Karnataka High Court
Mr. Prashant Khare vs The State Of Karnataka By on 13 June, 2025
Author: M.Nagaprasanna
Bench: M.Nagaprasanna
Reserved on : 03.06.2025
Pronounced on : 13.06.2025
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 13TH DAY OF JUNE, 2025
BEFORE
THE HON'BLE MR. JUSTICE M. NAGAPRASANNA
CRIMINAL PETITION No.7326 OF 2023
BETWEEN:
1. MR. PRASHANT KHARE
S/O MR. M.P.KHARE
AGED ABOUT 58 YEARS
OCC. REGIONAL VICE PRESIDENT OF
M/S. SHAPOORJI PALLONJI AND
COMPANY PVT. LTD.,
O/AT NO.24, SURYA CHAMBERS
7TH FLOOR, HAL AIRPORT ROAD
MURUGESH PALYA, BENGALURU - 560 017.
2. MR. KRISHNAMACHARI BALAJI
S/O MR. V.KRISHNAMACHARIYAR
AGED ABOUT 47 YEARS
OCC. ADDL. GENERAL MANAGER (COMMERCIAL)
M/S. SHAPOORJI PALLONJI AND
COMPANY PVT. LTD.,
O/AT NO. 24, SURYA CHAMBERS
7TH FLOOR, HAL AIRPORT ROAD
MURUGESH PALYA, BENGALURU - 560 017.
3. MR. SUSANTA KUMAR PANDA
S/O MR. CHINTAMANI PANDA
AGED ABOUT 49 YEARS
OCC. ADDL. GENERAL MANAGER (ACCOUNTS)
M/S. SHAPOORJI PALLONJI AND
COMPANY PVT. LTD.,
O/AT NO. 24, SURYA CHAMBERS
2
7TH FLOOR, HAL AIRPORT ROAD
MURUGESH PALYA, BENGALURU - 560 017.
4. MR. ISRAR AHMED
S/O MR. SYED HABIB
AGED ABOUT 59 YEARS
OCC. ADDL. GENERAL MANAGER (PROJECTS)
M/S. SHAPOORJI PALLONJI AND
COMPANY PVT. LTD.,
O/AT NO. 24, SURYA CHAMBERS
7TH FLOOR, HAL AIRPORT ROAD
MURUGESH PALYA, BENGALURU - 560 017.
5. MR. MADHUSUDHAN RAO
S/O MR. DASSAPPAYA T.,
AGED ABOUT 51 YEARS
OCC. ADDL. GENERAL MANAGER (PROJECTS)
M/S. SHAPOORJI PALLONJI AND
COMPANY PVT. LTD.,
O/AT NO. 24, SURYA CHAMBERS
7TH FLOOR, HAL AIRPORT ROAD
MURUGESH PALYA, BENGALURU - 560 017.
... PETITIONERS
(BY SRI D.R.RAVISHANKAR, SENIOR ADVOCATE FOR
SRI VINAYA H., ADVOCATE)
AND:
1. THE STATE OF KARNATAKA BY
HENNUR P.S.
BANASAWADI SUB-DIVISION
BENGALURU
REPRESENTED BY PUBLIC PROSECUTOR
KARNATAKA HIGH COURT
BE - 560 001.
2. MR. ANISH P. C.,
S/O MR. P.G.CHACKO
AGED ABOUT 39 YEARS
OCC. DIRECTOR OF TRINITY
MEP SERVICES PVT. LTD.,
3
O/AT C1, 34/2, ROYAL SUITS
IV BLOCK, HENNUR CROSS
HBR LAYOUT, KALYAN NAGAR
BENGALURU - 560 043.
... RESPONDENTS
(BY SRI B.N.JAGADEESHA, ADDL. SPP FOR R1;
SRI R.SWAROOP ANAND, ADVOCATE FOR R2)
THIS CRIMINAL PETITION IS FILED UNDER SECTION 482
OF CR.P.C., PRAYING TO QUASH THE ENTIRE INVESTIGATION IN
CR.NO.131/2022 REGISTERED BY HENNUR POLICE, FOR THE
OFFENCE P/U/S 406 AND 420 R/W 34 OF IPC NOW THE CASE IS
PENDING ON THE FILES OF HON'BLE IV ADDL. C.M.M., COURT
BENGALURU AND DISMISS THE COMPLAINT.
THIS CRIMINAL PETITION HAVING BEEN HEARD AND
RESERVED FOR ORDERS ON 03.06.2025, COMING ON FOR
PRONOUNCEMENT THIS DAY, THE COURT MADE THE
FOLLOWING:-
CORAM: THE HON'BLE MR JUSTICE M.NAGAPRASANNA
CAV ORDER
The petitioners/accused Nos. 1 to 5 are before this Court
calling in question registration of a crime in Crime No.131 of
2022 for offences punishable under Sections 406 and 420 r/w.
34 of the IPC and pending before the 4th Additional Chief
Metropolitan Magistrate, Bengaluru.
2. Heard Sri D.R. Ravishankar, learned senior counsel
appearing for petitioners, Sri B.N. Jagadeesha, learned Additional
State Public Prosecutor appearing for respondent No.1 and
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Sri R. Swaroop Anand, learned counsel appearing for respondent
No.2.
3. Facts, in brief, germane are as follows: -
The 2nd respondent is the complainant. A complaint comes
to be registered on 17-05-2022 alleging that, the 2nd respondent
is a sub-contractor and a holder of sub-contract agreement with
M/s Shapoorji Pallonji and Company Private Limited (hereinafter
referred to as 'the Company' for short) for supply, installation
and commissioning for plumbing, electrical and other works to
the Sea Bird Residential Project, a Naval project at Karwar. It is
the case of the complainant that petitioners are the
representatives of the Company and the Company is in the
business of construction infrastructure and real estate. On
07.12.2018, the officials of the Company represented to the 2nd
respondent that the Company has been awarded contract from
Indian Navy to design and construct residential buildings and
township along with related common facilities, trunk
infrastructure and utility through design - Project Seabird at
Naval Base, Karwar (hereinafter referred as 'the project' for
short). The Company on the same day is said to have expressed
its willingness to sub-contract the work to any interested and
5
capable party by way of tender. Based on the contract
specification given by the Indian Navy, the Company through the
petitioners represented that it is sub-contracting the work of
Indian Navy. It is then, the complainant/2nd respondent and the
petitioners enter into a sub-contract. The complainant
participated in the tender and the Company awarded the tender
to the 2nd respondent/complainant for construction.
4. It is the contention in the complaint that through various
work orders the petitioners sub-contracted the work of the said
project to the 2nd respondent. Under the terms of work orders, it
was agreed between the parties that officials of the Company are
liable to pay 95% of the bill amount for the works executed by
the complainant within 30 days from the date on which the
complainant submits the running bill to the Company. The
remaining 5% of the bill amount from each work orders shall be
retained by the Company. The complaint further narrates that
the complainant began to execute the project by purchasing raw
material from third parties for which third parties raised invoices
against the complainant. The complainant then invested huge
sums of money and paid all those bills. The 2nd respondent used
to raise running bills as obtaining in the agreement and part
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payments were being made by the Company. The Company
represented by the petitioners is said to have defaulted in
making further payments and the total amount outstanding to be
paid as on the date of registration of the complaint was
₹3,18,77,169.36. Since bills were not paid and the Company
wanted to escape liability, the complainant registers the
complaint. The registration of the complaint drives these
petitioners to this Court in the subject petition.
5. This Court has stalled further investigation by granting
interim order against these petitioners on the score that offence
of cheating would not get attracted in the case at hand, which is
subsisting even as on date.
6. The learned senior counsel Sri D.R. Ravishankar,
appearing for the petitioners would vehemently contend that the
issue in the lis is with regard to an agreement and breach of an
agreement. The 2nd respondent/complainant registers claim
before the Micro, Small, and Medium Enterprises Council
(hereinafter referred to as 'the MSME Council' for short) and the
matter is said to be pending before the MSME Council. After
having done so, the complainant seeks to set the criminal law
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into motion by registering a complaint on 17-05-2022 for the
aforesaid alleged breach of agreement. The learned senior
counsel would contend that criminal law cannot be set into
motion for the purpose of recovery of money. The remedy
available to the respondent / complainant is not availed of and
therefore, registration of crime cannot but be said to be a mala
fide action on the part of the complainant. He would seek that
the petition be allowed and crime be quashed.
7. Per contra, the learned counsel Sri R. Swaroop Anand,
appearing for the 2nd respondent/complainant would though
accept the fact that the issue arises out of an agreement and its
breach or the payment and breach of its schedule, contends that
the Company has received all the moneys from the builder.
Having received moneys that belong to the complainant, the
Company has not paid it to the complainant. Therefore, it
becomes a case of criminal breach of trust and since the
complainant has been lured in entering into a contract with the
Company after participating in the tender and huge amounts
have not been paid, it would amount to cheating as obtaining
under Section 420 of the IPC. He would seek to place reliance
upon several e-mail communications to contend that the
8
petitioners are now refusing to pay the sum of ₹3,18,77,169.36
and the Company as on date owes ₹4,23,75,518/- inclusive of
interest. The learned counsel would contend that the Company
has received the entire amount from Indian Navy and has not
paid it to the complainant which would amount to both criminal
breach of trust and cheating as the case is sought to be made
out by the complainant. He would seek dismissal of the petition.
8. The learned Additional State Public Prosecutor
Sri B.N. Jagadeesha, representing the State would also toe the
lines of the learned counsel for the 2nd respondent in contending
that the matter is still at the stage of investigation. A perusal of
the complaint would clearly bear the ingredients of offences that
are laid against the petitioners. The learned Additional State
Public Prosecutor would submit that the crime should be
permitted to be investigated into and the petitioners may avail of
any remedy available to them in law in case charge sheet would
be filed against them.
9. I have given my anxious consideration to the
submissions made by the respective learned counsel and have
perused the material on record.
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10. The afore-narrated facts are all a matter of record.
The Company is said to have received a work order from the
hands of Indian Navy for construction of the subject project.
After receipt of the work order from Indian Navy, it is a matter of
record that the petitioners hand out tender notification for
supply, installations, testing and commissioning of MEP package.
The sub-contractor enquiry document is appended to the
statement of objections. The complainant being interested to
secure sub-contract from the hands of the Company, participates
in the sub-contract enquiry proceedings and is awarded sub-
contract for the following project:
"Name of Project: Design & Construction of Residential
Buildings/Towers and Townships along with related
common facilities, Trunk infrastructure and utilities
through Design - Build works Contract (DB-01)" -
Project Seabird, Phase-IIA at Naval Base, Karwar,
Karnataka, India."
The arrangement between the petitioners and the complainant
was that 95% of the amount shall be paid as against running
bills on invoices raised and 5% after completion of the project.
The arrangement goes wrong which puts the complainant in
doldrums as the complainant is said to have procured raw
materials from various third parties by making payment on the
10
strength of the agreement so entered into between the parties.
The schedule of payment or the manner of payment is said to
have been breached by the Company which led the complainant
to incur huge loss. It is also said that the complainant had
approached MSME Council against the petitioners and the
proceedings did not result in any favourable order in favour of
the complainant. It is at that juncture, the complainant registers
the complaint on 17th May, 2022.
11. Since the entire issue has sprung from the complaint, I
deem it appropriate to notice the complaint. It reads as follows:
"TMSPL/Legal/101 17th May 2022
To
The Station House Office
Hennur Police Station
Bangalore
STATEMENT OF CASE IS SUBMITTED TO THE OFFICE OF
HONORABLE HENNUR POLICE INSPECTOR,
BANGALORE
Respected Sir,.
I, Anish PC, Director of Trinity MEP Services Pvt. Ltd.,
humbly submitting our grievous to the following for your kind
perusal, consideration and favorable action in respect of non-
payment of Rupees 4,23,75,517-00 (Four Crore Twenty
Three Lakhs Seventy Five Thousand Five Hundred and
Seventeen Only) by M/s. Shapoorji Pallonji and Company
Pvt. Ltd. For the Mechanical and Electrical works what we
11
have carried out with various work order viz 24836,
4148/007, 4148/010, 4148/25. 4151/029 At Sea Bird Project
Karwar and APGC project at Amaravathi.
We are doing sub contract works to various clients such as
Godrej, L&T, Embassy, Phoenix, Shapoorji & Pallonji
Company Pvt. Ltd. (SPCL) etc.
We are doing some MEP works of Seabird project, Karwar
under SPCL, Soorya Chambers, Murugesh Palya, Old Airport
Road, Bangalore for last 3.5 years. We have the following
work orders from SPCL in respect of Seabird site:-
Sl. Work WO WO Amount Remarks
No Order No. Pertains to
1 24836 Mockup 14,58,623 Work Completed and
in use by client
2 4148/007 Electrical 1,31,55,926 Work Completed for 2
External towers and in use by
client
3 4148/010 Re-Routing 41,30,366 Work Completed
works
4 21873 Kamat Bay 22,49,643 Work Completed and
in use by client
5 4151/033 Engineers 77,54,494 Work Completed and
Building in use by client
6 4148/025 WOMC 7,35,44,866 Out of four tower two
Buildings tower completed
MEP Works balance two tower
partial work
completed
7 4151/029 External 1,02,53,816 Work Completed for 2
Electrical towers and in use by
Works client.
Till October 2020, there were no sufficient civil construction
clearances for continuous work. However, as a good gesture
we continued to work at those locations wherever clearances
were available, along with supply of required materials.
As per the work order mentioned in the above table, the
scope of work includes Plumbing, Electrical and HVAC works
for Tower No. 22, 23, 27 and 28 and other site office. There
was no much progress in civil works till October 2020 and
SPCL has requested us to complete Tower-22 and Tower-23
MEP works within a span of four to five months. We had
12
agreed to finish the work as soon as possible, based on civil
construction clearances.
The Work Order issued to us with the payment terms of
within 30 days payment immediately after delivery of
materials at site later our site meeting on 12th October 2020,
SPCL Bangalore Regional Head, Mr. Prashanth Khare,
assured us that materials supply amount would be paid
within Ten days (Copy of MOM attached herewith) to
meet the target and to recover the delay in the project. In
line with that they have done some certification of bills, and
we had supplied further high value items. These certifications
were done to gain our confidence. As we started supplying
the high value items, SPCL started refusing to sign our
bills from the month of December 2020, by citing the
reasons of:-
(a) Non-availability of funds.
(b) SPCL is in loss due to under quoting for the
works with Sea Bird.
(c) Expected penalty by Indian Navy since there
was huge delays in executing the township works
(SPCL had executed only two high rise buildings out
of 40 high-rise buildings and external developments
works).
(d) The signed copy of the work order has not
submitted to SPCL. But recently they sent a letter to
us in which photocopy of a page of the same work
order was enclosed. Meanwhile, we have intimated
SPCL that we are ready to provide a photocopy of
the work order that we have.
The non-certification or non-payment of bills is
intentional and the same is made with malafide
intention to cheat us. From the first day of the contract
they very purpose is to cheat us by getting the work done
from us as per their satisfaction and by inducing using
believing that they honor the contract. A classic example,
the negotiation is done without Performance Bank
Guarantee(PBG) clause for the better rate but later
they Withhold the entire amount of 32 Lakhs without
any acceptance. One point of time they destroyed the
work order itself and delayed our bill certification.
Without Certifying the bills and payment they started
engaged another contractor for work with our
materials. They broke our store and taken the
13
materials whatever they want for their requirement
without pay us.
We have an approved payment schedule, proposed and
approved by SPCL themselves. The copy of the same is
enclosed here with for your kind perusal. But even
materials supply part is not being certified by SPCL
after receipt of materials at site from December 2020.
As per MSME norms, bill amount has to be cleared within
forty-five days. SPCL is delaying the bill certification so as to
avoid any legal implications that may arise at a later stage.
Since we are under MSME registered organization the buyer
is to make payment on or before the date agreed on
between seller and buyer shall not exceed more than 45
days. In this regard the relevant RBI circular,
IECD/5/08.12.01/2000-01 dated October 16, 2000(reiterated
on May 30, 2003, vide circular No.
IECD.No.20/08.12.01/2002-03) available on RBI website.
Countless time We tried contacting them through personal
visit at their Regional office, Site office at Karwar, mail,
telephone etc. But always we get either false commitments
of payment and bill certification. If we wait at their reception
to meeting any of their senior person from morning to
evening no person was there resolve our issue Even Nobody,
ask why did you sit here.
The security at reception always says that Sir is in meeting in
case they came to knew that we were waiting at reception
they were using another lift to escape. If we met them at
parking slot or somewhere they will instruct that go to Site at
Kawar they will settle. when we went to site at karwar they
were ask why did you come as we have no money and our
Region office they will settle you. using this tactic, they were
cheating us last two years.
We would like to bring the following points for your
kind perusal: -
1. Rupees 4,23,75,517-00(Four Crore Twenty-Three
Lakhs Seventy-Five Thousand Five Hundred and
Seventeen Only) the interest calculation done up to
5th April 2022. based on the latest mail forwarded
to SPCL
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2. Due to the non-payment, our vendors are creating
problems in our office.
3. Due to non-payment by SPCL, our credibility in the
market is damaged.
4. We suffered huge losses due to lack of work
clearances till October 2020 (due to idle
manpower).
5. We have to pay to our vendors, who have supplied
materials to SPCL.
In view of the above facts, we request your kind support and
intervention to register the complaint against the below
mention persons and take legal action against them to
release the pending payment
1. Mr Prasanth Khare - Regional Project in charge
Contact No- 9591304444
2. Mr Krishnamachari Balaji Commercial in charge -
Contact No 9538872078
3. Mr Sushant Panda - Accounts in charge - Contact No.
9100993665
4. Mr. Israr Ahmend Project Head- Contact No-
6366018786
5. Mr. Madhu Rao - GM Projects - Contact No
7381020901
Requesting your kind Consideration for the above request
Enclosures
1. Work Order copies
2. Payment terms
3. Pending Bill Copies
Yours faithfully,
Anish PC
Sd/-
Director
Trinity MEP Services Pvt. Ltd.
15
S/o P.G.Chacko
Age - 39
C1. #34/2, Royal Suits
Hennur Cross, Kalyan Nagar
Bangalore - 560 043
9916308800"
(Emphasis added)
The complaint narrates minute details of the transactions
between the petitioners and the complainant and as on the date
of registration of the complaint, an amount of ₹4,23,75,517/-
was to be paid by the Company to the complainant. Due to non-
payment what has happened is what is narrated in the
complaint. The moment complaint is registered, the petitioners
are before this Court.
12. The contention of the learned senior counsel for the
petitioners is that the agreement between the Company and the
complainant has Sub-clause 20.6 in it, which deals with
arbitration. The dispute of any amount between the parties is to
be arbitrated is the agreement. The Sub-clause of settlement of
dispute through arbitration reads as follows:
16
"Sub-Clause 20.6 Delete this Sub-clause entirely and
- Arbitration: replace with following:
"Any dispute in respect of which the
decision(s), if any, of the DAB has not
become final and binding pursuant to
Sub-Clause 20.4 shall be finally
settled by arbitration as set forth
below:
(i) A dispute shall be finally
settled by arbitration in
accordance with the
Arbitration & Conciliation Act,
1996, as amended by the
Arbitration and Conciliation
(Amendment) Act, 2015 or
any statutory amendment
thereof.
(ii) The arbitral tribunal shall
consist of 3 (three)
arbitrators, one each to be
appointed by the Employer
and the Contractor. The third
arbitrator shall be chosen by
the two arbitrators so
appointed by the Parties and
shall act as presiding
arbitrator.
(iii) If one of the Parties fail to
appoint its arbitrator pursuant to
sub-paras (i) and (ii) above,
within 30 days after receipt of the
notice of the appointment of its
arbitrator by the other party,
then the appointing authority
specified in the 'Appendix to
Tender' shall appoint the
arbitrator.
17
(iv) In case of failure of the two
arbitrators, appointed by the
Parties to reach upon a
consensus within a period of 30
days from the appointment of the
arbitrator appointed
subsequently, the presiding
arbitrator shall be appointed by
the appointing authority as
specified in the Appendix to
Tender.
(v) Where the mandate of an
arbitrator terminates, a
substitute arbitrator shall be
appointed according to the rules
that were applicable to the
appointment of the arbitrator
being replaced.
(vi) Arbitration proceedings shall be
held at Delhi or at any other
place agreed between the parties.
(vii) The language of the arbitration
proceedings and that of all
documents and communications
between the parties and the
arbitral tribunal shall be English.
(viii) The arbitral tribunal shall have
full power to open up, review and
revise any decision, opinion,
instruction, determination,
certificate or valuation of the
Engineer and any decision(s) of
the DAB related to the dispute.
(ix) Neither party shall be limited in
the proceedings before such
tribunal to the evidence or
arguments before the Board for
the purpose of obtaining its
decision(s) pursuant to Sub-
Clause 20.4. No decision of the
DAB shall disqualify any DAB
18
member from being called as a
witness and giving evidence
before the arbitrator(s) on any
matter whatsoever relevant to
the dispute.
(x) Arbitration may be commenced
prior to or after completion of the
Works, provided that the
objections of the Employer, the
Engineer, the Contractor and the
Board shall not be altered by
reason of the arbitration being
conducted during the progress of
the Works.
(xi) The cost and expenses of
arbitration proceedings will be
paid as determined by the
arbitral tribunal. However, the
expenses incurred by each party
in connection with the
preparation, presentation, etc., of
its proceedings as also the fees
and expenses paid to the
arbitrator appointed by such
party or on its behalf shall be
borne by each party itself.
(xii) The decision of the arbitral
tribunal shall be made by a
majority of all its members.
(xiii) Recourse against the arbitral
award(s) shall be limited to
jurisdictions of courts in Delhi
only."
(Emphasis added)
Any dispute arising out of the agreement is to be settled in
arbitration proceedings in terms of the afore-quoted Sub-clause.
19
13. The issue now would be, whether further investigation
in the teeth of Sub-clause of arbitration and claim for recovery of
money should be permitted or otherwise. The Apex Court in
plethora of judgments has elucidated the law that criminal law
should not be set into motion and if the criminal law is set into
motion, it cannot be permitted to be continued for the purpose of
recovery of money. There can be no qualm about the principle so
laid down by the Apex Court in plethora of judgments. The case
at hand pertains to offences punishable under Sections 406 and
420 of the IPC. Section 406 of the IPC has its ingredients in
Section 405 of the IPC. Both Sections 406 and 405 of the IPC
read as follows:
"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.
405. Criminal breach of trust.--Whoever, being in
any manner entrusted with property, or with any
dominion over property, dishonestly misappropriates
or converts to his own use that property, or
dishonestly uses or disposes of that property in
violation of any direction of law prescribing the mode
in which such trust is to be discharged, or of any legal
contract, express or implied, which he has made
touching the discharge of such trust, or wilfully suffers
any other person so to do, commits "criminal breach of
trust".
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[Explanation 1.--A person, being an employer of an
establishment whether exempted under Section 17 of
the Employees' Provident Funds and Miscellaneous Provisions
Act, 1952 (19 of 1952), or not] who deducts the employee's
contribution from the wages payable to the employee for
credit to a Provident Fund or Family Pension Fund
established by any law for the time being in force, shall be
deemed to have been entrusted with the amount of the
contribution so deducted by him and if he makes default in
the payment of such contribution to the said fund in violation
of the said law, shall be deemed to have dishonestly used
the amount of the said contribution in violation of a direction
of law as aforesaid.
Explanation 2.--A person, being an employer, who
deducts the employees' contribution from the wages payable
to the employee for credit to the Employees' State Insurance
Fund held and administered by the Employees' State
Insurance Corporation established under the Employees'
State Insurance Act, 1948 (34 of 1948), shall be deemed to
have been entrusted with the amount of the contribution so
deducted by him and if he makes default in the payment of
such contribution to the said Fund in violation of the said Act,
shall be deemed to have dishonestly used the amount of the
said contribution in violation of a direction of law as
aforesaid.
Illustrations
(a) A, being executor to the will of a deceased person,
dishonestly disobeys the law which directs him to divide the
effects according to the will, and appropriates them to his
own use. A has committed criminal breach of trust.
(b) A is a warehouse-keeper. Z, going on a journey,
entrusts his furniture to A, under a contract that it shall be
returned on payment of a stipulated sum for warehouse
room. A dishonestly sells the goods. A has committed
criminal breach of trust.
(c) A, residing in Calcutta, is agent for Z, residing at
Delhi. There is an express or implied contract
between A and Z, that all sums remitted by Z to A shall be
invested by A, according to Z's direction. Z remits a lakh of
rupees to A, with directions to A to invest the same in
Company's paper. A dishonestly disobeys the directions and
21
employs the money in his own business. A has committed
criminal breach of trust.
(d) But if A, in the last illustration, not dishonestly but
in good faith, believing that it will be more for Z's advantage
to hold shares in the Bank of Bengal, disobeys Z's directions,
and buys shares in the Bank of Bengal, for Z, instead of
buying Company's paper, here, though Z should suffer loss,
and should be entitled to bring a civil action against A, on
account of that loss, yet A, not having acted dishonestly, has
not committed criminal breach of trust.
(e) A, a revenue officer, is entrusted with public
money and is either directed by law, or bound by a contract,
express or implied, with the Government, to pay into a
certain treasury all the public money which he
holds. A dishonestly appropriates the money. A has
committed criminal breach of trust.
(f) A, a carrier, is entrusted by Z with property to be
carried by land or by water. A dishonestly misappropriates
the property. A has committed criminal breach of trust."
(Emphasis supplied)
Section 405 of the IPC bears the ingredients of criminal breach of
trust. A person who misappropriates to himself an amount which
is belonging to the victim, who has entrusted to the accused and
on such entrustment, the amount is misappropriated with
dishonest intention, it would become an offence under Section
406 of the IPC. In the case at hand, the entire narration in the
complaint is that the Company has received the entire amount
from the Indian Navy. That amount legally belongs to the
complainant as he is the sub-contractor from the hands of the
22
petitioners. Having received the money that belongs to the
complainant, the petitioners have not parted with the amount.
14. As on today, the amount due is as noted hereinabove.
The breach of trust that prevails in the case at hand is the
amount being with the petitioners and its breach is with regard
to non-payment to the complainant. It prima facie meets the
ingredients of criminal breach of trust as the amount that is
legally payable to the complainant is not paid and it is with the
petitioners. If it was a case that the complainant has set the
criminal law into motion for the purpose of recovery of money on
an agreement between the petitioner and the complainant, it
would have been an altogether a different circumstance. There
is a twist in entrustment in the case at hand. The twist is with
regard to the amount of the complainant being received by the
petitioners and then not parting with it. Therefore, this aspect
would undoubtedly require further investigation in the least.
15. Insofar as offence under Section 420 of the IPC is
concerned, it would on the face of it become untenable as there
is no question of luring the complainant by the petitioners for
entering into an agreement. Tenders were called for,
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complainant participates in the tender, sub-contract agreement
is made and the contract is awarded in favour of the
complainant. Section 420 of the IPC has its ingredients in
Section 415 of the IPC. Section 415 of the IPC reads as follows:
"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.
Illustrations
(a) A, by falsely pretending to be in the Civil Service,
intentionally deceives Z, and thus dishonestly induces Z to
let him have on credit goods for which he does not mean to
pay. A cheats.
(b) A, by putting a counterfeit mark on an article,
intentionally deceives Z into a belief that this article was
made by a certain celebrated manufacturer, and thus
dishonestly induces Z to buy and pay for the
article. A cheats.
(c) A, by exhibiting to Z a false sample of an article,
intentionally deceives Z into believing that the article
corresponds with the sample, and thereby dishonestly
induces Z to buy and pay for the article. A cheats.
(d) A, by tendering in payment for an article a bill on a
house with which A keeps no money, and by which A expects
that the bill will be dishonoured, intentionally deceives Z, and
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thereby dishonestly induces Z to deliver the article, intending
not to pay for it. A cheats.
(e) A, by pledging as diamonds articles which he
knows are not diamonds, intentionally deceives Z, and
thereby dishonestly induces Z to lend money. A cheats.
(f) A intentionally deceives Z into a belief
that A means to repay any money that Z may lend to him
and thereby dishonestly induces Z to lend him money, A not
intending to repay it. A cheats.
(g) A intentionally deceives Z into a belief
that A means to deliver to Z a certain quantity of indigo plant
which he does not intend to deliver, and thereby dishonestly
induces Z to advance money upon the faith of such
delivery, A cheats; but if A, at the time of obtaining the
money, intends to deliver the indigo plant, and afterwards
breaks his contract and does not deliver it, he does not
cheat, but is liable only to a civil action for breach of
contract.
(h) A intentionally deceives Z into a belief that A has
performed A's part of a contract made with Z, which he has
not performed, and thereby dishonestly induces Z to pay
money. A cheats.
(i) A sells and conveys an estate to B. A, knowing that
in consequence of such sale he has no right to the property,
sells or mortgages the same to Z, without disclosing the fact
of the previous sale and conveyance to B, and receives the
purchase or mortgage money from Z. A cheats."
(Emphasis supplied)
Section 415 of the IPC mandates that the accused should lure
the victim for entering into a transaction with dishonest intention
from the inception of the contract. There is no dishonest
intention from the inception in the case at hand. It is an
agreement between the parties. Therefore, it is not a case where
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an offence under Section 420 of the IPC is made out even to its
remotest sense. In that light, the crime so registered for offence
punishable under Section 420 of the IPC is loosely laid against
the petitioners. Therefore, the said registration of crime has to
be obliterated.
16. In the light of the aforesaid facts and the matter being
pending investigation, I deem it necessary to permit
investigation only for the offence under Section 406 of the IPC.
The petition deserves to succeed albeit, in part.
17. For the aforesaid reasons, the following:
ORDER
(i) Criminal Petition is allowed in part.
(ii) Crime registered in Crime No.131 of 2022 stands quashed insofar as it pertains to offence punishable under Section 420 of the IPC.
(iii) Crime registered in Crime No.131 of 2022 stands sustained qua Section 406 of the IPC.
26(iv) The investigation in the case at hand shall continue only in respect of offences punishable under Sections 406 r/w 34 of the IPC.
I.A.No.1/2024 is disposed, as a consequence.
Sd/-
(M.NAGAPRASANNA) JUDGE nvj CT:SS