Gujarat High Court
Amit Ashokbhai Patel vs State Of Gujarat on 20 March, 2026
NEUTRAL CITATION
R/CR.MA/6315/2013 JUDGMENT DATED: 20/03/2026
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION (FOR QUASHING & SET ASIDE
FIR/ORDER) NO. 6315 of 2013
FOR APPROVAL AND SIGNATURE:
HONOURABLE MRS. JUSTICE M. K. THAKKER
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Approved for Reporting Yes No
NO
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AMIT ASHOKBHAI PATEL
Versus
STATE OF GUJARAT & ANR.
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Appearance:
MR BM MANGUKIYA(437) for the Applicant(s) No. 1
MS BELA A PRAJAPATI(1946) for the Applicant(s) No. 1
MR AJIT S NAIR(10802) for the Respondent(s) No. 2
MR RONAK RAVAL, ADDL. PUBLIC PROSECUTOR for the Respondent(s)
No. 1
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CORAM:HONOURABLE MRS. JUSTICE M. K. THAKKER
Date : 20/03/2026
JUDGMENT
1. Learned advocate Mr. B.M. Mangukiya was not present, and as the matter has been pending since 2013, this Court deems it fit to proceed with the matter.
2 The present application is filed for quashing of the FIR being C.R. No.1-576 of 2007 registered with Satellite Police Station, Ahmedabad, for the offences Page 1 of 22 Uploaded by M.M.MIRZA(HC01407) on Thu Apr 02 2026 Downloaded on : Fri Apr 03 22:21:48 IST 2026 NEUTRAL CITATION R/CR.MA/6315/2013 JUDGMENT DATED: 20/03/2026 undefined punishable under Sections 406, 420, 423, and 120-B of the IPC, arraigning three persons as accused, alleging that though the land in dispute was sold to Hetalkumar on 24.11.1997, the same was again sold to the complainant in the year 2005, wherein the present applicant has signed as a witness.
3 Heard the learned advocate Mr. Ajit Nair for the respondent No.2 and the learned APP Mr. Ronak Raval for the respondent-State.
4 Learned advocate Mr. Ajit Nair appearing for the complainant has submitted that the land bearing Survey No.76/1/1 of village Bodakdev, Taluka Daskroi, District Ahmedabad (hereinafter referred to as the "land in question") was originally owned by the persons hereinabove named (hereinafter referred to as the "original owners"). On 24.11.1997, the land in question was purchased by Sureshkumar Chaturbhai Brahmbhatt and others through a registered sale deed (hereinafter referred to as the "purchasers"), and possession thereof was handed over at the time of execution of the said sale deed. Subsequently, the original owners attempted to dispossess the purchasers by filing Civil Suit No.13 of 1998 before the learned Civil Judge, Senior Division, Ahmedabad (Rural) on 03.01.1998. An application for interim injunction filed by the purchasers came to be Page 2 of 22 Uploaded by M.M.MIRZA(HC01407) on Thu Apr 02 2026 Downloaded on : Fri Apr 03 22:21:48 IST 2026 NEUTRAL CITATION R/CR.MA/6315/2013 JUDGMENT DATED: 20/03/2026 undefined allowed on 20.03.1998. Thereafter, upon a compromise arrived at between the parties, the suit came to be withdrawn on 25.01.2001. It is submitted by the learned advocate Mr. Nair that on 17.03.2004, a joint application was preferred before the DILR for distribution of Survey No.76/1, having a total area of 9915 sq. meters, between the purchasers and Jivanji Varsangji. Pursuant thereto, the land came to be divided into Survey Nos.76/1/1 and 76/1/2, and Survey No.76/1/1 admeasuring approximately 4975.5 sq. meters fell to the share of the purchasers. Thereafter, the purchasers executed a sale deed in favour of Vimlaben Sukhdevbhai Gadhvi and Varshaben Sukhdevbhai Gadhvi, whose names came to be mutated in the revenue record. In the meanwhile, the original owners had instituted Civil Suit No.13 of 1998 seeking cancellation of the sale deed dated 25.11.1997, wherein the complainant, being the power of attorney holder of the said purchasers, was impleaded as a party. The said suit ultimately came to be dismissed for default on 02.04.2009.
4.2 It is submitted by the learned advocate Mr. Nair that the original owners executed three sale deeds, including one dated 22.02.2005 in favour of Devrajbhai Patel and others, including the father of Page 3 of 22 Uploaded by M.M.MIRZA(HC01407) on Thu Apr 02 2026 Downloaded on : Fri Apr 03 22:21:48 IST 2026 NEUTRAL CITATION R/CR.MA/6315/2013 JUDGMENT DATED: 20/03/2026 undefined the present applicant. The present applicant is stated to have signed as a witness to the said sale deed and has, therefore, been arraigned as an accused on the allegation that he had knowledge of the prior transactions in favour of Sureshkumar Brahmbhatt and others. It is submitted by the learned advocate Mr. Nair that the revenue records, namely Village Forms Nos.7/12, 6 and 8A, clearly indicate collusion between the original owners and co-accused and establish that the impugned transactions were executed with an intent to grab the land, thereby constituting fraud. It is, therefore, submitted by the learned advocate Mr. Nair that the present applicant, along with other accused, is a conspirator and that the continuation of the proceedings cannot be said to be an abuse of the process of law, and hence, the present application deserves to be dismissed.
5 Learned APP Mr. Raval has supported the submissions advanced by learned advocate Mr. Nair appearing for the complainant.
6 Having considered the submissions made by the learned advocates appearing for the complainant and the State, and upon perusal of the FIR as well as the chargesheet forming part of the additional affidavit Page 4 of 22 Uploaded by M.M.MIRZA(HC01407) on Thu Apr 02 2026 Downloaded on : Fri Apr 03 22:21:48 IST 2026 NEUTRAL CITATION R/CR.MA/6315/2013 JUDGMENT DATED: 20/03/2026 undefined filed by the complainant, the last column of the chargesheet states as under:
"The offence under sections 406, 420, 423, and 120(B) of I.P.C. in such a manner that, the Accused Nos. 1 to 5 mentioned in Column No. 1 had sold their land bearing Survey No. 76/1 paiki situated in the outskirts of Moje Bodakdev, Taluka Daskroi, to Witness No. 4 on 24/11/1997 for Rs. 4,46,(illegible)/- via Sale Deed No. 3594. Despite this, the said accused and the accused mentioned in Column No. 2 hatched a pre-planned criminal conspiracy and abetted each other with the intention of grabbing the said land; wherein Accused Nos. 1 to 5 executed Sale Deed No. 1401 on 22/02/2005 by obtaining the signatures of the accused mentioned in Column No. 2, thereby committed cheating against the Complainant and the witness, and Accused No. 6 signed as a witness in the said second deed, thus committed an offence of cheating and criminal breach of trust."
7 It emerges from the allegations made in the FIR that the original owners had filed Civil Suit No.13 of 1998 against the purchasers, which came to be withdrawn on 25.01.2001 pursuant to a settlement between the parties. Thereafter, another Civil Suit No.34 of 2001 Page 5 of 22 Uploaded by M.M.MIRZA(HC01407) on Thu Apr 02 2026 Downloaded on : Fri Apr 03 22:21:48 IST 2026 NEUTRAL CITATION R/CR.MA/6315/2013 JUDGMENT DATED: 20/03/2026 undefined came to be filed, which was also dismissed for default on 02.04.2009. Despite the aforesaid, the original owners executed three sale deeds in favour of different persons, namely, in favour of Raghunath on 27.02.2004, in favour of Aashish Brahmbhatt on 21.06.2004, and in favour of Devrajbhai Patel and others, including the father of the present applicant, on 22.02.2005. The allegation against the present applicant is that he stood as a witness to the third sale deed dated 22.02.2005, wherein one of the purchasers is his father, Ashokbhai Patel. Even if the allegations are accepted at their face value, the question that arises is whether the offences alleged under Sections 406, 420, 423 and 120-B of the Indian Penal Code are made out.
8 At this stage, it is required to make a reference to Sections 406, 420 and 423 of the Indian Penal Code:
"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.
420: Cheating and dishonestly inducing delivery of property.--Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to Page 6 of 22 Uploaded by M.M.MIRZA(HC01407) on Thu Apr 02 2026 Downloaded on : Fri Apr 03 22:21:48 IST 2026 NEUTRAL CITATION R/CR.MA/6315/2013 JUDGMENT DATED: 20/03/2026 undefined any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.
423:Dishonest or fraudulent execution of deed of transfer containing false statement of consideration.-- Whoever dishonestly or fraudulently signs, executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property, or any interest therein, and which contains any false statement relating to the consideration for such transfer or charge, or relating to the person or persons for whose use or benefit it is really intended to operate, shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both."
9 To attract the provisions of Section 406 of the IPC, the ingredients of "criminal breach of trust" as defined under Section 405 are required to be satisfied. The essential ingredients of the said offence are: (i) entrustment of property or dominion over it to Page 7 of 22 Uploaded by M.M.MIRZA(HC01407) on Thu Apr 02 2026 Downloaded on : Fri Apr 03 22:21:48 IST 2026 NEUTRAL CITATION R/CR.MA/6315/2013 JUDGMENT DATED: 20/03/2026 undefined the accused; and (ii) dishonest misappropriation or conversion of such property to his own use, or disposal thereof in violation of any legal contract or trust.
10 Admittedly, the present petitioner was neither entrusted with the property nor has he dishonestly misappropriated or converted the same for his own use. To attract the provisions of Section 420, the offence of cheating as defined under Section 415 is required to be considered.
"415 The ingredients of the cheating as defined under section 415 is- (1) deception of any person (2) (a) fraudulently or dishonestly inducing that person; or
(i) to deliver any property to any person or
(ii) to consent that any person shall retain any property; or
(b) intentionally inducing that person to do or omit to do anything which he would not do or omit, if he was not so deceived which act or omission causes or likely to cause damage or harm to that person in body, mind, reputation or property.
11 Upon reconsideration of the allegations made against the present applicant, none of the ingredients required under Section 415, as discussed hereinabove, are satisfied. At this stage, reference is required to be made to the decision of the Apex Page 8 of 22 Uploaded by M.M.MIRZA(HC01407) on Thu Apr 02 2026 Downloaded on : Fri Apr 03 22:21:48 IST 2026 NEUTRAL CITATION R/CR.MA/6315/2013 JUDGMENT DATED: 20/03/2026 undefined Court in Delhi Race Club (1940) Limited and Others v. State of Uttar Pradesh and Another, reported in 2024 (10) SCC 690, wherein it has been held that offences under Sections 406 and 420 cannot co-exist simultaneously. The relevant observations read as under:
"35. 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 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), Page 9 of 22 Uploaded by M.M.MIRZA(HC01407) on Thu Apr 02 2026 Downloaded on : Fri Apr 03 22:21:48 IST 2026 NEUTRAL CITATION R/CR.MA/6315/2013 JUDGMENT DATED: 20/03/2026 undefined 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."
36. 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) dishonestly used or disposed of the 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 Page 10 of 22 Uploaded by M.M.MIRZA(HC01407) on Thu Apr 02 2026 Downloaded on : Fri Apr 03 22:21:48 IST 2026 NEUTRAL CITATION R/CR.MA/6315/2013 JUDGMENT DATED: 20/03/2026 undefined 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))
37. 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.
38. In our view, the plain reading of the complaint fails to spell out any of the 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.
39. 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 Page 11 of 22 Uploaded by M.M.MIRZA(HC01407) on Thu Apr 02 2026 Downloaded on : Fri Apr 03 22:21:48 IST 2026 NEUTRAL CITATION R/CR.MA/6315/2013 JUDGMENT DATED: 20/03/2026 undefined 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 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."
40. 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 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.
41. The distinction between mere breach of contract Page 12 of 22 Uploaded by M.M.MIRZA(HC01407) on Thu Apr 02 2026 Downloaded on : Fri Apr 03 22:21:48 IST 2026 NEUTRAL CITATION R/CR.MA/6315/2013 JUDGMENT DATED: 20/03/2026 undefined 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.
42. 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 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.
43. 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 Page 13 of 22 Uploaded by M.M.MIRZA(HC01407) on Thu Apr 02 2026 Downloaded on : Fri Apr 03 22:21:48 IST 2026 NEUTRAL CITATION R/CR.MA/6315/2013 JUDGMENT DATED: 20/03/2026 undefined simultaneously.
44. 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 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.
45. 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.
46. 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 of another or of another and the owner.Page 14 of 22 Uploaded by M.M.MIRZA(HC01407) on Thu Apr 02 2026 Downloaded on : Fri Apr 03 22:21:48 IST 2026
NEUTRAL CITATION R/CR.MA/6315/2013 JUDGMENT DATED: 20/03/2026 undefined 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".
47. 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 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 Page 15 of 22 Uploaded by M.M.MIRZA(HC01407) on Thu Apr 02 2026 Downloaded on : Fri Apr 03 22:21:48 IST 2026 NEUTRAL CITATION R/CR.MA/6315/2013 JUDGMENT DATED: 20/03/2026 undefined 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 'trust' 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 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)
48. 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.
Page 16 of 22 Uploaded by M.M.MIRZA(HC01407) on Thu Apr 02 2026 Downloaded on : Fri Apr 03 22:21:48 IST 2026NEUTRAL CITATION R/CR.MA/6315/2013 JUDGMENT DATED: 20/03/2026 undefined "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 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."
49. 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 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 Page 17 of 22 Uploaded by M.M.MIRZA(HC01407) on Thu Apr 02 2026 Downloaded on : Fri Apr 03 22:21:48 IST 2026 NEUTRAL CITATION R/CR.MA/6315/2013 JUDGMENT DATED: 20/03/2026 undefined 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]
50. The case at hand falls in category No. 1 as laid in Smt. Nagawwa (supra) referred to in para 7 of this judgment.
51. 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. 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.
52. In such circumstances referred to above, the continuation of the criminal proceeding would be nothing but abuse of the process of law."
12 Considering the aforesaid legal position, for an offence under Section 406 of the IPC, the essential requirement is entrustment of property and its subsequent dishonest misappropriation. On the other hand, for an offence punishable under Section 420 of the IPC, it is necessary to establish cheating, i.e., deception by the accused and dishonest inducement Page 18 of 22 Uploaded by M.M.MIRZA(HC01407) on Thu Apr 02 2026 Downloaded on : Fri Apr 03 22:21:48 IST 2026 NEUTRAL CITATION R/CR.MA/6315/2013 JUDGMENT DATED: 20/03/2026 undefined of the person deceived to deliver property. In cases of criminal breach of trust, the property is initially acquired lawfully or with consent, but is subsequently misappropriated. In contrast, in cases of cheating, the property is obtained by deception from the very inception. In the present case, the essential ingredients of both the provisions are absent, and in any case, the offences under Sections 406 and 420 cannot co-exist simultaneously.
13 With regard to the allegations under Section 423 of the IPC, which pertains to dishonest or fraudulent execution of a sale deed or transfer containing a false statement of consideration, the essential requirement is that the document must contain a false statement either as to the consideration or as to the person for whose use or benefit it is intended to operate. Admittedly, no such allegation is made against the present applicant. In this view of the matter, none of the ingredients of the aforesaid offences are satisfied. So far as the charge of conspiracy is concerned, in the absence of the foundational ingredients of the substantive offences, continuation of the prosecution against the present applicant for the said offence would amount to a gross abuse of the process of law.
Page 19 of 22 Uploaded by M.M.MIRZA(HC01407) on Thu Apr 02 2026 Downloaded on : Fri Apr 03 22:21:48 IST 2026NEUTRAL CITATION R/CR.MA/6315/2013 JUDGMENT DATED: 20/03/2026 undefined 14This Court has referred to the decision of the Apex Court in State of Haryana v. Bhajan Lal, reported in 1992 Supp (1) SCC 335, wherein the Apex Court has laid down the guidelines governing the exercise of inherent powers under Section 482 of the Code of Criminal Procedure which are reproduced hereinbelow:
"102. In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under Section 482 of the Code which we have extracted and reproduced above, we have given the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised.
(i) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused.
(ii) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview Page 20 of 22 Uploaded by M.M.MIRZA(HC01407) on Thu Apr 02 2026 Downloaded on : Fri Apr 03 22:21:48 IST 2026 NEUTRAL CITATION R/CR.MA/6315/2013 JUDGMENT DATED: 20/03/2026 undefined of Section 155(2) of the Code.
(iii) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused.
(iv) Where, the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code.
(v) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused.
(vi) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party.
(vii) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge."
15This case falls under the criteria (i) and (v) from the case of Bhajan Lal (supra), therefore the application deserves to be allowed.
Page 21 of 22 Uploaded by M.M.MIRZA(HC01407) on Thu Apr 02 2026 Downloaded on : Fri Apr 03 22:21:48 IST 2026NEUTRAL CITATION R/CR.MA/6315/2013 JUDGMENT DATED: 20/03/2026 undefined 16Resultantly, the present application is allowed. The FIR being C.R. No.1-576 of 2007 registered with Satellite Police Station, Ahmedabad, as well as all consequential proceedings arising therefrom, are hereby quashed and set aside. Rule is made absolute accordingly.
(M. K. THAKKER,J) M.M.MIRZA Page 22 of 22 Uploaded by M.M.MIRZA(HC01407) on Thu Apr 02 2026 Downloaded on : Fri Apr 03 22:21:48 IST 2026