Tarun Agarwala, J.
A complaint u/S 406, 418, 420, 504 and 506 I.P.C. was filed by the complainant at Police Station Kashipur, District Udham Singh Nagar against the applicant alleging that the applicant is a builder and had come to Kashipur to engage the complainant in constructing a septic tank, sewer lines etc. in a colony which was being developed by the applicant in Meerut. It is alleged that on the basis of an oral agreement, the complainant undertook the work. It was agreed that payment would be made from time to time on the basis of the work done by the complainant. It was alleged that the complainant invested his money in laying down the pipe lines, constructing the septic tank, etc, and as on 31st March, 2003, a sum of Rs. 7,22,396/- became due and payable by the applicant. It was alleged that the applicant did not pay the bills nor had any intention to pay the bills and, accordingly, the applicant had an intention to deceive and defraud the complainant. It was alleged that a statement of account dated 9th September, 2003 was sent which was refused by the applicant and that a sum of Rs.80,000/- was paid by two cheques which were dishonoured and only Rs.50,000/- was paid and the balance amount has been usurped by the applicant for vested reasons. The complaint was accordingly filed alleging that the applicant had cheated and defrauded the complainant and accordingly, the applicant be punished in accordance with law. It transpires that the complainant was examined u/S 200 Cr.P.C. and some of his witnesses were examined u/S 202 Cr.P.C. The trial court took cognizance and issued a summoning order dated 20.11.2003. The applicant, being aggrieved by the issuance of the summoning order, has filed the present application u/S 482 Cr.P.C. for the quashing of the summoning order as well as the criminal proceedings initiated pursuant to the complaint.
On identical facts, another complaint u/S 138 of the Negotiable Instrument Act was filed alleging that the cheque of Rs.30,000/- was dishonoured and that the applicant was liable for punishment under the provision of Section 138 of the N.I. Act. The court took cognizance of the offence by an order dated 8th January, 2004. The applicant, being aggrieved, has filed an application u/S 482 Cr.P.C. for the quashing of the order dated 8th January, 2004 as well as the entire proceedings initiated u/S 138 of the N.I. Act.
Heard Shri S.K. Jain, the learned counsel for the applicant, Shri G.C. Lakhchaura, the learned counsel for the respondent No.2 and Shri T.C. Agarwal, the learned Addl. G.A. for the State.
Learned counsel for the applicant contended that from a perusal of the complaint, it is absolutely clear that the dispute relates to a business transaction between the applicant and the complainant and that it is a pure civil dispute. Even otherwise, no offence is made out from a bare reading of the complaint and, consequently, the applicant should not be dragged in this frivolous litigation and, consequently, prayed that the proceedings should be quashed. On the other hand, the learned counsel for the complainant submitted that the statement of the complainant and his witnesses made u/S 200 Cr.P.C. and 202 Cr.P.C. corroborates the version made under the complaint and that the Court below rightly took cognizance of the offence. A clear case of willful offence was made out against the applicant. The learned counsel accordingly submitted that the Court should not interfere in these proceedings since a criminal offence was made out. The learned counsel submitted that the fact as to whether the amount was paid or not was a disputed question of fact which cannot be examined in these proceedings u/S 482 Cr.P.C. and that this factual controversy could only be examined by the trial court. In support of his submission, the learned counsel placed reliance upon certain case laws which would be dealt at the appropriate stage.
In order to appreciate the contention of the rival parties, it would be appropriate to peruse the various provisions under which the alleged offence is alleged to have been made out. Section 415 of the I.P.C. defines cheating as under :-
“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 person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do 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".
An offence of cheating cannot be said to have been made out unless the following ingredients are satisfied :
i) deception of a person either by making a false or misleading representation or by other action or omission;
(ii) fraudulently or dishonestly inducing any person to deliver any property; or to consent that any person shall retain any property and finally intentionally inducing that person to do or omit to do anything which he would not do or omit.
For the purpose of constituting an offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. Even in a case where allegations are made with regard to failure on the part of the accused to keep his promise, in absence of a culpable intention at the time of making initial promise being absent, no offence under Section 420 of the Indian Penal Code can be said to have been made out.
Section 420 I.P.C. is extracted hereunder :-
“Whoever cheats and thereby dishonestly induces the person deceived 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 be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.”
In Vir Prakash Sharma Vs. Anil Kumar Agarwal, (2007) 7 SCC 373, the Supreme Court held as under :
“The ingredients of Section 420 of the Penal Code are as follows:
(i) Deception of any persons;
(ii) Fraudulently or dishonestly inducing any person to deliver any property; or
(iii) To consent that any person shall retain any property and finally intentionally inducing that person to do or omit to do anything which he would not do or omit.
No act of inducement on the part of the appellant has been alleged by the respondent. No allegation has been made that he had an intention to cheat the respondent from the very inception.”
Section 405 I.P.C. defines criminal breach of trust. The said provision is extracted hereunder :-
“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 willfully suffers any other person so to do, commits "criminal breach of trust".
[Explanation [1] - A person, being an employer 3[of an establishment whether exempted under section 17 of the Employees' Provident funds and Miscellaneous Provisions Act, 1952 (19 of 1952), or not] who deducts the employee's contribution from the wages payable to the employee for credit to a Provident Fund or Family Pension Fund established by any law for the time being in force, shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to said Fund in violation of the said law, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid.]
[Explanation 2. - A person, being an employer, who deducts the employees' contribution from the wages payable to the employee for credit to the Employees' State Insurance Fund held and administered by the Employees' State Insurance Corporation established under the Employees' State Insurance Act, 1948 (34 of 1948), shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said Act, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid.]”
An offence of cheating would be constituted when the accused had fraudulent or dishonest intention at the time of making a promise or representation. A bare and simple breach of contract does not constitute an offence of cheating. In order to constitute an offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation.
In Anil Mahajan Vs. Bhor Industries Ltd. and another, (2006) 1 SCC (Cri) 746, the Supreme Court held that the substance of the complaint was required to be seen and mere use of words “deceive” and “cheat” used in the complaint was of no consequence. The Supreme Court held that in order to constitute the offence of cheating, there must be a specific averment about the deceit, cheating or fraudulent intention of the accused at the time of entering into MOU whereupon it can be inferred that the accused had the intention to deceive the complainant right from the very beginning.
In Alpic Finance Ltd. Vs. P. Sadasivan (2001) 3 SCC 513, the Supreme Court held :-
“The facts in the present case have to be appreciated in the light of the various decisions of this Court. When somebody suffers injury to his person, property or reputation, he may have remedies both under civil and criminal law. The injury alleged may form basis of civil claim and may also constitute the ingredients of some crime punishable under criminal law. When there is dispute between the parties arising out of a transaction involving passing of valuable properties between them, the aggrieved person may have right to sue for damages or compensation and at the same time, law permits the victim to proceed against the wrongdoer for having committed an offence of criminal breach of trust or cheating. Here the main offence alleged by the appellant is that respondents committed the offence under Section 420 I.P.C. and the case of the appellant is that respondents have cheated him and thereby dishonestly induced him to deliver property. To deceive is to induce a man to believe that a thing is true which is false and which the person practicing the deceit knows or believes to be false. It must also be shown that there existed a fraudulent and dishonest intention at the time of commission of the offence. There is no allegation that the respondents made any willful misrepresentation. Even according to the appellant, parties entered into a valid lease agreement and the grievance of the appellant is that the respondents failed to discharge their contractual obligations. In the complaint, there is no allegation that there was fraud or dishonest inducement on the part of the respondents and thereby the respondents parted with the property. It is trite law and common sense that an honest man entering into a contract is deemed to represent that he has the present intention of carrying it out but if, having accepted the pecuniary advantage involved in the transaction, he fails to pay his debt, he does not necessarily evade the debt by deception.”
In V.Y. Jose and another Vs. State of Gujarat and another, (2009) 3 SCC 78, the Supreme Court again reiterated that the complainant in order to prove the offence of cheating was required to show that the accused had fraudulent or dishonest intention from the very inception, i.e. at the time of making the promise.
In the light of the aforesaid, the Court finds from a bare reading of the complaint that a pure business transaction was entered into the party for executing certain civil works in the construction raised by the applicant. A statement of account has been furnished by a complainant in his counter which reveals that payments were being made by the applicant to the complainant from time to time and large sums of money had been paid. This itself indicates absence of cheating and deception from the very inception. If the applicant had a dishonest intention from the very beginning, the question of payment would not have arisen. The ingredients of cheating contemplated u/S 415 of the I.P.C. is not made out. The record further reveals that the applicant had made some complaints with regard to the bad quality of work done by the complainant and was asked to rectify the defects pointed out by the applicant. As a counter blast, a notice was issued by the complainant demanding certain money and, thereafter, the present complaint was filed.
In the opinion of the Court, it is a pure civil dispute and from a bare reading of the complaint, no offence is made out. Section 482 of the Cr.P.C. saves the inherent power of the Court. It is a salutary provision to prevent harassment and to ensure that a person should not undergo harassment of litigation for a number of years where no case is made out against him. The Supreme Court in the case of V.Y. Jose (Supra) held that it was one thing to say that case had been made out for trail and, as such, criminal proceedings should not be quashed but it was another thing to say that a person should undergo a criminal trial despite the fact that no case has been made out at all.
In Hira Lal Vs. State of U.P., (2009), 11 SCC 89, the Supreme Court held that the High Court in exercise of its jurisdiction u/s 482 Cr.P.C. can interfere in a criminal proceedings when it finds that the allegation in the complaint even if taken to be correct on its face value, the commission of offence was not disclosed would allow the High Court to interfere, especially, where the action of the complainant was malafide.
The decision cited by the learned counsel for the complainant in the case of Mahesh Chaudhary Vs. State of Rajasthan an another (2009) 2 SCC (Cri) 332 is not applicable. In the said decision, the Supreme Court held that merely because the dispute was a civil nature was not by itself a ground to quash the criminal proceedings. Similarly, the decision of N. Devindrappa Vs. State of Karnataka, (2007) 5 SCC 228 is not also helpful, inasmuch as, in the said case, it was made out that the accused had cheated the complainant by dishonestly inducing him to pay an amount after assuring to allot him a plot .
In the present case, the Court finds that from a bare reading of the complaint, no offence is made out. The ingredient of cheating is lacking. In the light of the aforesaid, the Court is of the opinion, that such proceedings should not be permitted to be continued. The order dated 20/11/2003 is quashed. The proceedings initiated in complaint Case No. 677 of 2003 is accordingly quashed. The petition filed by the applicant is accordingly allowed.
In so far as the complaint case No. 218 of 2003 filed u/S 138 of the N.I. Act is concerned, the short allegation is that two cheques dated 23rd October, 2003 for a sum of Rs. 50,000/- and 30,000/- was paid by the applicant to the complainant. The said cheques were dishonoured. It has come on record that Rs.50,000/- was paid in cash on 31st October, 2003 which the complainant has acknowledged. According to the complainant, the cheque of Rs.30,000/- which had been dishonoured was not paid and accordingly the offence u/S 138 of the N.I. Act was made out.
According to the applicant, a sum of Rs.30,000/- was paid in cash on 03/11/2003 and an endorsement to this effect was given by the complainant, a copy of which, has been annexed to the petition. In response to the aforesaid averment made by the applicant, the complainant has categorically stated that no such receipt was either issued by him nor did he ever receive a sum of Rs.30,000/- in cash and that the receipt so enclosed was a forged document. The Court has perused the receipt and prima-facie the Court is of the opinion that it cannot be said that the receipt was issued by the complainant. Consequently, a prima-facie case is made out and the Court rightly issued the summoning order. During the course of the argument, the learned counsel for the applicant submitted that he will pay the balance amount of Rs.30,000/-. Considering the aforesaid stand, the Court disposes of the petition directing the applicant to pay a sum of Rs.30,000/- to the complainant towards the dishonoured cheque. In addition to the aforesaid principal amount, the petitioner will pay interest which the Court quantifies at Rs.20,000/-. The Court accordingly directs the petitioner to pay a total sum of Rs.50,000/- to the complainant on or before the 30th December, 2011. If such an amount is paid, the proceedings initiated u/S 138 of the N.I. Act will be quashed upon an application being filed by the applicant before the trial court. A certified copy of this order shall be sent by the Registry to the Court below for necessary information and action.