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2021 (2) TMI 478 - HC - Indian LawsCheating - allegation is that the petitioner had given a false statement before the Revenue Authorities for which the petitioner company suffered loss, as he was deprived of future business transactions - offence under Section 420 of the Indian Penal Code - HELD THAT - There is no allegation of delivering any property to any person, nor there is any allegation of altering or destroying any security. The element of deception vis- -vis the complainant is missing in this case. The best allegation against the petitioner is that he suppressed the business relations between the petitioner and the complainant company with the Revenue Authorities to save tax. For this the complainant cannot be said to have been cheated. The revenue authorities, which was the only appropriate authority, has already imposed punishment upon the petitioner s company as per law. Thus, there is no application of Section 420 of the Indian Penal Code in this case. Thus, the petitioner was not entrusted with any property by the complainant nor did he dishonestly misappropriate or convert any property for his own use. On the facts stated above, Section 406 of the Indian Penal Code is also not applicable in this case. The Hon ble Supreme Court in the case of STATE OF HARYANA VERSUS BHAJAN LAL 1990 (11) TMI 386 - SUPREME COURT of the said judgment has framed various categories of cases by way of illustration for exercise of the extraordinary power under Article 226 of the Constitution of India or the exercise of inherent powers under Section 482 of the Code of Criminal Procedure, to prevent abuse of the process of any Court or otherwise to secure the ends of justice. This case is a fit case and falls in Category (1) and (5) of the above guidelines laid down by the Hon ble Supreme Court for exercise of inherent powers under Section 482 of the Code of Criminal Procedure - Petition allowed.
Issues Involved:
1. Quashing of criminal proceedings including FIR. 2. Alleged offences under Sections 406 and 420 of the Indian Penal Code (IPC). 3. False statement to Revenue Authorities. 4. Application of Section 156(3) of the Code of Criminal Procedure (CrPC). 5. Defamation and loss of business reputation. Issue-wise Detailed Analysis: 1. Quashing of Criminal Proceedings Including FIR: The petitioner sought to quash the entire criminal proceeding, including the FIR of Sector 4 Police Station Case No. 86 of 2018, pending in the Court of the Additional Chief Judicial Magistrate at Bokaro. The court found that the allegations did not prima facie constitute any offence under Sections 406 and 420 IPC. Thus, the entire criminal proceeding was quashed. 2. Alleged Offences Under Sections 406 and 420 of the IPC: The court examined the allegations under Sections 406 (criminal breach of trust) and 420 (cheating) IPC. It was found that: - Section 420 IPC requires cheating, dishonest inducement to deliver property, and mens rea at the time of inducement. The court noted that there was no allegation of delivering any property or altering any security. The element of deception vis-à-vis the complainant was missing. - Section 406 IPC pertains to criminal breach of trust, which involves being entrusted with property and dishonestly misappropriating it. The court found no evidence that the petitioner was entrusted with any property by the complainant or misappropriated any property. 3. False Statement to Revenue Authorities: The petitioner allegedly made false statements to the Revenue Authorities to save Cenvat, which led to penalties by the Revenue Authorities. The court noted that the Revenue Authorities had already penalized the petitioner’s company for this act. The court concluded that this act did not amount to cheating or criminal breach of trust under the IPC. 4. Application of Section 156(3) of the CrPC: The court highlighted the improper application of Section 156(3) CrPC by the Magistrate. The order referring the complaint under Section 156(3) was non-speaking and did not comply with the pre-conditions set forth in the Supreme Court judgments (Priyanka Srivastava & Another v. The State of Uttar Pradesh & Others). The court emphasized that applications under Section 156(3) should be supported by an affidavit and the Magistrate should apply their mind before directing the registration of an FIR. 5. Defamation and Loss of Business Reputation: The complainant alleged that the false statements by the petitioner led to defamation and loss of business reputation, seeking ?3 crore for defamation and ?10 lakh as recovery. The court found that the allegations of defamation and mental harassment due to loss of business did not attract the offences under Sections 406 and 420 IPC. The court concluded that these allegations were civil in nature and did not constitute a criminal offence. Conclusion: The court quashed the entire criminal proceeding, including the FIR, as the allegations did not prima facie constitute any offence under Sections 406 and 420 IPC. The court also criticized the improper application of Section 156(3) CrPC and emphasized the need for judicial scrutiny and adherence to procedural requirements in such cases.
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