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2021 (9) TMI 707 - HC - Indian LawsDishonor of Cheque - cheating versus breach of contract - allegation is that petitioners entered into a criminal conspiracy to misappropriate the outstanding dues payable to the opposite party - fraudulent or dishonest intention at the time of making the promise or not - Section 482 of the Code of Criminal Procedure - HELD THAT - In the instant case the petitioners practically admitted their outstanding dues by filing the instant application. It is contended on behalf of the petitioners that they have no fraudulent or dishonest intention to induce the opposite party to deliver the goods, viz, C.R Coil and the petitioners have already paid a sum of ₹ 8 (eight) lakh as part payment of the consideration money. Since there is no ingredient of offence under Section 420 of the IPC against the petitioners from the very inception of transaction between the parties the dispute is essentially civil in nature. Applicability of Section 482 of the Code - HELD THAT - It is no longer a res integra that the power under Section 482 of the Code must be exercised sparingly, with circumspection and in rarest of rare cases. Exercise of inherent power under Section 482 of the Code is not the rule but the exception. The exception is applicable only when it is brought to the notice of the court that grave miscarriage of justice would be committed if the trial is allowed to proceed where the accused would be harassed unnecessarily. This court is not unmindful to note that there remains fine line of distinction between breach of contract and cheating. In case of cheating, it is the duty of the complainant to make out a case that from the very inception of establishment of commercial contractual relation between the parties, the accused had an intention to deceive fraudulently or dishonestly the complainant to induce him to deliver property. It is true that the complainant/opposite party No.2 failed to make out any such case in his petition of complaint. On the other hand, the petitioners paid part of consideration money to the opposite party No.2. Subsequently, the rest amount of ₹ 16,24,723/- was not paid to the opposite party No.2 - This court has inherent power under Section 482 of the Code amongst other to prevent abuse of the process of the court and to otherwise secure ends of justice. The court has the mandatory duty not only to prevent abuse of the process of the court but also to secure ends of justice. The High Court can very well quash the proceeding holding, inter alia, that the dispute between the parties is civil in nature and giving liberty to the opposite party to move the Civil Court to recover the unpaid amount of consideration money - Application disposed off.
Issues Involved:
1. Legality and validity of criminal proceedings under Sections 406, 420, and 120B of the IPC. 2. Distinction between civil disputes and criminal liability. 3. Applicability of Section 482 of the Code of Criminal Procedure for quashing proceedings. Detailed Analysis: 1. Legality and Validity of Criminal Proceedings: The petitioners, accused in GR Case No.1524 of 2015, sought quashing of proceedings under Sections 406, 420, and 120B of the IPC. The factual background reveals that the petitioners, partners of Shree Raj Steal Products, ordered CR Coil worth ?24,24,723 from the opposite party No.2. Payment was made partially, with ?16,24,723 remaining unpaid. The opposite party filed a complaint under Section 138/141 of the Negotiable Instruments Act, which was returned for lack of jurisdiction. Subsequently, a complaint under Section 156(3) of the Code of Criminal Procedure was filed, alleging criminal conspiracy and cheating, leading to the registration of the FIR. 2. Distinction Between Civil Disputes and Criminal Liability: The petitioners argued that the dispute was civil in nature, emphasizing that part payment had been made and there was no fraudulent intention. They cited several Supreme Court judgments, including Vir Prakash Sharma vs. Anil Kumar Agarwal and G. Sagar Suri vs. State of U.P, which establish that non-payment or underpayment does not constitute cheating or criminal breach of trust. The court noted that mere breach of contract does not amount to a criminal offense unless there is fraudulent intent at the inception of the transaction. 3. Applicability of Section 482 of the Code of Criminal Procedure: Section 482 preserves the inherent powers of the High Court to prevent abuse of process and secure the ends of justice. The court referred to the principles laid down in State of Haryana vs. Ch. Bhajan Lal, identifying circumstances where quashing of proceedings is justified. These include situations where allegations do not disclose a cognizable offense or are inherently improbable. The court observed that the opposite party No.2 failed to demonstrate fraudulent intent at the inception of the transaction. The petitioners' part payment indicated no initial intention to deceive. The court emphasized that both civil and criminal remedies can coexist but must be pursued based on the nature of the dispute. Conclusion: The court concluded that the dispute was essentially civil in nature, arising from a breach of contract, and lacked ingredients of criminal offenses under Sections 406 and 420 IPC. Exercising inherent powers under Section 482, the court quashed the criminal proceedings, allowing the opposite party No.2 to seek remedy in a civil court for recovery of the unpaid amount, subject to the law of limitation.
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