The applicants filed an application under Section 482 of the Criminal Procedure Code for quashing FIR No. 652/2020 registered with Jalgaon City Police Station under Sections 406 and 420 read with 34 of the Indian Penal Code (IPC). The FIR pertains to a business dispute between two companies over non-payment of dues for chemicals supplied. The Court quashed the FIR, finding the dispute to be of a civil nature without criminal intent.

The Court determined that the allegations in the FIR lacked the necessary criminal elements to constitute offenses under Sections 406 (criminal breach of trust) and 420 (cheating) IPC. The matter was found to be a civil dispute concerning the non-fulfillment of contractual obligations and could not be prosecuted criminally.

1. Application for Quashing (Paras 1-3)

• Applicants approached the Court under Section 482 of CrPC to quash FIR No. 652/2020 for offenses under Sections 406 and 420 IPC.
• Respondent No. 2 alleged that applicants, as directors of Narol Textile Infrastructure and Enviro Management (NTIEM), failed to pay Rs. 44,09,234 for chemicals supplied by M/s. Rishabh Metals and Chemicals Private Limited.

2. Applicant’s Arguments (Paras 4-5)

• The applicants contended that the FIR was frivolous and that the issue was purely civil, related to non-payment due to a dispute over costs.
• They argued there was no fraudulent intention or deception at the inception of the transaction, and hence, no criminal offense was committed.

3. Respondent’s Opposition (Para 5)

• Respondents argued that the applicants deliberately withheld payment, amounting to cheating and breach of trust, and the criminal proceedings were warranted based on the facts presented.

4. Court's Analysis and Observations (Paras 6-15)

• The Court noted the absence of evidence showing fraudulent intention or deception at the beginning of the transaction, a necessary element for constituting cheating under Section 420 IPC.
• It further found that the allegations did not fulfill the criteria for criminal breach of trust under Section 406 IPC, as there was no entrustment of property or dishonest misappropriation.
• The Court referenced precedents (Ram Jas vs. State of U.P., Hira Lal Hari Lal Bhagwati vs. CBI, Hridaya Ranjan Prasad Verma vs. State of Bihar) to conclude that mere non-fulfillment of contractual obligations does not amount to criminality.

Acts and Sections Discussed:

• Criminal Procedure Code (CrPC): Section 482 (Inherent powers of the Court).
• Indian Penal Code (IPC):
  • Section 406 (Punishment for criminal breach of trust).
  • Section 420 (Cheating and dishonestly inducing delivery of property).
  • Section 415 (Definition of cheating).
  • Section 34 (Acts done by several persons in furtherance of common intention).

Ratio Decidendi:
To constitute the offenses of cheating (Section 420) and criminal breach of trust (Section 406), there must be evidence of fraudulent or dishonest intention at the beginning of the transaction. The absence of such intent and the existence of a purely contractual dispute indicate that the matter is civil and does not attract criminal liability.

Subjects:
Criminal Law - Quashing of FIR

Civil Dispute, Cheating, Criminal Breach of Trust, Contractual Obligations, Quashing FIR, Section 482 CrPC, IPC Sections 406 and 420.