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2007 (8) TMI 781 - SC - Indian LawsJurisdiction by the High Court u/s 482 CrPC - Dishonor of Cheque - issued the fabricated cheques to deceive and grab the money - Commission of an Offence of Cheating Or Criminal breach of trust - HELD THAT - The dispute between the parties herein is essentially a civil dispute. Non-payment or under-payment of the price of the goods by itself does not amount to commission of an offence of cheating or criminal breach of trust. No offence, having regard to the definition of criminal breach of trust contained in Section 405 of the Indian Penal Code can be said to have been made out in the instant case. Neither any allegation has been made to show existence of the ingredients of the aforementioned provision nor any statement in that behalf has been made. Ordinarily, bouncing of a cheque constitutes an offence u/s 138 of the Negotiable Instruments Act. No complaint thereunder had been taken. 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. In law, only because he had issued cheques which were dishonoured, the same by itself would not mean that he had cheated the complainant. Assuming that such a statement had been made, the same, in our opinion, does not exhibit that there had been any intention on the part of the appellant herein to commit an offence u/s 417 of the Indian Penal Code. Furthermore, admittedly, their residences are in different districts. Whereas the appellant is a resident of the district of Ajamgarh, the respondent is a resident of the district of Rampur. Cheques were admittedly issued by the appellant at his place. There is nothing on record to show that any part of the cause of action arose within the jurisdiction of the court concerned. Even if such statements merits had been made, the same admittedly have been made only at the place where the appellant resides. The learned Magistrate, therefore had no jurisdiction to issue the summons. Musaraf Hossain Khan v. Bhagheeratha Engg. Ltd. and Ors. 2006 (2) TMI 610 - SUPREME COURT . Thus, the impugned judgment is set aside. The order taking cognizance is quashed. The appeal is allowed. No offence is made out.
Issues: Allegations of cheque dishonor, criminal breach of trust, cheating, jurisdiction of the court
Cheque Dishonor Allegations: The case involved a contract for the sale and purchase of welding rods where the Appellant allegedly did not pay the due amount, resulting in dishonored cheques. The complaint alleged offenses under various sections of the Indian Penal Code, claiming the Appellant knowingly issued fabricated cheques to cheat the complainant. Witnesses supported these claims by stating the Appellant refused to pay, admitting to issuing the cheques to deceive and grab money. Criminal Breach of Trust Analysis: The High Court refused to quash the criminal proceedings, emphasizing that the allegations were factual and required trial. However, the Supreme Court clarified that non-payment or under-payment of goods does not constitute criminal breach of trust as per Section 405 of the Indian Penal Code. The Court highlighted that the essential elements of criminal breach of trust were not met in this case, as no misappropriation or dishonest use of entrusted property was alleged. Cheating Allegations Examination: The Court analyzed the offense of cheating under Section 415 of the Indian Penal Code, emphasizing the need for fraudulent or dishonest intention at the inception of the transaction. It was noted that mere breach of contract does not amount to cheating unless there is evidence of fraudulent intent from the beginning. The complaint lacked allegations of inducement or intention to cheat by the Appellant, with statements focusing on subsequent conduct rather than initial fraudulent intent. Jurisdiction of the Court Clarification: The Supreme Court highlighted the importance of jurisdiction, noting that the alleged statements were made in the district where the Appellant resided, not where the complainant was located. This lack of connection to the court's jurisdiction rendered the summons invalid. Citing relevant case law, the Court emphasized that the cause of action must arise within the court's jurisdiction for legal proceedings to be valid. Conclusion: Ultimately, the Supreme Court set aside the impugned judgment, quashed the order taking cognizance, and allowed the appeal. The Court concluded that no offense was established in the case due to the absence of essential elements for criminal breach of trust and cheating. Additionally, the lack of jurisdiction further weakened the legal basis for the criminal proceedings, leading to the dismissal of the case.
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