2019 (1) TMI 1632 - SC - Indian Laws

Framing of charges by the Additional Chief Metropolitan Magistrate - HELD THAT - It is to be noted that the criminal application preferred by the accused before the High Court was against the order of the Trial Court at the stage of framing of charges, wherein it is the duty of the court to apply its judicial mind to the material placed before it and to come to a clear conclusion that a prima facie case has been made out against the accused. An order for framing of charges is of serious concern to the accused as it affects his liberty substantially. Courts must therefore be cautious that their decision at this stage causes no irreparable harm to the accused. Quashing of the charges - HELD THAT - It is well settled that such exercise needs to be undertaken by the High Court in exceptional cases. It is also well settled that the framing of charges being initial stages in the trial process, the court therein cannot base the decision of quashing the charge on the basis of the quality or quantity of evidence rather the enquiry must be limited to a prima facie examination. Charge under Section 415 punishable under Section 420 of IPC - HELD THAT - The mere inability of the appellant to return the loan amount cannot give rise to a criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, as it is this mens rea which is the crux of the offence. Even if all the facts in the complaint and material are taken on their face value, no such dishonest representation or inducement could be found or inferred. The High Court should have maintained judicial restraint and desisted from making such general observations at this stage of the criminal proceeding, as they may have had a bearing on the adjudication of the trial. Therefore, the observations made in paragraphs 42 and 43 of the impugned judgment stand expunged. We are unable to uphold the impugned order passed by the High Court in Criminal Miscellaneous Application No. 4033 of 2012 and the same is hereby set aside. The application filed by the appellant under Section 482 of Cr.P.C. is allowed and the proceedings initiated based on the FIR instituted at the instance of respondent no. 2 are hereby quashed - Appeal allowed.

Summary

Issues:
- Appeal against judgment quashing charges framed by the trial court.
- Allegations of cheating and criminal breach of trust.
- Application for quashing charge sheet and further proceedings.
- Judicial scrutiny of charges under IPC Sections 406 and 420.
- Consideration of civil nature of the dispute and criminal prosecution.
- Observations made by the High Court during the trial process.

Analysis:
1. The appellant appealed against the High Court's judgment dismissing the application seeking quashing of charges framed by the trial court. The appellant contended that the charges were framed without giving him an opportunity to be heard, violating Section 239 of the Criminal Procedure Code.
2. The case involved allegations of cheating and criminal breach of trust under various sections of the Indian Penal Code. The respondent, a money lending company director, accused the appellant, a retired bank employee, of not repaying a loan and threatening him. The appellant sought to quash the charge sheet and proceedings based on the FIR filed against him.
3. The High Court observed that a prima facie case of cheating was made out but found the charge of criminal breach of trust not applicable. However, the High Court did not quash the charges under Section 406, leading to the appellant's appeal to the Supreme Court.
4. The appellant argued that the allegations were civil in nature and lacked the essential elements to establish cheating. The delay in filing the criminal complaint after the alleged offense was also highlighted as a point of contention.
5. In analyzing the charges under Sections 405 and 406 of IPC, the Supreme Court found that there was no evidence of entrustment of property to the appellant, essential for criminal breach of trust. The Court criticized the Magistrate's error in issuing process for this offense and the High Court's failure to rectify the mistake.
6. Regarding the charge under Section 415 punishable under Section 420 of IPC, the Court emphasized the need for fraudulent inducement and mens rea to establish cheating. It was noted that the mere inability to repay a loan does not automatically lead to criminal prosecution unless fraudulent intent is proven.
7. The Supreme Court cautioned against criminalizing civil disputes and emphasized the requirement of fraudulent or deceptive inducements for a charge of cheating to stand. The Court also criticized the High Court's moral observations and recommended judicial restraint to avoid prejudicing the trial process.
8. Ultimately, the Supreme Court set aside the High Court's order and allowed the appellant's application under Section 482 of Cr.P.C., quashing the proceedings initiated based on the FIR. The appeal was allowed in favor of the appellant, highlighting the importance of maintaining judicial restraint and adhering to legal principles in criminal proceedings.