Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 2327 OF 2014
(Arising out of SLP (Crl.) No. 9751/2011)
BINOD KUMAR & ORS. .. Appellant
Versus
STATE OF BIHAR & ANR. ..Respondents
J U D G M E N T
R. BANUMATHI, J.
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Leave granted.
2. Whether the charges under Section 406 IPC and the
criminal complaint for criminal breach of trust for allegedly
retaining the bill amount payable to respondent No.2 is liable
to be quashed is the point falling for consideration in this
appeal.
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3. Payment of bill pertaining to the contract executed
by the second respondent in Tilka Manjhi Bhagalpur
University had a chequered history. Case of second
respondent is that contract was entered into between him and
K.S.S. College on 4.9.1990 for the construction of building of
K.S.S. College, Lakhisarai, a constituent unit of Tilka Manjhi
Bhagalpur University. According to second respondent, since
money and requisite materials were not given to him in time,
the work was not completed within stipulated period. The
university vide letter dated 9.5.1995, informed the respondent
No.2 that his contract is terminated and all his dues including
final bill, earnest money and security deposit etc. will be
released after consultation with the College Development
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Committee. The University Engineer vide letter dated
4.6.1996, addressed to the Principal of the college, informed
that a payment of Rs.48,505/- is payable to the contractor;
but the respondent No.2 was not paid the aforesaid bill
amount. Finally, the respondent was paid Rs.14,000/- vide
cheque No. EMGCO-OP.Z No. 0127627, as per the direction of
the College Development Committee and balance amount of
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Rs.34,505/- was not paid to him. Aggrieved by the said non-
payment of entire amount, respondent No.2 filed a criminal
complaint case No.196-C/1997 in the Court of Sub Divisional
Judicial Magistrate, Lakhisarai for criminal breach of trust,
alleging that the amount of Rs.34,505/- was not paid to him
and that the amount was utilized by the appellants in some
other work.
4. The appellants filed an application under
Section 227 Cr.P.C. before the Court of Sub Divisional Judicial
Magistrate, Lakhisarai seeking their discharge from the
criminal case. The Court of Sub Divisional Judicial Magistrate,
Lakhisarai vide its order dated 2.12.2002 dismissed the said
petition and directed the appellants to remain present in the
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court on 8.1.2003 for framing of charges under Section
406/120B IPC. The appellants filed petition under Section
482 Cr.P.C. before the Patna High Court for quashing the said
order and by the impugned order dated 18.2.2011, the High
Court dismissed the petition. Aggrieved by the same, the
appellants are before us.
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5. Dr. Manish Singhvi, learned counsel appearing for
the appellants, contended that the act of withholding of
payment to the second respondent was as per the direction
issued by the Vice-Chancellor and no case is made out for
misappropriation of funds under Section 406 IPC. It was
contended that the act of the appellants was done in the
discharge of their public duties and there was no dishonest
intention to misappropriate the amount and the essential
ingredients of criminal breach of trust are not made out and
the High Court has not properly appreciated the matter.
6. Ms. Prerna Singh, learned counsel for respondent
No.1 - State of Bihar, submitted that the instant petition
does not relate to any police case and the matter was never
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subjected to police investigation. It was, however, submitted
that on examination of four witnesses, Magistrate found that
a prima facie case was made out against the appellants and
therefore, High Court rightly dismissed the petition filed under
Section 482 Cr.P.C.
7. Mr. Rajiv Kumar, learned counsel appearing for the
second respondent contended that the application for
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discharge was rightly rejected by the Magistrate as the case
filed by the second respondent is a warrant case instituted
other than on police report and since prima-facie case was
made out, the discharge application was rightly dismissed by
the trial court. It was also contended that as per the terms
and conditions of the contract, the second respondent had
executed the work and the same was also measured and
verified by the University Engineer and while so, the
appellants with malafide intention withheld the second
respondent’s dues and thus, committed criminal breach of
trust and the High Court rightly dismissed the petition filed
under Section 482 Cr.P.C.
8. We have carefully considered the rival contentions
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and also perused the impugned order and the materials on
record.
9. In proceedings instituted on criminal complaint,
exercise of the inherent powers to quash the proceedings is
called for only in case where the complaint does not disclose
any offence or is frivolous. It is well settled that the power
under Section 482 Cr.P.C. should be sparingly invoked with
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circumspection, it should be exercised to see that the process
of law is not abused or misused. The settled principle of law is
that at the stage of quashing the complaint/FIR, the High
Court is not to embark upon an enquiry as to the probability,
reliability or the genuineness of the allegations made therein.
In Smt. Nagawwa vs. Veeranna Shivalingappa Konjalgi ,
(1976) 3 SCC 736, this Court enumerated the cases where an
order of the Magistrate issuing process against the accused
can be quashed or set aside as under:
“(1) where the allegations made in the complaint
or the statements of the witnesses recorded
in support of the same taken at their face
value make out absolutely no case against
the accused or the complainant does not
disclose the essential ingredients of an
offence which is alleged against the
accused;
(2) where the allegations made in the
complaint are patently absurd and
inherently improbable so that no prudent
person can ever reach a conclusion that
there is a sufficient ground for proceeding
against the accused;
(3) where the discretion exercised by the
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Magistrate in issuing process is capricious
and arbitrary having been based either on
no evidence or on materials which are
wholly irrelevant or inadmissible; and
(4) where the complaint suffers from
fundamental legal defects such as, want of
sanction, or absence of a complaint by
legally competent authority and the like.”
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The Supreme Court pointed out that the cases mentioned are
purely illustrative and provide sufficient guidelines to indicate
contingencies where the High Court can quash the
proceedings.
10. In Indian Oil Corporation vs. NEPC India Ltd. And
Ors. , (2006) 6 SCC 736, this Court has summarized the
principles relating to exercise of jurisdiction under Section 482
Cr.P.C. to quash complaints and criminal proceedings as
under:-
“The principles relating to exercise of jurisdiction
under Section 482 of the Code of Criminal Procedure
to quash complaints and criminal proceedings have
been stated and reiterated by this Court in several
decisions. To mention a few— Madhavrao Jiwajirao
Scindia v. Sambhajirao Chandrojirao Angre (1988) 1
SCC 692 , State of Haryana v. Bhajan Lal ,1992 Supp
(1) SCC 335; Rupan Deol Bajaj v. Kanwar Pal Singh
Gill (1995) 6 SCC 194 , Central Bureau of Investigation
v. Duncans Agro Industries Ltd (1996) 5 SCC 591; State
of Bihar v. Rajendra Agrawalla (1996) 8 SCC 164 ,
Rajesh Bajaj v. State NCT of Delhi,(1999) 3 SCC 259;
Medchl Chemicals & Pharma (P) Ltd. v. Biological E.
Ltd(2000) 3 SCC 269 Hridaya Ranjan Prasad Verma v.
State of Bihar (2000) 4 SCC 168 , M. Krishnan v. Vijay
Singh (2001) 8 SCC 645 and Zandu Pharmaceutical
Works Ltd. v. Mohd. Sharaful Haque( 2005) 1 SCC 122 .
The principles, relevant to our purpose are:
( i ) A complaint can be quashed where the
allegations made in the complaint, even if they
are taken at their face value and accepted in
their entirety, do not prima facie constitute any
offence or make out the case alleged against the
accused.
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For this purpose, the complaint has to be
examined as a whole, but without examining the
merits of the allegations. Neither a detailed
inquiry nor a meticulous analysis of the material
nor an assessment of the reliability or
genuineness of the allegations in the complaint,
is warranted while examining prayer for
quashing of a complaint.
( ii ) A complaint may also be quashed where it is a
clear abuse of the process of the court, as when
the criminal proceeding is found to have been
initiated with mala fides /malice for wreaking
vengeance or to cause harm, or where the
allegations are absurd and inherently
improbable.
( iii ) The power to quash shall not, however, be
used to stifle or scuttle a legitimate prosecution.
The power should be used sparingly and with
abundant caution.
( iv ) The complaint is not required to verbatim
reproduce the legal ingredients of the offence
alleged. If the necessary factual foundation is
laid in the complaint, merely on the ground that
a few ingredients have not been stated in detail,
the proceedings should not be quashed.
Quashing of the complaint is warranted only
where the complaint is so bereft of even the
basic facts which are absolutely necessary for
making out the offence.
( v ) A given set of facts may make out: ( a ) purely a
civil wrong; or ( b ) purely a criminal offence; or ( c )
a civil wrong as also a criminal offence. A
commercial transaction or a contractual dispute,
apart from furnishing a cause of action for
seeking remedy in civil law, may also involve a
criminal offence. As the nature and scope of a
civil proceeding are different from a criminal
proceeding, the mere fact that the complaint
relates to a commercial transaction or breach of
contract, for which a civil remedy is available or
has been availed, is not by itself a ground to
quash the criminal proceedings. The test is
whether the allegations in the complaint disclose
a criminal offence or not.”
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11. Referring to the growing tendency in business
circles to convert purely civil disputes into criminal cases, in
paragraphs (13) and (14) of the Indian Oil Corporation’s case
(supra), it was held as under:-
“13. While on this issue, it is necessary to take notice
of a growing tendency in business circles to convert
purely civil disputes into criminal cases. This is
obviously on account of a prevalent impression that
civil law remedies are time consuming and do not
adequately protect the interests of lenders/creditors.
Such a tendency is seen in several family disputes
also, leading to irretrievable breakdown of
marriages/families. There is also an impression that if
a person could somehow be entangled in a criminal
prosecution, there is a likelihood of imminent
settlement. Any effort to settle civil disputes and
claims, which do not involve any criminal offence, by
applying pressure through criminal prosecution
should be deprecated and discouraged. In G. Sagar
Suri v. State of U.P., (2000) 2 SCC 636 this Court
observed: (SCC p. 643, para 8)
“It is to be seen if a matter, which is
essentially of a civil nature, has been given a
cloak of criminal offence. Criminal proceedings
are not a short cut of other remedies available
in law. Before issuing process a criminal court
has to exercise a great deal of caution. For the
accused it is a serious matter. This Court has
laid certain principles on the basis of which the
High Court is to exercise its jurisdiction under
Section 482 of the Code. Jurisdiction under
this section has to be exercised to prevent
abuse of the process of any court or otherwise
to secure the ends of justice.”
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14. While no one with a legitimate cause or grievance
should be prevented from seeking remedies available
in criminal law, a complainant who initiates or persists
with a prosecution, being fully aware that the criminal
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proceedings are unwarranted and his remedy lies only
in civil law, should himself be made accountable, at
the end of such misconceived criminal proceedings, in
accordance with law. One positive step that can be
taken by the courts, to curb unnecessary prosecutions
and harassment of innocent parties, is to exercise
their power under Section 250 CrPC more frequently,
where they discern malice or frivolousness or ulterior
motives on the part of the complainant. Be that as it
may.”
12. Coming to the facts of this case, it is no doubt true
that the dispute relates to the non-payment of bill amount of
Rs.34,505/- pertaining to the contract executed by respondent
No.2. It is also pertinent to note that respondent No.2 preferred
CWJC No.5803/1999 wherein an order dated 5.4.2000 was
passed by Patna High Court directing the Vice-Chancellor of
Bhagalpur University to release the balance amount of
Rs.34,505/- with interest at the rate of 18% w.e.f. 1.10.1994 till
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the date of payment and pay the interest at the rate of 11% on
the sum of Rs.14,000/- from 1.10.1994 till 9.12.1996.
Aggrieved by the said order, Bhagalpur University preferred LPA
No.716/2000 wherein it was directed that since it was not a
statutory contract, no direction for payment of money could be
issued and the respondent No.2 can pursue other remedies
available in law for the recovery of money. Aggrieved by the
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said order, respondent No. 2 filed SLP(C) No. CC 4832/2001
which was dismissed as withdrawn by this Court by Order
dated 30.7.2001 granting him liberty to approach the
appropriate forum. Respondent No.2 thereafter filed Money
st
Suit No. 2/2002 before the Court of Sub Judge 1 Court,
Lakhisarai on 20.4.2002 for recovery of Rs. 69,010/- i.e. double
the amount of Rs.34,505/- and the said suit is pending.
Second appellant representing the university had also filed
Money Suit No.2/2006 before the same Court on 4.2.2006
claiming a sum of Rs.1,44,437/- with interest against the
second respondent-contractor. These acts of the parties show
that the parties have already had recourse to the civil remedies
that are available to them in law.
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13. Appellant Nos.1 and 2 were then employed as
Principal and Professor respectively in KSS College, Lakhisarai
and appellant No.3 as Bursar of the said college. The
appellants have stated that they had no intention to cheat or
dishonestly misappropriate the amount of Rs. 34,505/-. The
appellants have stated that there were disputes regarding the
quality of work done and also non-return of some cement bags
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by the second respondent. It is stated that in view of the
dispute between the university and the contractor and
stoppage of further construction by the second respondent
and with the direction and approval of the Vice-Chancellor,
contract of the appellant was terminated and his bill was
placed before the College Development Committee. In its
meeting dated 8.12.1995, the Committee considered the claim
of the second respondent and rejected his certain claims and
the same was informed to the Vice-Chancellor. The university
vide letter No. E/243 dated 25.3.1998 directed to stop final
payment to the second respondent and the university
requested the Executive Engineer for verification of quality of
work done. Appellants have stated that the amount of
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Rs. 34,505/- has been lying in the account of the university
and only on instruction from the Vice-Chancellor, the amount
was not paid to the second respondent and no dishonest
intention could be attributed to the appellants.
14. At this stage, we are only concerned with the
question whether the averments in the complaint taken at
their face value make out the ingredients of criminal offence
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or not. Let us now examine whether the allegations made in
the complaint when taken on their face value, are true and
constitute the offence as defined under Section 406.
15. Section 405 IPC deals with criminal breach of trust.
A careful reading of the Section 405 IPC shows that a criminal
breach of trust involves the following ingredients:
( a ) a person should have been entrusted with
property, or entrusted with dominion over
property;
( b ) that person should dishonestly misappropriate
or convert to his own use that property, or
dishonestly use or dispose of that property or
wilfully suffer any other person to do so;
( c ) that such misappropriation, conversion, use or
disposal should be in violation of any direction
of law prescribing the mode in which such trust
is to be discharged, or of any legal contract
which the person has made, touching the
discharge of such trust.
16. Section 406 IPC prescribes punishment for criminal
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breach of trust as defined in Section 405 IPC. For the offence
punishable under Section 406 IPC, prosecution must prove:
(i) that the accused was entrusted with property
or with dominion over it and
(ii) that he (a) misappropriated it, or (b) converted
it to his own use, or (c) used it, or (d) disposed
of it.
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The gist of the offence is misappropriation done in a dishonest
manner. There are two distinct parts of the said offence. The
first involves the fact of entrustment, wherein an obligation
arises in relation to the property over which dominion or
control is acquired. The second part deals with
misappropriation which should be contrary to the terms of the
obligation which is created.
17. Section 420 IPC deals with cheating. Essential
ingredients of Section 420 IPC are:- (i) cheating; (ii) dishonest
inducement to deliver property or to make, alter or destroy any
valuable security or anything which is sealed or signed or
is capable of being converted into a valuable security, and
(iii) mens rea of the accused at the time of making the
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inducement.
18. In the present case, looking at the allegations in the
complaint on the face of it, we find no allegations are made
attracting the ingredients of Section 405 IPC. Likewise, there
are no allegations as to cheating or the dishonest intention of
the appellants in retaining the money in order to have
wrongful gain to themselves or causing wrongful loss to the
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complainant. Excepting the bald allegations that the
appellants did not make payment to the second respondent
and that the appellants utilized the amounts either by
themselves or for some other work, there is no iota of
allegation as to the dishonest intention in misappropriating
the property. To make out a case of criminal breach of trust,
it is not sufficient to show that money has been retained by
the appellants. It must also be shown that the appellants
dishonestly disposed of the same in some way or dishonestly
retained the same. The mere fact that the appellants did not
pay the money to the complainant does not amount to
criminal breach of trust.
19. Even if all the allegations in the complaint taken at
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the face value are true, in our view, the basic essential
ingredients of dishonest misappropriation and cheating are
missing. Criminal proceedings are not a short cut for other
remedies. Since no case of criminal breach of trust or
dishonest intention of inducement is made out and the
essential ingredients of Sections 405/420 IPC are missing, the
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prosecution of the appellants under Sections 406/120B IPC, is
liable to be quashed.
20. The impugned order of the High Court is set aside
and this appeal is allowed. Parties are at liberty to work out
their remedy in the civil suits which they have already had
recourse to.
……………………….J.
(T.S. Thakur)
……………………….J.
(R. Banumathi)
New Delhi;
October 30, 2014
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