Case: Vesa Holdings P. Ltd. &amp; Another Vs. State of Kerala &amp; Others

it is liable to be quashed. It is his further contention that the allegation in the complaint does not disclose the commission of offence of cheating and only discloses the civil dispute at best and the complaint is nothing but an abuse of process to harass and extort money from the appellants and the High Court erroneously refused to quash the same. In support of submissions he relied on the following decisions – Uma Shankar Gopalika Vs. State of Bihar and Another [(2005) 10 SCC 336] ; All Cargo Movers (India) Private Limited and others Vs. Dhanesh Badarmal Jain and Another [(2007) 14 SCC 776] ; and V.Y. Jose and Another Vs. State of Gujarat and another [(2009)3 SCC 78] . 4. Per contra the learned counsel appearing for respondent No.3 contended that there is no merit in the contention of the appellants that the FIR discloses only a civil case or that there is no allegation making out the criminal offence of cheating. It is his further contention that the facts in the present case may make out a civil wrong as also a criminal offence and only because a civil remedy may also be available to the complainant that by itself cannot be a ground to quash the criminal proceedings. In support of his submission he relied on the decision of this Court in Vijayander Kumar and others Vs. State of Rajasthan and another [(2014) 3 SCC 389] 5. We also heard the learned counsel for the State namely respondent Nos. 1 and 2. 6. We have been taken through the complaint petition in its entirety. The letter dated 6.8.2008 contains the offer of the appellants as well as the acceptance made by 3rd respondent, and it reads thus : August 6, 2008 Mr. K.G.S. Nair Keezhoot, Changanasserry Kerala. Dear Sir, Sub: Settlement of IIBI dues at Rs.8.25 Crores. Please refer to the discussion we had on the above subject. As discussed we are agreeable to pay you a lump sum amount of Rs. 75 lacs towards consultancy fee for the above settlement, out of this amount Rs.5 lacs will be paid upfront for out of pocket expenses and the balance amount Rs.70 lacs will be paid on completion of the assignment. We enclose herewith a cheque bearing number 47025 for Rs.30,00,000 (Thirty lacs only) dated 06.08.2008 drawn on HDFC Bank Ltd, which as agreed, this cheque should be presented to bank only after obtaining acceptance letter from IIBI on or before 30th October 2008 or otherwise the cheque should be returned to us. Please note that company should be informed before presenting the said cheque. If it is agreeable you may return the duplicate of this letter, duly signed in token of acceptance of the offer. Thanking you, Yours faithfully, For Vesa Holdings Private Limited Director I Accord my consent to this assignment. (K.G.S. Nair) 7. It is also not in dispute that the IIBI did not issue any acceptance letter on or before 30.10.2008 with regard to the settlement of disputes of the appellant company. The 3rd respondent also did not present the cheque dated 6.8.2008 issued by the appellant company for encashing a sum of Rs.30 lakhs. Due to the efforts of the appellant company IIBI finally agreed and issued letter of acceptance dated 5.1.2009. One year later, the 3rd respondent sent a letter dated 6.3.2010 to the appellant company demanding the balance amount of Rs.70 lakhs towards the consultancy fee. No allegation whatsoever was made against the appellants herein in the said letter. It was only mentioned in it that the consultation fee remains unpaid and the company is delaying the payment on one pretext or the other. In this context it is relevant to point out that after the expiry of the validity period of the cheque dated 6.8.2008, the 3rd respondent did not ask for re-issue of the same. 8. From the decisions cited by the appellant, the settled proposition of law is 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 other words 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 in regard to failure on the part of the accused to keep his promise, in the 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. 9. It is true that a given set of facts may make out a civil wrong as also a criminal offence and only because a civil remedy may be available to the complainant that itself cannot be a ground to quash a criminal proceeding. The real test is whether the allegations in the complaint disclose the criminal offence of cheating or not. In the present case there is nothing to show that at the very inception there was any intention on behalf of the accused persons to cheat which is a condition precedent for an offence under Section 420 IPC. In our view the complaint does not disclose any criminal offence at all. Criminal proceedings should not be encouraged when it is found to be malafide or otherwise an abuse of the process of the court. Superior courts while exercising this power should also strive to serve the ends of justice. 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 the High Court committed an error in refusing to exercise the power under Section 482 Criminal Procedure Code to quash the proceedings.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]8. From the decisions cited by the appellant, the settled proposition of law is 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 other words 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 in regard to failure on the part of the accused to keep his promise, in the 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 out9. It is true that a given set of facts may make out a civil wrong as also a criminal offence and only because a civil remedy may be available to the complainant that itself cannot be a ground to quash a criminal proceedingIn the present case there is nothing to show that at the very inception there was any intention on behalf of the accused persons to cheat which is a condition precedent for an offence under Section 420 IPC. In our view the complaint does not disclose any criminal offence at all. Criminal proceedings should not be encouraged when it is found to be malafide or otherwise an abuse of the process of the court. Superior courts while exercising this power should also strive to serve the ends of justice. 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 the High Court committed an error in refusing to exercise the power under Section 482 Criminal Procedure Code to quash the proceedings.