A.K. Sikri, J.
1. Respondent No. 2, namely M/s. Bhargava & Associates Pvt. Ltd., has filed criminal complaint against the petitioners herein under Section 420 IPC in which order dated 29.3.1996 was passed by the learned MM summoning the petitioners. The petitioners filed application for recalling of the summoning orders, which has been dismissed by the learned MM vide order dated 3.4.2003.
2. The main contention of the petitioners, on the basis of which they seek dismissal of the complaint, is that the dispute between the parties is purely of civil nature and criminal complaint has been filed giving it a colour of offence of cheating which is to harass and pressurize the petitioners. It is this question which needs determination by this Court. In order to appreciate the controversy, let me scan through the undisputed facts which emerge from the complaint.
3. In the complaint filed by the respondent No. 2 against the petitioners, it is alleged that the petitioners had engaged the services of the complainant for carrying out various works at sites allegedly owned by the petitioners and upon engaging its services, the petitioners had declined and failed to pay for the services rendered, thereby committing an offence under Section 420 IPC. It is stated that the petitioners had approached the respondent No. 2 for providing services of design and consultation for the proposed development:
a) a farm house at Sultanpur, New Delhi, owned by the petitioners;
b) garment unit on plot of land at Jaunapur, Mehrauli, New Delhi, owned by a concern in which both petitioners are partners;
c) design of the property proposed to be acquired at Okhla Phase-II, New Delhi, which the petitioners were interested in purchasing; and
d) the work of renovation of the existing residential house being W-155, Greater Kailash-II, New Delhi.
4. It is not in dispute that the complainant has also filed a suit in this Court against the petitioners as well as some other defendants for the recovery of alleged dues. It is also not in dispute that cause of action in the said suit is pari materia with the allegations made in the complaint filed before the learned MM. Some of the averments made in the plaint filed by the complainant would have bearing on the issue involved herein and, thereforee, those paragraphs from the plaint are reproduced below:
15. That defendants required plaintiff to render complete services for their afore-mentioned factory project at Jaunapur. They desired plaintiff to prepare tender documents and contract documents for inviting contracts on lump sum basis stating specifications of work to be done in the tender document.
Plaintiff prepared complete drawings, tender invitation documents, scrutinised the quotations received from tenderers and submitted Report for appointment of contractors. This exercise consumed around 45 days of complete working with plaintiff for defendant's aforesaid project. Thereafter Defendants desired plaintiff to prepare tender documents, scrutinise the quotations and finalise contracts with construction agencies, by obtaining quotations on item rate basis also. On the basis of quotations received project cost was evaluated at around Rs. 72,00,000/-. After finalisation of above contracts, based on defendants desire and increased quantum of work. (sic) Plaintiff prepared fresh designs and drawings as per requirements of defendants given in their meetings from time to time. Plaintiff prepared following drawings for aforesaid project of defendants in....
16. That plaintiffs submitted bill to defendants for aforementioned works/projects:
S.No. Project Project Cost Fee Chargeable Amount (inRs.)1. Farm house at Sultanpur Mehrauli Lumpsum fee 3,00,000.002. W-115, Greater Kailash Part-II,New Delhi (House) 36,00,000 15% 5,40,000.003. Proposed factory at A-23, OkhlaPhase-I, New Delhi Lumpsum fee 1,00,000.004. Factory at Jaunapur, Mehrauli, New Delhi 75,00,000 10% 7,50,000.00TOTAL 16,90,000.0017. That against above bills defendants paid following amounts:
Date Particulars Amount (in Rs. )31.8.90 By Cheque No. 512379 15,000.0009.5.91 By Cheque No. 550928 20,000.0010.1.92 By cash 7,500.0013.3.92 By Cheque No. 052584 60,000.0013.3.92 By Cheque No. 051911 10,000.009.4.92 By Cheque 50,000.0018.5.92 By Cheque 50,000.00TOTAL 2,12,000.0013.3.92 Less: Cheque returned to Oxford Builders 20,000.00Net fee received on a/c of all projects 1,92,000.0018. That after taking into account, amount of fee paid by defendants against plaintiff's aforementioned bills, a sum of Rs. 14,79,500/- remained payable by defendants. Under ethic prescribed by Institute of Engineering/ Architects, 80% of fee is receivable by Consultants/ architects at the time of undertaking execution of Project. Plaintiff completed whole work at his own expense required in execution of aforesaid projects. Defendants opted not to proceed with their projects for reasons originating at their end. Plaintiff requested and reminded defendants to settle pending bills. Neither of defendants responded until meeting took place between the parties on 21st April, 1993, wherein defendants offered to settle plaintiff's bills by discussing with few of agreed names amongst leading architects who are in responsible position in the aforesaid trade. Defendants obtained complete record of works done/performed by plaintiff including their account of expenses incurred in above. Defendants did not respond thereafter and have failed and neglected to take steps to discharge their liability to plaintiff in terms of above bills.
19. That value of bills raised and paid, as aforesaid, is legally recoverable by plaintiff and payable by aforesaid defendants, liable jointly and severally. The defendants are illegally and arbitrarily withholding payment of above sums to plaintiff thereby enjoying benefit of utilising aforementioned sums payable to plaintiff, in their businesses. For such acts and actions of defendants, Plaintiff is entitled to recover interest on aforesaid sums at rate of 21% per annum, which rate besides being recognised rate of interest in market usage and custom, is the rate of interest which bankers of plaintiff are charging from plaintiff and no charge of interest at aforesaid rate of interest is enjoyed defendants in bank accounts maintained by them with their bankers. Plaintiff limits claim on account of interest at aforesaid sum up to the date of filing of the suit at Rs. 1,25,500/-. A sum of Rs. 16,00,000/- (Rupees 14,79,500/- + Rs. 1,20,500/-) by plaintiff is legally enforceable against defendants. Plaintiff is also entitled to aforesaid rate of interest during pendency of the suit, until realisation of moneys under orders of Hon'ble Court. There is no impediment to grant of relief prayed in suit. Defendants having stopped response to plaintiff's requests, reminders and demands for release of above said sums, is left with no other alternative but to file the present suit, hence this suit.
5. As per the averments made in the aforesaid paras of the plaint, the complainant admits that against the work done in respect of four projects, total bills were raised for Rs. 16,90,000/- and various payments were made by the petitioners herein. The balance payable is Rs. 14,79,500/-. It is alleged that though the complainant (plaintiff therein) had completed the entire work and it is the defendants (petitioners herein) who opted not to proceed with their projects and, thereforee, on that ground the petitioners could not deny the payment of dues. If one goes by these allegations, even as per the complainant, on raising the bills the petitioners had started making the payments and, in fact, made certain payments from time to time by various cheques between the period 31.8.1990 to 18.5.1992. The dispute arose, as per the petitioners, when the petitioners opted not to proceed with their projects. It may be mentioned that though as per the petitioners the complainant had not carried its obligation by completing the work because of which it is the petitioners who suffered losses and damage caused to them and they have filed counter claim of Rs. 20 lacs in that very suit. Even if this aspect is not to be seen at this stage, fact remains that the complainant is also admitting the existence of disputes because of which the petitioners did not make the payment. Further, the complainant is also admitting that initially payments were made. thereforee, it cannot be a case of cheating as dishonest intention has to be shown at the time of entering into the deal, which cannot be attributed as the petitioners had started making the payment. Basic ingredients of Section 420 IPC are, thereforee, clearly missing. In U.Dhar and Anr. v. The State of Jharkhand and Anr. : 2003CriLJ1224 , almost on similar facts the Apex Court came to the same findings holding that the dispute between the parties was of civil nature. That was also a case where grievance of the complainant was about the failure on the part of the accused to pay the balance amount under the contract even though according to the complainant the work had been completed, which was disputed by the accused persons. The Court observed as under:
4. The present appeal has been filed against the said order of the High Court whereby the High Court refused to quash the order of the learned Chief Judicial Magistrate taking cognizance of the alleged offences against the appellants. The Learned Counsel for the appellants argued that a perusal of the complaint would show that no case is made out against the appellants for the alleged offences, and, thereforee, the order passed by the learned Chief Judicial Magistrate is wholly without jurisdiction. According to the Learned Counsel for the appellants, the controversy relates to a purely civil dispute regarding payment of money and no case for criminal complaint for the alleged offences is made out. We have been taken through the complaint as well as our attention has been drawn to the impugned order passed by the Chief Judicial Magistrate and the confirming order of the High Court. After careful consideration of the facts placed on record, it appears to us that the dispute between the parties is purely of a civil nature. The grievance of the complainant is about the failure of TCPL to pay the balance amount under the contract even though according to it the work stands completed. The appellants have disputed this.
6. The Court also opined that Section 403 IPC uses the words 'dishonestly' and 'misappropriate' which were necessary ingredients for an offence under the said provision and on the aforesaid facts these ingredients are not satisfied. I may state that not only in the plaint filed by the complainant but even in the complaint also the complainant has admitted that part payment is made and it is a case relating to making payment of balance amount, as would be clear from para 6 of the complaint, which reads as under:
That total consideration for all the four projects was settled and the accused promised to pay the agreed fee amounting to Rs. 16,90,000/- out of which the accused paid only Rs. 1,92,500/- as per the details annexed hereto as Annexure 'C' and detail of the fee receipt is annexed hereto as Annexure C-1.
7. It may also be of interest to note that the complainant had written letter dated 21.4.1993 to the petitioners wherein the complainant referred to a meeting with the petitioners and stated that in the said meeting the petitioners had conveyed that they were no more interested in utilising the services of the complainant and as such the work done by the complainant on the said projects could be evaluated. It also records that in the said meeting it is also agreed that one Shri Sher Singh Dagar be appointed as the sole arbitrator. This would also indicate that the dispute is of civil nature. In Hridaya Ranjan Prasad Verma v. State of Bihar (2000) 4 SCC 168, the Supreme Court held as under:
14. On a reading of the section it is manifest that in the definition there are set forth two separate classes of acts which the person deceived may be induced to do. In the first place he may be induced fraudulently or dishonestly to deliver any property to any person. The second class of acts set forth in the section is the doing or omitting to do anything which the person deceived would not do or omit to do if he were not so deceived. In the first class of cases the inducing must be fraudulent or dishonest. In the second class of acts, the inducing must be intentional but not fraudulent or dishonest.
15. In determining the question it has to be kept in mind that the distinction between mere breach of contract and the offence of cheating is a fine one. It depends upon the intention of the accused at the time of inducement which may be judged by his subsequent conduct but for this subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, that is, the time when the offence is said to have been committed. thereforee it is the intention which is the gist of the offence. To hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise. From his mere failure to keep up promise subsequently such a culpable intention right at the beginning, that is, when he made the promise cannot be presumed.
8. In a recent case decided by the Supreme Court {Indian Oil Corporation v. NEPC India Ltd. and Ors. : AIR2006SC2780 , the Apex Court has revisited the law on the subject extensively taking note of various earlier judgments and held that : 'The essential ingredients of the offence of 'cheating' are: (i) deception of a person either by making a false or misleading representation or by other action or omission, (ii) fraudulent or dishonest inducement of that person to either deliver any property or to consent to the retention thereof by any person or to intentionally induce that person 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.' On the facts of this case, I am of the view that these ingredients are ex-facie lacking.
9. I am, thereforee, of the opinion that the matter is purely of a civil nature; ingredients of cheating have not been made out even as per the complaint; the suit between the parties is pending where even the petitioners have lodged counter claims and, thereforee, the complaint even prima facie does not disclose any offence allegedly committed by the petitioners under Section 420 IPC. The summoning orders as well as the impugned order dated 3.4.2003 are hereby quashed and the complaint of the respondent herein is consequently dismissed.
10. With these observations, the petition and the application stand disposed of.