Gujarat High Court
Dharmishthaben Hareshbhai Pandya vs State Of Gujarat on 8 January, 2025
NEUTRAL CITATION
R/CR.MA/9164/2017 JUDGMENT DATED: 08/01/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC. APPLICATION NO. 9164 of 2017
(FOR QUASHING & SET ASIDE FIR/ORDER)
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE DIVYESH A. JOSHI : Sd/-
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Approved for Reporting Yes No
- √
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DHARMISHTHABEN HARESHBHAI PANDYA
Versus
STATE OF GUJARAT & ANR.
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Appearance:
MR MAULIN G PANDYA(3999) for the Applicant(s) No. 1
MR TUSHAR M GOKANI(5472) for the Applicant(s) No. 1
MR RAVI MANDALIYA for MR PRATIK B BAROT(3711) for the
Respondent(s) No. 2
MR SOAHAM JOSHI APP for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE DIVYESH A. JOSHI
Date : 08/01/2025
ORAL JUDGMENT
1. By filing instant application under section 482 of the Code of Criminal Procedure, 1973 (hereinafter referred to as "CrPC" for short), the applicant - original accused no.2 seeks quashment of the impugned FIR being C.R. No.I-21/2017 registered with Rajkot Taluka Police Station, Rajkot for the offences punishable under Sections 406, 420, 507 and 114 of the Indian Penal Code, 1860 (hereinafter referred to as "IPC" for short).
2. The allegations in the impugned FIR in nutshell are as under, Page 1 of 25 Uploaded by PATIL GAUTAMBHAI GOPALBHAI(HC00190) on Mon Jan 13 2025 Downloaded on : Mon Jan 13 21:26:06 IST 2025 NEUTRAL CITATION R/CR.MA/9164/2017 JUDGMENT DATED: 08/01/2025 undefined The accused have, in connivance with each other, have purchased tar weighing 3,50,684 Kgs. worth of Rs.80,48,201/- from the Company of the respondent no.2 herein and out of which, Rs.25,00,000/- was paid to him by depositing it in the account and, thereafter, the assurance was given to make the payment of remaining amount of Rs.55,48,201/-, however, the said amount was not paid and on the contrary, threats were administered and thereby the accused have committed alleged offences.
3. Heard learned advocate Mr. Maulin Pandya for the applicant, learned APP Mr. Soaham Joshi for the respondent - State and learned advocate, Mr. Ravi Mandaliya for learned advocate, Mr. Pratik Barot for the respondent no.2.
4. Learned advocate, Mr. Pandya submitted that bare perusal of the allegations leveled in the impugned FIR clearly goes on to show that entire allegations and accusation are leveled against the original accused no.1, who is husband of the present applicant but except that, no any other transaction took place between the complainant and the present applicant. Learned advocate has referred to the allegations leveled in the impugned FIR, more particularly, at the bottom of the FIR and submitted that the respondent no.2 herein has made bald assertion that the applicant is one of the partners of the partnership firm and since very beginning, she is aware about the said Page 2 of 25 Uploaded by PATIL GAUTAMBHAI GOPALBHAI(HC00190) on Mon Jan 13 2025 Downloaded on : Mon Jan 13 21:26:06 IST 2025 NEUTRAL CITATION R/CR.MA/9164/2017 JUDGMENT DATED: 08/01/2025 undefined business transaction between the parties and except that, no any specific instance has been mentioned in entire body of the FIR. He further submitted that if the recital of the FIR are to be seen, in that event, it would be found out that there was simple business transaction took place between two traders and due to non-payment of the outstanding amount, the impugned FIR has been lodged. He, however, submitted that by filing impugned FIR, civil dispute has been converted into criminal one. He further submitted that bare perusal of the allegations clearly goes on to show that basic, essential and requisite ingredients to constitute the charge under Sections 405 of the IPC are missing and vague and general allegations arel eveled in the impugned FIR. He further submitted that in fact, the applicant is not directly or indirectly connected with the commission of crime and despite that, he is wrongly arraigned as accused in the aforesaid commission of crime.
5. Learned advocate has placed reliance upon following decisions, (1) the judgment of the Hon'ble Supreme Court in case of Delhi Race Club (1940) Ltd. & Ors. Vs. State of Uttar Pradesh & Anr.,, reported in (2024) 10 SCC 690;
(2) the judgment of the Hon'ble Supreme Court in case of Sunil Bharti Mittal Vs. CBI, reported in (2015) 4 SCC 609;
Page 3 of 25 Uploaded by PATIL GAUTAMBHAI GOPALBHAI(HC00190) on Mon Jan 13 2025 Downloaded on : Mon Jan 13 21:26:06 IST 2025NEUTRAL CITATION R/CR.MA/9164/2017 JUDGMENT DATED: 08/01/2025 undefined (3) the judgment of the Hon'ble Supreme Court in case of Hotline Teletubes and Components Ltd. Vs. State of Bihar, reported in (2005) 10 SCC 261;
(4) the judgment of this Hon'ble Court in case of Jayrajsinh Madhubha Gadhvi Vs. State of Gujarat, reported in 2024 (1) GLR 786;
6. Referring to the aforesaid decisions, learned advocate submitted that the case of the applicant is squarely covered by those decisions, therefore, discretion may be exercised in favour of the applicant. At this stage, learned advocate submitted that considering the principle of law laid down by the Hon'ble Apex Court in case of State of Haryana Vs. Bhajan Lal, reported in AIR 1992 SC 604 as well as in case of R.P. Kapur Vs. State of Punjab, reported in AIR 1960 SC 866 :
1960 Cri LJ 1239, the prosecution launched against the applicant is required to be quashed and set aside.
7. Learned APP Mr. Soaham has objected present application with vehemence and submitted that it was a pre-planned conspiracy hatched by the accused in connivance with each other, wherein involvement of the applicant is found out. Learned APP submitted that the accused have committed criminal breach of trust with the respondent no.2 herein by giving false promises of repayment of the amount but they have not cleared the outstanding dues. It is, therefore, urged that the Page 4 of 25 Uploaded by PATIL GAUTAMBHAI GOPALBHAI(HC00190) on Mon Jan 13 2025 Downloaded on : Mon Jan 13 21:26:06 IST 2025 NEUTRAL CITATION R/CR.MA/9164/2017 JUDGMENT DATED: 08/01/2025 undefined present application may be rejected.
8. Learned advocate, Mr. Mandaliya appearing for the respondent no.2 has also opposed the present application and submitted that in the business transaction, the applicant being a partner of the partnership firm has played equal role and right from the beginning, she was aware about the transaction took place between the parties, therefore, she is arraigned as accused in the aforesaid offence and at the time of registration of the impugned FIR, specific allegations are leveled against her, which constitute the commission of crime and thus, basic, essential and requisite ingredients of the alleged offences are satisfied. It is, therefore, urged that no discretion may be exercised in favour of the applicant and the present application may be rejected.
9. I have given my thoughtful consideration to the submissions advanced by the learned advocates for the respective parties. After hearing the learned advocates for the respective parties and perusing the contents of the FIR, this Court is of the considered opinion that the complainant has tried to misuse the machinery of criminal law. For ascertaining whether any offence as alleged in the FIR is established or not, this Court has very minutely gone through the allegations and the documents as pointed out by the respective parties.
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10. Before evaluating the contentions advanced on behalf of the parties, it will be useful to briefly notice the scope and ambit of the inherent powers of the High Court under Section 482 of the IPC. The section itself envisages three circumstances, under which, the inherent jurisdiction may be exercised, namely, (i) to give effect to an order under the Code; (ii) to prevent an abuse of the process of court; and to otherwise secure the ends of justice. Nevertheless, it is neither possible nor discernible to lay down any inflexible rule which govern the exercise of inherent jurisdiction of the court. Undoubtedly, the power possessed by the High Court under the said provision is very wide, but is not unlimited. Therefore, it has to be exercised sparingly, carefully and cautiously, ex debito justitiae to do real and substantial justice for which alone the court exits. It needs little emphasis that the inherent jurisdiction does not confer any arbitrary power on the High Court to act according to whim or caprice. The power exists to prevent abuse of authority and not to produce any justice.
11. In the case of R.P. Kumar (supra), the Supreme Court had summarized some of the categories of cases where the inherent power under Section 482 of the Code could be exercised by the High Court to quash criminal proceedings against the accused. These are; (i) where it manifestly appear that there is a legal bar against the institution or Page 6 of 25 Uploaded by PATIL GAUTAMBHAI GOPALBHAI(HC00190) on Mon Jan 13 2025 Downloaded on : Mon Jan 13 21:26:06 IST 2025 NEUTRAL CITATION R/CR.MA/9164/2017 JUDGMENT DATED: 08/01/2025 undefined continuance of the proceedings e.g. want of sanction; (ii) where allegations in the first information report or complaint taken at its face value and accepted in their entirety do not constitute the offence alleged; (iii) where the allegations constitute an offence, but there is no legal evidence adduced or the evidence adduced clearly or manifestly fails to prove the charge.
12. In the case of G. Sagar vs. State of U.P., reported in (2000) 2 SCC 636, the Supreme Court had opined as follows;
"Jurisdiction under Section 482 of the Code has to be exercised with a great care. In exercise of its jurisdiction High Court is not to examine the matter superficially. It is to be seen if a matter, which is essentially of civil nature, has been given a cloak of criminal offence. Criminal proceedings are not a short cut of other remedies available in law. Before issuing process a criminal court has to exercise a great deal of caution. For the accused it is a serious matter. This Court has laid certain principles on the basis of which High Court is to exercise its jurisdiction under Section 482 of the Code, Jurisdiction under this Section has to be exercised to prevent abuse of the process of any court or otherwise to secure the ends of justice."
13. A bare perusal of the contents of the FIR, it is found out that there was transaction between the Page 7 of 25 Uploaded by PATIL GAUTAMBHAI GOPALBHAI(HC00190) on Mon Jan 13 2025 Downloaded on : Mon Jan 13 21:26:06 IST 2025 NEUTRAL CITATION R/CR.MA/9164/2017 JUDGMENT DATED: 08/01/2025 undefined respondent no.2 herein and the original accused no.1, who is husband of the applicant to the tune of Rs.80,48,201/-, out of which admittedly as per the say of the respondent no.2 himself, Rs.25,00,000/- have already been paid by the accused no.1 through RTGS and the dispute is with regard to remaining amount of Rs.55,48,201/- and as the said amount was not paid by the accused no.1, the impugned FIR has been lodged against the accused no.1 and his wife i.e. the applicant herein, who is partner of the partnership firm. However it is found out from bare perusal of the contents of the FIR that except in last paragraph of the impugned FIR, not a single allegation is leveled against the applicant herein nor any instance is mentioned in the entire body of the FIR. Thus from this fact itself, it is clear that the basic, essential and requisite ingredients for the alleged offences are missing.
14. The offences of criminal breach of trust (Section 406 IPC) and cheating (Section 420 IPC) have specific ingredients. In order to constitute a criminal breach of trust (Section 406 IPC);
1) There must be entrustment with person for property or dominion over the property, and
2) The person entrusted :
a) dishonestly misappropriated or converted property to his own use, or
b) dishonestly used or disposed of the property or willfully suffers any other Page 8 of 25 Uploaded by PATIL GAUTAMBHAI GOPALBHAI(HC00190) on Mon Jan 13 2025 Downloaded on : Mon Jan 13 21:26:06 IST 2025 NEUTRAL CITATION R/CR.MA/9164/2017 JUDGMENT DATED: 08/01/2025 undefined person so to do in violation
i) any direction of law prescribing the method in which the trust is discharged and
ii) of legal contract touching the discharge of trust (see: S.W.P. Palanitkar v.
State of Bihar, (2002)1 SCC 241) : (AIR 2001 SC 2960).
15. Similarly, in respect of an offence under Section 420 IPC, the essential ingredients are :
1) deception of any person, either by making a false or misleading representation or by other action or by omission;
2) fraudulently or dishonestly inducing any person to deliver any property, or
3) the consent that any persons shall retain any property and finally intentionally inducing that person to do or omit to do anything which he would not do or omit (see:
Harmanpeet Singh Ahluwalia v. State of Punjab, (2009)7 SCC 712 : (2009) Cr.L.J. 3462 (SC))
16. Further, in both sections, mens rea i.e. intention to defraud or the dishonest intention must be present from the very beginning or inception, without which, either of these sections cannot be invoked.
17. In my view, the plain reading of the contents of the impugned FIR fails to spell out any of the aforesaid ingredients noted above. I may only say, Page 9 of 25 Uploaded by PATIL GAUTAMBHAI GOPALBHAI(HC00190) on Mon Jan 13 2025 Downloaded on : Mon Jan 13 21:26:06 IST 2025 NEUTRAL CITATION R/CR.MA/9164/2017 JUDGMENT DATED: 08/01/2025 undefined with a view to clear a serious misconception of law in the mind of the police as well as the courts below, that if it is a case of the complainant that offence of criminal breach of trust as defined under Section 405 of IPC, punishable under Section 406 of IPC, is committed by the accused, in that event, it could not be said that the accused has also committed the offence of cheating as defined and explained in Section 415 of the IPC, punishable under Section 420 of the IPC.
18. Every act of breach of trust may not be resulted in a penal offence of criminal breach of trust unless there is evidence of manipulating act of fraudulent misappropriation. An act of breach of trust involves a civil wrong in respect of which the person may seek his remedy for damages in civil courts but, any breach of trust with a mens rea, gives rise to a criminal prosecution as well. It has been held in Hart Prasad Chamaria Vs. B.K. Surekha & Ors., reported in (1973) 2 SCC 823 as under:
We have heard Mr. Maheshwari on behalf of the appellant and are of the opinion that no case has been made out against the respondents under Section 420 Indian Penal Code. For the purpose of the present appeal, we would assume that the various allegations of fact which have been made in the complaint by the appellant are correct.Page 10 of 25 Uploaded by PATIL GAUTAMBHAI GOPALBHAI(HC00190) on Mon Jan 13 2025 Downloaded on : Mon Jan 13 21:26:06 IST 2025
NEUTRAL CITATION R/CR.MA/9164/2017 JUDGMENT DATED: 08/01/2025 undefined Even after making that allowance, we find that the complaint does riot disclose the commission of any offence on the part of the respondents under Section 420 Indian Penal Code. There is nothing in the complaint to show that the respondents had dishonest or fraudulent intention at the time the appellant parted with Rs. 35.000/- There is also nothing to indicate that the respondents induced the appellant to pay them Rs. 35.000/- by deceiving him. It is further not the case of the appellant that a representation was made, the respondents knew the same to be false. The fact that the respondents subsequently did not abide by their commitment that they would show the appellant to be the proprietor of Drang Transport Corporation and would also render accounts to him in the month of December might create civil liability on the respondents for the offence of cheating.
19. To put it in other words, the case of cheating and dishonest intention starts with the very inception of the transaction. But in the case of criminal breach of trust, a person who comes into possession of the movable property and receives it legally, but illegally retains it or converts it to his/her own use against the terms of the contract, then the question is as to whether the retention is with dishonest intention or not, whether the retention involves criminal breach of Page 11 of 25 Uploaded by PATIL GAUTAMBHAI GOPALBHAI(HC00190) on Mon Jan 13 2025 Downloaded on : Mon Jan 13 21:26:06 IST 2025 NEUTRAL CITATION R/CR.MA/9164/2017 JUDGMENT DATED: 08/01/2025 undefined trust or only a civil liability would depend upon the facts of each case.
20. At this juncture, I may quote with profit the observations made by the Hon'ble Supreme Court in case of Delhi Race Club (1940) Ltd. (supra), upon which reliance has been placed by learned advocate for the applicant, wherein the Hon'ble Supreme Court has the difference between criminal breach and trust and cheating as also aspect of civil dispute, which was considered in criminal colour. Relevant observations made by the Hon'ble Supreme Court in Paragraph Nos.24 to 39 as under,
24. This Court in its decision in S.W. Palanitkar & Ors. v. State of Bihar & Anr. reported in (2002) 1 SCC 241 expounded the difference in the ingredients required for constituting an of offence of criminal breach of trust (Section 406 IPC) viz-a-viz the offence of cheating (Section 420). The relevant observations read as under: -
"9. The ingredients in order to constitute a criminal breach of trust are: (i) entrusting a person with property or with any dominion over property, (ii) that person entrusted (a) dishonestly misappropriating or converting that property to his own use; or (b) dishonestly using or disposing of that property or wilfully suffering any other person so to do in violation (i) of any direction of law prescribing the mode in which such trust is to be discharged, (ii) of Page 12 of 25 Uploaded by PATIL GAUTAMBHAI GOPALBHAI(HC00190) on Mon Jan 13 2025 Downloaded on : Mon Jan 13 21:26:06 IST 2025 NEUTRAL CITATION R/CR.MA/9164/2017 JUDGMENT DATED: 08/01/2025 undefined any legal contract made, touching the discharge of such trust.
10. The ingredients of an offence of cheating are: (i) there should be fraudulent or dishonest inducement of a person by deceiving him, (ii)(a) the person so deceived should be induced to deliver any property to any person, or to consent that any person shall retain any property; or (b) the person so deceived should be intentionally induced to do or omit to do anything which he would not do or omit if he were not so deceived; and
(iii) in cases covered by (ii)(b), the act of omission should be one which causes or is likely to cause damage or harm to the person induced in body, mind, reputation or property. "
25. What can be discerned from the above is that the offences of criminal breach of trust (Section 406 IPC) and cheating (Section 420 IPC) have specific ingredients.
In order to constitute a criminal breach of trust (Section 406 IPC): -
1) There must be entrustment with person for property or dominion over the property, and
2) The person entrusted: -
a) dishonestly misappropriated or converted property to his own use, or
b) ishonestly used or disposed of the Page 13 of 25 Uploaded by PATIL GAUTAMBHAI GOPALBHAI(HC00190) on Mon Jan 13 2025 Downloaded on : Mon Jan 13 21:26:06 IST 2025 NEUTRAL CITATION R/CR.MA/9164/2017 JUDGMENT DATED: 08/01/2025 undefined property or willfully suffers any other person so to do in violation of:
i. any direction of law prescribing the method in which the trust is discharged; or ii. legal contract touching the discharge of trust (see: S.W.P. Palanitkar (supra).
Similarly, in respect of an offence under Section 420 IPC, the essential ingredients are: -
1) deception of any person, either by making a false or misleading representation or by other action or by omission;
2) fraudulently or dishonestly inducing any person to deliver any property, or
3) the consent that any persons shall retain any property and finally intentionally inducing that person to do or omit to do anything which he would not do or omit (see: Harmanpreet Singh Ahluwalia v. State of Punjab, (2009) 7 SCC 712 : (2009) Cr.L.J. 3462 (SC)
26. Further, in both the aforesaid sections, mens rea i.e. intention to defraud or the dishonest intention must be present, and in the case of cheating it must be there from the very beginning or inception.
27. In our view, the plain reading of the complaint fails to spell out any of the Page 14 of 25 Uploaded by PATIL GAUTAMBHAI GOPALBHAI(HC00190) on Mon Jan 13 2025 Downloaded on : Mon Jan 13 21:26:06 IST 2025 NEUTRAL CITATION R/CR.MA/9164/2017 JUDGMENT DATED: 08/01/2025 undefined aforesaid ingredients noted above. We may only say, with a view to clear a serious misconception of law in the mind of the police as well as the courts below, that if it is a case of the complainant that offence of criminal breach of trust as defined under Section 405 of IPC, punishable under Section 406 of IPC, is committed by the accused, then in the same breath it cannot be said that the accused has also committed the offence of cheating as defined and explained in Section 415 of the IPC, punishable under Section 420 of the IPC.
28. Every act of breach of trust may not result in a penal offence of criminal breach of trust unless there is evidence of manipulating act of fraudulent misappropriation. An act of breach of trust involves a civil wrong in respect of which the person may seek his remedy for damages in civil courts but, any breach of trust with a mens rea, gives rise to a criminal prosecution as well. It has been held in Hari Prasad Chamaria v. Bishun Kumar Surekha & Ors., reported in (1973) 2 SCC 823 as under:
"4. We have heard Mr. Maheshwari on behalf of the appellant and are of the opinion that no case has been made out against the respondents under Section 420 Penal Code, 1860. For the purpose of the present appeal, we would assume that the Page 15 of 25 Uploaded by PATIL GAUTAMBHAI GOPALBHAI(HC00190) on Mon Jan 13 2025 Downloaded on : Mon Jan 13 21:26:06 IST 2025 NEUTRAL CITATION R/CR.MA/9164/2017 JUDGMENT DATED: 08/01/2025 undefined various allegations of fact which have been made in the complaint by the appellant are correct. Even after making that allowance, we find that the complaint does not disclose the commission of any offence on the part of the respondents under Section 420 Penal Code, 1860. There is nothing in the complaint to show that the respondents had dishonest or fraudulent intention at the time the appellant parted with Rs. 35.000/- There is also nothing to indicate that the respondents induced the appellant to pay them Rs. 35,000/- by deceiving him. It is further not the case of the appellant that a representation was made, the respondents knew the same to be false. The fact that the respondents subsequently did not abide by their commitment that they would show the appellant to be the proprietor of Drang Transport Corporation and would also render accounts to him in the month of December might create civil liability on the respondents for the offence of cheating."
29. To put it in other words, the case of cheating and dishonest intention starts with the very inception of the transaction. But in the case of criminal breach of trust, a Page 16 of 25 Uploaded by PATIL GAUTAMBHAI GOPALBHAI(HC00190) on Mon Jan 13 2025 Downloaded on : Mon Jan 13 21:26:06 IST 2025 NEUTRAL CITATION R/CR.MA/9164/2017 JUDGMENT DATED: 08/01/2025 undefined person who comes into possession of the movable property and receives it legally, but illegally retains it or converts it to his own use against the terms of the contract, then the question is, in a case like this, whether the retention is with dishonest intention or not, whether the retention involves criminal breach of trust or only a civil liability would depend upon the facts of each case.
30. 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. Whereas, for the criminal breach of trust, the property must have been entrusted to the accused or he must have dominion over it. The property in respect of which the offence of breach of trust has been committed must be either the property of some person other than the Page 17 of 25 Uploaded by PATIL GAUTAMBHAI GOPALBHAI(HC00190) on Mon Jan 13 2025 Downloaded on : Mon Jan 13 21:26:06 IST 2025 NEUTRAL CITATION R/CR.MA/9164/2017 JUDGMENT DATED: 08/01/2025 undefined accused or the beneficial interest in or ownership of it must be of some other person. The accused must hold that property on trust of such other person. Although the offence, i.e. the offence of breach of trust and cheating involve dishonest intention, yet they are mutually exclusive and different in basic concept. 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 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.
31. At the most, the court of the Additional Chief Judicial Magistrate could have issued process for the offence punishable under Section 420 of the IPC i.e. cheating but in any circumstances no case of criminal breach of trust is made out. The reason being that indisputably there is no entrustment of any property in the case at hand. It is not even the case of the complainant that any property Page 18 of 25 Uploaded by PATIL GAUTAMBHAI GOPALBHAI(HC00190) on Mon Jan 13 2025 Downloaded on : Mon Jan 13 21:26:06 IST 2025 NEUTRAL CITATION R/CR.MA/9164/2017 JUDGMENT DATED: 08/01/2025 undefined was lawfully entrusted to the appellants and that the same has been dishonestly misappropriated. The case of the complainant is plain and simple. He says that the price of the goods sold by him has not been paid. Once there is a sale, Section 406 of the IPC goes out of picture. According to the complainant, the invoices raised by him were not cleared. No case worth the name of cheating is also made out.
32. Even if the Magistrate would have issued process for the offence punishable under Section 420 of the IPC, i.e., cheating the same would have been liable to be quashed and set aside, as none of the ingredients to constitute the offence of cheating are disclosed from the materials on record.
33. It has been held in State of Gujarat v.
Jaswantlal Nathalal reported in (1968) 2 SCR 408, "The term "entrusted" found in Section 405 IPC governs not only the words "with the property" immediately following it but also the words "or with any dominion over the property" occurring thereafter-see Velji Raghvaji Patel v. State of Maharashtra [(1965) 2 SCR 429]. Before there can be any entrustment there must be a trust meaning thereby an obligation annexed to the ownership of property and a confidence reposed in and accepted by the owner or declared and accepted by him for the benefit Page 19 of 25 Uploaded by PATIL GAUTAMBHAI GOPALBHAI(HC00190) on Mon Jan 13 2025 Downloaded on : Mon Jan 13 21:26:06 IST 2025 NEUTRAL CITATION R/CR.MA/9164/2017 JUDGMENT DATED: 08/01/2025 undefined of another or of another and the owner. But that does not mean that such an entrustment need conform to all the technicalities of the law of trust - see Jaswantrai Manilal Akhaney v. State of Bombay [1956 SCR 483]. The expression "entrustment" carries with it the implication that the person handing over any property or on whose behalf that property is handed over to another, continues to be its owner. Further the person handing over the property must have confidence in the person taking the property so as to create a fiduciary relationship between them. A mere transaction of sale cannot amount to an "entrustment"".
34. Similarly, in Central Bureau of Investigation, SPE, SIU(X), New Delhi v. Duncans Agro Industries Ltd., Calcutta reported in (1996) 5 SCC 591, this Court held that the expression "entrusted with property"
used in Section 405 of the IPC connotes that the property in respect of which criminal breach of trust can be committed must necessarily be the property of some person other than the accused or that the beneficial interest in or ownership thereof must be in the other person and the offender must hold such property in trust for such other person or for his benefit. The relevant observations read as under: -
"27. In the instant case, a serious dispute Page 20 of 25 Uploaded by PATIL GAUTAMBHAI GOPALBHAI(HC00190) on Mon Jan 13 2025 Downloaded on : Mon Jan 13 21:26:06 IST 2025 NEUTRAL CITATION R/CR.MA/9164/2017 JUDGMENT DATED: 08/01/2025 undefined has been raised by the learned counsel appearing for the respective parties as to whether on the face of the allegations, an offence of criminal breach of trust is constituted or not. In our view, the expression "entrusted with property" or "with any dominion over property" has been used in a wide sense in Section 405 IPC. Such expression includes all cases in which goods are entrusted, that is, voluntarily handed over for a specific purpose and dishonestly disposed of in violation of law or in violation of contract. The expression entrusted appearing in Section 405 IPC is not necessarily a term of law. It has wide and different implications in different contexts. It is, however, necessary that the ownership or beneficial interest in the ownership of the property entrusted in respect of which offence is alleged to have been committed must be in some person other than the accused and the latter must hold it on account of some person or in some way for his benefit. The expression tuts in Section 405 IPC is a comprehensive expression and has been used to denote various kinds of relationships like the relationship of trustee and beneficiary, bailor and bailee, master and servant, pledger and Page 21 of 25 Uploaded by PATIL GAUTAMBHAI GOPALBHAI(HC00190) on Mon Jan 13 2025 Downloaded on : Mon Jan 13 21:26:06 IST 2025 NEUTRAL CITATION R/CR.MA/9164/2017 JUDGMENT DATED: 08/01/2025 undefined pledgee. When some goods are hypothecated by a person to another person, the ownership of the goods still remains with the person who has hypothecated such goods. The property in respect of which criminal breach of trust can be committed must necessarily be the property of some person other than the accused or the beneficial interest in or ownership of it must be in the other person and the offender must hold such property in trust for such other person or for his benefit. In a case of pledge, the pledged article belongs to some other person but the same is kept in trust by the pledgee. [...]" (Emphasis supplied)
35. The aforesaid exposition of law makes it clear that there should be some entrustment of property to the accused wherein the ownership is not transferred to the accused. In case of sale of movable property, although the payment may be deferred yet the property in the goods passes on delivery as per Sections 20 and 24 respectively of the Sale of Goods Act, 1930.
"20. Specific goods in a deliverable state.-
Where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the Page 22 of 25 Uploaded by PATIL GAUTAMBHAI GOPALBHAI(HC00190) on Mon Jan 13 2025 Downloaded on : Mon Jan 13 21:26:06 IST 2025 NEUTRAL CITATION R/CR.MA/9164/2017 JUDGMENT DATED: 08/01/2025 undefined contract is made and it is immaterial whether the time of payment of the price or the time of delivery of goods, or both, is postponed.
xxx xxx xxx
24. Goods sent on approval or "on sale or return". - When goods are delivered to the buyer on approval or "on sale or return" or other similar terms, the property therein passes to the buyer -
(a) when he signifies his approval or acceptance to the seller or does any other act adopting the transaction;
(b) if he does not signify his approval or acceptance to the seller but retains the goods without giving notice of rejection, then, if a time has been fixed for the return of the goods on the expiration of such time, and, if no time has been fixed, on the expiration of a reasonable time."
36. From the aforesaid, there is no manner of any doubt whatsoever that in case of sale of goods, the property passes to the purchaser from the seller when the goods are delivered. Once the property in the goods passes to the purchaser, it cannot be said that the purchaser was entrusted with the property of the seller. Without entrustment of property, there cannot be any criminal breach of trust. Thus, prosecution of cases on charge of Page 23 of 25 Uploaded by PATIL GAUTAMBHAI GOPALBHAI(HC00190) on Mon Jan 13 2025 Downloaded on : Mon Jan 13 21:26:06 IST 2025 NEUTRAL CITATION R/CR.MA/9164/2017 JUDGMENT DATED: 08/01/2025 undefined criminal breach of trust, for failure to pay the consideration amount in case of sale of goods is flawed to the core. There can be civil remedy for the non-payment of the consideration amount, but no criminal case will be maintainable for it. [See : Lalit Chaturvedi and Others v. State of Uttar Pradesh and Another : 2024 SCC OnLine SC 171 & Mideast Integrated Steels Ltd. (MESCO Steel Ltd.) and Others v. State of Jharkhand and Another : 2023 SCC OnLine Jhar 301]
37. The case at hand falls in category No. 1 as laid in Smt. Nagawwa (supra) referred to in para 7 of this judgment.
38. If it is the case of the complainant that a particular amount is due and payable to him then he should have filed a civil suit for recovery of the amount against the appellants herein. But he could not have gone to the court of Additional Chief Judicial Magistrate by filing a complaint of cheating and criminal breach of trust.
39. It appears that till this date, the complainant has not filed any civil suit for recovery of the amount which according to him is due and payable to him by the appellants. He seems to have prima facie lost the period of limitation for filing such a civil suit."
21. Thus in view of the above facts coupled with the broad guidelines issued by the Hon'ble Supreme Court in the aforesaid decision, I am of the Page 24 of 25 Uploaded by PATIL GAUTAMBHAI GOPALBHAI(HC00190) on Mon Jan 13 2025 Downloaded on : Mon Jan 13 21:26:06 IST 2025 NEUTRAL CITATION R/CR.MA/9164/2017 JUDGMENT DATED: 08/01/2025 undefined opinion that the chances of an ultimate conviction of the applicant on the basis of the facts of the present case are bleak and therefore continuation of criminal prosecution against the applicant is nothing but sheer misuse of process of the Court. Therefore, the present application deserves to be allowed.
22. In the result, the application succeeds and is hereby allowed. Accordingly, the impugned First Information Report being C.R. No.I-21/2017 registered with Rajkot Taluka Police Station, Rajkot and all other consequential proceedings arising out of said FIR are hereby quashed and set aside qua the applicant. Rule is made absolute. Direct service is permitted.
Sd/-
(DIVYESH A. JOSHI, J.) Gautam Page 25 of 25 Uploaded by PATIL GAUTAMBHAI GOPALBHAI(HC00190) on Mon Jan 13 2025 Downloaded on : Mon Jan 13 21:26:06 IST 2025