THE HON’BLE SRI JUSTICE B. CHANDRA KUMAR Criminal Petition No. 5948 of 2007 Order: This Petition has been filed praying to quash the FIR in Crime No.137 of 2006, dated 13.09.2006, of Police Station Sangam, Nellore District. The petitioner herein is the sole accused in Crime No.137 of 2006 (hereinafter referred as ‘the accused’) and the third respondent herein is the de facto complainant (hereinafter referred as ‘the complainant’). The brief facts of the case, as seen from the contents of the FIR and the charge sheet, are as follows. The accused is the Doctor by profession and he had cold storage plant in the name of Siri Storage Private Limited at Pottepalem village, Nellore Rural Mandal. The complainant is a commission agent at Yards. The accused went to Hyderabad with the assistance of the complainant and filed a tender in the auction of A.P. State Co-operative Marketing Federation Limited, Hyderabad and secured orders on 23.04.2004 for storage of Red Chilly bags for the season commencing from the month of May 2004 till December 2005. The accused appointed the complainant as his commission agent to procure Red Chilly bags from Guntur and Sattenapalli to Pottepalem and to that effect he executed an agreement on 24.04.2004. The accused also directed the complainant to attend the transport work by letter dated 03.05.2004. In the first season from April 2004 to December 2004 the A.P. Markfed, Hyderabad paid Rs.75/- per bag, out of which Rs.45/- for cold storage and the remaining amount of Rs.30/- for transportation. The accused promised the complainant that after deducting the transport charges out of Rs.30/- the remaining amount would be paid to him. From February to March 2005 the A.P. Markfed, Hyderabad paid Rs.10/- for each bag per month (towards storage charges). The accused promised the complainant to pay Rs.3/- per bag per month. In the second season from April 2005 to December 2005 the accused promised to pay the commission which remains after deducting storage charges from Rs.45/- for each bag to the complainant. The accused also promised to pay the entire amount on or before the last payment made by the AP Markfed. On such promise, the complainant transported 50,736 Chilly bags from Guntur and Sattenapalli Yards through lorries. After completion of the work, the accused received an amount of Rs.83,71,460/- and as per the agreement he has to pay an amount of Rs.13,19,136/- to the complainant as his commission, but the said amount was not paid. When the complainant pressed for payment in the month of January 2006 in the presence of mediator P. Malyadri Reddy, the accused had taken an exception for bringing a mediator and dishonestly refused to pay the commission amount to the complainant. Therefore the same amounts to cheating. The matter was reported to the Police, Nellore, on 30.01.2006, but the police did not take any action. Therefore, the complainant filed a complaint under Section 200 Cr.P.C, which was referred to the police. Basing on which, a case in Crime No. 137 of 2006 of Sangam Police Station, under Sections 406 and 420 IPC was registered on 13.09.2006. Learned counsel for the petitioner/accused submitted that the contents of the FIR simply go to show that when the complainant demanded his commission, the accused had taken exception for bringing a mediator and refused to pay the amount due to the complainant and therefore no offence punishable under Section 420 IPC has been made out. His main submission is that mere refusal to pay the amount as agreed will not attract the ingredients of cheating under Section 420 IPC. It is further argued that admittedly the contract came to an end in December 2005, but the complainant lodged the complaint about 10 months thereafter i.e., on 13.09.2006. It is further argued that this quash petition was filed on 09.10.2007 and subsequently the police filed charge sheet and the Photostat copy of the charge sheet shows that it is dated 24.11.2007. He further submitted that the petitioner/accused has approached this Court and filed quash petition and obtained interim stay on 11.10.2007 and once this Court granted interim stay, the police are not justified in completing the investigation and laying the charge sheet and therefore filing of charge sheet cannot be taken into consideration. He further submitted that the said interim stay orders are being extended from time to time and that the matter was admitted on 22.07.2008 and interim stay of all further proceedings was granted on that day. The main contention of the learned counsel for the petitioner is that even if the contents of charge sheet are taken into consideration, neither the contents of the charge sheet nor the contents of the FIR disclose any offence under Section 420 IPC. It is further submitted that there should be mens rea from the very inception and where the contents of the FIR do not disclose that there was criminal intention to cheat at the inception the mere breach of agreement would not become cheating. It is further submitted that even if an intention to cheat developed subsequently that would not attract the offence punishable under Section 420 IPC. It is also submitted that the FIR must disclose the cognizable offence. In support of his contentions, learned counsel for the petitioner/accused has relied on the decisions reported in Hridaya Ranjan Prasad Verma v. State of Bihar[1], Uma Shankar Gopalika v. State of Bihar[2], Ajay Mitra v. State of M.P.[3], Hari Prasad Chamaria v. Bishun Kumar Surekha[4] and State of West Bengal v. Swapan Kumar Guha[5]. On the other hand, learned counsel for the third respondent/complainant submitted that it is the accused who had promised and induced the complainant to do certain acts promising to pay commission and that the complainant believing the version of the accused proceeded along with him to Hyderabad and subsequently procured Red Chilly bags and transported from Sattenapalli and Guntur depots through lorries and that the accused received an amount of Rs.83,71,460/- towards storage and transport charges from A.P. Markfed and that he has to pay an amount of Rs.13,19,136/- towards commission to the complainant and refused to pay the said amount and thus cheated the complainant. The main submission of the learned counsel for the complainant is that the accused had criminal intention from the inception and this is clear from the act of the accused in denying the very execution of the agreement dated 24.04.2004. Learned counsel for the complainant, while relying on the judgment reported in P. Prem Kumar v. State of Andhra Pradesh[6], submits that the power of quashing criminal proceedings should be exercised very sparingly and that too in the rarest of rare cases. It is also submitted that when the prosecution is at the initial stage, it is not desirable to quash the proceedings. It is also submitted that it is not desirable to appreciate the evidence and come to a conclusion as to whether a prima facie case has been made out or not at the initial stage. His main submission is that the complaint has to be read as a whole and it would not be proper for the Court to analyze the case of the complainant in the light of all probabilities in order to determine whether a conviction would be sustainable and on such premise arrive at a conclusion that the proceedings are to be quashed. He has also relied on a judgment reported in Lalmuni Devi v. State of Bihar[7], in support of his contention that the prosecution cannot be quashed on the ground that the complaint spelled out a civil wrong. It is further submitted that in the present quash petition, this Court, on 11.10.2007, granted interim stay of arrest only and further clarified that the investigation may go on. It is further submitted that since there was an order of interim stay of arrest only, the investigating agency was justified in completing investigation and filing the charge sheet. It is further argued that once a charge sheet has been filed, this petition to quash the FIR would become infructuous and therefore the petition is not maintainable. It is also submitted that the petitioner/accused was permitted to amend his prayer by order dated 24.03.2009 and that the petitioner failed to amend the prayer column in the petition. The points that arise for consideration are; (1) whether the filing of charge sheet, subsequent to passing of interim orders by this Court, can be taken into consideration or not? and (2) whether the contents of the FIR and the charge sheet make out a prima facie case of cheating against the accused and whether the entire proceedings have to be quashed? The facts are not in dispute. However, the charge sheet allegations further go to show that during the course of investigation the Investigating Officer seized three pages of sample signatures of the accused, the agreement dated 24.04.2004 and letter dated 03.05.2004 containing the signatures of the accused and since the accused denied his signatures on the agreement dated 24.04.2004, the disputed signatures of the accused along with his admitted signatures were sent to the FSL, Hyderabad on 13.07.2007. After receiving the report from FSL, Hyderabad, wherein the handwriting expert opined that the questioned signatures were tallied with the sample signatures of the accused, the police laid charge sheet against the accused. Point No.1: This petition to quash FIR was filed on 09.10.2007. This Court, by order dated 11.10.2007, granted interim stay of arrest only and further clarified that the investigation should go on. Though the date of filing of charge sheet is in dispute, but the Photostat copy of the charge sheet contain the date 24.11.2007. Though there was interim order, but it was only with regard to stay of arrest. Therefore, the Investigating Officer appears to be justified in completing the investigation and laying the charge sheet. Once the charge sheet has been filed, the contents of the charge sheet have to be taken into consideration. Though there is interim stay of all further proceedings on 22.07.2008 that would not come in the way of considering the charge sheet allegations. Point No.2: Section 415 IPC is as follows. 415. 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 person 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”. Explanation:- A dishonest concealment of facts is a deception within the meaning of this section. Section 420 IPC is as follows. S.420.Cheating and dishonestly inducing delivery of property:- Whoever cheats and thereby dishonestly induces the person deceived to deliver 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 State of West Bengal v. Swapan Kumar Guha (5 supra), it is held that an investigation can be quashed if no cognizable offence is disclosed by the FIR and it is surely not within the province of the police to investigate into a report (FIR) which does not disclose the commission of a cognizable offence. In the case between Hari Prasad Chamaria v. Bishun Kumar Surekha (4 supra) it was held that unless the complaint showed that the accused had dishonest or fraudulent intention at the time when the complainant parted with the money it would not amount to an offence under Section 420 IPC and it may only amount to breach of contract. In case between Ajay Mitra v. State of M.P (3 supra) it was observed that where the allegations made in the complaint, even if they are taken at their face value and accepted in their entirety, do not constitute any offence, the FIR registered in pursuance thereof is liable to be quashed. It is also observed that there should be Mens rea at the time of inducing the person deceived to deliver any property to any person essential to constitute the offence under Section 420 IPC. In Medchl Chemicals and Pharma (P) Ltd., v. Biological E. Ltd[8], it was observed that the mere subsequent failure to fulfil the promise by itself would not attract the provisions of Section 418 or Section 420 IPC. In case between Hridaya Ranjan Prasad Verma v. State of Bihar (1 supra), it was held that 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. In case between Uma Shankar Gopalika v. State of Bihar (2 supra), it was held that every breach of contract would not give rise to an offence of cheating and only in those cases breach of contract would amount to cheating where there was any deception played at the very inception. The learned counsel for the complainant submits that the conduct of the accused in not paying a single pie to the complainant and subsequently refusing the very execution of the agreement shows that the accused had criminal intention from the inception of the agreement. He has relied in the case between Lalmuni Devi v. State of Bihar (7 supra), wherein it was held that merely because a civil claim is maintainable it does not mean that the criminal complaint cannot be maintained. He has also relied in the case between P. Prem Kumar v. State of Andhra Pradesh (6 supra) wherein it was observed that at the stage of considering the FIR or the contents of the charge sheet it is not open for the Court either to sift the evidence and come to a conclusion that no prima facie case is made out. A reading of Section 415 IPC makes it clear that the first part of this section shows that the complainant may be induced fraudulently or dishonestly to deliver any property to any person. The second part of the section reveals that doing or omitting to do anything which the person deceived would not have done, or would have done if he were not so deceived also amount to cheating. In Hridaya Ranjan Prasad Verma v. State of Bihar (1 supra) the Hon’ble Supreme Court observed that the intention of the accused at the time of inducement may be judged by the subsequent conduct. It is settled law that the powers of quashing the criminal proceedings should be exercised very sparingly and with circumspection and that too in the rarest of rare cases. The Court will not be justified in making thorough enquiry at this stage. In the instant case, the allegation against the accused is that he promised to pay certain percentage of amount as commission in the transactions and the complainant, believing the version of the accused, transported the Chilly bags and acted with a hope that he would get the commission as promised by the accused. He would not have acted, if he were not so promised by the accused to pay the amount. As seen from the record, the complainant did not file the copy of the agreement dated 24.04.2004 or the letter dated 03.05.2004 directing the complainant to procure and attend transport work respectively. What are the specific conditions of the agreement dated 24.04.2004 and what are the contents of the letter dated 03.05.2004 and whether they reveal the intention of the accused or not cannot be decided in the absence of those documents. Admittedly, the accused did not pay any amount to the complainant. Just he had extracted work from the complainant. Moreover, the contents of the charge sheet filed by the police go to show that the accused seems to have denied the very execution of the agreement dated 24.04.2004. Since the accused seems to have denied the signatures on the agreement, his admitted signatures were collected and the admitted signatures of the accused along with the disputed signatures were sent to FSL, Hyderabad. The action of the accused in denying the very agreement dated 24.04.2004 and not paying a single pie to the complainant prima facie go to show that the accused had criminal intention to cheat the complainant at the very inception. Therefore, it appears that it is not a case where it can be definitely said that the accused had no criminal intention at the very inception of agreement. Intention can be gathered from the circumstances. The subsequent acts referred above are the strong circumstances in favour of the complainant and against the accused. Each case has to be decided on its own facts and circumstances. It is also true that the complainant has a civil remedy and he can approach the competent civil Court. Merely because the complainant has a civil remedy it does not mean that the complainant cannot initiate criminal proceedings. The acts of the complainant in procuring Chilly bags and transporting the same to the cold storage of the accused believing the words of the accused, which the complainant would not have done surely appears to attract the explanation 2(b) of Section 415 IPC. In view of the above discussion, I am of the view that there are no merits in the petition and the same is liable to be dismissed. Accordingly, the Criminal Petition is dismissed. _______________________ B. CHANDRA KUMAR, J. Date: 22.01.2010 Nsr [1] (2000) 4 Supreme Court Cases 168 [2] (2005) 10 Supreme Court Cases 336 [3] (2003) 3 Supreme Court Cases 11 [4] (1973) 2 Supreme Court Cases 823 [5] AIR 1982 Supreme Court 949 [6] 2005(2) ALT 38 Crl. [7] 2001(1) ALD (Crl.) 220 (SC) [8] (2000) 3 Supreme Court Cases 269