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SUPREME COURT OF INDIA
T.S. Thakur, R. Banumathi, JJ.
BINOD KUMAR & ORS. – Appellant
Versus
STATE OF BIHAR & ANR. – Respondents
CRIMINAL APPEAL NO. 2327 OF 2014 (Arising out of SLP (Crl.) No. 9751/2011)
Decided On : 30-10-2014
(1976) 3 SCC 736; (2006) 6 SCC 736 – Relied upon
(b) Indian Penal Code, 1860 – Section 405 and 406 and section 420 – Claim of respondent no. 2 not paid – Parties already availing civil remedies – Basic essential ingredients of dishonest misappropriation and cheating missing in the case – No case made out u/s 405 or 420 – Non-payment of claimed amount does not amount to criminal breach of trust. (Para 16, 18, 19)
Facts of the case:
A contract was entered into between the second respondent and K.S.S. College for construction of building of K.S.S. College, Lakhisarai, a constituent unit of Tilka Manjhi Bhagalpur University.
The work was not completed within stipulated period, and the university informed the respondent No.2 that his contract is terminated and all his dues including final bill, earnest money and security deposit etc. will be released after consultation with the College Development Committee.
Out of the respondent’s claim of Rs.48,505/- he was finally paid Rs.14,000/- as per the direction of the College Development Committee and balance amount of Rs.34,505/-was not paid to him.
Aggrieved by the said nonpayment of entire amount, respondent No.2 filed a criminal complaint case in the Court of Sub Divisional Judicial Magistrate, Lakhisarai for criminal breach of trust.
The appellants filed an application under Section 227 Cr.P.C. before the Court of Sub Divisional Judicial Magistrate, Lakhisarai seeking their discharge from the criminal case which was dismissed.
The appellants then filed petition under Section 482 Cr.P.C. before the High Court for quashing the said order and the High Court dismissed the petition.
Finding of the Court:
No case of criminal breach of trust is made out.
Result:
Appeal allowed
Certainly. Based on the provided legal document, here are the key points:
The case concerns whether non-payment of a claimed amount constitutes criminal breach of trust. The court clarified that mere non-payment does not automatically amount to criminal breach of trust, especially when civil remedies are already being pursued by the aggrieved party (!) (!) .
The essential ingredients of criminal breach of trust involve entrustment of property and dishonest misappropriation or conversion in violation of a legal obligation or contract. The court emphasized that for an offence under this section, there must be proof of dishonest intent to misappropriate or convert the property (!) (!) (!) .
The allegations in the case did not establish the presence of dishonest misappropriation or cheating. The absence of dishonest intention or wrongful gain or loss indicates that the ingredients for offences under Sections 405, 406, or 420 IPC were not satisfied (!) (!) .
The court highlighted that the mere retention of money, without evidence of dishonest disposal or misappropriation, does not constitute a criminal offence. The fact that the appellants did not pay the amount, in itself, was insufficient to establish criminal breach of trust (!) (!) .
The court noted the importance of civil remedies for disputes of this nature and emphasized that criminal proceedings should not be used as a shortcut to civil remedies. The tendency to convert civil disputes into criminal cases was discouraged (!) (!) .
The court reiterated that the power to quash criminal proceedings should be exercised sparingly and only when the complaint does not disclose any offence or is frivolous. It is not required to investigate the probability or genuineness of allegations at this stage (!) (!) .
Ultimately, the court found that the allegations did not meet the criteria for criminal offences, and therefore, the proceedings against the appellants were liable to be quashed. The parties were free to pursue their civil remedies (!) (!) (!) .
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JUDGMENT
R. BANUMATHI, J.
Leave granted.
2. Whether the charges under Section 406 IPC and the criminal complaint for criminal breach of trust for allegedly retaining the bill amount payable to respondent No.2 is liable to be quashed is the point falling for consideration in this appeal.
3. Payment of bill pertaining to the contract executed by the second respondent in Tilka Manjhi Bhagalpur University had a chequered history. Case of second respondent is that contract was entered into between him and K.S.S. College on 4.9.1990 for the construction of building of K.S.S. College, Lakhisarai, a constituent unit of Tilka Manjhi Bhagalpur University. According to second respondent, since money and requisite materials were not given to him in time, the work was not completed within stipulated period. The university vide letter dated 9.5.1995, informed the respondent No.2 that his contract is terminated and all his dues including final bill, earnest money and security deposit etc. will be released after consultation with the College Development Committee. The University Engineer vide letter dated 4.6.1996, addressed to the Principal of the college, informed that a payment of Rs.48,505/-is payable to the contractor; but the respondent No.2 was not paid the aforesaid bill amount. Finally, the respondent was paid Rs.14,000/-vide cheque No. EMGCO-OP.Z No. 0127627, as per the direction of the College Development Committee and balance amount of Rs.34,505/-was not paid to him. Aggrieved by the said nonpayment of entire amount, respondent No.2 filed a criminal complaint case No.196-C/1997 in the Court of Sub Divisional Judicial Magistrate, Lakhisarai for criminal breach of trust, alleging that the amount of Rs.34,505/-was not paid to him and that the amount was utilized by the appellants in some other work.
4. The appellants filed an application under Section 227 Cr.P.C. before the Court of Sub Divisional Judicial Magistrate, Lakhisarai seeking their discharge from the criminal case. The Court of Sub Divisional Judicial Magistrate, Lakhisarai vide its order dated 2.12.2002 dismissed the said petition and directed the appellants to remain present in the court on 8.1.2003 for framing of charges under Section 406/120B IPC. The appellants filed petition under Section 482 Cr.P.C. before the Patna High Court for quashing the said order and by the impugned order dated 18.2.2011, the High Court dismissed the petition. Aggrieved by the same, the appellants are before us.
5. Dr. Manish Singhvi, learned counsel appearing for the appellants, contended that the act of withholding of payment to the second respondent was as per the direction issued by the Vice-Chancellor and no case is made out for misappropriation of funds under Section 406 IPC. It was contended that the act of the appellants was done in the discharge of their public duties and there was no dishonest intention to misappropriate the amount and the essential ingredients of criminal breach of trust are not made out and the High Court has not properly appreciated the matter.
6. Ms. Prerna Singh, learned counsel for respondent No.1 -State of Bihar, submitted that the instant petition does not relate to any police case and the matter was never subjected to police investigation. It was, however, submitted that on examination of four witnesses, Magistrate found that a prima facie case was made out against the appellants and therefore, High Court rightly dismissed the petition filed under Section 482 Cr.P.C.
7. Mr. Rajiv Kumar, learned counsel appearing for the second respondent contended that the application for discharge was rightly rejected by the Magistrate as the case filed by the second respondent is a warrant case instituted other than on police report and since prima-facie case was made out, the discharge application was rightly dismissed by the trial court. It was also contended that as per the terms and conditions of the contract, the second respondent had executed the work and the same
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