The case involves an appeal against the Allahabad High Court’s dismissal of a petition to quash a summoning order. The complaint alleges cheating and misappropriation of funds by officials of the Delhi Race Club 1940 Limited and Delhi Horse Trainers Association. The crux of the matter revolves around the non-payment of dues for goods supplied by the complainant, Vipin Kumar Agarwal.

1. Background of the Complaint:
   The complainant’s firm, Agarwal Udyog, supplied horse feed to the Delhi Race Club from 1990. Payments were later redirected to the Delhi Horse Trainers Association. The dispute arose when a sum of ₹9,11,434 remained unpaid after 2017.

2. Complaint and Legal Proceedings:
   After failed attempts to recover the dues, the complainant filed a private complaint, leading to a magisterial inquiry. The Additional Chief Judicial Magistrate, Khurja, issued a summoning order based on prima facie evidence of criminal breach of trust (Section 406 IPC).

3. High Court’s Dismissal of Quashing Application:
   The appellants argued that the dispute was civil in nature, but the High Court determined there was sufficient evidence to suggest criminal intent, justifying the continuation of proceedings.

4. Taking Cognizance and Issuing Process:

   • The court emphasized that the magistrate must apply their mind before taking cognizance. In cases like Legal Remembrancer, West Bengal v. Abani Kumar Banerji and R.R. Chari v. State of U.P., it was held that cognizance should be taken only if the complaint warrants legal action.
   • The distinction between taking cognizance under Section 190 CrPC and issuing process under Section 204 CrPC is significant. Issuing process requires the magistrate to be satisfied that there are adequate grounds for proceeding.

5. Criminal vs. Civil Dispute:

   • The High Court noted that although the dispute appeared contractual, the manner in which payments were withheld and billing entities shifted indicated potential criminal intent.

6. Prima Facie Case for Criminal Proceedings:

   • The court held that the non-contestation of invoices and the pattern of non-payment suggested an intentional withholding of funds. Thus, a prima facie case existed for criminal proceedings.

7. Difference Between Criminal Breach of Trust and Cheating:

   • The offenses of criminal breach of trust and cheating involve distinct elements and cannot coexist. Cheating requires intent from the inception of the transaction, while criminal breach of trust involves dishonest misappropriation after entrustment.

8. Implications for the Present Case:

   • The court observed that no entrustment of property was established, making Section 406 IPC inapplicable. Additionally, the elements for cheating under Section 420 IPC were not sufficiently proven, making prosecution under these charges unsustainable.

Conclusion

The High Court’s dismissal of the quashing petition was based on a thorough examination of the evidence and legal principles. The summoning order stands justified as it reflects a prima facie case of criminal breach of trust, warranting further legal proceedings.