1. Chit fund dispute — Non-payment of prized amount — Complaint under Sections 406, 420 IPC and special Acts. (Para 2 )
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2024 Supreme(Online)(AP) 4259
HIGH COURT OF ANDHRA PRADESH
Tarlada Rajasekhar Rao, J
Kambamsetty Vijayalakshmi – Appellant
Versus
State Of Andhra Pradesh – Respondent
CRIMINAL PETITION NO: 7438/2019
Advocates:
For the Appellants/Petitioners: Marri Venkata Ramana, Posani Venkateswarlu
For the Respondents: Public Prosecutor (AP)
For the Appellants/Petitioners: Marri Venkata Ramana, Posani Venkateswarlu
For the Respondents: Public Prosecutor (AP)
Cheating (S. 420 IPC) and Criminal Breach of Trust (S. 406 IPC) cannot coexist for the same transaction as the former requires dishonest intention at the inception and the latter requires dishonest intention after entrustment of property.
Headnote:(A) Criminal Law - Cheating vs. Criminal Breach of Trust - Distinction between Section 420 and Section 406 IPC - A person cannot be charged with both offences simultaneously for the same transaction because cheating requires dishonest intention at the inception, whereas criminal breach of trust involves dishonest intention arising after property has been entrusted. (Para 14, 15)
(B) Cheating - Section 420 IPC - Unauthorized chit fund transactions - Failure to pay prized money after collecting installments indicates fraudulent intention and constitutes an offence of cheating if the intention to defraud existed at the initial stage. (Para 8, 9, 10)
Issues: Whether the proceedings under Sections 406 and 420 of the IPC could be quashed on the ground that the dispute was civil in nature and whether both charges could coexist for the same transaction.
Legal Category Hierarchy
- crime and sentencing
- practice and procedure
- statutory interpretation
Table of Contents
2. Petitioners argued civil dispute with no dishonest intention; respondent alleged criminal breach of trust and cheating. (Para 5 )
3. Non-repayment of prized chit amount indicates fraudulent intention; dishonest intention must exist at inception for cheating. (Para 8 , 9 , 10 , 11 , 12 , 13 )
4. Cheating and criminal breach of trust cannot coexist as dishonest intention timing differs; Section 406 quashed. (Para 14 )
5. Petition allowed in part; quashing Section 406 IPC but dismissing quash of Section 420 IPC; trial to proceed. (Para 15 , 16 )
6. Can a person be charged simultaneously for cheating under Section 420 IPC and criminal breach of trust under Section 406 IPC for the same transaction?
No, because cheating requires dishonest intention at the inception of the transaction, while criminal breach of trust requires dishonest intention arising after entrustment of property. (Para 14 )
7. What are the essential ingredients for an offence under Section 420 IPC?
There must be cheating within Section 415 IPC with dishonest or fraudulent intention (mens rea) existing at the initial stage and continuing until the end. (Para 9 )
8. What constitutes criminal breach of trust under Section 405 IPC?
There must be entrustment or dominion over property, and the accused dishonestly misappropriates or converts it to their own use in violation of law. (Para 11 )
9. Does non-payment of prized chit amount indicate fraudulent intention?
Yes, non-payment of the prized amount in a chit clearly indicates fraudulent intention, as the accused violated the promise and evaded payment. (Para 10 )
The Court made the following:
ORDER:
The present Criminal Petition is filed under Section 482 of the Code of Criminal Procedure, 1973 (Cr.P.C.), praying to call for the records pertaining to C.C.No.84 of 2017 on the file of the Judicial Magistrate of First Class, Kovur, and to quash the same.
2. On perusal of the record, the 2nd respondent, who is the de facto complainant, has lodged a report to the police accusing the petitioners/ A1 and A2, i.e., Kambamsetty Vijayalakshmi and her husband Kambamsetty Srinivasulu are maintaining Sri Harsha Chits and they used to collect chits from others in their village and the de facto complainant being one of the subscriber has joined in the chit and paid the entire installments. Despite he being the paid subscriber (quantum of money relating) on even repeated demands, though lapse of one year from the prized date, the accused for one reason or the other, postponing the payment of the prized chit amount on false words and therefore he sought to take action against the petitioners/accused.
3. On receiving the said report, Kovur Police registered the crime as F.I.R.No.154 of 2014 for the offences under Sections 406 and 420 I.P.C. and Section 5 of the Andhra Pradesh Protection of Depositors of Financial Establishments Act, 1999, and Section 76 of the Chit Funds Act, 1982. After completion of investigation, the police have forwarded the charge sheet under Section 173(2) Cr.P.C. to the jurisdictional Magistrate to punish the accused for the offences under Sections 406 and 420 I.P.C. by deleting the special Acts referred supra i.e., Andhra Pradesh Protection of Depositors of Financial Establishments Act, 1999 and the Chit Funds Act, 1982.
4. The learned Magistrate has taken cognizance of the case for the offences under Sections 406 and 420 I.P.C. by an order dated 10.04.2017 and registered the case as C.C.No.84 of 2017.
5. The aforesaid C.C. was assailed in the present Criminal Petition on the ground that the entire dispute is a civil dispute and in order to give cloak of criminal offence, the 2nd respondent-de facto complainant has filed a false complaint to the police and on entire reading of the alleged transactions, they do not disclose the dishonest intention except bald allegations and no other details like, date of payment, mode of payment, place and time of payment were absent in the charge sheet and the statements under Section 161 Cr.P.C. and the charge sheet does not disclose specific role of the petitioners and without there being any specific allegations against each of the petitioner in the report, the police made the petitioners as accused. As there are no specific allegations, which attracts ingredients of Sections 406 and 420 I.P.C. and it amounts to abuse of process of law, and rigmarole of trial. Therefore, it is urged to quash the C.C.No.84 of 2017 on the file of the Judicial Magistrate of First Class, Kovur.
6. Heard Sri Posani Venkateswarlu, learned senior counsel appearing for Sri Marri Venkata Ramana, learned counsel for the petitioners and the learned Special Assistant Public Prosecutor appearing for the State.
7. Aggrieved by order of taking cognizance of case in C.C.No.84 of 2017, the petitioners have filed the above Criminal Petition under Section 482 of Code of Criminal Procedure, to quash the C.C. 84 of 2017.
8. The petitioners /accused A-1 and A- 2 in the above criminal case have run unauthorized chit fund transaction and they have collected money from the de facto complainant and others and thereafter did not pay the prized money, to the de facto complainant. The cognizance will be taken against the offence and not offender. The word ‘offence’ means an act committed by the accused. Here the act committed by the accused is collection of money on a promise and ultimately failed to keep the promise. Therefore, this will amount to an offence punishable under Section 420 of Indian Penal Code.
9. To constitute an offence under Section 420 IPC, there
