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2021 (6) TMI 1078 - HC - Indian LawsDishonor of Cheque - insufficiency of funds - commercial transaction governed by contract between the parties regarding purchase of goods - Section 161(3) Cr.P.C. - Sections 406 and 420 of IPC - HELD THAT - Admittedly, there is a contract existing between the petitioners and the defacto complainant. When the petitioners had requested for 100 tonnes of old iron from the defacto complainant, the parties had entered into a contract and the said contract was duly signed by both the parties. While that being the case, the defacto complainant cannot now take a turn and seek for a direction under the Criminal Procedure Code, that too when the present case is purely civil in nature, which involves a commercial transaction between the petitioners and the defacto complainant and no criminal offence has been made out. It is pertinent to point out that the dispute between the parties, at the most, can be said to be the civil dispute and it is tried to be converted into the criminal dispute. Therefore, this Court is of the opinion that continuing the criminal proceedings against the petitioners will be an abuse of process of law and, therefore, the criminal proceedings are liable to be quashed. Merely because the petitioners have not have paid the amount due and payable under the agreement or even assuming not paid the amount in lieu of one month Notice, this by itself cannot be said to be a cheating and/or having committed offence under Sections 406 and 420 of the IPC. In the present case on hand, looking at the allegations in the charge sheet, on the face of it, this Court finds no allegations are made attracting the ingredients of Section 406 IPC. Likewise, there are no allegations as to cheating or the dishonest intention of the petitioners in retaining the money in order to have wrongful gain to themselves or causing wrongful loss to the complainant. Excepting the bald allegations that the petitioners did not make payment to the defacto complainant and that the petitioners utilized the amounts either by themselves or for some other work, there is no iota of allegation as to the dishonest intention in misappropriating the money / property - The mere fact that the petitioners did not pay the money to the complainant does not amount to criminal breach of trust. Even if all the allegations in the charge sheet taken at the face value are true, this Court is of the view that basic essential ingredients of dishonest misappropriation and cheating are missing. Criminal proceedings are not a short cut for other remedies. Since no case of criminal breach of trust or dishonest intention of inducement is made out and the essential ingredients of Sections 406/420 IPC are missing, the prosecution of the petitioners under Sections 406/420 IPC, is liable to be quashed. The present Criminal Original Petition is allowed.
Issues:
Allegations of criminal breach of trust and cheating in a commercial transaction. Analysis: The petitioners, owners of a company, were charged under Sections 406 and 420 of IPC based on a commercial transaction with the defacto complainant involving the purchase of iron. The petitioners visited the complainant's company, entered into an agreement for 100 tonnes of iron, and paid a partial amount. Disputes arose over the quality of the iron and the remaining payment, leading to a complaint and subsequent charge sheet. The petitioners argued that the transaction was purely commercial and contractual, lacking criminal intent. They contended that the charges did not align with the facts of the case and sought to quash the proceedings. Conversely, the prosecution argued for the dismissal of the petition, emphasizing the statements recorded under Section 161(3) to support their case. Upon examination, the court found that a contract existed between the parties for the iron transaction. The court noted the payments made, cheques issued, and subsequent disputes over the remaining amount. It observed that the matter primarily involved a civil dispute being transformed into a criminal one, which was deemed an abuse of legal process. Referring to relevant sections of the IPC, the court highlighted the elements of criminal breach of trust and cheating. It concluded that the allegations in the charge sheet did not establish the essential ingredients of Sections 406 and 420 IPC. The court emphasized the absence of dishonest intention or inducement by the petitioners, stating that mere non-payment did not amount to criminal breach of trust. Citing precedents and legal principles, the court ruled in favor of the petitioners, allowing the Criminal Original Petition and quashing the proceedings in the lower court. The court ordered the cancellation of any bail bond and the refund of any fines paid by the petitioners, closing the related miscellaneous petition.
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