Case: UMA SHANKAR GOPALIKA Vs. STATE OF BIHAR

1. Heard the parties at length. 2. This appeal by special leave has been filed challenging the judgment rendered by Ranchi Bench of Patna High Court, as it then stood whereby petition under Section 482 of the Code of Criminal Procedure (hereinafter referred to as the Criminal Procedure Code) filed on behalf of the appellant for quashing the first information report lodged against him has been dismissed. 3. The short facts are that Madhusudan Ram Gupta, respondent No.2 filed a complaint in the court of the Chief Judicial Magistrate, Dhanbad bearing complaint case No.88/1998 for prosecution of M/s. Gopalika Finance Corporation Limited, Sitarampur within the district of Burdwan and its two Directors, namely, the appellant and his brother Vijay Shanker (since deceased) under Sections 420/120B of Indian Penal Code alleging therein, inter alia that M/s.Gopalika Finance Corporation Ltd. (hereinafter referred to as the Corporation) was engaged in the business of financing the purchase of vehicles under hire purchase scheme and the complainant who was desirous of purchasing a truck approached the accused persons for financial assistance in the year 1991 whereupon the appellant and his brother Vijay Shanker agreed to finance the purchase of truck by the complainant on Hire Purchase Agreement. Pursuant to the aforesaid agreement, the complainant made over his part of the investment by paying a sum of Rs. 1,60,000/- to the appellant. He also handed over various documents to the appellant. Thereafter, on payment of balance price of the vehicle to the dealer by the financer, chassis was made over to the complainant, who spent a sum of Rs. one lakh for building body of the truck whereafter the truck started plying. The complainant could repay only three installments to the financer. In the meantime on 30.11.1991 the truck in question loaded with goods became traceless, for which the matter was reported to the police as well as the insurance company. The complainant submitted a claim before the insurance company to the tune of Rs. 4,20,000/-. According to the complainant thereafter on 20.7.1995 the appellant called upon him at his Sindhri house and induced him to permit the appellant to handle the insurance claim, which request was acceded to by the complainant on assurances given by the appellant that when the claim of Rs. 4,20,000/- is received from insurance company, out of that a sum of Rs. 2,60,000/- which the complainant was entitled to receive would be paid to him. Upon this assurance a complaint was made by the accused persons before the West Bengal Consumers Grievances Redressal Forum in which the complainant was also made a party and by order dated 23rd July, 1996 the entire claim was allowed and insurance company was directed to pay Rs. 4,20,000/- with interest accrued thereon and pursuant thereto insurance company issued a cheque for Rs. 4,20,000/- in favour of the Corporation which was encashed by the appellant but out of the said amount a sum of Rs. 2,60,000/- was never paid to the complainant in spite of assurances given to him by the appellant which necessitated filing of the complaint for prosecution of the accused persons. Upon filing of the complaint, the Magistrate did not entertain the same but directed the police to register a case and investigate. Pursuant to said direction, the police registered a first information report which was numbered as Sindhri P.S. Case No.23/98 dated 3.3.1998 under Sections 420/120B of the Indian Penal Code against all the aforesaid three accused persons including the appellant. 4. Challenging the first information report, the appellant moved the High Court on 11.3.1998 by filing a petition under Section 482 of the Criminal Procedure Code for quashing the first information report and the consequent police investigation in which at the time of issuing notice police investigation was stayed but ultimately by the impugned order, the High Court dismissed the application whereafter a petition for grant of special leave to appeal was filed before this Court in which on 6.10.1988 leave was granted and police investigation was stayed. By virtue of the interim order passed by the High Court as well as this Court the police investigation has remained stayed for a period of six years and the same could not proceed further. 5. Now the question to be examined by us is as to whether on the facts disclosed in the petition of complaint any criminal offence whatsoever is made out much less offences under Section 420/120B of the Indian Penal Code. The only allegation in the complaint petition against the accused persons is that they assured the complainant that when they receive the insurance claim amounting to Rs. 4,20,000/-, they would pay a sum of Rs. 2,60,000/- to the complainant out of that but the same has never been paid. Apart from that there is no other allegation in the petition of complaint. It was pointed out on behalf of the complainant that the accused fraudulently persuaded the complainant to agree so that the accused persons may take steps for moving the Consumer Forum in relation to claim of Rs. 4,20,000/-. It is well settled 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. If the intention to cheat has developed later on, the same cannot amount to cheating. In the present case it has nowhere been stated that at the very inception there was any intention on behalf of the accused persons to cheat which is condition precedent for an offence under Section 420 of the Indian Penal Code. 6. In our view petition of complaint does not disclose any criminal offence at all much less any offence either under Section 420 or Section 120B of the Indian Penal Code and the present case is a case of purely civil dispute between the parties for which remedy lies before a Civil Court by filing a properly constituted suit. In our opinion, in view of these facts allowing the police investigation to continue would amount to an abuse of the process of Court and to prevent the same it was just and expedient for the High Court to quash the same by exercising the powers under Section 482 of the Criminal Procedure Code which it has erroneously refused. It appears that though the complaint was filed against three persons one of whom Vijay Shankar has died as stated above, there is another accused Gopalika Financial Corporation Limited which has neither moved the High Court nor this Court for quashing the first information report relating to it. But in view of our conclusion that the first information report does not disclose any offence whatsoever and the prosecution is liable to be quashed, we are of the view that it would be just and expedient to quash prosecution launched against the aforesaid Corporation as well.

Decision reasoning: 1[ds]It is well settled 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. If the intention to cheat has developed later on, the same cannot amount to cheating. In the present case it has nowhere been stated that at the very inception there was any intention on behalf of the accused persons to cheat which is condition precedent for an offence under Section 420 of the Indian Penal Code.6. In our view petition of complaint does not disclose any criminal offence at all much less any offence either under Section 420 or Section 120B of the Indian Penal Code and the present case is a case of purely civil dispute between the parties for which remedy lies before a Civil Court by filing a properly constituted suit. In our opinion, in view of these facts allowing the police investigation to continue would amount to an abuse of the process of Court and to prevent the same it was just and expedient for the High Court to quash the same by exercising the powers under Section 482 of the Criminal Procedure Code which it has erroneously refused. It appears that though the complaint was filed against three persons one of whom Vijay Shankar has died as stated above, there is another accused Gopalika Financial Corporation Limited which has neither moved the High Court nor this Court for quashing the first information report relating to it. But in view of our conclusion that the first information report does not disclose any offence whatsoever and the prosecution is liable to be quashed, we are of the view that it would be just and expedient to quash prosecution launched against the aforesaid Corporation as well.