Full Judgment Text
2025 INSC 1151
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. OF 2025
(Arising out of Special Leave Petition (Criminal) No.3606 of 2024)
ARSHAD NEYAZ KHAN …APPELLANT
VERSUS
STATE OF JHARKHAND
& ANOTHER …RESPONDENTS
J U D G M E N T
NAGARATHNA, J.
Leave granted.
2. This appeal arises out of the order dated 19.01.2023 passed
by the High Court of Jharkhand at Ranchi in Cr.M.P. No.2384 of
2022 dismissing the application filed under Section 482 of the
Code of Criminal Procedure (hereinafter ‘CrPC’ for short) preferred
by the accused-appellant and thereby refusing to quash the
Signature Not Verified
Digitally signed by
BORRA LM VALLI
Date: 2025.09.24
19:10:51 IST
Reason:
proceedings arising out of the Complaint Case No.619 of 2021 and
Page 1 of 17
FIR No.18 of 2021 dated 08.02.2021 registered at PS Hindpiri that
was filed by Md. Mustafa, the complainant/respondent No.2.
3. Briefly stated, the facts of the case are that the appellant is
the owner of the property situated at Khata No.186, MS Plot
No.1322, Sub Plot No.1322/38-A and that he is also the power of
attorney holder for the property adjacent to the above-mentioned
plot situated at Sub-Plot No.1322/39-A-1.
4. On 16.02.2013, the appellant entered into an agreement for
sale of the aforesaid properties with the complainant/respondent
No.2 for a total consideration of Rs.43,00,000/-. Out of the said
consideration, the petitioner received an advance payment of
Rs.20,00,000/- on the date of agreement for sale.
5. Thereafter, on 29.01.2021, after nearly eight years from the
date of the agreement for sale, aggrieved by the non-transfer of the
said properties, a complaint was filed being Complaint Case No.619
of 2021 by the complainant/respondent No.2 against the appellant
alleging offences under Sections 406, 420, and 120B of the Indian
Penal Code, 1860 (hereinafter, “IPC” for short.). The said complaint
culminated into registration of the FIR No.18 of 2021 dated
Page 2 of 17
08.02.2021 at Police Station Hindpiri against the appellant. The
allegations contained in the said complaint and F.I.R. can be
crystallized as hereunder:
i. In January 2013, one Atik Alam assured the
complainant/respondent No.2 that the property owned by the
appellant situated at Khata No.186, MS Plot No.1322, Sub Plot
No.1322/38-A was available for sale. Thereafter, upon meeting
the appellant, the complainant/respondent No.2 was assured
that all the documents and titles to the said property were in
order and correct.
ii. The complainant/respondent No.2 was also informed that the
land adjacent to the property owned by the appellant, situated
at M.S. Plot No.1322, Sub Plot No.1322/39-A-1, was owned by
six different individuals, all of whom had created a power of
attorney in favour of the appellant and therefore authorized
him to sell the said adjacent land as well.
iii. Pursuant to the said representations, the complainant/
respondent No.2 agreed to buy the said properties for a
consideration of Rs.43,00,000/- vide agreement for sale dated
Page 3 of 17
16.02.2013. In furtherance to the said agreement, a total sum
of Rs.20,00,000/- was given to the appellant and it was agreed
between the parties that the balance amount shall be paid by
the complainant/respondent No.2 to the appellant at the time
of the registration of the said document.
iv. After the execution of the said agreement for sale, the appellant
failed to convey title of the said lands to the complainant/
respondent No.2 nor did he return the money deposited with
him by the complainant/respondent No.2.
6. Apprehending arrest on the aforesaid complaint and F.I.R.,
the appellant herein preferred Anticipatory Bail Petition No.681 of
2021 before the Judicial Commissioner, Ranchi, Jharkhand on
22.03.2021.
7. Meanwhile, the parties were referred to the Mediation Centre,
Ranchi wherein they arrived at a mutually satisfactory disposition
according to which the appellant agreed to return a sum of
Rs.24,00,000/- to the complainant/respondent No.2 in five
instalments as a full and final settlement of all the claims between
the parties.
Page 4 of 17
8. The Court of Judicial Commissioner, Ranchi, vide order dated
23.12.2021, allowed the Anticipatory Bail Application No.681 of
2021.
9. In pursuance to the aforesaid order of the Judicial
Commissioner, Ranchi, the appellant appeared before the said
Court on 19.01.2022 to surrender and sought permission to
furnish bail bond. The appellant, in compliance with the
anticipatory bail conditions imposed by the Judicial
Commissioner, Ranchi, also furnished a demand draft bearing no.
115484 dated 13.01.2022 of Rs.5,00,000/- in favour of the
complainant/respondent No.2 as a payment of the first instalment.
10. Subsequently, on the failure of the appellant to abide by the
condition of timely payment of instalments fixed by the Judicial
Commissioner vide its order dated 23.12.2021 while granting
anticipatory bail, the complainant/respondent No.2 preferred
Criminal Miscellaneous Case No.39 of 2022 in Anticipatory Bail
Application No.681 of 2021 seeking cancellation of the bail granted
to the appellant. The said application was allowed and
Page 5 of 17
consequently vide order dated 15.06.2022, the anticipatory bail
granted to the appellant was cancelled.
11. Aggrieved by the order dated 15.06.2022 of the Court
cancelling the Anticipatory Bail, the appellant preferred Criminal
Miscellaneous Petition No.2384 of 2022 under Section 482 CrPC
before the Jharkhand High Court at Ranchi praying for the relief of
quashing of F.I.R. No.18 of 2021; Criminal Complaint Case No.619
of 2021; and order dated 15.06.2022 vide which the anticipatory
bail of the appellant was cancelled.
12. The Criminal Miscellaneous Petition No. 2384 of 2022
preferred by the appellant was partly allowed by the Jharkhand
High Court vide impugned order dated 19.01.2023 whereby the
High Court although refused to quash the criminal proceedings
against the appellant but nevertheless allowed him the liberty to
approach the High Court to prefer a fresh anticipatory bail
application.
13. Aggrieved by the impugned order dated 19.01.2023 passed by
the High Court of Jharkhand, the appellant has preferred the
present appeal.
Page 6 of 17
14. We have heard learned counsel for the appellant and learned
counsel for the respondent-State as well as respondent-
complainant. We have perused the material on record.
15. We have given our thorough consideration to the arguments
advanced at the bar and the material on record.
16. The contents of the complaint as well as the FIR would have
to be read in light of the ingredients of Sections 406 and 420 IPC
and the law settled by this Court through various judicial dicta. On
perusal of the complaint dated 29.01.2021, it is noted that the
complainant/respondent No.2 has filed the said complaint
invoking Sections 406, 420 and 120B 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
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
Page 7 of 17
either description for a term which may extend to seven
years, and shall also be liable to fine.
xxx
120B. Punishment of criminal conspiracy.- (1) Whoever
is a party to a criminal conspiracy to commit an offence
punishable with death, imprisonment for life or rigorous
imprisonment for a term of two years or upwards, shall,
where no express provision is made in this Code for the
punishment of such a conspiracy, be punished in the same
manner as if he had abetted such offence.
(2) Whoever is a party to a criminal conspiracy other than
a criminal conspiracy to commit an offence punishable as
aforesaid shall be punished with imprisonment of either
description for a term not exceeding six months, or with
fine or with both.”
17. In Inder Mohan Goswami vs. State of Uttaranchal, (2007)
12 SCC 1 (“Inder Mohan Goswami”), while dealing with Section
420 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
Page 8 of 17
cannot presume that he all along had a culpable intention
to break the promise from the beginning.”
18. In light of the facts and circumstances of the present case, we
find that the complainant/respondent No.2 has failed to make out
a case that satisfies the basic ingredients of the offence under
Section 420 IPC. We fail to understand as to how the allegations
against the appellant herein could be brought within the scope and
ambit of the aforesaid section. On a bare perusal of the FIR as well
as the complaint, we do not find that the offence of cheating as
defined under Section 420 IPC is made out and we do not find that
there is any cheating and dishonest inducement to deliver any
property or a valuable security involved in the instant case.
19. It is settled law that for establishing the offence of cheating,
the complainant/respondent No.2 was required to show that the
appellant had a fraudulent or dishonest intention at the time of
making a promise or representation of not fulfilling the agreement
for sale of the said property. Such a culpable intention right at the
beginning when the promise was made 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 dishonest and fraudulent intention
Page 9 of 17
on the part of the appellant during the agreement for sale. We must
hasten to add that there is no allegation in the FIR or the complaint
indicating either expressly or impliedly any intentional deception
or fraudulent/dishonest intention on the part of the appellant right
from the time of making the promise or misrepresentation. Nothing
has been said on what the misrepresentations were and how the
appellant intentionally deceived the complainant/respondent No.2.
Mere allegations by the complainant/respondent No.2 that the
appellant failed to execute the agreement for sale and failed to
refund the money paid by the complainant/respondent No.2 does
not satisfy the test of dishonest inducement to deliver a property
or part with a valuable security as enshrined under Section 420
IPC.
20. On perusal of the allegations contained in the complaint, in
light of the ingredients of Section 406 IPC, read in the context of
Section 405 IPC, do not find that any offence of criminal breach of
trust has been made out. It is 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 property
entrusted to him. In the case of criminal breach of trust, if a person
Page 10 of 17
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 a civil liability would depend upon
the facts and circumstances of the case. In the present case, the
complainant/respondent No.2 has failed to establish the
ingredients essential to constitute an offence under Section 406
IPC. The complainant/respondent No.2 has failed to place any
material on record to show us as to how he had entrusted property
to the appellant. Furthermore, the complaint also omits to aver as
to how the property, so entrusted to the appellant, was dishonestly
misappropriated or converted for his own use, thereby committing
a breach of trust.
21. Furthermore, it is pertinent to mention that if it is the case of
the complainant/respondent No.2 that the offence of criminal
breach of trust as defined under Section 405 IPC, punishable
under Section 406 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, punishable under
Page 11 of 17
Section 420 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 misappropriates
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 co-exist simultaneously in the same set of facts as they are
antithetical to each other.
22. At this point, we must hasten to add that the complaint was
filed after a delay of nearly eight years. Learned counsel for the
complainant/respondent No.2 has failed to impress the Court
about the reason for the delay and hence this fact further raises a
suspicion about the bona fides of the complainant/respondent
Page 12 of 17
No.2. The delay in lodging of the complaint and FIR, coupled with
the vague allegations do not inspire any confidence in the Court to
allow the criminal proceedings to continue against the appellant.
Further, the complainant/respondent No.2 had an alternative
remedy of filing a civil suit claiming damages for the alleged
violation of his contractual rights which has not been availed but
a 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 therefore, in our
view, could not be attributed any mens rea and therefore, the
allegations levelled by the prosecution against the appellant are
unsustainable.
23. 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 any inflexible rule that would govern the
exercise of inherent jurisdiction. In view of the above and for the
Page 13 of 17
reasons stated above, we are of the firm opinion that to continue
the criminal proceedings against the appellant herein would cause
undue harassment to him because as observed hereinabove, no
prima facie case for the offence under Sections 406 or 420 IPC is
made out.
24. 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 give 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.
Page 14 of 17
(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.
(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.”
Page 15 of 17
25. On a careful consideration of the aforementioned judgment in
the light of the facts of this case, we find that none of the offences
alleged against the appellant herein is made out. In fact, we find
that the allegations of criminal intent and other allegations against
the appellant herein have been made with a mala fide intent and
therefore, the judgment of this Court in the case of Bhajan Lal and
particularly sub-paragraphs 1, 3, 5 and 7 of paragraph 102,
extracted above, squarely apply to the facts of this case. In our
view, it is neither expedient nor in the interest of justice to permit
the present prosecution to continue.
26. 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.2 has made grave
Page 16 of 17
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.
27. In the aforementioned circumstances, the impugned order of
the High Court is set aside and consequently, the Complaint Case
No.619/2021 and FIR No.18 of 2021 dated 08.02.2021 lodged with
Police Station Hindpiri and all consequent proceedings initiated
pursuant thereto stand quashed.
The appeal is allowed in the aforesaid terms.
…………………………………..J.
(B.V. NAGARATHNA)
…………………………………..J.
(R. MAHADEVAN)
NEW DELHI;
SEPTEMBER 24, 2025.
Page 17 of 17
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. OF 2025
(Arising out of Special Leave Petition (Criminal) No.3606 of 2024)
ARSHAD NEYAZ KHAN …APPELLANT
VERSUS
STATE OF JHARKHAND
& ANOTHER …RESPONDENTS
J U D G M E N T
NAGARATHNA, J.
Leave granted.
2. This appeal arises out of the order dated 19.01.2023 passed
by the High Court of Jharkhand at Ranchi in Cr.M.P. No.2384 of
2022 dismissing the application filed under Section 482 of the
Code of Criminal Procedure (hereinafter ‘CrPC’ for short) preferred
by the accused-appellant and thereby refusing to quash the
Signature Not Verified
Digitally signed by
BORRA LM VALLI
Date: 2025.09.24
19:10:51 IST
Reason:
proceedings arising out of the Complaint Case No.619 of 2021 and
Page 1 of 17
FIR No.18 of 2021 dated 08.02.2021 registered at PS Hindpiri that
was filed by Md. Mustafa, the complainant/respondent No.2.
3. Briefly stated, the facts of the case are that the appellant is
the owner of the property situated at Khata No.186, MS Plot
No.1322, Sub Plot No.1322/38-A and that he is also the power of
attorney holder for the property adjacent to the above-mentioned
plot situated at Sub-Plot No.1322/39-A-1.
4. On 16.02.2013, the appellant entered into an agreement for
sale of the aforesaid properties with the complainant/respondent
No.2 for a total consideration of Rs.43,00,000/-. Out of the said
consideration, the petitioner received an advance payment of
Rs.20,00,000/- on the date of agreement for sale.
5. Thereafter, on 29.01.2021, after nearly eight years from the
date of the agreement for sale, aggrieved by the non-transfer of the
said properties, a complaint was filed being Complaint Case No.619
of 2021 by the complainant/respondent No.2 against the appellant
alleging offences under Sections 406, 420, and 120B of the Indian
Penal Code, 1860 (hereinafter, “IPC” for short.). The said complaint
culminated into registration of the FIR No.18 of 2021 dated
Page 2 of 17
08.02.2021 at Police Station Hindpiri against the appellant. The
allegations contained in the said complaint and F.I.R. can be
crystallized as hereunder:
i. In January 2013, one Atik Alam assured the
complainant/respondent No.2 that the property owned by the
appellant situated at Khata No.186, MS Plot No.1322, Sub Plot
No.1322/38-A was available for sale. Thereafter, upon meeting
the appellant, the complainant/respondent No.2 was assured
that all the documents and titles to the said property were in
order and correct.
ii. The complainant/respondent No.2 was also informed that the
land adjacent to the property owned by the appellant, situated
at M.S. Plot No.1322, Sub Plot No.1322/39-A-1, was owned by
six different individuals, all of whom had created a power of
attorney in favour of the appellant and therefore authorized
him to sell the said adjacent land as well.
iii. Pursuant to the said representations, the complainant/
respondent No.2 agreed to buy the said properties for a
consideration of Rs.43,00,000/- vide agreement for sale dated
Page 3 of 17
16.02.2013. In furtherance to the said agreement, a total sum
of Rs.20,00,000/- was given to the appellant and it was agreed
between the parties that the balance amount shall be paid by
the complainant/respondent No.2 to the appellant at the time
of the registration of the said document.
iv. After the execution of the said agreement for sale, the appellant
failed to convey title of the said lands to the complainant/
respondent No.2 nor did he return the money deposited with
him by the complainant/respondent No.2.
6. Apprehending arrest on the aforesaid complaint and F.I.R.,
the appellant herein preferred Anticipatory Bail Petition No.681 of
2021 before the Judicial Commissioner, Ranchi, Jharkhand on
22.03.2021.
7. Meanwhile, the parties were referred to the Mediation Centre,
Ranchi wherein they arrived at a mutually satisfactory disposition
according to which the appellant agreed to return a sum of
Rs.24,00,000/- to the complainant/respondent No.2 in five
instalments as a full and final settlement of all the claims between
the parties.
Page 4 of 17
8. The Court of Judicial Commissioner, Ranchi, vide order dated
23.12.2021, allowed the Anticipatory Bail Application No.681 of
2021.
9. In pursuance to the aforesaid order of the Judicial
Commissioner, Ranchi, the appellant appeared before the said
Court on 19.01.2022 to surrender and sought permission to
furnish bail bond. The appellant, in compliance with the
anticipatory bail conditions imposed by the Judicial
Commissioner, Ranchi, also furnished a demand draft bearing no.
115484 dated 13.01.2022 of Rs.5,00,000/- in favour of the
complainant/respondent No.2 as a payment of the first instalment.
10. Subsequently, on the failure of the appellant to abide by the
condition of timely payment of instalments fixed by the Judicial
Commissioner vide its order dated 23.12.2021 while granting
anticipatory bail, the complainant/respondent No.2 preferred
Criminal Miscellaneous Case No.39 of 2022 in Anticipatory Bail
Application No.681 of 2021 seeking cancellation of the bail granted
to the appellant. The said application was allowed and
Page 5 of 17
consequently vide order dated 15.06.2022, the anticipatory bail
granted to the appellant was cancelled.
11. Aggrieved by the order dated 15.06.2022 of the Court
cancelling the Anticipatory Bail, the appellant preferred Criminal
Miscellaneous Petition No.2384 of 2022 under Section 482 CrPC
before the Jharkhand High Court at Ranchi praying for the relief of
quashing of F.I.R. No.18 of 2021; Criminal Complaint Case No.619
of 2021; and order dated 15.06.2022 vide which the anticipatory
bail of the appellant was cancelled.
12. The Criminal Miscellaneous Petition No. 2384 of 2022
preferred by the appellant was partly allowed by the Jharkhand
High Court vide impugned order dated 19.01.2023 whereby the
High Court although refused to quash the criminal proceedings
against the appellant but nevertheless allowed him the liberty to
approach the High Court to prefer a fresh anticipatory bail
application.
13. Aggrieved by the impugned order dated 19.01.2023 passed by
the High Court of Jharkhand, the appellant has preferred the
present appeal.
Page 6 of 17
14. We have heard learned counsel for the appellant and learned
counsel for the respondent-State as well as respondent-
complainant. We have perused the material on record.
15. We have given our thorough consideration to the arguments
advanced at the bar and the material on record.
16. The contents of the complaint as well as the FIR would have
to be read in light of the ingredients of Sections 406 and 420 IPC
and the law settled by this Court through various judicial dicta. On
perusal of the complaint dated 29.01.2021, it is noted that the
complainant/respondent No.2 has filed the said complaint
invoking Sections 406, 420 and 120B 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
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
Page 7 of 17
either description for a term which may extend to seven
years, and shall also be liable to fine.
xxx
120B. Punishment of criminal conspiracy.- (1) Whoever
is a party to a criminal conspiracy to commit an offence
punishable with death, imprisonment for life or rigorous
imprisonment for a term of two years or upwards, shall,
where no express provision is made in this Code for the
punishment of such a conspiracy, be punished in the same
manner as if he had abetted such offence.
(2) Whoever is a party to a criminal conspiracy other than
a criminal conspiracy to commit an offence punishable as
aforesaid shall be punished with imprisonment of either
description for a term not exceeding six months, or with
fine or with both.”
17. In Inder Mohan Goswami vs. State of Uttaranchal, (2007)
12 SCC 1 (“Inder Mohan Goswami”), while dealing with Section
420 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
Page 8 of 17
cannot presume that he all along had a culpable intention
to break the promise from the beginning.”
18. In light of the facts and circumstances of the present case, we
find that the complainant/respondent No.2 has failed to make out
a case that satisfies the basic ingredients of the offence under
Section 420 IPC. We fail to understand as to how the allegations
against the appellant herein could be brought within the scope and
ambit of the aforesaid section. On a bare perusal of the FIR as well
as the complaint, we do not find that the offence of cheating as
defined under Section 420 IPC is made out and we do not find that
there is any cheating and dishonest inducement to deliver any
property or a valuable security involved in the instant case.
19. It is settled law that for establishing the offence of cheating,
the complainant/respondent No.2 was required to show that the
appellant had a fraudulent or dishonest intention at the time of
making a promise or representation of not fulfilling the agreement
for sale of the said property. Such a culpable intention right at the
beginning when the promise was made 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 dishonest and fraudulent intention
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on the part of the appellant during the agreement for sale. We must
hasten to add that there is no allegation in the FIR or the complaint
indicating either expressly or impliedly any intentional deception
or fraudulent/dishonest intention on the part of the appellant right
from the time of making the promise or misrepresentation. Nothing
has been said on what the misrepresentations were and how the
appellant intentionally deceived the complainant/respondent No.2.
Mere allegations by the complainant/respondent No.2 that the
appellant failed to execute the agreement for sale and failed to
refund the money paid by the complainant/respondent No.2 does
not satisfy the test of dishonest inducement to deliver a property
or part with a valuable security as enshrined under Section 420
IPC.
20. On perusal of the allegations contained in the complaint, in
light of the ingredients of Section 406 IPC, read in the context of
Section 405 IPC, do not find that any offence of criminal breach of
trust has been made out. It is 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 property
entrusted to him. In the case of criminal breach of trust, if a person
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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 a civil liability would depend upon
the facts and circumstances of the case. In the present case, the
complainant/respondent No.2 has failed to establish the
ingredients essential to constitute an offence under Section 406
IPC. The complainant/respondent No.2 has failed to place any
material on record to show us as to how he had entrusted property
to the appellant. Furthermore, the complaint also omits to aver as
to how the property, so entrusted to the appellant, was dishonestly
misappropriated or converted for his own use, thereby committing
a breach of trust.
21. Furthermore, it is pertinent to mention that if it is the case of
the complainant/respondent No.2 that the offence of criminal
breach of trust as defined under Section 405 IPC, punishable
under Section 406 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, punishable under
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Section 420 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 misappropriates
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 co-exist simultaneously in the same set of facts as they are
antithetical to each other.
22. At this point, we must hasten to add that the complaint was
filed after a delay of nearly eight years. Learned counsel for the
complainant/respondent No.2 has failed to impress the Court
about the reason for the delay and hence this fact further raises a
suspicion about the bona fides of the complainant/respondent
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No.2. The delay in lodging of the complaint and FIR, coupled with
the vague allegations do not inspire any confidence in the Court to
allow the criminal proceedings to continue against the appellant.
Further, the complainant/respondent No.2 had an alternative
remedy of filing a civil suit claiming damages for the alleged
violation of his contractual rights which has not been availed but
a 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 therefore, in our
view, could not be attributed any mens rea and therefore, the
allegations levelled by the prosecution against the appellant are
unsustainable.
23. 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 any inflexible rule that would govern the
exercise of inherent jurisdiction. In view of the above and for the
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reasons stated above, we are of the firm opinion that to continue
the criminal proceedings against the appellant herein would cause
undue harassment to him because as observed hereinabove, no
prima facie case for the offence under Sections 406 or 420 IPC is
made out.
24. 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 give 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.
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(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.
(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.”
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25. On a careful consideration of the aforementioned judgment in
the light of the facts of this case, we find that none of the offences
alleged against the appellant herein is made out. In fact, we find
that the allegations of criminal intent and other allegations against
the appellant herein have been made with a mala fide intent and
therefore, the judgment of this Court in the case of Bhajan Lal and
particularly sub-paragraphs 1, 3, 5 and 7 of paragraph 102,
extracted above, squarely apply to the facts of this case. In our
view, it is neither expedient nor in the interest of justice to permit
the present prosecution to continue.
26. 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.2 has made grave
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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.
27. In the aforementioned circumstances, the impugned order of
the High Court is set aside and consequently, the Complaint Case
No.619/2021 and FIR No.18 of 2021 dated 08.02.2021 lodged with
Police Station Hindpiri and all consequent proceedings initiated
pursuant thereto stand quashed.
The appeal is allowed in the aforesaid terms.
…………………………………..J.
(B.V. NAGARATHNA)
…………………………………..J.
(R. MAHADEVAN)
NEW DELHI;
SEPTEMBER 24, 2025.
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