Delhi District Court
State vs Renu Khattar on 13 January, 2025
IN THE COURT OF MS. SEEMA NIRMAL
JUDICIAL MAGISTRATE FIRST CLASS -09,
SOUTH-EAST DISTRICT / SAKET COURTS, DELHI
Cr CASES 360/2/2014 and 94485/2023
STATE Vs. RENU KHATTAR
FIR NO. 173/13/2013
(PS CHITRANJAN PARK)
JUDGMENT
a. CNR NO. DLSE020049352014
b. Name of the DSN apparels Private Limited
Complainant having its registered office at
E-1, Masjid Moth , Greater Kailash
III, New Delhi, through his
director DS Nanda
c. Name of the accused RENU KHATTAR,
& his parentage and Managing Director of B.R. Fashions
address private Limited
Plot No. 175-176, sector 37,
Kandsa, Gurgaon.
R/o 1/W, Gali no.1, Shiv Durga
Vihar, Gurukul Industrial Area,
Faridabad.
d. Offence charged 420 IPC
e. Date of commission of From 27.10.2011 till unknown date
offence and time
f. Date of Institution 30.09.2014
g. Plea of accused Pleaded not guilty
h. Order Reserved on 13.01.2025
i. Date of 13.01.2025
Pronouncement
j. Final Order Acquitted
Cr CASES 360/2/2014 and 94485/2023 Page 1 of 21
STATE Vs. RENU KHATTAR
FIR NO. 173/13/2013
(PS CHITRANJAN PARK)
SEEMA Digitally signed by
SEEMA NIRMAL
NIRMAL Date: 2025.01.13
16:36:56 +0530
Present: Ms. Shilpi Chaudhary, Ld. APP for the State.
Sh. Sumit Kumar, Ld. counsel for accused Renu Khattar along with accused.
BRIEF FACTS AND REASONS FOR DECISION
1. Briefly stated, the case of the prosecution is that the complainant and private limited company engaged in the business Garment buying house for USA Companies. The complainant procures orders for manufacturing garments from the US companies and in turn assigns the work to manufacturers in India. On 29/10/2011 the complainant gave export order of ready-made garment on behalf of M/s At Last to M/s B.R. fashions Private Limited company represented by Ms. Renu Khattar managing director of the said company. The order was for 64935 pieces of value of US dollar 22400 approximately. The original order was required to be completed before 15/01/2012.It is alleged that accused time and again requested for extension of the time of delivery. On 21/11/2011 accused approach the complainant for extension of the time for completing the said order and accordingly complainant cooperated with the accused and the delivery of the set of order was extended till 15/02/2012 with consent of buyer M/s At Last, New York. On 10/01/2012 complainant received final approval from from the buyer on the "fit sample" submitted by the accused but the accused took more than two months to procure the requisite approvals from the "compliant testing laboratories" for starting the production on mass scale and on materials viz. lab dip, place, trims and other approvals.
Cr CASES 360/2/2014 and 94485/2023 Page 2 of 21
STATE Vs. RENU KHATTAR
FIR NO. 173/13/2013
(PS CHITRANJAN PARK) SEEMA Digitally signed by
SEEMA NIRMAL
NIRMAL Date: 2025.01.13
16:37:06 +0530
2. In the month of January 2012, Mr. Sunil Ahuja, owner from M/s At Last, New York, the buyer visited the factory of the accused and felt that she would not be able to handle such huge order and that the complainant have erred in decision of choosing the accused for completion of the above said order. The accused was there during the dialogue, thereafter the AR of the complainant suggested that as the production had not commenced, the complainant will pay the accused cost of the investment and shift the everything to another factory and accused again requested for extension of time up to 25 th February. M/s At Last, New York called one of their staff from Bangalore to supervise and give daily report on production. The accused did not like the approach and started to complain that said staff was only using her office as his own and foulmouthed about him, until the complainant had to revert the same to the Bangalore office and said official was removed from the designated tasks. In regard to the ability of factory Mr. Sunil Ahuja and Shiv had also sent the email to the complainant and various officials of his company in USA and Bangalore. On 15/02/2012 Mr. Ajit Kumar, on behalf of the said buyer from Bangalore inspected the goods being manufactured at factory of the accused for their quality. He found a lot of discrepancies in the quality of the goods due to the lack of the control and manpower in factory of the accused and for the found incompetent/missing staff to complete such large quantity order.
3. In month of February again, accused requested buyer for extension of time for delivery of the said order and requested till 25.03.2012 for the delivery of the said order as the accused was unable to complete the said order as per the own given timeframe. In mid-February, Cr CASES 360/2/2014 and 94485/2023 Page 3 of 21 STATE Vs. RENU KHATTAR FIR NO. 173/13/2013 (PS CHITRANJAN PARK) SEEMA Digitally signed by SEEMA NIRMAL NIRMAL 16:37:12 +0530 Date: 2025.01.13 accused was in shortage of the funds and hence approach the complainant, showing her financial in inability to complete the order the accused induced the complainant towards her deceitful design and stated that she may not be able to complete the order. This was a matter of very serious concern as the failure would mean the complainant to lose the customer. The accused asked the AR of the complainant to help her and pay the money to one Mr Khan who is doing the lace work for her. On allurement/inducement the AR of the complainant agreed on her behalf and paid ₹ 6 lakhs approximately to Mr Khan. On 07/03/2012 accused sent email to Mr Ajit Kumar for revised date of delivery for said order of 64935 pieces which was to be finalised on 25/03/2012. It is further submitted that as per the last extension of the delivery of the goods, accused had not delivered the goods and offered the goods to be delivered on 09/04/2012. Further on 09/04/2012 the order was not completed and only 31068 pieces of the garments were ready instead of 64935 pieces.
4. It is further submitted by the complainant that the buyer, M/s At Last, New York, agreed that whatever goods M/s BR Fashion Pvt. Ltd. had offered to deliver shall be inspected by M/s Impactiva, which was nominated by M/s At Last, New York for quality inspection of the goods. But on 11/04/2012 M/s Impactiva rejected the goods due to low quality and unrepairable rejection. Therefore, the delivery of incomplete order was cancelled by the buyer M/s At Last, New York.
5. Accused again came to the AR of the complainant seeking support of another buyer with extended timeframe. At first AR of the complainant was unwilling to search for the another buyer but the Cr CASES 360/2/2014 and 94485/2023 Page 4 of 21 STATE Vs. RENU KHATTAR FIR NO. 173/13/2013 (PS CHITRANJAN PARK) SEEMA Digitally signed by SEEMA NIRMAL NIRMAL Date: 2025.01.13 16:37:18 +0530 accused misrepresented and induced that there were severe hardships from the bank, creditors etc. and further desired assistance that goods be outsourced for finishing and completing the goods for any new customer. The accused induced the complainant and revealed that she has sent the goods for completion of the said order to Chandra and Sai and Sai Impex for finishing and completing the order. Further accused also represented that M/s BR Fashion Private Limited does not have sufficient funds to call\take delivery from M/s Chandra and Sai and Sai Impex. It is further submitted by complainant that once the order was cancelled with the previous buyer upon the repeated requests by the accused that the dire problems of being faced by her and that her labour had thrashed her car and rented factory, the complainant made another buyer available that is, M/s Mitchel & Star (M/s Michelin Star Inc.), to take delivery of the goods and by the same. On 20/07/2012 accused approach the complainant and induced the complainant to lend her a temporary loan of ₹ 1 lakh, as she required the money to pay of M/s Sai and Sai Impex. For some outsourcing work that accused has given to expedite the completion of the new order. Therefore, the AR of the complainant issued a bank pay order in name of M/s Sai and Sai Impex drawn on IndusInd bank, Greater Kailash New Delhi. The accused again approach the complainant showing her financial inability to complete the order as she was continuing to face shortage of funds in September 2012 and allured/induced the complainant to pay ₹ 3 Lakhs and promised to return the same the said amount on shipment to second customer. The complainant in Bonafide belief, extended her said friendly loan on 07/09/2012, as non-shipping would have costed US dollars 51,000 towards non-shipping cost damages to the customer, on account of axis Cr CASES 360/2/2014 and 94485/2023 Page 5 of 21 STATE Vs. RENU KHATTAR FIR NO. 173/13/2013 (PS CHITRANJAN PARK) SEEMA Digitally signed by SEEMA NIRMAL NIRMAL Date: 2025.01.13 16:37:24 +0530 Bank. Accused refused to pay back either the amount taken by the friendly loan or advance paid to M/s Sai and Sai Impex. Accused even refused to deliver goods to new buyer. It is further submitted Accused further issued to the AR of the complainant defamatory emails. Hence the present complaint is filed. Vide order dated 26/06/2013 Ld. predecessor of this court had allowed application to investigate the present case under section 156(3) CrPC. After investigation the chargesheet was filed in present case
6. After taking cognizance of the offence by the court, the accused was summoned. Pursuant to her appearance, in compliance of Section 207 Cr.P.C, copy of chargesheet was supplied to her. Subsequently, after perusal of the judicial file and hearing the parties, a prima facie case against the accused for commission of offence punishable under Section 420 IPC was found to be made out. Accordingly, on 28.01.2016, formal charge for commission of offence under Section 420 IPC was framed against the accused, to which she pleaded not guilty and claimed trial. Thereafter, the matter was posted for Prosecution Evidence.
7. The prosecution, in order to prove its case against the accused beyond all reasonable doubts, examined the following witnesses; viz.
i) PW-1 D.S. Nanda (complainant)
ii) PW-2 HC Mohd. Naseem Khan (police witness)
iii) PW-3 Shri Nikhil Sharma (bank witness)
iv) PW-4 Shri Murarilal (bank witness)
Cr CASES 360/2/2014 and 94485/2023 Page 6 of 21
STATE Vs. RENU KHATTAR
FIR NO. 173/13/2013
(PS CHITRANJAN PARK)
SEEMA Digitally signed by
SEEMA NIRMAL
NIRMAL 16:37:29 +0530
Date: 2025.01.13
v) PW-5 SI Rahul Soni (police witness)
vi) PW-6 Insp. Gajender Singh (IO)
vii) PW-7 Insp. Anil Kumar (IO)
8. The prosecution, in order to prove its case against the accused beyond all reasonable doubts, also relied upon the following documents:
1) Complaint of complainant to police as Ex. PW1/A,
2) Complaint and application u/s 156(3) Cr.P.C as Ex. PW1/B,
3) endorsement on Rukka as Ex. PW2/A,
4) Copy of FIR as Ex. PW2/B (OSR),
5) covering letter dated 07.03.2014 as Ex. PW3/A,
6) statement of account bearing no. 4578008700000065 as Ex. PW3/B,
7) statement of account bearing no. 457800IB00000027 as Ex. PW3/C and notice u/s 91 Cr.P.C dated 02.01.2014 as Ex. PW3/D,
8) covering letter dated 02.01.2014 as Ex. PW3/E colly,
9) covering letter dated 02.07.2014 as Ex. PW3/F colly,
10) copy of LC No. 64600709 dated 09.11.2000 as Ex. PW4/A(OSR),
11) certified copies of account no. 457800UD00000010, 457800UD00000029, 457800UD00000038 and 457800UD00000047 as Ex. PW4/B, Ex. PW4/C,Ex. PW4/D and Ex. PW4/E,
12) copy of letter dated 01.07.2011 as Ex. PW4/F (OSR),
13) copies of balance sheets and profit loss account for financial year 2009-10, 2010-11 as on 31.10.2011 as Ex. PW4/G (OSR),
14) copy of documents pertaining to cash credit limit and term loan as Ex. PW4/H (OSR), Cr CASES 360/2/2014 and 94485/2023 Page 7 of 21 STATE Vs. RENU KHATTAR FIR NO. 173/13/2013 (PS CHITRANJAN PARK) Digitally signed SEEMA by SEEMA NIRMAL NIRMAL 16:37:34 Date: 2025.01.13 +0530
15) Copy of LC no. L561058 as Ex. PW4/I,
16) Copy of agreement of guarantee as Ex. PW4/J(OSR),
17) Rukka as Ex. PW5/A,
18) Notice u/s 91 Cr.P.C as Ex. PW5/B,
19) Second notice u/s 91 Cr.P.C dated 01.03.2014 as Ex. PW6/A,
20) copy of relevant documents of M/s B.R Fashion Pvt. Ltd. as Mark 6/X (running into 80 pages),
21) seizure memo of eight original cheques as Ex. PW6/B,
22) Notice dated 01.03.2014 as Ex. PW6/C,
23) seizure memo of 75 documents as Ex. PW7/A.
9. After prosecution evidence, statement of accused was recorded u/s 313 Cr.P.C wherein all incriminating circumstances led against her during the trial by the prosecution witnesses were put to him, affording her an opportunity to give her explanation, if any. Accused pleaded innocence and claimed that she has been falsely implicated in the present case. However, accused preferred not to lead defence evidence, and therefore, DE was closed vide order dated 17.09.2024. Thereafter, the matter was posted for final arguments.
10. I have heard the Ld. APP for the State and the Ld. counsel for the accused and gone through the case file carefully and minutely.
11. It is argued by Ld. APP for the State that all the ingredients of the offence are fulfilled in the present case. She has argued that prosecution witnesses have categorically deposed about the commission of the offence and there is no ground to disbelieve their Cr CASES 360/2/2014 and 94485/2023 Page 8 of 21 STATE Vs. RENU KHATTAR FIR NO. 173/13/2013 (PS CHITRANJAN PARK) Digitally signed SEEMA by SEEMA NIRMAL NIRMAL Date: 2025.01.13 16:37:45 +0530 testimony. She further content that documentary evidence has proved the offence beyond reasonable doubt. As such, it is prayed that accused be punished for said offence.
12. Per contra, Ld. Counsel for the accused has argued that state has failed to establish its case beyond reasonable doubt. Ld. Counsel further argued that entire case of the prosecution is false and fabricated and the same is evident from the material inconsistencies and contradictions born out from the material on record. It is argued that prosecution has failed to discharge the burden cast upon it. As such, it is prayed that accused be acquitted of the said offence.
13. After hearing rival contentions and after appreciation of evidence on file, I am of the considered view that prosecution is not able to prove its case against the accused beyond reasonable doubts for the reasons given below.
POINTS OF DETERMINATION
14. Having perused the relevant facts and the contentions made by the parties herein in my considered opinion, following issues require determination in the instant case
a) whether necessary ingredients of offence punishable under section 420 prima facie made out?
b) whether non-fulfillment of promise in present case amounts to mere breach of contract or constitute an offence of cheating?
c) whether the dispute in present case is one entirely of civil nature?
Cr CASES 360/2/2014 and 94485/2023 Page 9 of 21
STATE Vs. RENU KHATTAR
FIR NO. 173/13/2013
(PS CHITRANJAN PARK)
SEEMA Digitally signed by
SEEMA NIRMAL
NIRMAL Date: 2025.01.13
16:37:53 +0530
15. In order to ascertain the veracity of the contentions made by the parties herein it is imperative to firstly examine whether the relevant ingredients of the offence which the accused herein had been charged with our prima facie made out. It would be beneficial if the necessary ingredients of the relevant provisions are reproduced;
"420. Cheating and dishonestly inducing delivery of property.--Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to 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.
16. How the ingredients of aforementioned provision are to be interpreted is detailed in Archna Rana vs. State of UP 2021 3SCC 751, the Hon'ble Supreme Court while discussing above provision guided that no offence u/s 420 IPC can be termed to have been committed, unless, the ingredients of Section 415 are shown to have been satisfied, in background of above, it is now worthwhile to reproduce the relevant part of the judgment as below :
i) a person must commit the offence of cheating under Section 415; and
ii) the person cheated must be dishonestly induced to
a) deliver property to any person; or
b) make, alter or destroy valuable security or anything Cr CASES 360/2/2014 and 94485/2023 Page 10 of 21 STATE Vs. RENU KHATTAR FIR NO. 173/13/2013 (PS CHITRANJAN PARK) SEEMA Digitally signed by SEEMA NIRMAL NIRMAL Date: 2025.01.13 16:38:01 +0530 signed or sealed and capable of being converted into valuable security.
Thus, cheating is an essential ingredient for an act to constitute an offence under Section 420 IPC.
17. Cheating is defined under Section 415 of the IPC. The ingredients to constitute an offence of cheating are as follows:
i) there should be fraudulent or dishonest inducement of a person by deceiving him:
ii)The person who was induced should be intentionally induced to deliver any property to any person or to consent that any person shall retain any property, or the person who was 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.
18. Thus, a fraudulent or dishonest inducement is an essential ingredient of the offence under Section 415 IPC. A person who dishonestly induced any person to deliver any property is liable for the offence of cheating."
19. The definition of cheating contains two parts. First comes the main part "whoever, by deceiving any person....." words which obviously apply to the whole section. Then comes the first part "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." Then comes Part 2, which is an alternative to subpart 1 Cr CASES 360/2/2014 and 94485/2023 Page 11 of 21 STATE Vs. RENU KHATTAR FIR NO. 173/13/2013 (PS CHITRANJAN PARK) SEEMA Digitally signed by SEEMA NIRMAL NIRMAL 16:38:13 +0530 Date: 2025.01.13 viz. "or intentionally induces ..... mind, reputation or property." then comes the closing words "is said to cheat.". The words "and which act or omission .... reputation or property" form a portion of Part 2 and are not applicable to Part 1 at all. (Ishar Das (1908) PR No.10 of 1908 :
(1906) 7 Cri LJ 290.
20. The aforementioned judgment makes it clear that there are two distinct provisions forming part of offence of cheating. First relating to inducement/deception to fraudulently get a transaction of property which may be movable or immovable in nature, whereas second part is more emphatic in connection with act or omission relating to inducement which may cause damage or harm to reputation or property. Both the aforementioned parts are distinct and disjunct; however, "deception" is common in both.
21. This preposition has been strengthened further in Bavaji (1875) Urrep Cr C 96, Cr R September 23, 1875, wherein it is detailed "the definition of offence of cheating embraces, in some cases, in which no transfer of property is occasioned by the deception and some in which such a transfer occurs; for these cases generally a general provision is made in Section 417 of the Code. For the cases in which property is transferred a more specific provision is made by Section 420 IPC. Again in Iridium India Telecom Ltd vs Motorola Incorporated : AIR 2011 SC 20 it is held that "misleading statements which withhold the vital facts for intentionally inducing a person to do or to omit to do something would amount to deception. Further, in case it is found that misleading statement has wrongfully caused damage to Cr CASES 360/2/2014 and 94485/2023 Page 12 of 21 STATE Vs. RENU KHATTAR FIR NO. 173/13/2013 (PS CHITRANJAN PARK) Digitally signed SEEMA by SEEMA NIRMAL NIRMAL Date: 2025.01.13 16:38:18 +0530 the person deceived it would amount to cheating". In Roop Chand & Anr. Vs. The State 1966 Crl. L.J. 1367 and again in Nadir Ali Barqa Zaidi And Ors. vs The State of U.P. : AIR 1960 All 103 : 1960 Cri LJ 188 (All), it is held "every promise by a person of his future conduct implies the statement of witness about it. Therefore, if a person makes a false representation regarding his future conduct and thereby obtain property from another, the misrepresentation made by him would be an existing state and would fall within the mischief of this section".
22. While discussing the ingredients, the applicability of Section requires the following ingredients as is held in Ram Jas vs. State of UP : AIR 1974 SC 1811:
"1 Deception of any person.
2 (a) Fraudulently or dishonestly inducing that person:
(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 ......."
23. While declaring the purport of deception it is held in Iridium India Telecom Ltd (supra) "nondisclosure of relevant information would also be treated as a misrepresentation of facts leading to deception".
24. Again, in Robert John D'Souza & Ors vs Mr. Stephen V. Gomes & Anr 2015 CriLJ 4040 SC, it is held that essential ingredient of cheating is "deception".
Cr CASES 360/2/2014 and 94485/2023 Page 13 of 21STATE Vs. RENU KHATTAR FIR NO. 173/13/2013 (PS CHITRANJAN PARK) SEEMA Digitally signed by SEEMA NIRMAL NIRMAL 16:38:28 +0530 Date: 2025.01.13
25. In Swami Dhirendra Brahmachari v/s Shailendar Bhushan :1995 CLJ 1580 as well as in Motorola Incorporated vs. Union of India : 2004 CriLJ 1576 (Bom), it is held that "it is causing to believe what is false; or misleading as to a matter of fact or leading into an error".
26. As to what is sufficient to constitute a deception must be decided in each case on its own fact [Ram Nath Kalphar (1905) 2 CLJ 524)].
27. When a person fraudulently represents as an existing fact, that, which is not an existing fact, he commits this offence. A willful misrepresentation of definite fact with intent to defraud, cognizable by the senses is cheating. Hence, in all cases, the evidence must show that the inducement was dishonest or fraudulent and accordingly to secure a person function of cheating mens rea on the part of that person must be established.
APPRECIATION OF EVIDENCE
28. Coming back to the facts of the case in hand the contested contention between the parties is that complainant had received order of 64935 ready-made garment pieces M/s At Last, New York, on 27/10/2011. That on 29/10/2011 complaint had given the above said export order of ready-made garments on behalf of M/s At Last, New York to M/s B.R. Fashion Private Limited which was represented by Cr CASES 360/2/2014 and 94485/2023 Page 14 of 21 STATE Vs. RENU KHATTAR FIR NO. 173/13/2013 (PS CHITRANJAN PARK) Digitally signed SEEMA by SEEMA NIRMAL NIRMAL Date: 2025.01.13 16:38:33 +0530 the accused for the total value of USD 224000, to be completed on or before 15/01/2012. Time and again extension for the completion of the order was sought by the accused from the complainant. In February 2012 AR of the complainant due to allurement/inducement of the accused paid ₹ 600,000/- one Mr Khan. After multiple extensions finally goods were agreed to be delivered to the wire on 09/04/2012. But even on given date accused was able to offer delivery of 31,068 pieces only. This offered delivery as alleged was rejected by the M/s At Last, New York. It is further alleged by complainant that due to the misrepresentation and inducement of the accused; AR of the complainant was ready to search for another buyer with extended timeframe. At this stage as alleged, accused had sent the goods for completion of said order to M/s Chandra and Sai and Sai Impex for finishing and completing the order. It is further alleged that as accused was facing problems with respect to labour who had thrashed the car and rented factory of the accused, accused not have sufficient funds to call back/take delivery from M/s Chandra and Sai and Sai Impex, and induced complainant to lend a temporary loan of rupees one lakh. On the said inducement AR of the complainant issued bank pay order in name of M/s Sai and Sai Impex drawn on IndusInd bank, Greater Kailash New Delhi. It is further alleged that accused allured/induced to pay ₹ 3 Lacs to accused and on 07/09/2012 the complainant had given the same through RTEGS in account of the accused at Axis bank, as it was believed by the complainant that non-shipping of the said order would have costed USD 51,000 to this customer. And thus, accused cheated the complainant towards above said amount. It is further alleged that accused had sent emails admitting her liability, taking loan Cr CASES 360/2/2014 and 94485/2023 Page 15 of 21 STATE Vs. RENU KHATTAR FIR NO. 173/13/2013 (PS CHITRANJAN PARK) SEEMA Digitally signed by SEEMA NIRMAL NIRMAL Date: 2025.01.13 16:38:40 +0530 and other details of transactions.
29. The complainant in present case is filed by DSN Apparels Private Limited, through its director DS Nanda. As per exhibit PW4/A (OSR) that is the letter of credit the original agreement is between the buyer, M/s At Last, New York and first beneficiary Ranveer Clothiers private Limited and second beneficiary BR Fashions Private Limited (accused). The complainant in his examination in chief has deposed that that he was running three buying houses in the year 2011 namely DSN Apparels Private Limited, Ranveer clothiers private Limited, Paragon buying house. However, there is nothing on record which shows that it is the complainant only who is the director of Ranveer clothiers. Ex. PW1/D1 that is the resolution passed by the Board of Directors shows that present complaint is filed on behalf of DSN Apparels Private Limited. Moreover, the complainant PW-1 clearly stated in his cross-examination that it is correct that the letter of credit (LC) Ex. PW4/A(OSR) does not mention the name of the complainant company i.e. M/s DSN Apparels Pvt. Ltd. He further clearly stated that the order was procured by Ranveer Clothier which goes to show that no order was placed directly by the complainant company to the accused. Thus, there is absence of any privity of contract between the accused and complainant. Prosecution has further failed to establish that there was any agreement between accused and the complainant.
30. However, even if it is assumed that there was a contract between the complainant and the accused then also it has to be shown that accused at the time of entering into the agreement, had dishonest Cr CASES 360/2/2014 and 94485/2023 Page 16 of 21 STATE Vs. RENU KHATTAR FIR NO. 173/13/2013 (PS CHITRANJAN PARK) Digitally signed SEEMA by SEEMA NIRMAL NIRMAL 16:38:47 Date: 2025.01.13 +0530 or fraudulent intention against the complainant not to fulfil the agreement. It is the case of the complainant only that time and again multiple extensions to complete the order of manufacturing ready- made garment 64935 pieces for by, M/s At Last, New York, was sought by the accused for which ₹ 6 lakhs were transferred in account of one Mr Khan. However, it is further to be noticed that Mr. Khan has not come on record to depose and as such complainant have failed to establish that how Mr. Khan is related to the complainant or his company and also that transfer of any such amount was for the accused. Further, it is the case of the complainant that accused was in need of money as she was not having sufficient funds as the car and the rented factory was thrashed by the labour. Complainant has also put on record FIR that is, annexures C and D (Colly), filed with the original complaint. This only goes on to show that due to unavoidable circumstances the promise to manufacture above said contract was not fulfilled by the accused. It is the case of the prosecution that on 09/04/2012 the order was not completed and only 31068 pieces of the garments were ready instead of 64935 pieces. This shows that accused had tried to fulfill the order, however she failed to do so. Hon'ble Supreme Court in the case of Hridaya Ranjan Prasad Verma & Ors. Vs. State of Bihar & Anr. (2000) 4 SCC 168 19, has observed:-
"15. ....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 to 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 Cr CASES 360/2/2014 and 94485/2023 Page 17 of 21 STATE Vs. RENU KHATTAR FIR NO. 173/13/2013 (PS CHITRANJAN PARK) SEEMA Digitally signed by SEEMA NIRMAL NIRMAL 16:38:52 +0530 Date: 2025.01.13 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..."
31. In another decision reported Mitesh Kumar J.Sha v. State of Karnataka and others 2021SCCOnlineSC976 6 VJPJ, CRLP.No.8295/2022 the Hon'ble Apex Court has held as under:
"41. Having considered the relevant arguments of the parties and decisions of this court we are of the considered view that existence of dishonest or fraudulent intention has not been made out against the Appellants. Though the instant dispute certainly involves determination of issues which are of civil nature, pursuant to which Respondent No. 2 has even instituted multiple civil suits, one can by no means stretch the dispute to an extent, so as to impart it a criminal colour. As has been rightly emphasized upon by this court, by way of an observation rendered in the case of M/s Indian Oil Corporation Vs. M/s. NEPC India Ltd & Ors., as under:-
"14. While no one with a legitimate cause or grievance should be prevented from seeking remedies available in criminal law, a complainant who initiates or persists with a prosecution, being fully aware that the criminal proceedings are unwarranted and his remedy lies only in civil law, should himself be made accountable, at the end of such misconceived criminal proceedings, in accordance with law. It was also observed:-
"13. While on this issue, it is necessary to take notice of a growing Cr CASES 360/2/2014 and 94485/2023 Page 18 of 21 STATE Vs. RENU KHATTAR FIR NO. 173/13/2013 (PS CHITRANJAN PARK) SEEMA Digitally signed by SEEMA NIRMAL NIRMAL Date: 2025.01.13 16:39:00 +0530 tendency in business circles to convert purely civil disputes into criminal cases. This is obviously on account of a prevalent impression that civil law remedies are time consuming and do not adequately protect the interests of lenders/creditors....There is also an impression that if a person could somehow be entangled in a criminal prosecution, there is a likelihood of imminent settlement. Any effort to settle civil disputes and claims, which do not involve any criminal offence, by applying pressure though criminal prosecution should be deprecated and discouraged."
32. Further, it is the case of the prosecution that some cheques were issued by the accused to the complaint the same were seized by the IO vide seizure memo Ex.PW6/B. However out all the cheques none is issued in favour of complainant. Five cheques are blank with respect to details of payee, one cheque is addressed to 'self', one cheque is addressed to khan k embroidery (mr. Khan never appeared on record to testify), one cheque is issued to shri Mahavira Garments (proprietor of same never appeared on record to testify). Thus, the cheques, Ex.PW6/B, do not prove any liability of accused towards complainant.
33. It is further alleged by complainant that he procured second buyer that is, M/s Mitchel & Star (Michelin Star Inc.) for the complainant. The document seized by the IO Ex. PW7/A at entry serial no. 15 shows the seizure of copy of email from second buyer, M/s Michelin Star inc. however the same is not supported by the mandatory certificate as required under Section 65B of Evidence Act.
Cr CASES 360/2/2014 and 94485/2023 Page 19 of 21STATE Vs. RENU KHATTAR FIR NO. 173/13/2013 (PS CHITRANJAN PARK) SEEMA Digitally signed by SEEMA NIRMAL NIRMAL 16:39:05 +0530 Date: 2025.01.13 In the absence of mandatory certificate as required under Section 65B of the Evidence Act, as held by the Apex Court in Arjun Panditrao Khotkar vs. Kailash Kushanrao Gorantyal and Ors.: (2020) 7 SCC 1, the email relied upon by the prosecution is also an inadmissible piece of evidence. Perusal of the record shows ,Copy letter of credit (LC no. L561058) Ex. PW4/I was filed with the chargesheet, in the same there is no mention of complainant. No agreement with respect to abovesaid buyer either with the accused or with the second buyer i.e. M/s Mitchel & Star (Michelin Star Inc.) is placed on record by the complainant. Thus allegation made of cheating with respect to second buyer, M/s Mitchel & Star (Michelin Star Inc.) by the accused, are also not substantiated.
34. It is further the case of the prosecution that complainant had advanced sum of Rs. one lakh in account of Sai and Sai Impex so that accused can fulfil her order with second buyer, that is, M/s Mitchel & Star (Michelin & Star). AR of the complainant issued a bank pay order in name of M/s Sai and Sai Impex drawn on IndusInd bank, Greater Kailash New Delhi. However, AR of M/s Sai and Sai Impex never appeared on record to depose whether same was issued on behalf of accused. Thus, allegation of cheating qua the same are not substantiated.
35. Coming back to the facts of the present case, by no stretch of imagination it can be said that the accused had fraudulent or dishonest intention at the time of making the promise and failure to fulfil the promise may at best be termed as breach of contract, and as it is clear Cr CASES 360/2/2014 and 94485/2023 Page 20 of 21 STATE Vs. RENU KHATTAR FIR NO. 173/13/2013 (PS CHITRANJAN PARK) SEEMA Digitally signed by SEEMA NIRMAL NIRMAL 16:39:13 +0530 Date: 2025.01.13 from the above said discussion that 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 which has not been proved in this case beyond reasonable doubts.
CONCLUSION
36. In the light of above discussion and reasons, this Court is of the considered view that evidence led by the prosecution is highly insufficient and is discrepant on the material aspects of this case. It is the bounden duty of the prosecution to prove its case against the accused present in the Court beyond the shadow of reasonable doubts. In the instant case prosecution has failed to prove its case and as such while extending the benefit of doubt to the accused, Renu Khattar is hereby acquitted of the charges leveled against her by the prosecution. Case property, if any, be disposed of as per rules after expiry of period of appeal/revision. File be consigned to the record room after due Digitally signed compliance. SEEMA by SEEMA NIRMAL NIRMAL Date: 2025.01.13 16:39:19 +0530 Announced in the Open (SEEMA NIRMAL) Court on 13.01.2025 JMFC-09/ SED/ Saket Courts, New Delhi/ 13.01.2025 It is certified by me that this judgment contains 21 pages and each page is digitally signed by me. SEEMA by Digitally signed SEEMA NIRMAL NIRMAL 16:39:24 Date: 2025.01.13 +0530 (SEEMA NIRMAL) JMFC-09/ SED/ Saket Courts, New Delhi/13.01.2025 Cr CASES 360/2/2014 and 94485/2023 Page 21 of 21 STATE Vs. RENU KHATTAR FIR NO. 173/13/2013 (PS CHITRANJAN PARK)