaded “not guilty.” The Prosecution, in a bid to establish its case, examined nineteen Witnesses including the I.O. of the case. The Respondent No.1 was examined under Section 313 of the Cr.P.C., on closure of Prosecution evidence. He had no Witnesses to examine. On consideration of the evidence including the documentary evidence, the Learned Trial Court convicted the Respondent No.1 under Sections 4