9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (8) TMI 1200 - SC - Indian LawsCriminal breach of trust - Quashing of summoning order - offence punishable under Sections 406, 420 120B respectively of the Indian Penal Code, 1860 - Vicarious liability of the office bearers - non-application of mind - HELD THAT - The impugned order passed by the High Court is a fine specimen of total nonapplication of mind. Although the complaint was filed for the offence punishable under Sections 406, 420 and 120B respectively of the IPC yet the Additional Chief Judicial Magistrate thought fit to take cognizance and issue process only for the offence of criminal breach of trust as defined under Section 405 of the IPC and made punishable under Section 406 of the IPC - even if the entire case of the complainant is accepted as true no offence worth the name is disclosed. Where a jurisdiction is exercised on a complaint petition filed in terms of Section 156(3) or Section 200 of the CrPC, the Magistrate is required to apply his mind. The Penal Code does not contain any provision for attaching vicarious liability on the part of the appellant Nos. 2 and 3 respectively herein who are none other than office bearers of the appellant No. 1 Company. When the appellant No. 1 is the Company and it is alleged that the company has committed the offence then there is no question of attributing vicarious liability to the office bearers of the Company so far as the offence of cheating or criminal breach of trust is concerned - Vicarious liability of the office bearers would arise provided any provision exists in that behalf in the statute. Statutes indisputably must contain provision fixing such vicarious liabilities. Even for the said purpose, it is obligatory on the part of the complainant to make requisite allegations which would attract the provisions constituting vicarious liability. Every act of breach of trust may not result in a penal offence of criminal breach of trust unless there is evidence of manipulating act of fraudulent misappropriation. An act of breach of trust involves a civil wrong in respect of which the person may seek his remedy for damages in civil courts but, any breach of trust with a mens rea, gives rise to a criminal prosecution as well - The distinction between mere breach of contract and the offence of criminal breach of trust and cheating is a fine one. In case of cheating, the intention of the accused at the time of inducement should be looked into which may be judged by a subsequent conduct, but for this, the subsequent conduct is not the sole test. Mere breach of contract cannot give rise to a criminal prosecution for cheating unless fraudulent or dishonest intention is shown right from the beginning of the transaction i.e. the time when the offence is said to have been committed. There is a distinction between criminal breach of trust and cheating. For cheating, criminal intention is necessary at the time of making a false or misleading representation i.e., since inception. In criminal breach of trust, mere proof of entrustment is sufficient. Thus, in case of criminal breach of trust, the offender is lawfully entrusted with the property, and he dishonestly misappropriated the same. Whereas, in case of cheating, the offender fraudulently or dishonestly induces a person by deceiving him to deliver any property. In such a situation, both the offences cannot co-exist simultaneously. There is no manner of any doubt whatsoever that in case of sale of goods, the property passes to the purchaser from the seller when the goods are delivered. Once the property in the goods passes to the purchaser, it cannot be said that the purchaser was entrusted with the property of the seller. Without entrustment of property, there cannot be any criminal breach of trust. Thus, prosecution of cases on charge of criminal breach of trust, for failure to pay the consideration amount in case of sale of goods is flawed to the core. There can be civil remedy for the non-payment of the consideration amount, but no criminal case will be maintainable for it. The magistrate must carefully apply its mind to ascertain whether the allegations, as stated, genuinely constitute these specific offences. In contrast, when a case arises from a FIR, this responsibility is of the police to thoroughly ascertain whether the allegations levelled by the informant indeed falls under the category of cheating or criminal breach of trust. Unfortunately, it has become a common practice for the police officers to routinely and mechanically proceed to register an FIR for both the offences i.e. criminal breach of trust and cheating on a mere allegation of some dishonesty or fraud, without any proper application of mind. The impugned order passed by the High Court is set aside so also the order passed by the Additional Chief Judicial Magistrate, Khurja, Bulandshahar taking cognizance upon the complaint - Appeal allowed.
Issues Involved:
1. Quashing of the summoning order under Section 406 IPC. 2. Distinction between criminal breach of trust and cheating. 3. Scope of inquiry under Section 202 CrPC. 4. Vicarious liability of office bearers in a company. 5. Magistrate's duty in issuing process. 6. Role of police in registering FIRs for criminal breach of trust and cheating. Detailed Analysis: 1. Quashing of the Summoning Order under Section 406 IPC: The Supreme Court examined whether the High Court erred in rejecting the application for quashing the summoning order. The complaint alleged that the appellants failed to pay Rs. 9,11,434/- for goods supplied. The Additional Chief Judicial Magistrate issued process under Section 406 IPC. The Supreme Court found that the complaint, even if accepted as true, did not disclose any offence under Section 406 IPC. The Court emphasized that summoning an accused in a criminal case is a serious matter and must reflect the Magistrate's application of mind to the facts and law. 2. Distinction between Criminal Breach of Trust and Cheating: The Court clarified the difference between criminal breach of trust (Section 406 IPC) and cheating (Section 420 IPC). Criminal breach of trust involves entrustment of property and its dishonest misappropriation, whereas cheating involves fraudulent or dishonest inducement to deliver property. The Court noted that the complaint did not disclose any entrustment of property, making Section 406 IPC inapplicable. It also stated that the same set of facts could not simultaneously constitute both offences. 3. Scope of Inquiry under Section 202 CrPC: The Court reiterated that at the stage of issuing process, the Magistrate must determine whether there are sufficient grounds for proceeding further. The inquiry is limited to the truth or falsehood of the allegations based on the complainant's materials. The Magistrate should not enter into a detailed discussion of the case's merits or demerits. The Court emphasized that the Magistrate's discretion must be judicially exercised, and the High Court should not substitute its discretion for that of the Magistrate. 4. Vicarious Liability of Office Bearers in a Company: The Court held that the Penal Code does not provide for vicarious liability of office bearers in a company for offences like cheating or criminal breach of trust. The complaint must demonstrate that the office bearers personally committed the offence. The Magistrate failed to consider whether the complaint, even if taken at face value, would make the office bearers personally liable. 5. Magistrate's Duty in Issuing Process: The Court emphasized that the Magistrate must meticulously examine the complaint to determine whether the allegations genuinely constitute the specific offences. The Magistrate should not act as a post office in taking cognizance and issuing process. The order issuing process must reflect the Magistrate's satisfaction that the allegations constitute an offence and that the accused is answerable before the court. 6. Role of Police in Registering FIRs: The Court criticized the routine and mechanical registration of FIRs for both criminal breach of trust and cheating by the police without proper application of mind. It stressed the need for police officers to be trained to understand the fine distinction between these offences. The Court directed the Registry to send copies of the judgment to the Principal Secretary, Ministry of Law & Justice, and the Principal Secretary, Home Department, Union of India, to ensure proper training of police officers. Final Conclusion: The appeal was allowed, and the impugned orders of the High Court and the Additional Chief Judicial Magistrate were set aside. The Court highlighted the need for proper understanding and application of the law by both the judiciary and the police, emphasizing the distinction between criminal breach of trust and cheating.
|
