Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 9 OF 2019
RISING OUT OF RL O F
(A SLP (C .) N . 5223 O 2018)
S ATISHCHANDRA R ATANLAL S HAH …A PPELLANT (s)
V ERSUS
TATE OF UJARAT AND NOTHER …
S G A
R ESPONDENT ( S )
J U D G M E N T
AMANA
N. V. R , J.
1. Leave granted.
2. The present appeal is preferred against the impugned
judgment, dated 12.04.2018, passed by the High Court of
Gujarat, in Criminal Miscellaneous Application No. 4033 of
2012, wherein the High Court has dismissed appellant’s
application seeking quashing of the order framing the charges
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dated 04.12.2013 by the Additional Chief Metropolitan
Magistrate in Criminal Case No. 388 of 2012.
3. It is pertinent to note the facts giving rise to the appeal in a
detailed manner. The respondent no. 2 complainant is the
director of a money lending company by the name of Dharshan
Fiscal Pvt. Ltd. The appellant, who is a retired bank employee,
approached the complainant’s company in the month of
January 2008 for a loan of Rs. 27,00,000/. Accordingly, the
respondent no. 2 transferred the funds as a loan, which was to
be repaid by the appellant within a year with interest.
Thereafter, the appellant has not repaid the amount back to
the respondent no.2. Further, respondent no.2 alleged that
when he approached the appellant, he was threatened by the
appellant with dire consequences. Thereafter, the respondent
no.2 filed a complaint based on which the FIR bearing I/C.R.
No. 22/2012, dated 25.01.2012, was filed before the Kagdapith
Police Station, Ahmedabad, against the present appellant
under Section 406, 409, 417, 420, 294 (b) and 506 (2) of IPC.
On 23.02.2012, the appellant was enlarged on bail by the High
Court after being arrested on 29.01.2012. The appellant
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preferred an application under Section 482 of the Cr.P.C for
the quashing of the FIR bearing I/C.R No. 22/2012.
4. The charge sheet No. 28 of 2012 dated 01.03.2012, came to be
filed against the appellant under Sections 406, 420 and 417 of
IPC. Pursuant to the same, the Magistrate issued summons.
The appellant alleged that on 04.12.2013, he was given a copy
of the said charge sheet, and that the charges were framed by
the Metropolitan Magistrate on the same day in a blank sheet
without giving him an opportunity of being heard, as the
appellant was unaccompanied by any counsel. The appellant
alleges that the same was in violation of Section 239 of the
Criminal Procedure Code.
5. In light of the aforesaid developments, the appellant filed an
application seeking amendment of the prayer in Criminal
Miscellaneous Application no. 4033 of 2012 wherein he sought
for the inclusion of prayer seeking to quash and set aside the
charge sheet no. 28/ 2012 in FIR No. I/C.R No.22/2012 and
the charges framed by the Metropolitan Magistrate vide order
dated 04.12.2013 and all further proceeding carried out in
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Criminal Case no. 388/2012 pending before the Additional
Metropolitan Magistrate.
6. It is pertinent to note that, simultaneously respondent no.2
had preferred a summary suit in Summary Civil Suit no.
928/2011 seeking the recovery of Rs.33,46,225/ which was
inclusive of the interest upon the principal amount. The same
was admitted on 25.04.2011 and is still pending before the
City Civil Judge, Ahmedabad.
7. Vide order dated 12.04.2018, the High Court dismissed the
quashing petition preferred by the appellant and directed the
trial court to complete the trial within three months. The High
Court further went on to observe that, prima facie an offence of
cheating under Section 420 is made out but charge under
Section 406 pertaining to criminal breach of trust is not
applicable in the given factual scenario. However, the High
Court did not remove the charges under Section 406 and
observed that no case has been made out to get the charge
quashed. Aggrieved by the aforesaid dismissal, the appellant
has preferred the present Special Leave Petition.
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8. The counsel on behalf of the appellant has urged that a
perusal of the complaint would reveal that the allegations as
contained in the complaint are civil in nature and the requisite
averments so as to make out a case of cheating are absent.
Hence, prima facie does not disclose the commission of the
alleged offence. Moreover, it is pertinent to note that after filing
Summary Suit No.928 of 2011 on 21.04.2011, the complainant
has filed the written complaint dated 05.01.2012 and has
attempted to give the cloak of a criminal offence to the present
case which is purely civil in nature, just to harass the
appellant. , the criminal complaint filed by the
Lastly
respondent no.2 is initiated after a lapse of more than three
years from the date of offence i.e. 21.03.2008.
9. On the contrary, the counsel on behalf of respondent no.2,
while supporting the judgment of the High Court has stated
that the appellant had fraudulent intention from the beginning
having induced the respondent no.2 to lend the aforesaid
amount of Rs. 27 lacs. Further, the appellant never had the
intention to repay the loan even though multiple requests were
made to him. The counsel pressed that whether the intention
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was to cheat from the inception or not is a question of fact and
the same can only be decided by trial after appreciating the
entire evidence.
10. Before we analyse this case, it is to be noted that the criminal
application preferred by the accused before the High Court was
against the order of the Trial Court at the stage of framing of
charges, wherein it is the duty of the court to apply its judicial
mind to the material placed before it and to come to a clear
conclusion that a prima facie case has been made out against
the accused. An order for framing of charges is of serious
concern to the accused as it affects his liberty substantially.
Courts must therefore be cautious that their decision at this
stage causes no irreparable harm to the accused.
11. Coming to the aspect of quashing of the charges, it is well
settled that such exercise needs to be undertaken by the High
Court in exceptional cases. It is also well settled that the
framing of charges being initial stages in the trial process, the
court therein cannot base the decision of quashing the charge
on the basis of the quality or quantity of evidence rather the
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enquiry must be limited to a prima facie examination. [refer to
, ].
State of Bihar vs. Ramesh Singh 1977 CriLJ 1606
12. Having observed the background principles applicable herein,
we need to consider the individual charges against the
appellant. Turning to Section 405 read with 406 of IPC, we
observe that the dispute arises out of a loan transaction
between the parties. It falls from the record that the
respondent no.2 knew the appellant and the attendant
circumstances before lending the loan. Further it is an
admitted fact that in order to recover the aforesaid amount, the
respondent no. 2 had instituted a summary civil suit which is
still pending adjudication. The law clearly recognizes a
difference between simple payment/investment of money and
entrustment of money or property. A mere breach of a promise,
agreement or contract does not, ipso facto, constitute the
offence of the criminal breach of trust contained in Section 405
IPC without there being a clear case of entrustment.
13. In this context, we may note that there is nothing either in the
complaint or in any material before us, pointing to the fact that
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any property was entrusted to the appellant at all which he
dishonestly converted for his own use so as to satisfy the
ingredients of Section 405 punishable under Section 406 of
IPC. Hence the learned Magistrate committed a serious error in
issuing process against the appellants for the said offence.
Unfortunately, the High Court also failed to correct this
manifest error.
14. Now coming to the charge under Section 415 punishable under
Section 420 of IPC. In the context of contracts, the distinction
between mere breach of contract and cheating would depend
upon the fraudulent inducement and mens rea . (See Hridaya
).
Ranjan Prasad Verma v. State of Bihar , (2000) 4 SCC 168
In the case before us, admittedly the appellant was trapped in
economic crisis and therefore, he had approached the
respondent no. 2 to ameliorate the situation of crisis. Further,
in order to recover the aforesaid amount, the respondent no. 2
had instituted a summary civil suit seeking recovery of the
loan amount which is still pending adjudication. The mere
inability of the appellant to return the loan amount cannot give
rise to a criminal prosecution for cheating unless fraudulent or
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dishonest intention is shown right at the beginning of the
transaction, as it is this mens rea which is the crux of the
offence. Even if all the facts in the complaint and material are
taken on their face value, no such dishonest representation or
inducement could be found or inferred.
15. Moreover, this Court in a number of cases has usually
cautioned against criminalizing civil disputes, such as breach
of contractual obligations [refer to Gian Singh v. State of
]. The legislature intended to
Punjab , (2012) 10 SCC 303
criminalize only those breaches which are accompanied by
fraudulent, dishonest or deceptive inducements, which
resulted in involuntary and inefficient transfers, under
Section 415 of IPC.
16. However, the High Court appears to have been carried away by
the moral element involved in the breach of promise and made
certain observations. Being a policy consideration, such
suggestions need to be restricted. The aforementioned
observations of the High Court were not only unnecessary for
the adjudication of this matter, but the same could have been
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understood as casting some kind of aspersions on the accused.
This clearly reflected a loaded dice situation against the
appellant herein.
17. In our considered opinion, the High Court should have
maintained judicial restraint and desisted from making such
general observations at this stage of the criminal proceeding,
as they may have had a bearing on the adjudication of the
trial. Therefore, the observations made in paragraphs 42 and
43 of the impugned judgment stand expunged.
18. In view of the above, we are unable to uphold the impugned
order passed by the High Court in Criminal Miscellaneous
Application No. 4033 of 2012 and the same is hereby set aside.
The application filed by the appellant under Section 482 of
Cr.P.C. is allowed and the proceedings initiated based on the
FIR instituted at the instance of respondent no. 2 are hereby
quashed.
19. The appeal is allowed in the aforesaid terms.
……………………………..J.
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( )
N. V. Ramana
……………………………..J.
( Mohan M. Shantanagoudar )
N EW D ELHI ,
J ANUARY 3, 2019.
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