Liability for cheating in commercial transactions and the requirement of dishonest intention to deceive in Section 420, I. P. C.

( 1 ) HEARD learned counsel for the applicants and the learned Additional Government Advocate for the State. None appears for the opposite party No. 2.

( 2 ) IN this proceeding under Section 482, Cr. P. C. the order dated 1/07/1996 of the learned Judicial Magistrate I, Etawah taking cognizance of the offence under Section 420, 406, I. P. C. is under challenge. The applicants (hereinafter referred to as the accused persons) are partners of the firm. M/s. Keshari Traders, G. T. Road, Rajganj in the district of Hazari Bagh (Bihar) and they deal in consumer goods. Accused Ram Lakhan Prasad, one of the partners, it is alleged approached the complainant, opposite party No. 2 herein on 1-8-1995 and requested to supply five truck-load fo flour inducing him to believe that price would be paid on receipt thereof. Accordingly, the complainant sent flour on different dates, but received payment only in respect of the first consignment. He requested the accused persons to pay up the balance amount and the same having not been heeded to, led him to file the case which was registered as Complaint Case No. 175 of 1996. The learned Magistrate upon examination of the complainant and the witnesses was prima facie satisfied that a case under Sections 420 and 406, I. P. C. was made out and accordingly cognizance of the said offences.

( 3 ) LEARNED counsel appearing for the accused persons contended that a reading of the complaint as well as the statement of the witnesses including the complainant do not reveal that the accused persons had any intention to deceive the complainant so as to bring the case within the ambit of Section 420, I. P. C. So far as the Section 406, I. P. C. is concerned, he urged that even assuming the prosecution as true, it being not the case of the complainant that he had entrusted the goods to the accused persons which they dishonestly misappropriated or converted to their own use, no offence of criminal breach of trust can be said to have been made out against them. Lastly, he submitted that this being purely a civil dispute criminal proceeding was not maintainable and in support thereof he relied upon a decision of the Apex Court in the case of Nageshwar Prasad Singh alias Sinha v. Narayan Singh , 1998 Cr R 625 : (1998 AIR SCW 4007 ).

( 4 ) WITH the assistance of the learned counsel for the accused persons as well as the counsel for the State I have gone through the complaint petition and the statement of the complainant recorded by the Magistrate. On facts, the question arises whether default of the accused persons to pay the balance price of the goods would make them criminally liable under Section 420, I. P. C. No doubt, the facts narrated in the complaint reveal that it was a commercial transaction between the parties but in my opinion, that cannot be sole reason to hold that no offence of cheating has been made out. The complainant, it is alleged, was deceived by accused, Ram Lakhan Prasad and was dishonestly induced to send five truck load of flour which he despatched on different dates. But payment was made only in respect of one consignment. This, prima facie shows that accused Ram Lakhan Prasad had dishonest intention from the very beginning not to make full payment of the price of the goods to the complainant. A similar case like the present one came up for consideration before the Apex Court in the case of Rajesh Bajaj v. State of U. P. (1999) 3 SCC 259 : (AIR 1999 SC 1216), as to whether non-payment of the balance amount in a commercial transaction would make one liable for cheating. In the said case, the grievance of the complainant was that he had supplied some garments to the accused, the Managing Director of a foreign company. The garments were received and the payment was promised to be made within a fortnight but when no payment was made a report was lodged to the police on the basis of which a case under Section 420, I. P. C. was registered. The accused approached the Delhi High Court se