Financial Misappropriation Clothed as Investment Failure Justifies Charges Under Section 406 IPC

The revisionist, a friend of the informant's husband, allegedly induced the informant and her daughter to invest ₹5,00,000/- in his export business, promising high returns.

While he initially paid ₹18,000/- (as per the FIR) or ₹1,80,000/- (as per the revisionist) as profit, he subsequently stopped all payments and allegedly threatened the informant.

Following an investigation into Case Crime No. 738/2022, a charge sheet was filed under Sections 406 (Criminal breach of trust) and 506 (Criminal intimidation) IPC.

The Chief Judicial Magistrate (CJM), Moradabad, rejected the revisionist's discharge application on 22.09.2025 and subsequently framed charges on 13.10.2025.

The revisionist challenged these orders, contending the dispute was purely civil and arising from business disruptions during the COVID-19 pandemic.

1. Whether the trial court erred in law by rejecting the discharge application when the dispute was allegedly civil in nature.

2. Whether a prima facie case under Sections 406 and 506 IPC was established to justify the framing of charges.

3. Whether the court is required to conduct a "mini-trial" or weigh evidence at the stage of framing charges.

The court primarily applied Section 227/239 of the CrPC (now Sections 250/262 of BNSS) regarding discharge.

It relied on the principle established in Captain Manjit Singh Virdi (Retd.) v. Hussain Mohammad Shattaf, which mandates that at the framing of charge, the prosecution's evidence is to be believed as true; discharge is only permissible if no offence is made out even if the evidence remains unrebutted.

The court further cited State of Rajasthan v. Ashok Kumar Kashyap and P. Vijayan v. State of Kerala, affirming that the judge must only "sift" the evidence to find sufficient grounds for proceeding rather than evaluating the "pros and cons" or the probability of conviction.

Sections 406 and 506 of the IPC regarding criminal breach of trust and intimidation were the substantive laws applied.

The Court examined the Case Diary, including statements from the informant and witnesses, which indicated that the revisionist lured the victims into giving money under the guise of investment but subsequently misappropriated it.

The Court found that the initial payment of a small "profit" by the revisionist served as prima facie evidence of an intent to lure the informant.

Regarding the revisionist's defense that the money was lost due to business failure during COVID-19, the Court held that such factual defenses must be proven during the trial and cannot be adjudicated at the discharge stage.

The Court distinguished the precedents cited by the revisionist (Dalip Kaur and Vijay Kumar Ghai), noting they involved either quashing under Section 482 CrPC or significantly different factual matrices like multiple complaints.

The Court reasoned that since there was evidence of entrustment and subsequent dishonest misappropriation, the ingredients of Section 406 were satisfied for the purpose of framing charges.

The Court found no illegality or perversity in the trial court's orders. The criminal revision was dismissed, upholding the CJM Moradabad’s orders dated 22.09.2025 and 13.10.2025.