Full Judgment Text
2025 INSC 1350
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO.5000 OF 2025
(Arising out of Special Leave Petition (Crl.) No.4939 of 2018)
INDER CHAND BAGRI …APPELLANT
VERSUS
JAGADISH PRASAD BAGRI & ANOTHER …RESPONDENTS
J U D G M E N T
NAGARATHNA, J.
Leave granted.
2. This appeal arises out of the order dated 13.02.2018 passed
by the High Court of Gauhati in Criminal Petition No.190 of 2015
dismissing the application filed under Section 482 of the Code of
Criminal Procedure (hereinafter “CrPC” for short) preferred by the
Signature Not Verified
appellant-accused, Inder Chand Bagri and thereby refusing to
Digitally signed by
NEETU SACHDEVA
Date: 2025.11.24
16:44:58 IST
Reason:
quash the proceedings instituted under Sections 406/420/120B of
1
the Indian Penal Code, 1860 (for short, “IPC”) arising out of the
Complaint Case C.R.No.3230c of 2013 dated 19.09.2013 before the
Court of Chief Judicial Magistrate, Kamrup, Gauhati that was filed
by Jagadish Prasad Bagri, the complainant/respondent No.1.
3. Briefly stated, the facts of the case are that the appellant-
accused along with four other individuals namely Bhagwandas
Bagri, Ramkishan Bagri, Shyamsundar Bagri and Jagdish Prasad
Bagri (complaint/respondent No.1) resolved to constitute a
partnership firm vide partnership deed dated 01.10.1976 in the
name and style of ‘INDRACHAND BAGRI AND BROTHERS’
(hereinafter referred to as “firm”). The aim of said partnership firm
was to carry on business of construction of warehouses and
godowns and subsequently letting them out to third parties. As per
the terms of the said partnership deed, the appellant-accused
agreed to bring into the partnership, for the purpose of business,
the land owned by him situated at New Dag No.2760 of New Patta
No. 455, Village Maidamgaon, Mouza Beltola, District: Kamrup,
Assam (hereinafter referred to as “disputed property”).
Subsequently, two godowns were constructed on the said disputed
property and leased out to Food Corporation of India on
2
01.04.1978 and 01.06.1978 for a period of fifteen years i.e. till
01.06.1993.
4. Thereafter, the partners of the said firm decided to enter into
a supplementary agreement on 03.04.1981 that was an addendum
to the original partnership deed dated 01.10.1976. In the said
supplementary agreement, it was decided conjointly by all the
partners that the appellant-accused shall be permitted to utilise
the disputed property for his individual interest. It was also
mutually decided that in the event of vacancy of the godowns by
the Food Corporation of India after the determination of lease deed
on 01.06.1993, the said disputed property shall revert back to the
appellant-accused along with all the rights, title and interest to the
said property.
5. The said godowns were vacated by 1995 thereafter the
partners of the said firm decided to dissolve the said partnership
firm vide the dissolution deed dated 03.04.1997 w.e.f. 01.04.1997.
Further it was mutually agreed upon that all the assets and
liabilities of the said firm would stand transferred to the appellant-
accused and the said firm would be his sole proprietary concern.
3
6. The complainant/respondent No.1 filed a Title Suit No.144 of
1998 for dissolution of the firm and rendition of partnership
accounts before Civil Judge (Senior Division) No.1, Gauhati
wherein the Court, vide order dated 08.09.2020, passed an ex-
parte preliminary decree declaring that the said partnership firm is
dissolved with effect from 08.09.2000 and the same shall be
advertised as such in the Gazette.
7. Thereafter, on 20.06.2011, the appellant-accused executed a
sale deed No.5359 of 2011 in favour of his nephew, one Ajit Kumar
Bagri for the consideration of Rs.94.60 lakh and thereby
transferred the said disputed property situated at New Dag
No.2760 of New Patta No.455, Village Maidamgaon, Beltola,
District Kamrup, Assam to him.
8. Aggrieved by the execution of the said sale deed, the
complainant/respondent No.1 filed a Title Suit No.160 of 2012
before Court of Civil Judge No.1, Kamrup at Gauhati against the
appellant-accused and the rest of the partners of the said firm
seeking relief of setting aside of the sale deed No.5359 of 2011
dated 20.06.2011 and declaration that the said disputed property
4
belongs to the firm and thereby permanently restraining the
appellant-accused from alienating the said disputed property.
9. Furthermore, the complainant/respondent No.1 filed a
complaint case being CR Case No.3230c of 2013 on 19.09.2013
against the appellant-accused and Ajit Kumar Bagri, who was
arraigned as accused No.2, under Section 406, 420 and 120B of
the IPC. The allegations made out in the said complaint can be
summarised as follows:
i. That the appellant-accused was entrusted by the
complainant/respondent No.1 and other partners with the
firm’s properties i.e. the disputed property allotted in favour of
the firm, the warehouses and godowns.
ii. The appellant-accused dishonestly misappropriated the said
disputed property belonging to the firm for his own and sold it
to accused No.2 and therefore the appellant-accused has
committed an offence of Criminal Breach of Trust. It is further
alleged that the appellant-accused failed to account for profits
and losses accruing to the firm post-March 1993.
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iii. It is further alleged that the appellant-accused induced the
complainant/respondent No.1 into entering in the partnership
deed and thereafter connived with accused No.2 to
intentionally cheat and deceive the complainant/respondent
No.1 by selling the disputed property belonging to the firm and
thereby committed the offence of cheating.
iv. Lastly, it is alleged by the complainant/respondent No.1 that
appellant-accused and accused No.2 together hatched a
conspiracy to misappropriate the property of the firm and
connived and cheated the complainant/respondent No.1 by
dishonestly inducing him to invest capital in the partnership
firm and thereafter selling the disputed property of the firm to
accused No.2.
10. Vide order dated 25.02.2014, the Sub-Divisional Judicial
Magistrate(I) Kamrup, Gauhati took cognizance of the complaint
against the appellant-accused in CR Case No.3230c of 2013 under
Section 406, 420 and 34 of the IPC and thereafter issued summon
to the appellant-accused to appear before the Court.
6
11. Aggrieved by the order dated 25.02.2014 of the Sub-
Divisional Judicial Magistrate (I) Kamrup, the appellant-accused
preferred Criminal Petition No.190 of 2015 under Section 482 CrPC
before the Gauhati High Court praying for the relief of quashing of
the cognizance order dated 25.02.2014 as well as the Complaint
Case being CR Case No.3230c of 2013.
12. The Criminal Petition No.190 of 2015 preferred by the
appellant-accused was clubbed together with Criminal Petition
No.620 of 2014 preferred by accused No.2 and was disposed of vide
common impugned order dated 13.02.2018 of the Gauhati High
Court. The High Court deemed it fit to quash the criminal
proceedings arising out of CR Case No.3230c of 2013 against
accused No.2. However, the High Court refused to quash the said
criminal proceedings against the appellant-accused wherein it was
observed that the complainant/respondent No.1 has been
successful in making out a prima facie case against the appellant-
accused. It was also observed that the material relied upon by the
appellant-accused is not of a quality so as to merit quashing of the
charges against him. It was further held that the points raised by
the appellant-accused deserve scrutiny which can only be done by
7
the Trial Court and not by the High Court while exercising its
inherent jurisdiction under Section 482 CrPC. Therefore, the High
Court directed the Trial Court to proceed with the criminal
proceedings against the appellant-accused.
13. Aggrieved by the impugned order dated 13.02.2018 passed by
the High Court of Gauhati, the appellant-accused has preferred the
present appeal.
14. The learned counsel for the appellant-accused contends that
the complaint filed by the complainant/respondent No.1 on
19.09.2013 is time-barred as the same was instituted 16 years
after the alleged acts of criminal breach of trust, without any
application for condonation of delay under Section 473 CrPC, and
is thus barred by three-year limitation period under Section
468(2)(c) CrPC. It is further argued that the complainant/
respondent No.1 suppressed the supplementary deed dated
03.04.1981 and the deed of dissolution dated 03.04.1997, based
on which an ex-parte decree had already been passed in the Title
suit No.144 of 1998 for the dissolution of partnership and rendition
of accounts in a suit preferred by the complainant/ respondent
No.1 himself and hence they cannot dispute the factum of
8
dissolution. It is also contended that since the Civil Suit No.160 of
2012 for setting aside the sale deed dated 20.06.2011 was filed by
the complainant/respondent No.1, prior to the criminal complaint,
the initiation of the latter amounts to an abuse of process of law,
especially when no other partners raised any objections or
complaints regarding the sale of the property. Finally, it is
submitted that the appellant-accused resided in Bangalore and did
not manage the partnership accounts, as the duty of maintaining
accounts and distributing profits was entrusted to one
Bhagwandas Bagri as per the partnership deed dated 01.10.1976.
15. On the contrary, the Learned Counsel for the complainant/
respondent No.1 submits that the appellant-accused was expressly
entrusted with the firm’s properties, including the land allotted to
the firm, thereby fulfilling the ingredients of offences under
Sections 405 and 406 of the IPC. It is argued that any property
brought in by a partner becomes the property of the firm, and upon
dissolution, a partner is entitled only to a share in the value of the
firm’s assets after liabilities are settled, as reflected in Clause 4 of
the partnership deed dated 01.10.1976. The complainant/
respondent No.1 contends that the appellant-accused did not
9
disclose or rely upon the supplementary and dissolution deeds
during the trial, rendering their authenticity doubtful. Lastly it is
asserted that there is no legal bar on pursuing civil and criminal
proceedings simultaneously, and despite the civil nature of the
dispute, the existence of clear criminal elements justifies
continuation of the criminal proceedings.
16. Heard the learned counsel for the appellant and learned
counsel for the respondent-State as well as complainant/
respondent No.1. We have perused the material on record and we
have given our thorough consideration to the arguments advanced
at the bar and the material on record.
17. The contents of the complaint would have to be read in light
of the ingredients of Sections 406 and 420 of the IPC and the law
settled by this Court through various judicial dicta. On perusal of
the complaint dated 19.09.2013, it is noted that the complainant/
respondent No.1 has filed the said complaint invoking Sections
406/420 of the IPC. For ease of reference, the aforesaid Sections
are extracted as under:
“ 406. Punishment for criminal breach of trust.—
Whoever commits criminal breach of trust shall be
punished with imprisonment of either description for a
10
term which may extend to three years, or with fine, or with
both.
xxx
420. Cheating and dishonestly inducing delivery of
property.- Whoever cheats and thereby dishonestly
induces the person deceived to deliver any property to any
person, or to make, alter or destroy the whole or any part
of a valuable security, or anything which is signed or
sealed, and which is capable of being converted into a
valuable security, shall be punished with imprisonment of
either description for a term which may extend to seven
years, and shall also be liable to fine. ”
18. In Inder Mohan Goswami vs. State of Uttaranchal, (2007)
12 SCC 1 (“Inder Mohan Goswami”), while dealing with Section
420 of the IPC, this Court observed thus:
“42. On a reading of the aforesaid section, it is manifest
that in the definition there are two separate classes of acts
which the person deceived may be induced to do. In the
first class of acts he may be induced fraudulently or
dishonestly to deliver property to any person. The second
class of acts is the doing or omitting to do anything which
the person deceived would not do or omit to do if he were
not so deceived. In the first class of cases, the inducement
must be fraudulent or dishonest. In the second class of
acts, the inducing must be intentional but need not be
fraudulent or dishonest. Therefore, it is the intention
which is the gist of the offence. To hold a person guilty of
cheating it is necessary to show that he had a fraudulent
or dishonest intention at the time of making the promise.
From his mere failure to subsequently keep a promise, one
cannot presume that he all along had a culpable intention
to break the promise from the beginning.”
11
19. In light of the facts and circumstances of the present case, we
find that the complainant/respondent No.1 has failed to make out
a case that satisfies the basic ingredients of the offence under
Section 420 of the IPC. We fail to understand as to how the
allegations against the appellant-accused herein could be brought
within the scope and ambit of the aforesaid section. On a bare
perusal of the complaint, we do not find that the offence of cheating
as defined under Section 420 of the IPC is made out at all and we
do not find that there is any cheating and dishonest inducement to
deliver any property of a valuable security involved in the instant
case.
20. It is settled law that for establishing the offence of cheating,
the complainant/respondent No.1 was required to show that the
appellant-accused had a fraudulent or dishonest intention at the
time of making a promise or representation of not fulfilling the
partnership agreement. Such a culpable intention right at the
beginning cannot be presumed but has to be made out with cogent
facts. In the facts of the present case, there is a clear absence of
material on record to attribute any dishonest and fraudulent
intention to the appellant-accused at the time of creation of
12
partnership agreement. We must hasten to add that there is no
allegation in the complaint indicating either expressly or impliedly
any intentional deception or fraudulent/dishonest intention on the
part of the appellant-accused right from the time of formation of
the partnership deed. Nothing has been said on what the
misrepresentations were and how the appellant-accused
intentionally deceived the complainant/respondent No.1. Mere
allegations that the appellant-accused dishonestly induced the
complainant/respondent No.1 to part with the property of the
partnership firm and subsequently sold the property to a third
party does not satisfy the test of dishonest inducement to deliver a
property or part with a valuable security as enshrined under
Section 420 of the IPC.
21. On perusal of the allegations contained in the complaint, in
the light of the ingredients of Section 406 of the IPC, read in the
context of Section 405 of the IPC, we again fail to see how an offence
of criminal breach of trust can be made out. It is a trite law that
every act of breach of trust may not result in a penal offence unless
there is evidence of a manipulating act of fraudulent
misappropriation of a property entrusted to him. In the case of
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criminal breach of trust, if a person comes into possession of the
property and receives it legally, but illegally retains it or converts it
to its own use against the terms of contract, then the question
whether such retention is with dishonest intention or not and
whether such retention involves criminal breach of trust or only
civil liability would depend upon the facts and circumstances of the
case.
22. In the present case, the complainant/respondent No.1 has
failed to establish ingredients essential to constitute an offence
under Section 406 of the IPC. The complainant/respondent No.1
has failed to place any material on record to show us as to how he
had entrusted the subject property to the appellant-accused.
Furthermore, the complaint/respondent No.1 also omits to aver as
to how the property, so entrusted to the appellant-accused, was
dishonestly misappropriated or converted for his own use, thereby
committing a breach of trust. On the contrary, the bare perusal of
the partnership deed dated 01.10.1976 shows that the disputed
property was solely owned and enjoyed by the appellant-accused
wherein as per Clause 4 of the said agreement he agreed to bring
into the partnership the said disputed property. We must hasten
14
to mention herein that upon reading of the supplementary
agreement dated 03.04.1981, it becomes amply clear that all the
partners including the complainant/respondent No.1 had agreed
that upon expiry of the lease period of 15 years with the Food
Corporation of India i.e. 01.06.1993, the said land would revert
back to the appellant-accused along with all the constructions
erected upon it. In the facts of the present case, the
complainant/respondent No.1 cannot be allowed to blow hot and
cold at the same time wherein on one hand, through the
supplementary deed, he has agreed upon the reversion of the said
disputed property back to the original owner i.e. appellant-accused
and yet on the other hand has proceeded to file a complaint alleging
cheating and misappropriation of said disputed property against
appellant-accused.
23. Furthermore, it is pertinent to mention that if it is the case of
the complainant/respondent No.1 that the offence of criminal
breach of trust as defined under Section 405 of the IPC, punishable
under Section 406 of the IPC, is committed by the accused, then in
the same breath it cannot be said that the accused has also
committed the offence of cheating as defined in Section 415,
15
punishable under Section 420 of the IPC. This Court in Delhi Race
Club (1940) Limited vs. State of Uttar Pradesh, (2024) 10 SCC
690 observed that there is a distinction between criminal breach
of trust and cheating. For cheating, criminal intention is necessary
at the time of making false or misleading representation i.e. since
inception. In criminal breach of trust, mere proof of entrustment is
sufficient. Thus, in case of criminal breach of trust, the offender is
lawfully entrusted with the property, and he dishonestly
misappropriated the same. Whereas, in case of cheating, the
offender fraudulently or dishonestly induces a person by deceiving
him to deliver a property. In such a situation, both offences cannot
co-exist simultaneously. Consequently, the complaint cannot
contain both the offences that are independent and distinct. The
said offences cannot coexist simultaneously in the same set of facts
as they are antithetical to each other.
24. The complainant/respondent No.1 has an alternative remedy
of filing a civil suit to set aside the sale deed dated 20.06.2011 and
claim damages for the alleged violation of his contractual rights
which he is already pursuing vide Title Suit No.160 of 2012 against
the appellant-accused which is currently pending adjudication and
16
hence the route through criminal proceedings, when no ingredient
of offence is made out, cannot be permitted. Criminal law ought
not to become a platform for initiation of vindictive proceedings to
settle personal scores and vendettas. The appellant-accused
therefore, in our view, could not be attributed any mens rea and
therefore, the allegations levelled by the prosecution against the
appellant-accused are unsustainable.
25. Furthermore, in Inder Mohan Goswami , it was held by this
Court that the Court must ensure that criminal prosecution is not
used as an instrument of harassment or for seeking private
vendetta or with an ulterior motive to pressurise the accused. It
was further held by this Court that it is neither possible nor
desirable to lay down an inflexible rule that would govern the
exercise of inherent jurisdiction. In view of the above and for the
reasons stated above, we are of the firm opinion that to continue
the criminal proceedings against the appellant-accused herein
would cause undue harassment to him because as observed
hereinabove, no prima facie case for the offence under Sections 406
or 420 of the IPC is made out.
17
26. In this regard, it would be apposite to rely on the judgment in
the case of State of Haryana vs. Bhajan Lal, 1992 Suppl (1)
SCC 335 (“Bhajan Lal”) with particular reference to paragraph
102 therein, where this Court observed:
“102. In the backdrop of the interpretation of the various
relevant provisions of the Code under Chapter XIV and of
the principles of law enunciated by this Court in a series
of decisions relating to the exercise of the extraordinary
power Under Article 226 or the inherent powers Under
Section 482 of the Code which we have extracted and
reproduced above, we have given the following categories
of cases by way of illustration wherein such power could
be exercised either to prevent abuse of the process of any
court or otherwise to secure the ends of justice, though it
may not be possible to lay down any precise, clearly
defined and sufficiently channelised and inflexible
guidelines or rigid formulae and to give an exhaustive list
of myriad kinds of cases wherein such power should be
exercised.
(1) Where the allegations made in the first information
report or 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 a case against the
accused.
(2) Where the allegations in the first information report and
other materials, if any, accompanying the FIR do not
disclose a cognizable offence, justifying an investigation by
police officers Under Section 156(1) of the Code except
under an order of a Magistrate within the purview of
Section 155(2) of the Code.
(3) Where the uncontroverted allegations made in the FIR
or complaint and the evidence collected in support of the
same do not disclose the commission of any offence and
make out a case against the accused.
18
(4) Where, the allegations in the FIR do not constitute a
cognizable offence but constitute only a non-cognizable
offence, no investigation is permitted by a police officer
without an order of a Magistrate as contemplated Under
Section 155(2) of the Code.
(5) Where the allegations made in the FIR or complaint are
so absurd and inherently improbable on the basis of which
no prudent person can ever reach a just conclusion that
there is sufficient ground for proceeding against the
Accused.
(6) Where there is an express legal bar engrafted in any of
the provisions of the Code or the concerned Act (under
which a criminal proceeding is instituted) to the institution
and continuance of the proceedings and/or where there is
a specific provision in the Code or the concerned Act,
providing efficacious redress for the grievance of the
aggrieved party.
(7) Where a criminal proceeding is manifestly attended
with mala fide and/or where the proceeding is maliciously
instituted with an ulterior motive for wreaking vengeance
on the Accused and with a view to spite him due to private
and personal grudge.”
27. On a careful consideration of the aforementioned judicial
dicta, we find that none of the offences alleged against the
appellant-accused herein is made out. In fact, we find that the
allegations of criminal intent and other allegations against the
appellant-accused herein have been made with a mala-fide intent
and therefore, the judgment of this Court in the case of Bhajan
Lal extracted above, squarely applies to the facts of these cases. It
19
is neither expedient nor in the interest of justice to permit the
present prosecution to continue.
28. At this juncture, we find it apposite to mention the
observations of this Court in Vishal Noble Singh vs. State of
Uttar Pradesh, 2024 SCC OnLine SC 1680 wherein it was
observed that in recent years the machinery of criminal justice is
being misused by certain persons for their vested interests and for
achieving their oblique motives and agenda. Courts have therefore
to be vigilant against such tendencies and ensure that acts of
omission and commission having an adverse impact on the fabric
of our society must be nipped in the bud. We say so for the reason
that while the complainant/respondent No.1 has made grave
allegations against the appellant herein, he has failed to justify the
same before this Court. Such actions would create significant
divisions and distrust among people, while also placing an
unnecessary strain on the judicial system, particularly criminal
courts.
29. In the aforementioned circumstances, the impugned order of
the High Court is set aside and consequently, the Complaint Case
No.3230c of 2013 dated 19.09.2013 pending before Sub-Divisional
20
Judicial Magistrate (I) Kamrup, Gauhati, Assam and all
consequent proceedings initiated pursuant thereto stand quashed.
30. The appeal is allowed in the aforesaid terms.
…………………………………..J.
(B.V. NAGARATHNA)
…………………………………..J.
(R. MAHADEVAN)
NEW DELHI;
NOVEMBER 24, 2025.
21
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO.5000 OF 2025
(Arising out of Special Leave Petition (Crl.) No.4939 of 2018)
INDER CHAND BAGRI …APPELLANT
VERSUS
JAGADISH PRASAD BAGRI & ANOTHER …RESPONDENTS
J U D G M E N T
NAGARATHNA, J.
Leave granted.
2. This appeal arises out of the order dated 13.02.2018 passed
by the High Court of Gauhati in Criminal Petition No.190 of 2015
dismissing the application filed under Section 482 of the Code of
Criminal Procedure (hereinafter “CrPC” for short) preferred by the
Signature Not Verified
appellant-accused, Inder Chand Bagri and thereby refusing to
Digitally signed by
NEETU SACHDEVA
Date: 2025.11.24
16:44:58 IST
Reason:
quash the proceedings instituted under Sections 406/420/120B of
1
the Indian Penal Code, 1860 (for short, “IPC”) arising out of the
Complaint Case C.R.No.3230c of 2013 dated 19.09.2013 before the
Court of Chief Judicial Magistrate, Kamrup, Gauhati that was filed
by Jagadish Prasad Bagri, the complainant/respondent No.1.
3. Briefly stated, the facts of the case are that the appellant-
accused along with four other individuals namely Bhagwandas
Bagri, Ramkishan Bagri, Shyamsundar Bagri and Jagdish Prasad
Bagri (complaint/respondent No.1) resolved to constitute a
partnership firm vide partnership deed dated 01.10.1976 in the
name and style of ‘INDRACHAND BAGRI AND BROTHERS’
(hereinafter referred to as “firm”). The aim of said partnership firm
was to carry on business of construction of warehouses and
godowns and subsequently letting them out to third parties. As per
the terms of the said partnership deed, the appellant-accused
agreed to bring into the partnership, for the purpose of business,
the land owned by him situated at New Dag No.2760 of New Patta
No. 455, Village Maidamgaon, Mouza Beltola, District: Kamrup,
Assam (hereinafter referred to as “disputed property”).
Subsequently, two godowns were constructed on the said disputed
property and leased out to Food Corporation of India on
2
01.04.1978 and 01.06.1978 for a period of fifteen years i.e. till
01.06.1993.
4. Thereafter, the partners of the said firm decided to enter into
a supplementary agreement on 03.04.1981 that was an addendum
to the original partnership deed dated 01.10.1976. In the said
supplementary agreement, it was decided conjointly by all the
partners that the appellant-accused shall be permitted to utilise
the disputed property for his individual interest. It was also
mutually decided that in the event of vacancy of the godowns by
the Food Corporation of India after the determination of lease deed
on 01.06.1993, the said disputed property shall revert back to the
appellant-accused along with all the rights, title and interest to the
said property.
5. The said godowns were vacated by 1995 thereafter the
partners of the said firm decided to dissolve the said partnership
firm vide the dissolution deed dated 03.04.1997 w.e.f. 01.04.1997.
Further it was mutually agreed upon that all the assets and
liabilities of the said firm would stand transferred to the appellant-
accused and the said firm would be his sole proprietary concern.
3
6. The complainant/respondent No.1 filed a Title Suit No.144 of
1998 for dissolution of the firm and rendition of partnership
accounts before Civil Judge (Senior Division) No.1, Gauhati
wherein the Court, vide order dated 08.09.2020, passed an ex-
parte preliminary decree declaring that the said partnership firm is
dissolved with effect from 08.09.2000 and the same shall be
advertised as such in the Gazette.
7. Thereafter, on 20.06.2011, the appellant-accused executed a
sale deed No.5359 of 2011 in favour of his nephew, one Ajit Kumar
Bagri for the consideration of Rs.94.60 lakh and thereby
transferred the said disputed property situated at New Dag
No.2760 of New Patta No.455, Village Maidamgaon, Beltola,
District Kamrup, Assam to him.
8. Aggrieved by the execution of the said sale deed, the
complainant/respondent No.1 filed a Title Suit No.160 of 2012
before Court of Civil Judge No.1, Kamrup at Gauhati against the
appellant-accused and the rest of the partners of the said firm
seeking relief of setting aside of the sale deed No.5359 of 2011
dated 20.06.2011 and declaration that the said disputed property
4
belongs to the firm and thereby permanently restraining the
appellant-accused from alienating the said disputed property.
9. Furthermore, the complainant/respondent No.1 filed a
complaint case being CR Case No.3230c of 2013 on 19.09.2013
against the appellant-accused and Ajit Kumar Bagri, who was
arraigned as accused No.2, under Section 406, 420 and 120B of
the IPC. The allegations made out in the said complaint can be
summarised as follows:
i. That the appellant-accused was entrusted by the
complainant/respondent No.1 and other partners with the
firm’s properties i.e. the disputed property allotted in favour of
the firm, the warehouses and godowns.
ii. The appellant-accused dishonestly misappropriated the said
disputed property belonging to the firm for his own and sold it
to accused No.2 and therefore the appellant-accused has
committed an offence of Criminal Breach of Trust. It is further
alleged that the appellant-accused failed to account for profits
and losses accruing to the firm post-March 1993.
5
iii. It is further alleged that the appellant-accused induced the
complainant/respondent No.1 into entering in the partnership
deed and thereafter connived with accused No.2 to
intentionally cheat and deceive the complainant/respondent
No.1 by selling the disputed property belonging to the firm and
thereby committed the offence of cheating.
iv. Lastly, it is alleged by the complainant/respondent No.1 that
appellant-accused and accused No.2 together hatched a
conspiracy to misappropriate the property of the firm and
connived and cheated the complainant/respondent No.1 by
dishonestly inducing him to invest capital in the partnership
firm and thereafter selling the disputed property of the firm to
accused No.2.
10. Vide order dated 25.02.2014, the Sub-Divisional Judicial
Magistrate(I) Kamrup, Gauhati took cognizance of the complaint
against the appellant-accused in CR Case No.3230c of 2013 under
Section 406, 420 and 34 of the IPC and thereafter issued summon
to the appellant-accused to appear before the Court.
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11. Aggrieved by the order dated 25.02.2014 of the Sub-
Divisional Judicial Magistrate (I) Kamrup, the appellant-accused
preferred Criminal Petition No.190 of 2015 under Section 482 CrPC
before the Gauhati High Court praying for the relief of quashing of
the cognizance order dated 25.02.2014 as well as the Complaint
Case being CR Case No.3230c of 2013.
12. The Criminal Petition No.190 of 2015 preferred by the
appellant-accused was clubbed together with Criminal Petition
No.620 of 2014 preferred by accused No.2 and was disposed of vide
common impugned order dated 13.02.2018 of the Gauhati High
Court. The High Court deemed it fit to quash the criminal
proceedings arising out of CR Case No.3230c of 2013 against
accused No.2. However, the High Court refused to quash the said
criminal proceedings against the appellant-accused wherein it was
observed that the complainant/respondent No.1 has been
successful in making out a prima facie case against the appellant-
accused. It was also observed that the material relied upon by the
appellant-accused is not of a quality so as to merit quashing of the
charges against him. It was further held that the points raised by
the appellant-accused deserve scrutiny which can only be done by
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the Trial Court and not by the High Court while exercising its
inherent jurisdiction under Section 482 CrPC. Therefore, the High
Court directed the Trial Court to proceed with the criminal
proceedings against the appellant-accused.
13. Aggrieved by the impugned order dated 13.02.2018 passed by
the High Court of Gauhati, the appellant-accused has preferred the
present appeal.
14. The learned counsel for the appellant-accused contends that
the complaint filed by the complainant/respondent No.1 on
19.09.2013 is time-barred as the same was instituted 16 years
after the alleged acts of criminal breach of trust, without any
application for condonation of delay under Section 473 CrPC, and
is thus barred by three-year limitation period under Section
468(2)(c) CrPC. It is further argued that the complainant/
respondent No.1 suppressed the supplementary deed dated
03.04.1981 and the deed of dissolution dated 03.04.1997, based
on which an ex-parte decree had already been passed in the Title
suit No.144 of 1998 for the dissolution of partnership and rendition
of accounts in a suit preferred by the complainant/ respondent
No.1 himself and hence they cannot dispute the factum of
8
dissolution. It is also contended that since the Civil Suit No.160 of
2012 for setting aside the sale deed dated 20.06.2011 was filed by
the complainant/respondent No.1, prior to the criminal complaint,
the initiation of the latter amounts to an abuse of process of law,
especially when no other partners raised any objections or
complaints regarding the sale of the property. Finally, it is
submitted that the appellant-accused resided in Bangalore and did
not manage the partnership accounts, as the duty of maintaining
accounts and distributing profits was entrusted to one
Bhagwandas Bagri as per the partnership deed dated 01.10.1976.
15. On the contrary, the Learned Counsel for the complainant/
respondent No.1 submits that the appellant-accused was expressly
entrusted with the firm’s properties, including the land allotted to
the firm, thereby fulfilling the ingredients of offences under
Sections 405 and 406 of the IPC. It is argued that any property
brought in by a partner becomes the property of the firm, and upon
dissolution, a partner is entitled only to a share in the value of the
firm’s assets after liabilities are settled, as reflected in Clause 4 of
the partnership deed dated 01.10.1976. The complainant/
respondent No.1 contends that the appellant-accused did not
9
disclose or rely upon the supplementary and dissolution deeds
during the trial, rendering their authenticity doubtful. Lastly it is
asserted that there is no legal bar on pursuing civil and criminal
proceedings simultaneously, and despite the civil nature of the
dispute, the existence of clear criminal elements justifies
continuation of the criminal proceedings.
16. Heard the learned counsel for the appellant and learned
counsel for the respondent-State as well as complainant/
respondent No.1. We have perused the material on record and we
have given our thorough consideration to the arguments advanced
at the bar and the material on record.
17. The contents of the complaint would have to be read in light
of the ingredients of Sections 406 and 420 of the IPC and the law
settled by this Court through various judicial dicta. On perusal of
the complaint dated 19.09.2013, it is noted that the complainant/
respondent No.1 has filed the said complaint invoking Sections
406/420 of the IPC. For ease of reference, the aforesaid Sections
are extracted as under:
“ 406. Punishment for criminal breach of trust.—
Whoever commits criminal breach of trust shall be
punished with imprisonment of either description for a
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term which may extend to three years, or with fine, or with
both.
xxx
420. Cheating and dishonestly inducing delivery of
property.- Whoever cheats and thereby dishonestly
induces the person deceived to deliver any property to any
person, or to make, alter or destroy the whole or any part
of a valuable security, or anything which is signed or
sealed, and which is capable of being converted into a
valuable security, shall be punished with imprisonment of
either description for a term which may extend to seven
years, and shall also be liable to fine. ”
18. In Inder Mohan Goswami vs. State of Uttaranchal, (2007)
12 SCC 1 (“Inder Mohan Goswami”), while dealing with Section
420 of the IPC, this Court observed thus:
“42. On a reading of the aforesaid section, it is manifest
that in the definition there are two separate classes of acts
which the person deceived may be induced to do. In the
first class of acts he may be induced fraudulently or
dishonestly to deliver property to any person. The second
class of acts is the doing or omitting to do anything which
the person deceived would not do or omit to do if he were
not so deceived. In the first class of cases, the inducement
must be fraudulent or dishonest. In the second class of
acts, the inducing must be intentional but need not be
fraudulent or dishonest. Therefore, it is the intention
which is the gist of the offence. To hold a person guilty of
cheating it is necessary to show that he had a fraudulent
or dishonest intention at the time of making the promise.
From his mere failure to subsequently keep a promise, one
cannot presume that he all along had a culpable intention
to break the promise from the beginning.”
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19. In light of the facts and circumstances of the present case, we
find that the complainant/respondent No.1 has failed to make out
a case that satisfies the basic ingredients of the offence under
Section 420 of the IPC. We fail to understand as to how the
allegations against the appellant-accused herein could be brought
within the scope and ambit of the aforesaid section. On a bare
perusal of the complaint, we do not find that the offence of cheating
as defined under Section 420 of the IPC is made out at all and we
do not find that there is any cheating and dishonest inducement to
deliver any property of a valuable security involved in the instant
case.
20. It is settled law that for establishing the offence of cheating,
the complainant/respondent No.1 was required to show that the
appellant-accused had a fraudulent or dishonest intention at the
time of making a promise or representation of not fulfilling the
partnership agreement. Such a culpable intention right at the
beginning cannot be presumed but has to be made out with cogent
facts. In the facts of the present case, there is a clear absence of
material on record to attribute any dishonest and fraudulent
intention to the appellant-accused at the time of creation of
12
partnership agreement. We must hasten to add that there is no
allegation in the complaint indicating either expressly or impliedly
any intentional deception or fraudulent/dishonest intention on the
part of the appellant-accused right from the time of formation of
the partnership deed. Nothing has been said on what the
misrepresentations were and how the appellant-accused
intentionally deceived the complainant/respondent No.1. Mere
allegations that the appellant-accused dishonestly induced the
complainant/respondent No.1 to part with the property of the
partnership firm and subsequently sold the property to a third
party does not satisfy the test of dishonest inducement to deliver a
property or part with a valuable security as enshrined under
Section 420 of the IPC.
21. On perusal of the allegations contained in the complaint, in
the light of the ingredients of Section 406 of the IPC, read in the
context of Section 405 of the IPC, we again fail to see how an offence
of criminal breach of trust can be made out. It is a trite law that
every act of breach of trust may not result in a penal offence unless
there is evidence of a manipulating act of fraudulent
misappropriation of a property entrusted to him. In the case of
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criminal breach of trust, if a person comes into possession of the
property and receives it legally, but illegally retains it or converts it
to its own use against the terms of contract, then the question
whether such retention is with dishonest intention or not and
whether such retention involves criminal breach of trust or only
civil liability would depend upon the facts and circumstances of the
case.
22. In the present case, the complainant/respondent No.1 has
failed to establish ingredients essential to constitute an offence
under Section 406 of the IPC. The complainant/respondent No.1
has failed to place any material on record to show us as to how he
had entrusted the subject property to the appellant-accused.
Furthermore, the complaint/respondent No.1 also omits to aver as
to how the property, so entrusted to the appellant-accused, was
dishonestly misappropriated or converted for his own use, thereby
committing a breach of trust. On the contrary, the bare perusal of
the partnership deed dated 01.10.1976 shows that the disputed
property was solely owned and enjoyed by the appellant-accused
wherein as per Clause 4 of the said agreement he agreed to bring
into the partnership the said disputed property. We must hasten
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to mention herein that upon reading of the supplementary
agreement dated 03.04.1981, it becomes amply clear that all the
partners including the complainant/respondent No.1 had agreed
that upon expiry of the lease period of 15 years with the Food
Corporation of India i.e. 01.06.1993, the said land would revert
back to the appellant-accused along with all the constructions
erected upon it. In the facts of the present case, the
complainant/respondent No.1 cannot be allowed to blow hot and
cold at the same time wherein on one hand, through the
supplementary deed, he has agreed upon the reversion of the said
disputed property back to the original owner i.e. appellant-accused
and yet on the other hand has proceeded to file a complaint alleging
cheating and misappropriation of said disputed property against
appellant-accused.
23. Furthermore, it is pertinent to mention that if it is the case of
the complainant/respondent No.1 that the offence of criminal
breach of trust as defined under Section 405 of the IPC, punishable
under Section 406 of the IPC, is committed by the accused, then in
the same breath it cannot be said that the accused has also
committed the offence of cheating as defined in Section 415,
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punishable under Section 420 of the IPC. This Court in Delhi Race
Club (1940) Limited vs. State of Uttar Pradesh, (2024) 10 SCC
690 observed that there is a distinction between criminal breach
of trust and cheating. For cheating, criminal intention is necessary
at the time of making false or misleading representation i.e. since
inception. In criminal breach of trust, mere proof of entrustment is
sufficient. Thus, in case of criminal breach of trust, the offender is
lawfully entrusted with the property, and he dishonestly
misappropriated the same. Whereas, in case of cheating, the
offender fraudulently or dishonestly induces a person by deceiving
him to deliver a property. In such a situation, both offences cannot
co-exist simultaneously. Consequently, the complaint cannot
contain both the offences that are independent and distinct. The
said offences cannot coexist simultaneously in the same set of facts
as they are antithetical to each other.
24. The complainant/respondent No.1 has an alternative remedy
of filing a civil suit to set aside the sale deed dated 20.06.2011 and
claim damages for the alleged violation of his contractual rights
which he is already pursuing vide Title Suit No.160 of 2012 against
the appellant-accused which is currently pending adjudication and
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hence the route through criminal proceedings, when no ingredient
of offence is made out, cannot be permitted. Criminal law ought
not to become a platform for initiation of vindictive proceedings to
settle personal scores and vendettas. The appellant-accused
therefore, in our view, could not be attributed any mens rea and
therefore, the allegations levelled by the prosecution against the
appellant-accused are unsustainable.
25. Furthermore, in Inder Mohan Goswami , it was held by this
Court that the Court must ensure that criminal prosecution is not
used as an instrument of harassment or for seeking private
vendetta or with an ulterior motive to pressurise the accused. It
was further held by this Court that it is neither possible nor
desirable to lay down an inflexible rule that would govern the
exercise of inherent jurisdiction. In view of the above and for the
reasons stated above, we are of the firm opinion that to continue
the criminal proceedings against the appellant-accused herein
would cause undue harassment to him because as observed
hereinabove, no prima facie case for the offence under Sections 406
or 420 of the IPC is made out.
17
26. In this regard, it would be apposite to rely on the judgment in
the case of State of Haryana vs. Bhajan Lal, 1992 Suppl (1)
SCC 335 (“Bhajan Lal”) with particular reference to paragraph
102 therein, where this Court observed:
“102. In the backdrop of the interpretation of the various
relevant provisions of the Code under Chapter XIV and of
the principles of law enunciated by this Court in a series
of decisions relating to the exercise of the extraordinary
power Under Article 226 or the inherent powers Under
Section 482 of the Code which we have extracted and
reproduced above, we have given the following categories
of cases by way of illustration wherein such power could
be exercised either to prevent abuse of the process of any
court or otherwise to secure the ends of justice, though it
may not be possible to lay down any precise, clearly
defined and sufficiently channelised and inflexible
guidelines or rigid formulae and to give an exhaustive list
of myriad kinds of cases wherein such power should be
exercised.
(1) Where the allegations made in the first information
report or 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 a case against the
accused.
(2) Where the allegations in the first information report and
other materials, if any, accompanying the FIR do not
disclose a cognizable offence, justifying an investigation by
police officers Under Section 156(1) of the Code except
under an order of a Magistrate within the purview of
Section 155(2) of the Code.
(3) Where the uncontroverted allegations made in the FIR
or complaint and the evidence collected in support of the
same do not disclose the commission of any offence and
make out a case against the accused.
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(4) Where, the allegations in the FIR do not constitute a
cognizable offence but constitute only a non-cognizable
offence, no investigation is permitted by a police officer
without an order of a Magistrate as contemplated Under
Section 155(2) of the Code.
(5) Where the allegations made in the FIR or complaint are
so absurd and inherently improbable on the basis of which
no prudent person can ever reach a just conclusion that
there is sufficient ground for proceeding against the
Accused.
(6) Where there is an express legal bar engrafted in any of
the provisions of the Code or the concerned Act (under
which a criminal proceeding is instituted) to the institution
and continuance of the proceedings and/or where there is
a specific provision in the Code or the concerned Act,
providing efficacious redress for the grievance of the
aggrieved party.
(7) Where a criminal proceeding is manifestly attended
with mala fide and/or where the proceeding is maliciously
instituted with an ulterior motive for wreaking vengeance
on the Accused and with a view to spite him due to private
and personal grudge.”
27. On a careful consideration of the aforementioned judicial
dicta, we find that none of the offences alleged against the
appellant-accused herein is made out. In fact, we find that the
allegations of criminal intent and other allegations against the
appellant-accused herein have been made with a mala-fide intent
and therefore, the judgment of this Court in the case of Bhajan
Lal extracted above, squarely applies to the facts of these cases. It
19
is neither expedient nor in the interest of justice to permit the
present prosecution to continue.
28. At this juncture, we find it apposite to mention the
observations of this Court in Vishal Noble Singh vs. State of
Uttar Pradesh, 2024 SCC OnLine SC 1680 wherein it was
observed that in recent years the machinery of criminal justice is
being misused by certain persons for their vested interests and for
achieving their oblique motives and agenda. Courts have therefore
to be vigilant against such tendencies and ensure that acts of
omission and commission having an adverse impact on the fabric
of our society must be nipped in the bud. We say so for the reason
that while the complainant/respondent No.1 has made grave
allegations against the appellant herein, he has failed to justify the
same before this Court. Such actions would create significant
divisions and distrust among people, while also placing an
unnecessary strain on the judicial system, particularly criminal
courts.
29. In the aforementioned circumstances, the impugned order of
the High Court is set aside and consequently, the Complaint Case
No.3230c of 2013 dated 19.09.2013 pending before Sub-Divisional
20
Judicial Magistrate (I) Kamrup, Gauhati, Assam and all
consequent proceedings initiated pursuant thereto stand quashed.
30. The appeal is allowed in the aforesaid terms.
…………………………………..J.
(B.V. NAGARATHNA)
…………………………………..J.
(R. MAHADEVAN)
NEW DELHI;
NOVEMBER 24, 2025.
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