Case Note & Summary
The petitioners, who are the original accused, filed a criminal writ petition under Article 226 of the Constitution read with Section 482 of the Code of Criminal Procedure, 1973, seeking quashing of the order dated 9.8.2012 passed by the learned Metropolitan Magistrate, 25th Court, Mazgaon, Mumbai, in Criminal Case No. 157/SW/2012. The complaint was filed by respondent No.2, alleging offences under Sections 120-B, 409, 465, 467, 471, and 420 read with Section 34 of the Indian Penal Code, 1860. The parties are related. The complainant alleged that he gave a loan of Rs.1,50,000 to accused No.1 to start a business, and before leaving for Canada, he handed over four cheques to the accused for share trading and payment of bills. Upon his return, the accused refused to render accounts. The accused gave three cheques of Rs.50 lakhs each drawn on HSBC Bank, which were dishonoured with the endorsement 'account closed'. The complainant issued a notice under Section 138 of the Negotiable Instruments Act, 1881, and filed a complaint at Alibagh. The accused alleged that the complainant stole nine cheques with forged signatures. The Magistrate, after verification, issued process. The High Court examined the complaint and found that the dispute was essentially civil in nature, arising from a family loan and business relationship. The court held that the ingredients of criminal breach of trust under Section 409 IPC were not made out as there was no entrustment in the capacity of a public servant, banker, merchant, etc. Similarly, the ingredients of cheating under Section 420 IPC were absent as there was no deception at the inception of the transaction. The court also noted that the complainant had already availed civil remedies by filing a complaint under Section 138 of the Negotiable Instruments Act. The court concluded that allowing criminal proceedings to continue would be an abuse of the process of court. Accordingly, the petition was allowed, and the impugned order and the criminal proceedings were quashed.
Headnote
A) Criminal Law - Quashing of FIR - Abuse of Process - Sections 482 CrPC, 120-B, 409, 420 IPC - Dispute arising from family loan and dishonoured cheques - Held that where the dispute is essentially civil in nature, criminal proceedings cannot be allowed to continue as they amount to abuse of process of court (Paras 5-8). B) Criminal Breach of Trust - Ingredients - Section 405, 409 IPC - Entrustment of property - Held that for an offence under Section 409 IPC, there must be entrustment in the capacity of a public servant, banker, merchant, etc., and dishonest misappropriation - Mere failure to repay loan does not constitute criminal breach of trust (Para 6). C) Cheating - Ingredients - Section 415, 420 IPC - Deception from inception - Held that to constitute cheating, there must be deception at the time of initial transaction; subsequent failure to pay does not attract Section 420 IPC (Para 6).
Issue of Consideration
Whether criminal proceedings for offences under Sections 120-B, 409, 465, 467, 471, 420 read with 34 IPC can be sustained when the dispute essentially arises from a family loan transaction and dishonour of cheques, and whether the complaint discloses any criminal offence or is an abuse of process of law.
Final Decision
The petition is allowed. The impugned order dated 9.8.2012 passed by the learned Metropolitan Magistrate, 25th Court, Mazgaon, Mumbai, in Criminal Case No. 157/SW/2012, and the criminal proceedings initiated pursuant thereto, are quashed and set aside.
Law Points
- Criminal proceedings can be quashed when dispute is predominantly civil in nature
- breach of contract does not constitute criminal offence
- ingredients of criminal breach of trust and cheating must be made out
- quashing under Section 482 CrPC for abuse of process
