A purely civil dispute, such as a loan transaction, cannot be converted into a criminal proceeding by invoking sections related to cheating or breach of trust, as doing so constitutes an abuse of the process of law.

ORDER

This petition has been filed to quash the FIR registered in Crime No.141 of 2023 on the file of the first respondent.

2. Heard the learned counsel appearing for the petitioners and the learned Government Advocate (Crl.Side) appearing for the first respondent. Though notice was served on the second respondent and his name is also printed in the cause-list, no one appeared before this Court either in person or through pleader. Perused the materials available on record.

3. The case of the defacto complainant is that the petitioners borrowed a sum of Rs.38,00,000/- on various dates and he had repaid a sum of Rs.20,50,000/- and there is balance to the tune of Rs.17,50,000/-. Hence, the complaint.

4. A perusal of an FIR revealed that admittedly the petitioners have borrowed a loan to the tune of Rs.38,00,000/- on various dates from the defacto complainant. Thereafter, he has paid the partial amount of Rs.20,50,000/- and failed to repay the balance amount to the tune of Rs.17,50,000/-. It is purely a loan transaction and no offence is made out under Sections 406 and 420 of IPC. In so far as the offence under Section 506(i) of IPC, FIR cannot be sustained and the FIR itself is nothing but a clear abuse of process of law and the entire allegations cannot be sustained as against the petitioners and is liable to be quashed.

5. The defacto complainant has alleged in the complaint that the petitioners have committed offences under Sections 406 and 420 of IPC. It would thus be necessary to examine the ingredients of the above offences and whether the allegations made in the complaint, read on their face, attract those offences under the Penal Code. Section 405 of Penal Code reads thus:-

405. Criminal breach of trust — Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits "criminal breach of trust".

A careful reading of Section 405 of IPC shows that the ingredients of a criminal breach of trust are as follows:-

(i) A person should have been entrusted with property, or entrusted with dominion over property; (ii) That person should dishonestly misappropriate or convert to their own use that property, or dishonestly use or dispose of that property or willfully suffer any other person to do so; and (iii) That such misappropriation, conversion, use or disposal should be in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract which the person has made, touching the discharge of such trust.

Entrustment is an essential ingredient of the offence. A person who dishonestly misappropriates property entrusted to them contrary to the terms of an obligation imposed is liable for a criminal breach of trust and is punished under Section 406 of the Penal Code.

6. It is relevant to extract the provisions under Section 420 of the Penal Code, which reads as follows :-

420. Cheating and dishonestly inducing delivery of property — Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall