Sections 406 and 420 IPC require specific entrustment or deception; allegations against employees alone are insufficient.

The petitioners, an E-Kart Logistic hub in-charge and a member of the Flipkart Security Team, sought quashing under Section 482 CrPC of Doranda P.S. Case No. 408 of 2019, the entire criminal proceeding, and the order dated 14 October 2020 taking cognizance under Sections 406 and 420 IPC.

The complainant’s company sold goods through the Flipkart platform and alleged that 19 shipments valued at ₹1,06,720 were not returned, while another 19 shipments were settled for a lower amount, causing an alleged total loss of ₹1,63,369.

It was further alleged that the petitioners visited the complainant’s office, discussed digital proof of delivery, behaved rudely, threatened or abused the complainant’s employees, and assaulted the complainant and his staff.

Following the complainant’s complaint and its reference to the police, Doranda P.S. Case No. 408 of 2019 was registered; after investigation, the police submitted a charge-sheet under Sections 406 and 420 IPC, pursuant to which the Magistrate took cognizance.

1. Whether the allegations, taken at their highest, disclosed the ingredients of cheating under Section 420 IPC against the petitioners, particularly deception or dishonest inducement at the inception of the transaction?

2. Whether the allegations disclosed criminal breach of trust under Section 406 IPC against the petitioners in the absence of personal entrustment of property to them and any dishonest misappropriation by them?

3. Whether continuation of the criminal proceeding, FIR, and cognizance order against the petitioners amounted to an abuse of the process of law warranting exercise of the High Court’s inherent jurisdiction under Section 482 CrPC?

The Court exercised its inherent jurisdiction under Section 482 CrPC to prevent abuse of process where the allegations, even if accepted in their entirety, do not constitute the alleged offences.

For Section 406 IPC, there must be entrustment of property to the accused, followed by dishonest misappropriation, conversion, or use in violation of a legal direction or contract.

For Section 420 IPC, the prosecution must establish deception or dishonest concealment, fraudulent or dishonest inducement to deliver property or act in a particular manner, and resultant or likely damage or harm.

Relying on Uma Shankar Gopalika v. State of Bihar, (2005) 10 SCC 336, the Court reiterated that a mere breach of contract does not constitute cheating unless fraudulent or dishonest intention existed at the inception of the transaction.

The Court also referred to Basudev Marandi v. State of Jharkhand, Cr.M.P. No. 2130 of 2018, and Mohammed Ibrahim v. State of Bihar for the ingredients of Sections 406 and 420 IPC.

The petitioners additionally relied on Delhi Race Club (1940) Ltd. v. State of Uttar Pradesh, (2024) 10 SCC 690, concerning the alleged incompatibility of Sections 406 and 420 IPC for the same occurrence.

The Court found that the principal entrustment, if any, was made to Flipkart, the company, in the course of the commercial arrangement with the complainant’s company; there was no allegation that either petitioner participated in creating that arrangement or personally received the complainant’s property.

The allegations also did not assert that the petitioners made any false representation, concealed any fact, or dishonestly induced the complainant to deliver property to them. Accordingly, the essential elements of deception and inducement required for Section 420 IPC were absent.

Similarly, there was no allegation of entrustment of property to the individual petitioners or of their dishonest misappropriation or conversion of entrusted property, defeating the charge under Section 406 IPC.

On this basis, the alleged acts of visiting the complainant’s office, discussing proof of delivery, and behaving improperly could not sustain the offences for which cognizance had been taken.

Since neither Section 406 nor Section 420 IPC was made out even on the prosecution’s allegations, continuation of the proceeding would constitute an abuse of process.

It held that the allegations did not establish either entrustment and dishonest misappropriation under Section 406 IPC or deception and dishonest inducement under Section 420 IPC.

The Court therefore quashed and set aside the entire criminal proceeding, Doranda P.S. Case No. 408 of 2019, and the order dated 14 October 2020 taking cognizance against both petitioners.

Both criminal miscellaneous petitions were accordingly allowed.