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SUPREME COURT OF INDIA
DELHI RACE CLUB (1940) LTD – Appellant
Versus
THE STATE OF UTTAR PRADESH – Respondent
Crl.A. No.-003114-003114 - 2024
Key Points: - The scope and limits of inquiry under Section 202 CrPC, including that the magistrate must determine prima facie grounds for proceeding and not adjudicate merits at this stage (!) (!) . - The difference between criminal breach of trust and cheating, emphasizing entrustment and mens rea requirements, and that mere non-payment in a sale does not automatically constitute criminal breach of trust or cheating without entrustment or fraudulent intent from inception (!) (!) (!) (!) (!) . - The High Court’s framing of the matter as lacking entrustment and fraudulent inception, leading to quashing of the summoning order; the Supreme Court’s conclusion that there was no entrustment and the offences were not established, so the summoning order and High Court’s decision were set aside (appeal allowed) (!) (!) (!) . - The requirement that a complainant must prove entrustment to sustain Section 406 IPC charges; a sale where property passes to buyer may negate entrustment for criminal breach of trust (!) (!) . - The caution that private complaints must show prima facie offences and that merely alleging non-payment does not automatically constitute a criminal offence, especially where there is no entrustment (!) (!) . - The principle that summons are serious and require subjective satisfaction of grounds for proceeding, and can be intervened upon under Section 482 CrPC if not properly applied (!) (!) (!) . - The concluding observation that the two offences (cheating and criminal breach of trust) are independent and cannot co-exist on the same factual matrix without proper entrustment and mens rea (!) (!) .
J U D G M E N T
J. B. PARDIWALA, J.:
1. This appeal arises from the order passed by the High Court of Judicature at Allahabad dated 03.04.2024 in Application No. 15453 of 2023 filed by the appellant herein by which, the High Court rejected the same and thereby declined to quash and set aside the summoning order dated 28.02.2023 passed by the Additional Chief Judicial Magistrate, Khurja, Bulandshahar in Complaint Case No. 547 of 2021.
2. Facts giving rise to this appeal may be summarised as under:
(i) The respondent No. 2 herein is the original complainant. He lodged a private complaint in the court of Additional Chief Judicial Magistrate, Khurja, Bulandshahar against the appellants herein for the offence punishable under Sections 406 , 420 & 120B respectively of the Indian Penal Code, 1860 (for short, “ IPC ”).
The complaint reads thus:
“It is most respectful that the Applicant Vipin Kumar Agarwal, son of Late Shri Bhagwat Swaroop Agarwal, who is the owner of a firm Agarwal Udyog, New Mandi, Khurja. The applicant’s firm used to supply horse feed, barley and oats to Delhi Race Club 1940 Limited, New Delhi since 1990. In the year 1995, the then head of the Race Club, Shri PS Vedi and the then Secretary Sehgal told the applicant that from now on the bills for the supply of horse grain and oats would be made in the name of Delhi Horse Trainers Association, Race Course Road, New Delhi. And the Head and Secretary of the same association have now been made separate, they will pay you for the goods supplied. Till the year 2017, the payment of the applicant’s firm continued to be regular and now at present Delhi Horse Trainers Association President Kazim Ali Khan and Secretary Sanjeev Charan owe a payment of Rs 9,11,434/- to the applicant's firm. Whenever the applicant makes demands, they keep evading when the applicant tried to talk to the current President of the Race Club, J. S. Vedi and the current Secretary about this. Then the Secretary GS Vedi said that you should demand your dues from Delhi Horse Trainers Association only, we have no relation with them, then the applicant tried to meet Kazim Ali Pradhan along with Manish Kumar Sharma, son of Mahesh Kumar Sharma, resident of Nawalpura Khurja and Chirag Agarwal, son of Vijay Agarwal, resident of Malpura, Khurja but they refused to talk to the applicant and threatened that if he came here again, it would be very bad and started a scuffle. The applicant feels that both the above mentioned officials of Delhi Race Club 1940 Limited, New Delhi and Delhi Horse Trainers Association, in connivance with each other, cheated the applicant and dishonestly obtained the goods from the applicant's firm in bad faith and they used it for their club and association and now they do not want to pay for the goods given by the applicant. All of them under conspiracy want to grab the money of the applicant's firm, after which the applicant had given a legal notice to the above mentioned people through his advocate on 18th June 2020 but even after receiving the notice, the above people neither gave any reply to the notice nor was the applicant's outstanding amount paid. In this context, the applicant gave an application to Inspector-in-charge of Kotwali Khurja Nagar on 25.07.2021 and on 06.08.2021, an application letter was sent to SSP Sir Bulandshahar through postal registry, but till date no action has been taken nor has the applicant's report been registered.
Therefore, it is prayed that after the investigation, please summon the accused along with evidence to the court and punish them for the crime committed by them. Date 27.08.2021”
(ii) The plain reading of the complaint would indicate that the appellant No. 1 is a legal entity. The appellant No. 2 is the Secretary of the appellant No. 1 Company, and the appellant No. 3 is the Honorary President and Non- Executive Director of the appellant No. 1 Company. They used to purchase grains and oats from the complainant meant to be fed to the horses maintained
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