Case Note & Summary
The applicants, directors of Narol Textile Infrastructure and Enviro Management (NTIEM), sought quashing of FIR No.652/2020 registered at Jalgaon City Police Station for offences under Sections 406, 420 read with 34 IPC, and the consequent RCC No.450/2021 pending before the Judicial Magistrate First Class, Jalgaon. The respondent no.2, Rishabh Metals & Chemicals Pvt. Ltd., through its law officer, alleged that NTIEM placed purchase orders for chemicals worth Rs.44,09,234/- between 21.07.2019 and 21.08.2019, and goods were supplied on credit with a 30-day payment term. The applicants failed to pay the amount, and the GST of Rs.7,13,700/- was also deposited by the respondent. The FIR claimed that the applicants deceived the respondent and caused loss. The applicants argued that the dispute was civil in nature, there was no fraudulent intention at the inception, and they had made substantial payments earlier. The respondent contended that the directors were responsible for day-to-day business and had induced supply on credit with dishonest intent. The court examined the ingredients of cheating under Section 415 IPC and criminal breach of trust under Section 405 IPC. It held that the FIR did not disclose any fraudulent or dishonest intention at the time of placing orders; the transaction was a commercial supply on credit, and mere non-payment did not constitute cheating. The court also found no entrustment of property for criminal breach of trust. Relying on precedents like Ram Jas v. State of U.P., Hira Lal Hari Lal Bhagwati v. CBI, and Hridaya Ranjan Prasad Verma v. State of Bihar, the court quashed the FIR and all consequential proceedings, holding that continuation would be an abuse of process.
Headnote
A) Criminal Law - Cheating - Section 415 IPC - Ingredients - To constitute cheating, there must be fraudulent or dishonest inducement at the time of making promise; subsequent failure to keep promise does not by itself prove culpable intention at inception (Paras 7-9).
B) Criminal Law - Criminal Breach of Trust - Section 405 IPC - Entrustment - For offence under Section 406 IPC, there must be entrustment of property or dominion over property; mere failure to pay for goods supplied on credit does not amount to criminal breach of trust (Paras 12-13).
C) Criminal Procedure - Quashing of FIR - Section 482 CrPC - Abuse of Process - Where allegations in FIR do not disclose ingredients of alleged offences and dispute is predominantly civil, continuation of criminal proceedings amounts to abuse of process of law (Paras 14-15).
Issue of Consideration
Whether the allegations in the FIR disclose the ingredients of offences under Sections 406 and 420 of the Indian Penal Code, or whether the dispute is purely civil in nature warranting quashing of criminal proceedings.
Final Decision
The court allowed the application and quashed FIR No.652/2020 registered with Jalgaon City Police Station and all consequential proceedings including RCC No.450/2021 pending before Judicial Magistrate First Class, Jalgaon.
Law Points
- Ingredients of cheating under Section 415 IPC require fraudulent or dishonest intention at the time of inducement
- mere breach of contract does not constitute cheating
- criminal breach of trust requires entrustment of property
- commercial disputes without criminal intent are not triable as criminal offences
Case Details
2024 LawText (BOM) (9) 180
Criminal Application No.77 of 2021
Smt. Vibha Kankanwadi, S. G. Chapalgaonkar
V. B. Patil, V. K. Kotecha, S. S. Bora
Nitin Chandulal Thakkar, Lalitmohan Radhakrishna Chamariya, Nareshkumar Ramgopal Sharma, Ashish Virendrabhai Shah, Devkinandan Gopiram Agarwal
State of Maharashtra, Rishabh Metals & Chemicals Pvt Ltd
Subscribe to unlock Case Details (Citation, Judge, Date & more)
Subscribe Now
Nature of Litigation
Criminal application under Section 482 CrPC for quashing of FIR and consequential proceedings.
Remedy Sought
Quashing of FIR No.652/2020 and RCC No.450/2021 pending before JMFC, Jalgaon.
Filing Reason
Alleged failure to pay for goods supplied on credit, leading to registration of FIR for cheating and criminal breach of trust.
Previous Decisions
Charge-sheet filed and RCC No.450/2021 pending trial before JMFC, Jalgaon.
Issues
Whether the allegations in the FIR disclose the ingredients of offences under Sections 406 and 420 IPC?
Whether the dispute is purely civil in nature warranting quashing of criminal proceedings?
Submissions/Arguments
Applicants: FIR is false and frivolous; dispute is civil; no fraudulent intention at inception; substantial payments already made; ingredients of cheating and criminal breach of trust absent.
Respondents: Directors induced supply on credit with dishonest intention; non-payment and correspondence show deceit; triable material exists; quashing not warranted.
Ratio Decidendi
For an offence of cheating under Section 420 IPC, it must be shown that the accused had fraudulent or dishonest intention at the time of making the promise or representation; mere subsequent failure to keep a promise does not constitute cheating. Similarly, for criminal breach of trust under Section 406 IPC, there must be entrustment of property. In a commercial transaction for supply of goods on credit, non-payment without evidence of initial fraudulent intent does not attract criminal liability. Continuation of criminal proceedings in such a case amounts to abuse of process of law.
Judgment Excerpts
The sum and substance of allegation in the FIR is that applicants- Directors of NTIEM have illegally withhold bills towards goods supplied on credit by M/s. Rishabh Metals. As such, they have committed offence under Section 406 and 420 of the Indian Penal Code.
Pertinently, from the contents of the FIR it is not discernible that at the inception of the transaction, NTIEM had fraudulent intention and order for supply of goods was deceitful or M/s. Rishabh Metals was induced to release the goods with intention to defraud them.
In the instant case, there is no entrustment of property with the applicants. The goods were supplied on credit basis. The transaction is purely of commercial nature. The failure to pay the price of goods supplied may give rise to civil liability but does not constitute criminal breach of trust.
Procedural History
On 30.10.2020, FIR No.652/2020 was registered at Jalgaon City Police Station for offences under Sections 406, 420 r/w 34 IPC. Investigation culminated in charge-sheet and RCC No.450/2021 was filed before Judicial Magistrate First Class, Jalgaon. The applicants filed Criminal Application No.77 of 2021 under Section 482 CrPC seeking quashing of FIR and proceedings. The High Court heard the matter and delivered judgment on 18.09.2024.
Acts & Sections
- Indian Penal Code, 1860 (IPC): 406, 420, 415, 405, 34
- Code of Criminal Procedure, 1973 (CrPC): 482
