In the High Court of Jharkhand at Ranchi. Cr.M.P.No.1533 of 2012 With Cr.M.P.No.1557 of 2012 V E R S U S CORAM: HON BLE MR.JUSTICE R.R.

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1 In the High Court of Jharkhand at Ranchi Cr.M.P.No.1533 of 2012 With Cr.M.P.No.1557 of M/s. Ramsarup Lohh Udyog 2.Ashish Jhunjhunwala... Petitioners(Cr.M.P.No.1533 of 2012) Dilip Didwania Petitioner (Cr.M.P.No.1557 of 2012) V E R S U S State of Jharkhand and another..opposite Parties CORAM: HON BLE MR.JUSTICE R.R.PRASAD For the Petitioners: Mr.Indrajit Sinha For the State :A.P.P For the Complainant : Mr.Amit Kumar Das 4/ Heard learned counsel appearing for the petitioners and learned counsel appearing for the opposite party no.2 and also learned counsel appearing for the State. Since both the cases arise out of the same case it were heard together and are being disposed of by this common order. In both the cases the order dated passed by the Chief Judicial Magistrate, Chaibasa in Complaint Case No.68 of 2011 has been challenged whereby and whereunder cognizance of the offence punishable under Sections 406, 420/34 of the Indian Penal Code has been taken against the petitioners. The case of the complainant is that DilipDidwania in Cr.M.P.No.1557 of 2012 approached the complainant for having supplyof iron ore to the company, namely, M/s. Ramsarup Lohh Udyog to which petitioner no.2 (Cr.M.P.No.1533 of 2012) is the Director and made representation that the company would be dealing fairly. On such representation, iron ore was supplied to the accused-company on assurance being given that payment of the same would be made immediately. But in spite of supply of iron ore, payment of Rs.61,59,043/- was never made to the complainant. On such allegation, a compliant was lodged which was registered as Complaint Case No.68 of 2011 under Sections 406, 420/34 of the Indian Penal Code against all the aforesaid three persons in which cognizance of

2 2 the offence as aforesaid was taken against the petitioners, vide order dted which is under challenge. Mr.Indrajit Sinha, learned counsel appearing for the petitioners submitted that accepting the entire allegation made in the complaint to be true, no offence is made out either under Section 406 or under Section 420 of he Indian Penal Code as the necessary ingredients for constituting offence either under Section 405 or Section 415 of the Indian Penal Code are completely lacking. In this regard it was submitted that the petitioners have never been alleged to have induced the complainant fraudulently or dishonestly to supply iron ore and hence, the petitioners cannot be held liable for an offence either under Section 406 or under Section 420 of the Indian Penal Code even if it is accepted that the petitioners did not make payment in spite of iron ore being supplied to the company. Under the circumstances, the order taking cognizance is fit to be quashed. As against this, Mr.Das, learned counsel appearing for the complainant submitted that at the time of agreement, it had been agreed in between the parties that as soon as iron ore would be supplied, payment would be made and on such assurance, iron ore was supplied but the payment was never made and thereby the petitioners can easily be said to have committed offence of forgery in view of the illustration (f) given under Section 415 of the Indian Penal Code. It was further pointed that keeping in view the said illustration, it has been held in a case of Rajesh Bajaj vs. State (NCT of Delhi) [(1999) 3 SCC 259] that every commercial transaction cannot be said to be a civil dispute, rather it may have criminal element also. In this regard learned counsel has also referred to a decision rendered in a case of Iridium India Telecom Limited vs. Motorola Incorporated and others [(2011) 1 SCC 74].

3 3 On that basis, it was submitted by Mr.Das, that when representation was made that the payment would be made as soon as iron ore would be received, iron ore was supplied but payment was not made and thereby the petitioners can certainly be said to have cheated the complainant. In the context of the submission advanced on behalf of the parties, it is to be considered as to whether the allegation made in the complaint does constitute offence of cheating and misappropriation or not? The offence of cheating has been defined under Section 415 of the Indian Penal Code which reads as follows: Cheating - Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any persons shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived and which act or omission causes or is likely to cause damage or harm to that person in body, mind reputation or property, is said to 'cheat. From its reading it appears that following ingredients should necessarily be there for constituting offence of cheating. (1) there should be fraudulent or dishonest inducement by the person alleged to have deceived the complainant. (2) (a) the person so deceived should be induced to deliver any property to any persons, or to consent that any person shall retain any property or (b) the person so deceived should be intentionally induced to do or omit to do anything which he would not do or omit if he were not so deceived. (3) in cases covered by 2(b) the Act or omission should be one which causes or is likely to cause damage or harm to the person induced in bodily or reputation or property. Thus, the first element necessary for constituting the offence of cheating is deception of the complainant by the accused. Unless there is deception, the offence of cheating never gets attracted. After deception has been practiced the persons deceived should get induced to do or omit to do something. Then, the question arises as to what is the deception?

4 4 In the ordinary sense deception has in it the element of misleading or making a person believe something that is false or inculcating of one so that he takes the false as true, the unreal as existent, the spurious as genuine and it is also necessary that deception should be right from the beginning of the contract. Applying the principle constituting a criminal offence of cheating in context of the allegation it does appear that first element of deception constituting an offence of cheating is lacking as nowhere the allegations made in the complaint do indicate about the complainant being deceived by the petitioners in any manner. At this stage, I may refer to illustration (f) to Section 415 of the Indian Penal Code which reads as follows: (f) A intentionally deceives Z into a belief that A means to repay any money that Z may led to him and thereby dishonestly induces Z to lend him money. A not intending to repay it. A cheats. From the aforesaid illustration, it would appear that A though had no intention to repay money still he represents before Z to repay money which made Z to lend money and thereby it has been said that in that case A would be guilty for an offence of cheating whereas in the instant case, there does not appear any allegation that at the time of entering into an agreement, the petitioner in any manner induced the complainant dishonestly or fraudulently to induce the complainant to supply iron ore rather there appears to be simple promise that on supply of iron ore payment would be made. But that simple promise does not indicate about fraudulent or dishonest on the part of the petitioner.. So far the decision referred to rendered in a case of Iridium India Telecom Limited vs. Motorola Incorporated and others (supra) as has been relied upon by the complainant is concerned, the Hon ble Supreme Court taking notice of Section 415 of the Indian Penal Code has been pleased to hold that deception is a necessary ingredient for the offence of cheating under both parts of the Section. It has been further observed that there is a growing tendency in business circle to convert purely civil dispute into criminal cases. This is

5 5 obviously on account of the prevalent impression that civil law remedies are time consuming and do not adequately protect the interest of lenders/creditors. Such tendency is seen in several family dispute also leading to irretrievable brake down of marriages/families. There is also an impression that if a person could somehow be entangled into a criminal prosecution, there is likelihood in imminent settlement. It has emphatically been said by the Hon'ble Supreme Court in the said decision that any effort to settle civil dispute and claims which do not involve any criminal offence by applying pressure through criminal prosecution should be deprecated and discouraged. So far the case of Rajesh Bajaj vs. State (supra) is concerned, their Lordships have observed as follows: It may be that the facts narrated in the present complaint would as well reveal a commercial transaction or money transaction. But this is hardly a reason for holding that the offence of cheating would elude from such a transaction. In fact, many a cheatings were committed in the course of commercial and also money transactions. The principal which has been decided in that case seems to be that merely because of an act does have colour of civil dispute one can not escape from the liability of criminal offence. Certainly one would be proceeded with criminal liability provided the offence alleged to have all the necessary ingredients. As I have already observed that necessary ingredients are lacking constituting offence of cheating, it be recorded that no offence of cheating is made out even if the entire allegations made in the complaint are taken to be true. So far as the offence under Section 406 of the Indian Penal Code is concerned, that also does not appear to have been made out against the petitioner. Criminal breach of trust has been defined in Section 405 of the Indian Penal Code which reads as under: 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

6 6 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 willfully suffers any other person so to do, commits criminal breach of trust. On reading of the said provision, the following ingredients should be there for constituting the offence under Section 405 of the Indian Penal Code. (a) a person should have been entrusted with property or entrusted with dominion over property; (b) that person should dishonestly misappropriate or convert to his own use that property, or dishonestly use or dispose of that property or willfully suffer any other person to do so; (c ) that such misappropriation, conversion, use or disposal should be in violation of any direction of laws 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. In the background of the allegation made in the complaint, I do not find it a case of criminal breach of trust, rather it is a pure case of breach of agreement which could have been enforced in the competent court of civil jurisdiction. Under the aforesaid circumstances, the entire criminal proceeding of Complaint Case no.68 of 2011 including the order dated is hereby set aside. In the result, both the applications are allowed. ND/ ( R.R.Prasad, J.)

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