Gujarat High Court
Rekhaben Pinakinbhai Shah vs State Of Gujarat on 6 August, 2025
NEUTRAL CITATION
R/CR.MA/14223/2013 ORDER DATED: 06/08/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION (FOR QUASHING & SET ASIDE
FIR/ORDER) NO. 14223 of 2013
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REKHABEN PINAKINBHAI SHAH & ORS.
Versus
STATE OF GUJARAT & ANR.
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Appearance:
ABATED for the Applicant(s) No. 3
MR. SUDHIR NANAVATI WITH MR VANDAN K BAXI(5863) for the
Applicant(s) No. 1,2
MS PRACHITI V SHAH(9990) for the Applicant(s) No. 1,2
NANAVATI & NANAVATI(1933) for the Applicant(s) No. 1,2
MR. CHINTAN DAVE ADDL. PUBLIC PROSECUTOR for the Respondent(s)
No. 1
UNSERVED EXPIRED (R) for the Respondent(s) No. 2
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CORAM:HONOURABLE MR. JUSTICE J. C. DOSHI
Date : 06/08/2025
ORAL ORDER
1. By way of this application under Section 482 of the Code of Criminal Procedure, 1973 (hereinafter referred to as " the Code"), the petitioners have prayed for quashing and setting aside the FIR No. C.R I-107 of 2013 lodged with Gotri Police Station for the offences punishable under Sections 406, 420 and 114 of the Indian Penal Code and all the consequential proceedings arising from the same FIR qua the petitioners herein.
1.1 Heard learned Senior Counsel Mr. Sudhir Nanavati assisted by learned advocate Mr. Vandan K. Baxi for the petitioners and learned APP Mr. Chintan Dave for the respondent State.
Page 1 of 9 Uploaded by MARY VADAKKAN(HC00204) on Thu Aug 07 2025 Downloaded on : Thu Aug 07 21:54:40 IST 2025NEUTRAL CITATION R/CR.MA/14223/2013 ORDER DATED: 06/08/2025 undefined 1.2 The complainant chose not to remain present and now as reported is expired.
2. There is no gain in saying that on plain reading of the FIR, it appears that the complainant had lended Rs. 25 lakhs to the accused as they meet each other out of close circle. The purpose of lending and investing the money is perhaps to take partnership in the Mira School ran by the petitioners. According to the complainant, he was given promise to pay 1% interest on the money borrowed by the petitioners. The complaint was filed on the aspect that the petitioners have not repaid Rs. 25 lakhs or the interest thereof to the complainant. It is also noticed that the cheques were issued by the petitioners to the complainant.
3. Learned Senior Counsel Mr. Nanavati argued that the proceedings against Negotiable Instruments Act, of Section 138 (for short " the N.I Act" was conducted by the learned Trial Court and all of them are turned in acquittal which is placed on record with the additional affidavit at page 188. Apart from that it is submitted by learned Senior Counsel that amount to the extent of Rs. 21 lakhs is fully paid to the complainant. All these aspects according to learned Senior Counsel does not attract the offence under Sections 406 and 420 of the Indian Penal Code. What could be noticed that it is a simple money transaction between the complainant and the petitioner. There was also no agreement between them whereby some thing has been promised to the Page 2 of 9 Uploaded by MARY VADAKKAN(HC00204) on Thu Aug 07 2025 Downloaded on : Thu Aug 07 21:54:40 IST 2025 NEUTRAL CITATION R/CR.MA/14223/2013 ORDER DATED: 06/08/2025 undefined complainant by the petitioner.
3.1 The case appears that the promise of 1% monthly interest was made by the petitioner to the complainant, however, there is no evidence supporting the said promise. Be that as it may. The FIR found to be a perfect plan for recovery of the amount lended to the petitioner or borrowed by the petitioner. In other words, it is an attempt on the part of the complainant to convert the civil litigation into the criminal litigation. There is no malafide intention to breach the trust or cheat the complainant. As per the record, it appears that Rs. 21 lakhs have been paid to the complainant and moreover the complainant remained unsuccessful in securing conviction of the petitioners under Section 138 of the N.I Act.
4. In the case of Ashok Kumar Jain Vs. State of Gujarat and Ors. reported in S.L.P.(Criminal) No. 1850 OF 2022, wherein the Apex Court after discussing the ingredients of Sections 406 and 420 observed that if the civil dispute has been given the clock of the criminality by filing the FIR, such FIR is found to be absurd and must be quashed. Relevant paras read as under :
9. The FIR has been registered under sections 406 and 420 of the IPC. The scope and expanse of these sections is better appreciated in the company of sections 405 and 415 of the IPC. This court in the case of Radheyshyam v.
State of Rajasthan4, culled out the following ingredients to constitute the criminal breach of trust:
"11. For an offence punishable under Section 406, IPC, the following ingredients must exist:
i. The accused was entrusted with property, or entrusted with dominion Page 3 of 9 Uploaded by MARY VADAKKAN(HC00204) on Thu Aug 07 2025 Downloaded on : Thu Aug 07 21:54:40 IST 2025 NEUTRAL CITATION R/CR.MA/14223/2013 ORDER DATED: 06/08/2025 undefined over property;
ii. The accused had dishonestly misappropriated or converted to their own use that property, or dishonestly used or disposed of that property or wilfully suffer any other person to do so; and iii. Such misappropriation, conversion, use or disposal should be in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract."
9.1 This court, while discussing the expression "entrustment" in Rashmi Kumar v. Mahesh Kumar Bhada, observed that it 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. Entrustment is not necessarily a term of law. It may have different implications in different contexts. In its most general significance, all its imports is handing over the possession for some purpose which may not imply the conferment of any proprietary right therein. The ownership or beneficial interest in the property in respect of which criminal breach of trust 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.
9.2 Further, in Hridaya Ranjan Prasad Verma v. State of Bihar6, this court observed as follows:
"15. In determining the question it has to be kept in mind that the distinction between mere breach of contract and the offence of cheating is a fine one. It depends upon the intention of the accused at the time of inducement which may be judged by his subsequent conduct but for this subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, that is the time when the offence is said to have been committed. Therefore it is the intention which is the gist of the offence. To hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise. From his mere failure to keep up promise subsequently such a culpable intention right at the beginning, that is, when he made the promise cannot be presumed."
(Emphasis supplied) 9.3 The ingredients to constitute an offence under sections 415 read with 420 of IPC have been considered and laid down by this court in Prof. R.K. Vijayasarathy and Anr v. Sudha Seetharam and Anr7, as under: "16. The ingredients to constitute an offence of cheating are as follows: 16.1. There should be fraudulent or dishonest inducement of a person by deceiving him:
16.1.1. The person so induced should be intentionally induced to deliver Page 4 of 9 Uploaded by MARY VADAKKAN(HC00204) on Thu Aug 07 2025 Downloaded on : Thu Aug 07 21:54:40 IST 2025 NEUTRAL CITATION R/CR.MA/14223/2013 ORDER DATED: 06/08/2025 undefined any property to any person or to consent that any person shall retain any property, or 16.1.2. The person so induced should be intentionally induced to do or to omit to do anything which he would not do or omit if he were not so deceived; and 16.2. In cases covered by 16.1.2. above, the act or omission should be one which caused or is likely to cause damage or harm to the person induced in body, mind, reputation or property.
17. A fraudulent or dishonest inducement is an essential ingredient of the offence. A person who dishonestly induces another person to deliver any property is liable for the offence of cheating.
18. xxx xxx xxx
19. The ingredients to constitute an offence under Section 420 are as follows:
19.1 A person must commit the offence of cheating under Section 415; and 19.2 The person cheated must be dishonestly induced to: (a) deliver property to any person; or
(b) make, alter or destroy valuable security or anything signed or sealed and capable of being converted into valuable security."
(Emphasis supplied) 9.4 Put succinctly, to constitute an offence under sections 415 and 420 of the IPC, the above ingredients are present in the FIR .
10. This court in AM Mohan v. State Represented by SHO & Another has observed as follows:
"13. It could be thus seen for attracting the provision of Section 420 of IPC, the FIR/complaint must show that the ingredients of Section 415 of IPC are made out and the person cheated must have been dishonestly in The FIR has been registered under sections 406 and 420 of the IPC. Thescope and expanse of these sections is better appreciated in the company ofsections 405 and 415 of the IPC. This court in the case of Radheyshyam v.State of Rajasthan4, culled out the following ingredients to constitute thecriminal breach of trust:"11. For an offence punishable under Section 406, IPC, the following ingredients must exist:
i. The accused was entrusted with property, or entrusted with dominion over property;
ii. The accused had dishonestly misappropriated or converted to their own use that property, or dishonestlyused or disposed of that property or wilfully suffer any other person to do so; and iii. Such misappropriation, conversion, use or disposal should be in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract."Page 5 of 9 Uploaded by MARY VADAKKAN(HC00204) on Thu Aug 07 2025 Downloaded on : Thu Aug 07 21:54:40 IST 2025
NEUTRAL CITATION R/CR.MA/14223/2013 ORDER DATED: 06/08/2025 undefined 9.1 This court, while discussing the expression "entrustment" in Rashmi Kumar v. Mahesh Kumar Bhada5, observed that it 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. Entrustment is not necessarily a term of law. It may have different implications in different contexts. In its most general significance, all its imports is handing over the possession for some purpose which may not imply the conferment of any proprietary right therein. The ownership or beneficial interest in the property in respect of which criminal breach of trust is alleged to have been committed,must be in some person other than the accused and the latter must hold iton account of some person or in some way for his benefit.
9.2 Further, in Hridaya Ranjan Prasad Verma v. State of Bihar6, this court observed as follows:
"15. In determining the question it has to be kept in mind that the distinction between mere breach of contract and the offence of cheating is a fine one. It depends upon the intention of the accused at the time of inducement which may be judged by his subsequent conduct but for this subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, that is the time when the offence is said to have been committed. Therefore it is the intention which is the gist of the offence. To hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise. From his mere failure to keep up promise subsequently such a culpable intention right at the beginning, that is, when he made the promise cannot be presumed."
(Emphasis supplied) 9.3 The ingredients to constitute an offence under sections 415 read with 420 of IPC have been considered and laid down by this court in Prof. R.K. Vijayasarathy and Anr v. Sudha Seetharam and Anr7, as under:
"16. The ingredients to constitute an offence of cheating are as follows:
16.1. There should be fraudulent or dishonest inducement of a person by deceiving him:
16.1.1. The person so induced should be intentionally induced to deliver any property to any person or to consent that any person shall retain any property, 16.1.2. The person so induced should be intentionally induced to do or to omit to do anything which he would not do or omit if he were not so deceived; and16.2. In cases covered by Page 6 of 9 Uploaded by MARY VADAKKAN(HC00204) on Thu Aug 07 2025 Downloaded on : Thu Aug 07 21:54:40 IST 2025 NEUTRAL CITATION R/CR.MA/14223/2013 ORDER DATED: 06/08/2025 undefined 16.1.2. above, the act or omission should be one which caused or is likely to cause damage orharm to the person induced in body, mind, reputation or property.
17. A fraudulent or dishonest inducement is an essential ingredient of the offence. A person who dishonestly induces another person to deliver any property is liable for theoffence of cheating.
18. xxx xxx xxx
19. The ingredients to constitute an offence under Section420 are as follows:
19.1 A person must commit the offence of cheating under Section 415; and 19.2 The person cheated must be dishonestly induced to:
(a) deliver property to any person; or(b) make, alter or destroy valuable security or anything signed or sealed and capable of being converted into valuable security."
(Emphasis supplied) 9.4 Put succinctly, to constitute an offence under sections 415 and 420 of the IPC, the above ingredients are present in the FIR .
10. This court in AM Mohan v. State Represented by SHO & Another8, has observed as follows:"13. It could be thus seen for attracting the provision of Section 420 of IPC, the FIR/complaint must show that the ingredients of Section 415 of IPC are made out and the person cheated must have been dishonestly induced to deliver the property to any person; or to make, alter or destroy valuable security or anything signed or sealed andcapable of being converted into valuable security. In other words, for attracting the provisions of Section 420 of IPC, it must be shown that the FIR/complaint discloses:
(i) the deception of any person;(ii) fraudulently or dishonestly inducing that person to deliver any property to any person; and(iii) dishonest intention of the accused at the time of making the inducement."
(Emphasis supplied)
11. As stated in the FIR:(i) In March 2012, the appellant had directly contacted the respondent no.2, gave him his visiting card, and saw the samples of the work being one by the latter;
(ii) Further, the appellant also enquired from respondent no. 2 from whom he was purchasing the goods of sarees. After 2-3 days, he came to the office of the appellant and demanded other samples;
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(iii) Appellant had asked respondent no. 2 to prepare goods and informed that he would make the payments in 60 to 90 days; and
(iv) Appellant had assured and given trust for making timely payments, stating that he has his own house in Chennai and had good contacts with political persons.
12. From the above, respondent no. 2 has not availed the services of M/s.Oswal Overseas as a transport carrier. It is unclear whether the invoice hasbeen raised in the name of the appellant or the exporter. The "bill of lading"would have disclosed the transfer of title in goods in favour of the appellant. On the contrary, the FIR is filed showing that the appellant, as accused, had an intention to cheat and commit breach of trust. The documents belie the allegations in the FIR. Looking at the controversy from any perspective, a mere civil dispute has been given the colour of an offence of cheating and criminal breach of trust. We have perused the FIR and are convinced that the inducement is an explanation to contradict the documents through which exports have been completed. In the circumstances of this case, by referring to inducement, the continuation of investigation/prosecution into the offence of cheating and breach of trust would amount to an abuse of the process of 12 law. Further, what begs the question is whether such non-payment of the sale price can be an offence of criminal breach of trust and cheating at the hands of the second respondent. The answer is clearly no.
(Emphasis supplied)
5. Applying the ratio of the facts of the present case, I am of the opinion that the FIR is abuse of process of law and being malicious and vexatious deserves to be quashed.
6. The order dated 16.7.2025 recorded that the petitioner No.3 has expired.
7. For the aforesaid reasons, the petition is allowed qua petitioners No. 1 and 2. The FIR No. C.R I-107 of 2013 lodged with Gotri Police Station and all the consequential proceedings arising from the same FIR are hereby quashed and setaside.
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(J. C. DOSHI,J) MARY VADAKKAN Page 9 of 9 Uploaded by MARY VADAKKAN(HC00204) on Thu Aug 07 2025 Downloaded on : Thu Aug 07 21:54:40 IST 2025