1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE CRIMINAL WRIT PETITION NO.2399 OF 2008 Shri Manoj Dattatray Mestry & Anr. : Petitioners (Orig.Accused Nos.1 & 2) V/s. The Maharashtra State Financial Corporation & Anr. : Respondents (No.1 Orig.Complainant) .... Mr.S.R. Chitnis, Senior Advocate, with Ms Pooja Bhojane for the petitioners. Dr.A.K. Barthakur for respondent no.1. Mrs.R.V. Newton, Addl. Public Prosecutor for the State. ... CORAM : S.A. BOBDE, J. DATE : SEPTEMBER 22, 2009. P.C.: 1. The petitioners have challenged the order of the learned Addl. Sessions Judge, Greater Bombay, dated 22.10.2008 dismissing their revision against the order framing charge for offences punishable under sections 420, 435, 406, 193 read with section 120-B of the Indian Penal Code against the petitioners in Complaint Case No.151/SW/05. 2. The petitioners are essentially charged with cheating and for 2 commission of breach of trust and mischief in respect of a loan of Rs.49 lakhs obtained by the petitioner no.1 from MSFC i.e. the complainant for purchase of video camera, machinery, accessories and equipments required for his business as well as for purchase of premises for the business. After the acquisition of the items, the petitioner no.1 executed a Deed of Mortgage and Hypothecation. The loan was repayable in nine half-yearly instalments. 3. The respondent no.1-complainant has filed the present complaint against the petitioners alleging offence of cheating, particularly in the light of the manner in which the equipment disappeared. According to the petitioner no.1, vide his statement, since his business was not running satisfactorily, he decided to take the entire equipments for abhishek to Mahalaxmi Mandir at Kolhapur from Mumbai. He, therefore, hired a Fiat car of the petitioner no.2 and at 10.30 p.m. The petitioner no.1 along with the petitioner no.2 loaded the entire equipment for video shooting in the Fiat car and went to Malad in the car along with the entire machinery. Peculiarly he also loaded the equipment for editing a film to be taken to the temple. At 1.30 a.m., the petitioner no.2 reported that the car suddenly caught fire near Vinayak Industry, Link Road, Malad, and the entire machinery along with the car was burnt to ashes. The petitioner justified in his statement that he did not obtain insurance for the 3 equipments because the insurance company had informed him that the claim was not payable. The complaint of cheating has been filed in these circumstances. Five witnesses have been examined and the charges have been framed. 4. Mr.Chitnis, the learned counsel for the petitioners, submitted that no offence of cheating can be said to have been made out since the respondents have not shown in the evidence that there was a dishonest intention of cheating the complainant at the inception of the transaction of loan and it would not be permissible to infer cheating from the alleged incident in which the equipment was burnt. He further submitted that the petitioner no.2 who was only driving the car had no role to play. 5. Mr.Barthakur, the learned counsel for the respondent no1, submitted that the clear allegation of cheating and breach of trust and misconduct has been levelled against the petitioners in view of the entire transaction, viz., obtaining the loan and the destruction of the property thereof. According to the learned counsel, every ingredient of the offence need not be pleaded in the body of the complaint itself nor according to the learned counsel, it is necessary that the complaint should state in so many words that the intention of the accused was dishonest or fraudulent. The learned counsel relies on the observations of the Supreme Court in 4 this regard in Rajesh Bajaj v. State NCT of Delhi [(1999) 3 SCC 259] reproduced in paragraph 34 of the judgement of the Supreme Court in Indian Oil Corpn. v. NEPC India Ltd. [(2006) 6 SCC 736]. The said observations are as follows:- “9. It is not necessary that a complainant should verbatim reproduce in the body of his complaint all the ingredients of the offence he is alleging. Nor is it necessary that the complainant should state in so many words that the intention of the accused was dishonest or fraudulent..........” 6. Having considered the rival submissions, it appears that the complaint is not liable to be thrown out at this stage. Indeed, there are some unusual features such as the fact that the equipment was not insured and, according to the petitioner no.1, he felt like carrying the entire equipment to Kolhapur for doing abhishek before the temple of the deity within a period of five months and further the destruction of the entire equipment in the alleged fire which is said to have burnt the car driven by the petitioner no.2 along with the equipment. While it is true that for the act of taking a loan to become a criminal offence, there must be a dishonest intention at the time of taking the loan, there is nothing in law 5 which prevents a complainant from establishing from subsequent events that the original intention itself was dishonest. 7. In Indian Oil Corpn. v. NEPC India Ltd. [(2006) 6 SCC 736], the Supreme Court has observed as follows:- “32. 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. 33. The High Court has held that mere breach of contractual terms would not amount to cheating unless fraudulent or dishonest intention is shown 6 right at the beginning of the transaction and in the absence of an allegation that the accused had a fraudulent or dishonest intention while making a promise, there is no “cheating”. The High Court has relied on several decisions of this Court wherein this Court has held that dishonest intent at the time of making the promise/inducement is necessary, in addition to the subsequent failure to fulfil the promise. Illustrations (f) and (g) to Section 415 make this position clear: “(f) A intentionally deceives Z into a belief that A means to repay any money that Z may lend to him and thereby dishonestly induces Z to lend him money, A not intending to repay it. A cheats. (g) A intentionally deceives Z into a belief that A means to deliver to Z a certain quantity of indigo plant which he does not intend to deliver, and thereby dishonestly induces Z to advance money upon the faith of such delivery, A cheats; but if A, at the time of obtaining the money, intends to 7 deliver the indigo plant, and afterwards breaks his contract and does not deliver it, he does not cheat, but is liable only to a civil action for breach of contract.” In paragraph 35, the Supreme Court has observed as under:- “35. In Hridaya Ranjan Prasad Verma this Court held: (SCC pp. 176-77, paras 14-15) “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. 8 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. Therefore 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. Having regard to the circumstances of the case and the observations of the Supreme Court, it does not appear to be a case where 9 it might be a mere failure on the part of the petitioner to keep the promise which may give rise to simple action for damages for breach of the contract. In view of the observations of the Supreme Court in Indian Oil Corpn.’s case, the reliance placed upon the case in S.W. Palanitkar v. State of Bihar [(2002) 1 SCC 241] on behalf of the petitioners is misplaced and not apposite. 9. In the circumstances of the case, there is no merit in this petition for quashing the proceedings in C.C. No.151/SW/05. The Petition is thus dismissed. Indeed all contentions of the parties, including the contention on behalf of the petitioner no.2 that he had no role in the cheating in regard to obtaining of the loan, are left open. S.A. BOBDE, J.