01Facts
The petitioners (accused) placed purchase orders for 293 metric tonnes of TMT steel bars worth approximately ₹1.19 Crores from the complainant’s company in November 2011
¶ 2Against this delivery, the petitioners issued ten cheques, all of which were dishonored due to "insufficient balance"
¶ 2An FIR was subsequently registered under Sections 406, 420, and 114 of the Indian Penal Code (IPC)
¶ 2The petitioners filed an application for discharge under Section 239 of the CrPC, which was rejected by the learned Additional Chief Judicial Magistrate, Anjar-Kutch, on 08.02.2016
¶ 2The petitioners challenged this rejection and the subsequent framing of charges (02.03.2023) through the present Revision Application
¶ 1, 3The petitioners contended that the dispute was purely civil, arising from a long-standing business relationship since 2008, and lacked criminal intent
¶ 4-502Issues
i.1. Whether the scope of revisional jurisdiction under Section 397 of the CrPC permits interference with an order rejecting a discharge application
¶ 10-11ii.2. Whether the ingredients of Section 406 IPC (Criminal Breach of Trust) are attracted in a commercial transaction of sale and purchase
¶ 20iii.3. Whether the ingredients of Section 420 IPC (Cheating) are prima facie made out based on the conduct of the accused from the inception of the transaction
¶ 2103Law Applied
The court primarily applied Section 397 of the CrPC regarding revisional jurisdiction, which is limited to correcting patent defects, errors of jurisdiction, or gross perversity [relying on Amit Kapoor v. Ramesh Chander, (2012) 9 SCC 460].
¶ 10-11For the substantive offences, the court relied on the distinction between Section 406 (Criminal Breach of Trust) and Section 420 (Cheating) IPC as established in Delhi Race Club (1940) Ltd. v. State of Uttar Pradesh, (2024) 10 SCC 690, and S.W. Palanitkar v. State of Bihar
¶ 19The rule dictates that Section 406 requires "entrustment" of property, whereas Section 420 requires fraudulent or dishonest inducement/intention from the very inception of the transaction
¶ 19-20Provisions in the judgment · 11 · Linked ones open on LawLens
Negotiable Instruments Act, 1881 Section 138
Indian Penal Code, 1860 Section 114Section 406Section 409Section 415Section 417Section 420
Code of Criminal Procedure, 1973 Section 161Section 239Section 397Section 401
04Reasoning
The court observed that in a standard contract for the sale and purchase of property for consideration, there is no "entrustment" for a limited purpose; thus, the property is not held in trust for the complainant
¶ 20Consequently, the court found that the essential ingredients for Section 406 IPC were missing as the complainant did not retain dominion over the goods once sold
¶ 20However, regarding Section 420 IPC, the court analyzed the petitioners' conduct: they placed two large orders within 14 days, received goods via ten trucks, sold the goods to third parties, and collected approximately ₹19 lakhs from those purchasers without paying a single penny to the complainant or even the transporter
¶ 21This conduct, the court reasoned, indicated a specific "plan and design" to cheat from the inception, distinguishing it from a mere civil breach of contract where part-payment or financial crunch might be a defense
¶ 2105Holding
The High Court partly allowed the Revision Application. It held that while no case was made out for Criminal Breach of Trust, a prima facie case for Cheating existed
¶ 23 · ¶ 20-22The court ordered the discharge of the petitioners from the offence punishable under Section 406 IPC but confirmed the rejection of the discharge application regarding Section 420 read with Section 114 IPC. The trial court was directed to alter the charge and proceed only under Section 420 read with Section 114 IPC
¶ 23 · ¶ 23-24Original Court PDF
YOGESH PREMJIBHAI SUVARIYAvsSTATE OF GUJARAT
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