DUCATI MOTOR HOLDING S.P.A THRO' RITESH KUMAR vs STATE OF GUJARAT
- Court
- Gujarat High Court
R/CR.MA/20012/2013 JUDGMENT DATED: 02/07/2026
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION (FOR QUASHING & SET ASIDE
FIR/ORDER) NO. 20012 of 2013
With
CRIMINAL MISC.APPLICATION (FOR VACATING INTERIM RELIEF) NO.
1 of 2016
In R/CRIMINAL MISC.APPLICATION NO. 20012 of 2013
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE P. M. RAVAL
==========================================================
Approved for Reporting Yes No
✔
==========================================================
DUCATI MOTOR HOLDING S.P.A THRO' RITESH KUMAR & ANR.
Versus
STATE OF GUJARAT & ANR.
==========================================================
Appearance:
MR DHAVAL M BAROT(2723) for the Applicant(s) No. 1,2
MR.VISHAL J DAVE(6515) for the Respondent(s) No. 2
PUBLIC PROSECUTOR for the Respondent(s) No. 1
==========================================================
CORAM: HONOURABLE MR.JUSTICE P. M. RAVAL
Date : 02/07/2026
ORAL JUDGMENT
1. The petitioners before this Court are original accused Nos. 5
and 2, namely Ducati Motor Holding S.P.A. (through Mr. Ritesh
Kumar – constituted Attorney) and Mr. Mirko Bordiga, respectively,
in Inquiry Case No.5 of 2012, lodged before learned Metropolitan
Magistrate Court, Ahmedabad, which was lodged as a private
complainant as defined under Section 2(d) of the Criminal Procedure
Code, on 16.02.2012, for the offence punishable under Sections 406,
420 read with Sections 120(b), 418, 504 and 114 of the Indian Penal
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Code, and after taking verification, the inquiry was ordered to be
carried out and report to be submitted within 60 days, and pursuant
to the report submitted by the Investigating Officer, vide order dated
06.09.2013, the summons came to be issued to the present petitioner,
hence the present petition to quash and set aside the said complaint
and consequential proceedings arising therefrom.
2. The complaint runs into 21 pages, however, in nutshell what
has been alleged is that, the complainant is working as General
Manager (Account and Administration) in M/s. Cama Motors Pvt.
Ltd. since last 24 years and has personal knowledge what has been
stated in the complaint, and on the basis of the authority has lodged
the present complaint.
2.1. It is alleged that accused No.7 – company is run by accused
Nos. 1, 3 and 4, and similarly, accused No.2 runs the administration
of accused No.5 – company. It is further alleged in the verification
that accused No.7 has power to appoint dealer on behalf of accused
No.5 – company, and has contacted the company for the purpose of
selling bikes in the name and style of Ducati and then by
misrepresentation and giving lucrative offers has tried to enter into
business relationship, and thus, letter of intent came to be entered on
24.06.2010. On the based of such document, the company of the
complainant was appointed as a dealership to sell bikes of the
accused company. The accused persons who are knowing right from
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the beginning that bike is not marketable and that they are not
having enough quantity to supply the same on time. However, by
suppressing such facts, a letter of intent was entered into with the
complainant company, it is also make understood at that time that
dealership agreement would be entered into later on, however, till
date, has not been entered into. That, the accused has also not stated
with regards to the bank guarantee, however, in the letter of intent
was entered into such condition was pressed into, for which the
complainant has also raised grievance, since bank guarantee as per
letter of intent to the tune of Rs.1,10,00,000/-. The complainant has
submitted that they would be taking delivery of bikes after paying
100% advance, and that, the condition of bank guarantee be
removed, at that time, the accused persons replied and has given
assurance that, as and when the dealership agreement would be
entered into, the condition of bank guarantee shall be removed.
2.2. Based on the promise made by the accused persons, the
complainant has invested huge amount and also has established
infrastructure facilities including renovation of the showroom and
office. Thereafter, the accused persons stated that only if the 100%
amount is paid in advance, the bikes would be delivered. Though the
bank guarantee was already given on 16.11.2010, pursuance to
which the accused persons did not deliver the bikes as per the order
placed by the complainant company, however, delivered different
models other than which were ordered, and the bikes were also not
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delivered despite of laps of substantial time and also delivered
defective goods and also not delivered spare-parts. Thus, in
connivance by the acts of the accused persons, the complainant has
to suffer huge loss, and has also lost his reputation, and hence stated
that they have committed offence as stated in the complaint.
3. Learned Senior Advocate Mr. Tejas Barot assisted by learned
advocates Mr. Sumeet Lall, Mr. Sidhart Kapoor, Mr. Dhaval Barot,
Ms. Palak Rawat, Mr. Jineesh Vadodaria and Ms. Rhea Chokshi, for
the petitioners would submit that from the entire reading of the
complaint, there is not an iota of evidence against the present
petitioners – original accused Nos. 2 and 5, that they had promised
to deliver the goods of certain numbers and certain quality on a
certain dates, and in absence of any allegations qua the present
petitioners, merely stating that entering into a letter of content with
the company of original accused No.7 represented by accused No.1
– who is the CEO and was the distributor of Ducati, and had nothing
to do with the promises made by him to the dealer, and for which, a
separate exclusive distribution agreement was also entered into with
accused No.7 – Prisison Moters India Pvt. Ltd. signed by accused
No.1 – Ashish Choradiya, which clearly stipulates that any
engagement that has been written by the distributor, namely accused
No.7 in the name on behalf of Ducati shall not bind Ducati in any
way and the distribution shall hold Ducati harmonious for any
damage deriving from it.
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3.1. Learned Senior Advocate would further draw the attention of
this Court towards recital 6.2, which states that Ducati may accept
and, once accepted, perform all, some or none of the distributors
purchase orders depending on its production capacity, without any
responsibility for Ducati. Learned Senior Advocate would further
draw the attention of this Court towards, paragraph 13.2, which
states that the distributor shall undertake to furnish Ducati at the
beginning of each year with a list of names and addresses of its
retailers to permit Ducati to directly contact said retailers with prior
notice of the distributor and verify, among other things, the
efficiency of technical assistance to customers. He would further
submitted that the letter of intent entered between the complainant
and accuse Nos.1 and 7, which has nothing to do with the petitioner
– company or the petitioner No.2 herein. Inasmuch as the factum of
email would reflect that the difficulties faced by the complainant,
company had tried to be solved, however, that itself cannot be made
basis of having committed offence, as alleged in the complaint. He
would further submit that the cognizance taken by the learned
Magistrate by isssuing summons, is non-application of mind
inasmuch as from reading of the entire complaint, there are vague
allegations, not connecting with the alleged crime with accused
Nos.2 and 5. Inasmuch as the factum of Ducati, having appointed
accused Nos.1 and 7 as exclusive distributor by itself would not
amount to attracting the provisions of the IPC as alleged in the
complaint. Learned Senior Advocate would further submit that
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without there being any specific allegations, as to how provisions of
Section 418 of the IPC would be attracted, since, the petitioners are
neither bound by law or by any legal contract, directly to supply of
any goods or to offer any services or any raw materials, and that if at
all, if there is any breach, would be that of a civil nature for which
civil suit is also filed bearing Civil Suit No.2572 of 2011, before the
City Civil Court, Ahmedabad, on 17.11.2011. Pursuant to which, the
present private complaint is lodged on 16.02.2012 with an ulterior
motive to pressurize the present petitioners, to see that the disputes
with the accused Nos.1 and 7 with the complaint are settled.
3.2. Learned Senior Advocate for the petitioners would rely upon
the judgments in the case of Vijay Kumar Ghai and Others v.
State of West Bengal and Others , reported in (2022) 7 SCC 124 ;
in the case of Satishchandra Ratanlal Shah v. State of Gujarat
and Another , reported in (2019) 9 SCC 148 ; in the case of V.
Ganesan v. State Represented by the Sub Inspector of Police and
Another , reported in 2026 SCC OnLine SC 444 ; in the case of
Delhi Race Club (1940) Limited and Others v. State of Utar
Pradesh and Another , reported in (2024) 10 SCC 690 .
4. Per contra , learned Advocate Mr. Vishal J. Dave for the
complainant – respondent No.2 herein and learned Additional Public
Prosecutor Mr. Rohan N. Shah for the respondent – State would
submit that the complaint is only at the stage of inquiry and at the
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stage of inquiry, the learned Magistrate has only to see as to whether
a prima facie case as alleged in the complaint is made out or not.
And if there is sufficient ground to proceed, it cannot be said that the
learned Magistrate has committed any error in issuing summons to
the accused persons, inasmuch as, there are clear averments against
all the accused persons. To butter the said argument they would rely
upon the judgment dated 12.06.2013 passed by the coordinate bench
of this Court in Criminal Misc. Application (for Quashing & Set
Aside FIR/Order) No.6565 of 2012 , wherein at paragraph No.11 it
is observed as under:
“(11) On bare perusal of the impugned complaint, it appears
that the complaint is filed by respondent No.2 against the
seven accused. On examining the complaint as it is on its face
value, it is found that the allegations are made against all
accused, including the present applicants. As observed
hereinabove, specific allegations are made in the complaint,
more particularly in Paragraph Nos. 8-12 and 24-30 and thus,
according to the complainant, the applicants have committed
offences as alleged in the impugned complaint.”
4.1. Thus, it would argue that when the coordinate bench while
rejecting the quashing petition of co-accused has observed that
allegations are made against all the accused, including the petitioners
who had appeared before the Court for quashing, under such
circumstances, the present petitioners cannot take advantage of
arguing that no case is made out.
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4.2. Learned Advocate for the complainant would further submit
that for exercising power under Section 482 of the Cr.P.C. the Court
is not bound to conclude that whether conviction would entail or not,
since it is a matter of evidence, and when a prima facie case is made
out, quashing of the complaint is not permissible. He would further
argue that accused No.5 is manufacturer of Ducati Bikes, who had
appointed accused No.7 – company represented by the CEO –
accused No.1 as a distributor, and through which dealers’ network
was also created, and thus, the business was spread across whole
India. Under such circumstances, the petitioners cannot claim any
immunity, relying upon the agreement entered into between accused
Nos.1 and 7. Leaned Advocate would draw attention to various
emails written by accused No.2 to the complainant, to point out that
the accused No.2 was in constant touch with the complainant –
company, to see that the worsening situation is taken care of, and has
also visited Ahmedabad, and thus, is involved right from the
beginning, even prior to entering into the signing of letter of intent
with accused Nos.1 and 7. He would further draw the attention to
one of the emails, more particularly, dated 16.12.2010, to point out
that the first Ducati Cafe was to be opened in Ahmedabad, for which
the email was written to the present complainant. He would further
point out email dated 24.10.2011 written by the complainant to
petitioner No.2, wherein the detail representation was made with
regards to the grave concern having huge financial implications that
the company was facing because of non-availability of required
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models, colours, special tools and equipments, accessories and
apparels, none ability of space, no reconciliation of account, and
signing of letter of intent only till 12.12.2010, pointing out internal
shortcomings, and thus, would argue that when accused No.2
representing accused No.5 – company were well aware with regards
to the difficulties faced by the complainant – company, and when the
accused No.2 was involved in the setting up of the retailership of
Ducati at Ahmedabad, right from the beginning, it cannot be said
that the averments made in the complaint are short of any allegations
against the petitioners.
4.3. To buttress his argument would rely upon the judgments in the
case of Mahesh Chaudhary v. State of Rajasthan and Another ,
reported in (2009) 4 SCC 439 , and in the case of Jairam s/o Nathu
Salunke v. State of Maharashtra and Another , reported in (2017)
2 SCC 371 .
5. Heard learned advocates for the respective parties and learned
Additional Public Prosecutor for the respondent – State.
6. At the outset, it is required to be noted that the complaint runs
into 21 pages, the allegations are against all the accused persons,
including the present petitioners being original accused Nos. 2 and 5,
however, the specific allegations against accused Nos.2 and 5 are
noted down in the said complaint on page No.3, it has been stated
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that, the accused No.2 is responsible for day to day work and
administration of accused No.5 – company.
6.1. At page No.8, para No.7, it has been stated that, “as a
representative of accuse No.1, accused No.2 had visited the
showroom of the complainant, and at that time, accused No.2 had
entered into deep friendship and had given wrong promises that you
don't have to worry”.
6.2. At page No.10, par No.9, it has been stated that “after the
showroom was started, the accused persons used to impose
conditions which were irresponsible that the complainant used to as
per the say of the accused persons that because of the blockage of
the money and not having entered into any dealership agreement, the
complainant raised objections, however, accused No.2 and 3 had
given promise that the letter of credit is only as a part of company's
policy, and dealership agreement would be entered into after some
time”.
6.3. At page No.10, para No.10, it has been alleged that “despite of
having no condition stated in the L.O.I., the accused No.2 compelled
accused No.1 to continue the business”.
6.4. At page No.11, para No.12, it has been stated that “accused
Nos.3 and 4 being representatives of accused No.1 - company, were
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bound to resolve the problems, however, was informed that the
complainant directly talked with accused No.2, and thus, emails
were also sent to accused No.2 that no one was ready to work as
dealer, with accused No.2 and had also received information that, the
company to which dealership was given a Delhi that is also stopped,
and no one is ready to accept the dealership”.
6.5. It has been further alleged that at para No.12, page No.12, to
the effect that “when Shreyans was delivered more than 60 bikes by
accused No.1 – company, the complainant had also received
information that the bank guarantee issued to accused No.1 was used
by him to increase business with accused No.5 – company for
purchasing bikes.”
6.6. At page No.13, para No.15, it has been stated that “the
complainant had been also called to meet at Milan–Italy, for which
the information was also given to accused Nos.1 and 2, however, as
there was no confidence, he did not attend the meeting and on
24.10.2011, one email to accused Nos.1 and 2 with regards to the
complaints.”
6.7. The reference has been also made at page No.14, para No.15
of the complainant that the complainant had sent an email on
24.10.2011 to accused Nos.1 and 2. Similarly, in para No.7, page
No.14, it has been averred that “email was sent to accused Nos.1 and
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2 on 08.11.2011 that without resolving the old dispute, the
complainant is not ready to follow the new terms, and at that time,
had threat dead, if order of 100 bikes is not given, the S.B.L.C. will
not be renewed, and the supply of bikes will be stopped.” At para
No.22, page No.18 of the complaint, there is also mentioned about
Civil Suit No.2572 of 2011.
7. Except for the aforestated allegations, no specific role has been
attributed to accused Nos.2 and 5. This Court has not entered into
the other allegations as stated in the complaint, since the compliant
is challenged by original accused Nos.2 and 5 only, and therefore,
allegations qua against accused Nos.2 and 5 have taken into
considered, for deciding the present petition. Without looking into
any other documents, if the complaint is read as it is, except for
vague allegations, that too also have stated hereinabove, do not
attract any other penal provisions, more particularly, Sections 418
and 420 and 415 of the IPC. Inasmuch as Section 418 reads as
under:
“418. Cheating with knowledge that wrongful loss may
ensue to person whose interest offender is bound to protect
—
Whoever cheats with the knowledge that he is likely thereby to
cause wrongful loss to a person whose interest in the
transaction to which the cheating relates, he was bound, either
by law, or by a legal contract, to protect, shall be punished
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with imprisonment of either description for a term which may
extend to three years, or with fine, or with both.”
8. Whereas Section 420 reads as under:
“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.”
9. Section 415 defines cheating which reads as under:
“415. Cheating —
Whoever, by deceiving any person, fraudulently or dishonestly
induces the person so deceived to deliver any property to any
person, or to consent that any person shall retain any property,
or intentionally induces the person so deceived to do or omit to
do anything which he would not do or omit if he were not so
deceived, and which act or omission causes or is likely to
cause damage or harm to that person in body, mind, reputation
or property, is said to "cheat".
Explanation—A dishonest concealment of facts is a deception
within the meaning of this section.”
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10. Hon’ble Supreme Court in Pradeep Kumar Kesarwani v.
State of Uttar Pradesh [AIROnline 2025 SC 956] recently
synthesized the jurisprudence governing Section 482 of the Code
and formulated a strict four-step analytical framework to evaluate
petitions seeking the quashing of criminal trials at their inception.
The framework dictates:
“ 20. The following steps should ordinarily determine the
veracity of a prayer for quashing, raised by an accused by
invoking the power vested in the High Court under Section 482
of the CrPC:
(i) Step one, whether the material relied upon by the
accused is sound, reasonable, and indubitable, i.e., the
materials is of sterling and impeccable quality?
(ii) Step two, whether the material relied upon by the
accused, would rule out the assertions contained in the
charges levelled against the accused, i.e., the material is
sufficient to reject and overrule the factual assertions
contained in the complaint, i.e., the material is such, as
would persuade a reasonable person to dismiss and
condemn the factual basis of the accusations as false.
(iii) Step three, whether the material relied upon by the
accused, has not been refuted by the
prosecution/complainant; and/or the material is such,
that it cannot be justifiably refuted by the
prosecution/complainant?
(iv) Step four, whether proceeding with the trial would
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result in an abuse of process of the court, and would not
serve the ends of justice?
If the answer to all the steps is in the affirmative, judicial
conscience of the High Court should persuade it to quash such
criminal proceedings, in exercise of power vested in it under
Section 482 of the Cr.P.C. Such exercise of power, besides
doing justice to the accused, would save precious court time,
which would otherwise be wasted in holding such a trial...”
11. To attract the provisions of Section 418, a person to be held
liable is bound either by law or by legal contract, to protect the
interesting transactions to which the cheating relates, only then the
provisions of Section 418 would be attracted. Merely, by making
averments against accused Nos.2 and 5 as stated hereinabove, would
not attract the ingredients of Section 418, inasmuch as the
complainant himself in para No.3 of the complaint states that he had
entered into the letter of intent on 24.06.2010 with accused No.1.
What has been projected by the complainant in his argument is to the
effect that accused No.1 is the agent being a distributor and accused
No.5 is the company, who is represented by the CEO – accused No.2
is the principal, and for the acts of agent, the principal is duty bound
under law though not under contract in the present case to protect the
interest. Assuming for the sake of argument that accused No.1
representing accused No.7 – company, is an agent of accused No.5 –
company represented by accused No.2, there is not an iota of
evidence in the complaint with regards to any promise, commitment
or any false promise being made by accused No.2 to the
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complainant, inasmuch as, the letter of intent is entered by the
complainant with accused No.7 – company represented by accused
No.1 on 24.06.2010, whereas the exclusive distribution agreement
specifically is between accused No.7 and accused No.5 – company.
12. Though this Court is not here to conduct a mini trial , however,
when the complaint is file with some misunderstanding, which
would result into the unnecessary harassment to the petitioners, more
particularly, having failed to meet with the commitments if at all
made by accused Nos.2 and 5, this Court is bound to look into the
documents, which are uncontroverted by the complainant, more
particularly, the exclusive distribution agreement, which specifically
states that each agreement undertaken by the distributor in the name
or on behalf of Ducati shall not bind Ducati in any way being recital
No.2.3 of the said agreement. If at all, some commitments are made
by accused No.2, then also, subsequent nonfulfillment of those
commitments cannot be said to be criminal breach of trust or forgery
or attracting provisions of Sections 418 and 420 of the IPC,
inasmuch as, the complainant has entered into the letter of intent that
with accused No.7 – company signed by accused No.1. Merely
cleverly drafting the complaint by stating “All the accused persons”,
by itself, would not attract penal provisions. When prima facie , it
appears that accused Nos.2 and 5 have tried see that the problems are
solved, which would be evident from the reading of the emails
placed on record by the complainant in his affidavit in reply.
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13. The visit of accused No.2 and communication through emails,
in no manner could be said to be attracting any penal provisions or
direct business transaction with the complainant, inasmuch as, the
allegations, if are taken into consideration, read with the exclusive
agreement between accused No.5 – company and accused No.7 –
company, mainly the exclusive distribution agreement would make it
clear that accused Nos.2 and 5 are not directly involved in any
manner whatsoever of either directly supplying any goods, raw
materials, spare-parts, etc. to the complainant. The visits made by
accused No.2 to the showroom of the complainant and promise if
any made, is also not clear as to what type of promises were made,
from the complaint itself, would not amount to attracting any of the
penal provisions. This Court is of the considered opinion that though
the complainant may have burnt his finger because of some
commitments made by accused No.7 – company through the CEO –
accused No.1, which at this stage if discussed, would prejudice the
case of the either side. However, there seems to be no promises or
commitments or even direct business relationship with the
complainant by the present petitioners, though being a retailer and
having entered into letter of intent with accused No.7 – company
through accused No.1. The visits by the accused No.2 to the
showroom and various communications mainly the emails pointed
out by the learned advocate for the complainant, would in no
manner, could be said that false promises were made and that
accused Nos.2 and 5 and thereby cheated the complainant.
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13.1. Thus, tested on the anvil of the principles laid down in the case
of Pradeep Kumar Kesarwani (supra), firstly, the documents relied
upon by the present petitioners are indoubtable; secondly, reading of
the agreement and the email conversation between the parties, would
rule out the charges levelled against the present petitioners, and thus,
the factual assertion contained in the complaint would falsify
acquisitions qua the petitioners herein; thirdly, the material relied by
the accused are not refuted by the complainant; and lastly, based on
such documents, it is found that the trial if proceeded would
certainly amounts to abuse of process of court and its continuity
would not serve the end of justice.
14. As far as learned Senior Advocate appearing for the petitioner
has relied upon the judgment in the case of Vijay Kumar (supra) is
concerned, at paragraphs 34, 35, 36 and 39 of the said judgment, it is
held as under:
“34. Section 420 IPC is a serious form of cheating that
includes inducement (to lead or move someone to happen) in
terms of delivery of property as well as valuable securities.
This section is also applicable to matters where the destruction
of the property is caused by the way of cheating or
inducement. Punishment for cheating is provided under this
section which may extend to 7 years and also makes the person
liable to fine.
35. To establish the offence of cheating in inducing the
delivery of property, the following ingredients need to be
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proved:-
(i) The representation made by the person was false.
(ii) The accused had prior knowledge that the
representation he made was false.
(iii) The accused made false representation with dishonest
intention in order to deceive the person to whom it was made.
(iv) The act where the accused induced the person to deliver
the property or to perform or to abstain from any act which
the person would have not done or had otherwise committed.
36. As observed and held by this Court in R.K.
Vijayasarathy v. Sudha Seetharam, the ingredients to
constitute an offence under Section 420 are as follows:-
(i) a person must commit the offence of cheating under
Section 415; and
(ii) the person cheated must be dishonestly induced to;
(a) deliver property to any person; or
(b) make, alter or destroy valuable security or anything
signed or sealed and capable of being converted into
valuable security. Thus, cheating is an essential
ingredient for an act to constitute an offence under
Section 420 IPC.
39. In Vesa Holdings (P) Ltd. v. State of Kerala, this Court
made the following observation:- (SCC pp. 297-98, para 13)
“13. It is true that a given set of facts may make out a
civil wrong as also a criminal offence and only because
a civil remedy may be available to the complainant that
itself cannot be ground to quash a criminal proceeding.
The real test is whether the allegations in the complaint
disclose the criminal offence of cheating or not. In the
present case, there is nothing to show that at the very
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inception there was any inception on behalf of an
accused person to cheat which is a condition precedent
for an offence under Section 420 IPC. In our view, the
complaint does not disclose any criminal offence at all.
Criminal proceedings should not be encouraged when it
is found to be mala fide or otherwise an abuse of the
process of the courts. Superior courts while exercising
this power should also strive to serve the ends of justice.
In our opinion, in view of these facts allowing the police
investigation to continue would amount to an abuse of
the process of the court and the High Court committed
an error in refusing to exercise the power under Section
482 Cr.P.C to quash the proceedings.”
14.1. Thus, for establishing the offence of cheating, in inducing the
delivery of property, the ingredients required would be
representation made by the person was false, had prior knowledge
that representation he made was false, accused made false
representation with dishonest intention in order to deceive the person
to whom it was made, and pursuant to which the accused induced the
person to deliver the property or to perform or to abstain from any
act which is the person would have not done or had otherwise
committed. Thus, cheating being essential ingredient for an act to
constitute an offence under Section 420, and having examined the
entire complaint, it does not disclose any criminal offence
whatsoever much less the offence punishable under Section 418 read
with Section 420. And the only allegations made against the present
petitioners as stated hereinabove, would fall short of attracting these
penal provisions.
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15. So far as the judgment in the case of Satishchandra (supra) is
concerned, wherein at paragraphs Nos.13 and 14, it is held as under:
“13. Now coming to the charge under Section 415 punishable
under Section 420 IPC. In the context of contracts, the
distinction between mere breach of contracts and cheating
would depends upon the fraudulent inducement and mens rea.
(See Hridaya Ranjan Prasad Verma v. State of Bihar.) In the
case before us, admittedly the appellant was trapped in
economic crisis and therefore, he had approached Respondent
2 to ameliorate the situation of crisis. Further, in order to
recover the aforesaid amount, Respondent 2 had instituted a
summary civil suit seeking recovery of the loan amount which
is still pending adjudication. The mere inability of the
appellant to return the loan amount cannot give rise to a
criminal prosecution for cheating unless fraudulent or
dishonest intention is shown right at the beginning of the
transaction, as it is this mens rea which is the crux of the
offence. Even if all the facts in the complaint and material are
taken on their face value, no such dishonest representation or
inducement could be found or inferred.
14. Moreover, this Court in a number of cases has usually
cautioned against criminalising civil disputes, such as breach
of contractual obligations (refer to Gain Singh v. State of
Punjab). The legislature intended to criminalise only those
breaches which are accompanied by fraudulent, dishonest or
deceptive inducements, which resulted in involuntary and
inefficient transfers, under Section 415 IPC.”
15.1. Thus, this Court cannot be carried away by the moral element
involving the breach of promise, if any, made by the petitioners
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herein, inasmuch as, despite of having failed to point out any such
promise by accused Nos.2 and 5, if it all such promises made, would
fall short of the offence alleged.
16. So far as the judgment in the case of V. Ganesan (supra) is
concerned, wherein at paragraphs Nos.12 and 14, it is held as under:
12. In Iridium India Telecome Ltd. v. Motorola Inc., this
Court laid down the ingredients of an offence of cheating as
defined in Section 415 of IPC. It was observed that Section
415 of IPC has two parts. The first part makes it necessary
that the deception by the accused of the person deceived, must
be fraudulent or dishonest. Such deception must induce the
person to either: (a) deliver property to any person; or (b)
consent that any person shall retain any property. The second
part also requires that the accused must by deception
intentionally induce the person deceived either to do or omit to
do anything which he would not do or omit, if he was not so
deceived. Besides, such act or omission must cause or must be
likely to cause damage or harm to that person in body, mind,
reputation or property. Thus, deception is a necessary
ingredient for the offence of cheating under both parts of this
section. Besides, the complainant must allege/prove that the
inducement had been caused by the deception exercised by the
accused. In other words, such deception must produce the
inducement to part with or deliver property, which the
complainant would not have parted with or delivered, but for
the inducement resulting from such deception. The explanation
to the section clarifies that non-disclosure of relevant
information would also be treated as a misrepresentation of
facts leading to deception.
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14. In Vesa Holding Private Limited v. State of Kerala, this
court held that every breach of contract would not give rise to
an offence of cheating. Only in those cases breach of contract
would amount to cheating where there was any deception
played at the very inception. If the intention to cheat has
developed later, the same cannot amount to cheating. In other
words, for the purpose of constituting an offence of cheating,
the complaint is required to show that the accused had
fraudulent or dishonest intention at the time of making promise
or representation. Even in a case where allegations are made
about failure on part of the accused to keep his promise, in
absence of a dishonest on part of the accused to keep his
promise, no offence under Section 420 of IPC is made out.”
16.1. In the aforestated judgment also, the principals are reiterated
and also taken considered by deciding the present petition.
17. Learned Senior Advocate for the petitioners has also relied on
the judgment in the case of Delhi Race Club (supra), more
particularly, paragraphs Nos.13, 24, 41, 43, which reads as under:
“13. If, however, a bare perusal of a complaint or the
evidence led in support of it shows essential ingredients of the
offences alleged are absent or that the dispute is only of a civil
nature or that there are such patent absurdities in evidence
produced that it would be a waste of time to proceed further,
then of course, the complaint is liable to be dismissed at that
stage only.
24. Where a jurisdiction is exercised on a complaint petition
filed in terms of Section 156(3) or Section 200 of the CrPC, the
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Magistrate is required to apply his mind. The Penal Code does
not contain any provision for attaching vicarious liability on
the part of the Appellant Nos. 2 and 3, respectively, herein
who are none other than office bearers of the Appellant No. 1
Company. When Appellant No. 1 is the Company and it is
alleged that the company has committed the offence then there
is no question of attributing vicarious liability to the office
bearers of the Company so far as the offence of cheating or
criminal breach of trust is concerned. The office bearers could
be arrayed as accused only if direct allegations are levelled
against them. In other words, the complainant has to
demonstrate that he has been cheated on account of criminal
breach of trust or cheating or deception practiced by the office
bearers.
41. The distinction between mere breach of contract and the
offence of criminal breach of trust and cheating is a fine one.
In case of cheating, the intention of the accused at the time of
inducement should be looked into which may be judged by a
subsequent conduct, but for this, the subsequent conduct is not
the sole test. Mere breach of contract cannot give rise to a
criminal prosecution for cheating unless fraudulent or
dishonest intention is shown right from the beginning of the
transaction i.e. the time when the offence is said to have been
committed. Therefore, it is this intention, which is the gist of
the offence.
43. There is a distinction between criminal breach of trust
and cheating. For cheating, criminal intention is necessary at
the time of making a 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
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he dishonestly misappropriated the same. Whereas, in case of
cheating, the offender fraudulently or dishonestly induces a
person by deceiving him to deliver any property. In such a
situation, both the offences cannot co-exist simultaneously.”
17.1. Considering the principles laid down in the said judgment,
merely by making averments in the complaint that right from the
beginning, the accused persons i.e. including the present petitioners,
were knowing that their goods are not marketable, and they are short
of supply, would not attract cheating or misleading representation
since inception, inasmuch as, on perusal of the content of the email
relied by learned Advocate for the complainant would reveal that,
accused No.2 has tried to see that problems, if any, are tried to set
right, though, have no direct business relation by way of contract, or
as an agent through accused Nos.1 and 7. Under the circumstances,
for the sake of argument, even if there is a breach of a contract,
cannot attract the offence of cheating, since, what has to be looked
into, is the conduct at the time of the so called inducement,
subsequent conduct, and considering conduct of the petitioners
herein, what is to be seen, is the intention right from the beginning,
and the aspect of deception right from the beginning is lacking in the
facts of the case, thus, no offence as alleged in the complaint are
attracted.
18. Whereas the judgments relied upon by the learned Advocate
for the complainant are concerned, he has relied in the case of
Mahesh Chaudhary (supra), more particularly, paragraphs Nos.12,
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14, 16 and 17, which reads as under:
12. It is also well settled that save and except very
exceptional circumstances, the court would not look to any
document relied upon by the accused in support of his defence.
Although allegations contained in the complaint petition may
disclose a civil dispute, the same by itself may not be a ground
to hold that the criminal proceedings should not be allowed to
continue. For the purpose of exercising its jurisdiction, the
superior courts are also required to consider as to whether the
allegations made in the FIR or Complaint Petition fulfill the
ingredients of the offences alleged against the accused.
14. While saying so, we are not unmindful of the limitations
of the court's power under Section 482 of the Code of Criminal
Procedure which is primarily for one either to prevent abuse
of the process of any Court or otherwise to secure the ends of
justice. The court at that stage would not embark upon
appreciation of evidence. The Court shall moreover consider
the materials on record as a whole. In Kamaladevi Agarwal v.
State of W.B. this Court opined: (SCC pp. 559-60, para 7)
"7. This Court has consistently held that the revisional
or inherent powers of quashing the proceedings at the
initial stage should be exercised sparingly and only
where the allegations made in the complaint or the FIR,
even if taken it at the face value and accepted in entirety,
do not prima facie disclose the commission of an offence.
Disputed and controversial facts cannot be made the
basis for the exercise of the jurisdiction."
It was furthermore observed that the High Court should be
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slow in interfering with the proceedings at the initial stage and
that merely because the nature of the dispute is primarily of a
civil nature, the criminal prosecution cannot be quashed
because in cases of forgery and fraud there would always be
some element of civil nature.
16. Recently in R. Kalyani v. Janak C. Mehta this Court laid
down the law in the following terms: (SCC p. 523, para 15-16)
"15. Propositions of law which emerge from the said decisions
are:
(1) The High Court ordinarily would not exercise its
inherent jurisdiction to quash a criminal proceeding
and, in particular, a First Information Report unless the
allegations contained therein, even if given face value
and taken to be correct in their entirety, disclosed no
cognizable offence.
(2) For the said purpose, the Court, save and except in
very exceptional circumstances, would not look to any
document relied upon by the defence.
(3) Such a power should be exercised very sparingly. If
the allegations made in the FIR disclose commission of
an offence, the court shall not go beyond the same and
pass an order in favour of the accused to hold absence of
any mens rea or actus reus.
(4) If the allegation discloses a civil dispute, the same by
itself may not be a ground to hold that the criminal
proceedings should not be allowed to continue.
16. It is furthermore well known that no hard and fast
rule can be laid down. Each case has to be considered
on its own merits. The Court, while exercising its
inherent jurisdiction, although would not interfere with a
genuine complaint keeping in view the purport and
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object for which the provisions of Sections 482 and 483
of the Code of Criminal Procedure had been introduced
by the Parliament but would not hesitate to exercise its
jurisdiction in appropriate cases. One of the paramount
duties of the Superior Courts is to see that a person who
is apparently innocent is not subjected to persecution
and humiliation on the basis of a false and wholly
untenable complaint."
17. The charge-sheet, in our opinion, prima facie discloses
commission of offences. A fair investigation was carried out by
the Investigating Officer. The charge-sheet is a detailed one. If
an order of cognizance has been passed relying on or on the
basis thereof by the learned Magistrate, in our opinion, no
exception thereto can be taken. We, therefore, do not find any
legal infirmity in the impugned orders.”
18.1. In the judgment itself, in paragraph 16 after referring to R.
Kalyani v. Janak c. Mehta, reported in (2009) 1 SCC 516, in
paragraph 16 of the said judgment, it is held that the Court while
exercising its inherent jurisdiction, would not interfere with a
genuine complaint keeping in view the purport and object for which
the provisions of Sections 482 and 483 of the Code of Criminal
Procedure had been introduced by the Parliament but would not
hesitate to exercise its jurisdiction in appropriate cases. This Court
finds it appropriate in the facts and circumstances, to exercise
jurisdiction being an appropriate case for the reasons stated hearing
above, and thus, the quoted judgment is of no help to the
complainant.
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19. The next judgment relied by the learned Advocate for the
complainant, in the case of Jairam (supra), wherein learned
Advocate relied paragraphs Nos.7 and 8, which reads as under:
“7. We have gone through the record and considered rival
submissions. The High Court found three infirmities namely
that Onkargiri, predecessor of the plaintiffs in Regular Civil
Suit No.81 of 1993 did not have any title; that no sale deed
was executed by the plaintiffs in favour of said three persons;
and that the document of lease stated to be in favour of the
appellant did not mention any rent at all. In the face of these
observations it cannot be said that the dispute in question was
purely of civil nature. If on the basis of false and fraudulent
documents a claim is made which leads to award of
compensation in land acquisition matter, the interest of the
State is certainly compromised or adversely affected. The
matter cannot then be termed as a civil dispute simplicitor.
The crime was therefore rightly registered.
8. Affirming the view taken by the High Court, we do not
find any reason to quash the criminal proceedings. The
appellant is certainly entitled to present his view on merits
which will be gone into and considered by the concerned
Court at the appropriate stage. We thus find no merit in the
matter and dismiss the present appeal.”
19.1. Though this Court is bound by the ratio laid down in the
aforestated judgment, and this Court is also mindful of the fact that
merely because there is a civil dispute, it cannot be said that a
criminal complaint is not maintainable, however, it all depends on
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facts and circumstances of the each case. More particularly, in the
said case 3 infirmities namely, that “Onkargiri, predecessor of the
plaintiffs in Regular Civil Suit did not have any title; that no sale
deed was executed by the plaintiffs in favour of the three persons;
and that the document of lease stated to be in favour of the appellant
did not mention any rent at all” . In face of these observations, the
Hon’ble Supreme Court held that the disputing question was not
purely civil in nature. However, in the facts of the cases as stated
hereinabove, for the purpose of excising jurisdiction under Section
482 of the Cr.P.C., this Court is also required to consider, as to
whether the allegations made in the complaint fulfilled the
ingredients of offence alleged against the accused – petitioners or
not. Having stated hereinabove, the allegations do not attract any of
the ingredients of IPC, more particularly Sections 418 and 420 read
with Sections 120 and 114, and merely, the presence of accused
No.2 at Ahmedabad with the representative of accused No.1 or with
the accused No.1 at the showroom of the complainant by itself
would not amount to criminal conspiracy or abetment as defined
under Section 107 read with Section 108 of the IPC.
20. As far as the observation made in Criminal Misc. Application
No.6565 of 2012, while rejecting the said petition by the coordinate
bench of this Court by judgment dated 12.06.2013 is concerned, the
said observations relates only to the petitioners who had approved
for quashing and not the present petitioners, coupled with the fact
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that, while rejecting the petition, the coordinate bench had
specifically noted that the said application was filed at a very
primitive stage, even before the cognizance was to be taken, and
found that, no interference was called to excise in inherent powers.
Under the circumstances, the observation mentioned therein, more
particularly, paragraph No.11 would be of no relevance.
21. Under the circumstances, the present petition stands allowed.
The Inquiry Case No.5 of 2012, lodged before learned Metropolitan
Magistrate Court, Ahmedabad, and consequential proceedings
arising therefrom are quashed and set aside qua the petitioners.
22. It is made clear that the learned Magistrate without being
influenced by the observation made hearing, may proceed against
other accused, in accordance with law, since these observations are
made only qua the present petitioners.
23. Rule is made absolute to the aforesaid extent. Direct service is
permitted.
24. In view of the aforesaid order passed in main application, the
Criminal Misc. Application No.1/2016 does not survive and stands
disposed of, accordingly.
(P. M. RAVAL, J)
NITIN MAKWANA
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