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[Cites 32, Cited by 3]

Gujarat High Court

Harjinder Singh Chanchad Singh Sachdev ... vs State Of Gujarat & on 11 December, 2014

Author: J.B.Pardiwala

Bench: J.B.Pardiwala

      R/CR.MA/6327/2012                                    CAV JUDGMENT



           IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

     CRIMINAL MISC.APPLICATION (FOR QUASHING & SET ASIDE
                          FIR/ORDER) NO. 6327 of 2012
                                     WITH
             CRIMINAL MISC. APPLICATION NO. 11550 of 2013


FOR APPROVAL AND SIGNATURE:


HONOURABLE MR.JUSTICE J.B.PARDIWALA
 ================================================================
1    Whether Reporters of Local Papers may be allowed to see              No
     the judgment ?

2    To be referred to the Reporter or not ?                              No

3    Whether their Lordships wish to see the fair copy of the             No
     judgment ?

4    Whether this case involves a substantial question of law as No
     to the interpretation of the Constitution of India, 1950 or any
     order made thereunder ?

5    Whether it is to be circulated to the civil judge ?                  No

================================================================
    HARJINDER SINGH CHANCHAD SINGH SACHDEV & 2....Applicant(s)
                            Versus
              STATE OF GUJARAT & 1....Respondent(s)
================================================================
Appearance:
MR ASHISH M DAGLI, ADVOCATE for the Applicant(s) No. 1 - 3
MS SM AHUJA, ADVOCATE for the Respondent(s) No. 2
PUBLIC PROSECUTOR for the Respondent(s) No. 1
RULE SERVED for the Respondent(s) No. 2
================================================================

          CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA

                               Date : 11 /12 /2014


                               CAV JUDGMENT
Page 1 of 20 R/CR.MA/6327/2012 CAV JUDGMENT

1. By this application under Section 482 of the Code  of Criminal Procedure, the applicants­original accused  Nos.1 to 3 seek to invoke the inherent powers of this  Court, praying for quashing of the proceedings of the  Criminal Case No.600 of 2011, pending in the Court of  the   learned   Metropolitan   Magistrate,   Court   No.15,  Ahmedabad. 

2. The facts giving rise to this application may be  summarized as under:­

(a) The respondent No.2­original complainant filed a  private   complaint   in   the   Court   of   the   learned  Metropolitan   Magistrate,   Court   No.15,   Ahmedabad,  against   seven   accused   persons   of   the   offence  punishable   under   Sections   406,   420,   465,   467,   471384,   120B   read   with   Section   34   of   the   Indian   Penal  Code. 

(b) The original accused Nos.1 to 3 are before me by  way of the present application. The applicant No.1 is  the brother of the complainant, the applicant No.2 is  the mother of the complainant and the applicant No.3  is the sister­in­law of the complainant i.e. the wife  of the applicant No.1. The dispute amongst the family  members   is   with   respect   to   a   bungalow   in   which   the  complainant claims that she has a share. 

3. According   to   the   complainant,   the   property   is  situated   at   the   Jaihind   Society,   Maninagar.   The  Page 2 of 20 R/CR.MA/6327/2012 CAV JUDGMENT bungalow   was   purchased   by   the   father   of   the  complainant namely Shri Chanchadsingh sachdev from one  Shri Vedprakash Sharma. Her father passed away in the  year   1985.   On   demise   of   late   Shri.   Chanchadsingh  Sachdev the rights in the property devolved upon three  persons, namely (1) applicant No.2, as the mother of  the complainant, (2) applicant No.1, as the brother of  the   complainant   and   the   complainant   herself   as   the  daughter of late Shri.Chanchadsingh Sachdev.

4. It is her case that despite the fact that she has  an equal share in the property, the applicants herein,  behind   her   back,   sold   of   the   terrace   part   of   the  bungalow   to   one   Shri   Prakash   Purusottam   Das   on   21st  May   1989.   Shri   Prakash   Purusottam   Das   Loda   is   the  owner of the Jaihind Land Development Corporation. She  has   alleged  that   by   selling   off   the  terrace   rights,  the applicants pocketed a huge amount thereby causing  wrongful loss to the complainant and wrongful gain to  the applicants. 

5. It   is   her   case   that   in   connection   with   the  transaction   between   the   applicants   and   Shri   Prakash  Purusottamdas   Loda,   she  filed  a   Regular     Civil   Suit  No. 1650/1990 in the Court of the learned City Civil  Judge,   Ahmedabad.   According   to   her,   being   a   dispute  amongst brother, sister and mother, she entered into a  settlement   outside   the   Court   and   pursuant   to   such  compromise,   she   withdrew   the   Regular   Civil   Suit  No.1750 of 1990 from the City Civil Court, Ahmedabad.  According   to   the   complainant,   the   settlement   was  Page 3 of 20 R/CR.MA/6327/2012 CAV JUDGMENT reduced into writing and according to the terms of the  settlement, she gave up her share in the bungalow so  far as the terrace part was concerned as the same had  already been sold away by the applicants in favour of  Shri   Purusottambai   Loda.   However,   it   was   understood  between the applicants and herself that she would have  an   equal   share   in   the   ground   floor   portion   of   the  bungalow. 

6. According   to   the   complainant,   despite   such  understanding   which   was   reduced   into   writing,   the  applicants disposed of the property in favour of the  accused Nos. 4 to 7 named in the complaint. 

7. The complainant, therefore, had to file a Regular  Civil Suit No.1547 of 2009 in the Court of the learned  City   Civil   Judge,   Ahmedabad,   for   a   declaration   and  permanent   injunction.     In   the   said   suit,   the  complainant has prayed for a declaration that she has  50 per cent share in the ground floor of the house and  the   defendant   be   restrained   from   transferring   the  property. According to her, the Civil Court passed an  interim   order   in   terms   of   para   (10)   of   the   interim  injunction application. 

8. It   is   the   case   of   the   complainant   that   despite  there being an order of injunction passed by the City  Civil Court, the same was breached by the applicants  herein, who are the defendants in the said Civil Suit  and,   therefore,   the   complainant   had   to   file   an  application   under   Order   39   Rule   2(a)   of   the   Civil  Page 4 of 20 R/CR.MA/6327/2012 CAV JUDGMENT Procedure   Code  for   the   disobedience  of  the   order   of  injunction. 

9. It also appears that the accused Nos.4 to 7 named  in the complaint claim to be the bonafide purchasers  of the property for value without notice and they have  also filed a Regular Civil Suit No.1663 of 2009 in the  Court of the learned City Civil Judge, Ahmedabad. 

10. According to the complainant, the applicants and  the   other   co­accused   have   committed   an   offence   of  cheating   and   forgery   and   have   also   committed   an  offence of the criminal breach of trust. 

11. It   appears   that   the   learned   Metropolitan  Magistrate   took   cognizance   upon   the   complaint   and  ordered magisterial inquiry under Section 202 of the  Code of Criminal Procedure, 1973. 

12. On completion of the inquiry under Section 202 of  the Code, the learned Metropolitan Magistrate, Court  No.15, Ahmedabad, thought fit to issue process against  the applicants of the offence under Section 420 of the  Indian Penal Code. 

13. The   order   dated   2nd  July   2011   passed   by   the  learned Magistrate makes it clear that the Court did  not   issue   process   of   the   offence   punishable   under  Sections 406465467471 and 384 of IPC as prayed  for by the complainant. 

Page 5 of 20 R/CR.MA/6327/2012 CAV JUDGMENT

14. It   appears   that   on   11th  May   2012,   notice   was  ordered to be issued to the respondents, and in the  meantime, ad­interim relief in terms of para 8(C) was  also granted.  On 21st  February 2013, rule was issued  in the matter. 

15. Mr.   Ashish   M.   Dagli,   the   learned   advocate  appearing   on   behalf   of   the   applicants   vehemently  submitted that the complaint filed by the respondent  No.2 is nothing but an abuse of process of law. Mr.  Dagli   submits   that   although   the   complainant   claims  that she has a share in the disputed property, yet the  Civil Court has to determine her right or share in the  property. Mr.Dagli submits that a pure civil dispute  is sought to be given a colour of a criminal offence.  Mr.   Dagli   submits   that   the   respondent   No.2   is   a  married lady, and whether after the marriage she can  claim any share in the property of her father, is an  issue   which   the   Civil   Court   has   yet   to   decide.   Mr.  Dagli submits that having regard to the facts of the  case   and   the   allegations   levelled   in   the   complaint,  none   of   the  ingredients  to  constitute   an   offence   of  cheating   punishable   under   Section   420   of   the   Indian  Penal Code are spelt out. 

16. In such circumstances, Mr. Dagli prays that the  proceedings of the Criminal Case pending as on today  against the applicants deserve to be quashed. 

17. On the other hand, Ms. Sunita Ahuja, the learned  advocate appearing on behalf of the respondent No.2,  Page 6 of 20 R/CR.MA/6327/2012 CAV JUDGMENT has   vehemently   opposed   this   application   submitting  that the complaint discloses commission of an offence  of criminal breach of trust as well as cheating. Ms.  Ahuja   submits   that   her   client   has   a   share   in   the  property is not in dispute because of the settlement  reduced into writing duly signed by both the parties.  She   submits   that   it   is   only   on   account   of   such  settlement   that   the   Regular   Civil   Suit   No.   1750   of  1990   was   withdrawn   by   the   complainant.   Ms.   Ahuja  submits that after such settlement if the applicants  have disposed of the property in favour of the other  co­accused,   then   it   definitely   amounts   to   criminal  breach of trust and cheating. Ms. Ahuja submits that  this   application   deserves   to   be   rejected   and  if  the  applicants are of the view that no case is made out  against   them,   then   they   may   file   appropriate  application before the trial Court for discharge. 

18. In such circumstances, Ms. Ahuja prays that there  being no merit in this application, the same deserves  to be rejected. 

19. Having   heard   the   learned   counsel   appearing   for  the parties and having gone through the materials on  record,   the   only   question   that   falls   for   my  consideration   is,   whether   the   criminal   proceedings  deserve to be quashed. 

20. As   observed   earlier,   it   is   not   in   dispute   that  the   learned   Magistrate   thought   fit   to   issue   process  only   of   the  offence   punishable   under   Section  420   of  Page 7 of 20 R/CR.MA/6327/2012 CAV JUDGMENT the Indian Penal Code i.e. cheating. Since, Ms. Ahuja  has laid much stress on the offence of the criminal  breach   of   trust   punishable  under  Section   406  of  the  Indian Penal Code, I may look into the same, although  the learned Magistrate has not issued the process of  the   offence   under   Section   406   of   the   Indian   Penal  Code. 

21. The following facts are not in dispute:­

(a) the complainant claims share in the ground floor  of the disputed property. 

(b) her claim is based on her right as a daughter on  the demise of her father dying intested. 

(c) in the year 1990, a Civil Suit was filed by her  being   Regular   Civil   Suit   No.   1757   of   1990   for   a  declaration that she has a share in the property. The  said suit was withdrawn on account of an out of  court  settlement between herself, her mother and brother. 

(d) the applicants have disposed of even the ground  floor  of  the   bungalow   and   for  which  the   complainant  has filed a Regular Civil Suit No. 1547 of 2009, which  is pending as on today in the Court of the City Civil  Judge, Ahmedabad. 

22. Thus, the foundation laid by the complainant for  filing   the   complaint   appears   to   be   the   out   of   the  court settlement reduced into writing, by which it was  Page 8 of 20 R/CR.MA/6327/2012 CAV JUDGMENT decided that day the ground floor part of the bungalow  is sold, the complainant would get 50 per cent share  out   of   the   sale   proceeds.   According   to   the  complainant, the applicants have resiled from the said  settlement. 

23. In   the   Regular   Civil   Suit   No.1547   of   2009,   the  complainant   has   prayed   for   a   declaration   as   regards  her   50   per   cent   share   in   the   ground   floor   of   the  bungalow. This suit is yet to be adjudicated. 

24. 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 
i)   any   direction   of   law   prescribing   the   method   in  which the trust is discharged and Page 9 of 20 R/CR.MA/6327/2012 CAV JUDGMENT
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).

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) ) 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.

25. 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  Page 10 of 20 R/CR.MA/6327/2012 CAV JUDGMENT 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   v.   B.K.   Surekha   and   others,   reported   in  1973(2) SCC 823 as under : 

We have  heard  Mr.  Maheshwarit  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.   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.

26. To put it in other words, the case of cheating  the   dishonest   intention   starts   with   the   very  inception   of   the   transaction.   But   in   the   case   of  criminal breach of trust, the person who comes into  possession   of   the   movable   property   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  Page 11 of 20 R/CR.MA/6327/2012 CAV JUDGMENT each case.

27. The distinction between mere  breach of contract  and   the   offence   of   criminal   breach   of   trust   and  cheating   are   fine   one.   In   case   of   cheating,   it  depends upon the intention of the accused at the time  of   inducement,   which   may   be   judged   by   a   subsequent  conduct   but   for   this   the   subsequent   conduct   is   not  the   sole   test   but   mere   breach   of   contract   which  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   his   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  after   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. But  the offence, i.e. the offence of breach of trust and  cheating   involve   dishonest   intention   but   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 entrustment. In criminal  breach   of   trust,   mere   proof   of   entrustment   is  sufficient.   Thus,   in   case   of   criminal   breach   of  Page 12 of 20 R/CR.MA/6327/2012 CAV JUDGMENT trust,   the   offender   is   lawfully   entrusted   with   the  property and he dishonestly misappropriated the same.  Whereas, in case of cheating, the offender practices  fraudulent or dishonest to induce with another person  to deliver the property. In such situation, both the  offences cannot co­exist simultaneously. 

28. I may quote with profit a decision of the Supreme  Court   in   the   case   of   Nageshwar   Prasad   Singh   alias  Sinha v. Narayan Singh, AIR 1999 SC 1480. In the said  case, the allegation of the prosecution was that an  agreement   was   signed   between   the   complainant  respondent   and   the   appellant   whereby   some   land   was  agreed   to   be   sold   by   the   appellant   to   the  complainants on a consideration, and allegedly a part  thereof was paid as earnest money, the balance being  payable in the manner indicated in the deed. The most  important term in the deed was that possession of the  plot would stand transferred to the complainants and  possession in fact was delivered to the complainants  over   which   they   made   certain   constructions.   The  complaint   was   laid   on   the   basis   that   the   appellant  had cheated the complainants of the sum of money they  had paid as earnest money as his subsequent conduct  reflected   that   he   was   not   willing   to   complete   the  bargain for which the complainants had to file a suit  for   specific   performance   which   was   pending   in   the  civil   court.   Held,   that   latter   part   of   illustration 

(g)   to   Section   415,   I.P.C.   illustrates   that   at   the  time when agreement for sell was executed, it could  have, in no event, been termed dishonestly so as to  Page 13 of 20 R/CR.MA/6327/2012 CAV JUDGMENT hold   that   the   complainants   were   cheated   of   the  earnest money, which they passed to the appellant as  part consideration and possession of the total amount  involved   in   the   bargain   was   passed   over   to   the  complainant/respondent   and   which   remained   in   their  possession.   Now   it   is   left   to   imagine   who   would   be  interested for dealing the matter for completing the  bargain   when   admittedly   the   complainants   have   not  performed   their   part   in   making   full   payment.   The  matter was, therefore, before the civil court in this  respect.   The   liability,   if   any,   arising   out   by  breaching   thereof   was   civil   in   nature   and   not  criminal.   Accordingly,   the   appeal   was   allowed   and  complaint proceedings were quashed.

29. It was further held by the Supreme Court in the  case   of   Hridaya   Ranjan   Prasad   Verma   v.   State   of  Bihar, AIR 2000 SC 2341 at Pp. 2345­46 of para 16) as  below :

"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."

30. In   All   Cargo   Movers   (I)   Pvt.   Ltd.   &   others   v.  Dhanesh Badarmal Jain & another, JT 2007 (12) SC 345,  Page 14 of 20 R/CR.MA/6327/2012 CAV JUDGMENT the Apex Court quashed a criminal proceeding on the  premise   that   the   allegations   contained   in   complaint  were   wholly   inconsistent   with   the   pleadings   in   a  collateral civil proceeding. It held as follows :

"17.   We   are   of   the   opinion   that   the   allegations   made   in   the complaint petition, even if given face value and taken   to be correct in its entirety, do not disclose an offence.   For   the   said   purpose,   This   Court   may   not   only   take   into   consideration   the   admitted   facts   but   it   is   also   permissible   to   look   into   the   pleadings   of   the   plaintiff­ respondent No.1 in the suit. No allegation whatsoever was   made against the appellants herein in the notice. What was   contended was negligence and/or breach of contract on the   part  of the  carriers  and  their  agent.  Breach  of  contract   simplicitor   does   not   constitute   an   offence.   For   the   said   purpose,   allegations   in   the   complaint   petition   must   disclose the necessary ingredients therefor. Where a civil   suit is pending and the complaint petition has been filed   one   year   after   filing   of  the   civil   suit,   we   may  for   the   purpose of finding out as to whether the said allegations   are   prima   facie   cannot   notice   the   correspondences   exchanged by the parties and other admitted documents. It   is one thing to say that the Court at this juncture would   not consider the defence of the accused but it is another   thing to say that for exercising the inherent jurisdiction   of   this   Court,   it   is   impermissible   also   to   look   to   the   admitted   documents.   Criminal   proceedings   should   not   be   encouraged, when it is found to be mala fide or otherwise   an   abuse   of   the   process   of   the   Court.   Superior   Courts   while   exercising   this   power   should   also   strive   to   serve   the ends of justice." 

31. In   K.L.E.   Society   &   others   v.   Siddalingesh,  (2008)   4   SCC   541,   on   a   similar   issue,   the   Supreme  Court quashed a criminal proceeding labeling it to be  an   abuse   of   process   of   Court   as   the   allegations  contained   in   the   complaint   ran   contrary   to   the  averments   made   in   the   petition   filed   under   the  Industrial   Disputes   Act.   The   Apex   Court   held   as  follows : 

"7.   One   thing   is   clear   on   reading   of   High   Court's   reasoning that the High Court came to the conclusion that   deductions   were   made   without   any   rhyme   and   reason   and   without   any   basis.   That   was   not   the   case   of   the   complainant.   On   the   other   hand,   it   tried   to   make   out   a   case   that   the   deduction   was   made   with   an   object.   That   Page 15 of 20 R/CR.MA/6327/2012 CAV JUDGMENT obviously,   was   the   foundation   to   substantiate   claim   of   entrustment.   On   a   close   reading   of   the   complaint   it   is   clear that the ingredients of Sections 403, 405 and 415 do   not   exist.   The   statement   made   in   the   complaint   runs   contrary to the averments made in the petition in terms of   Section 33­(C) (2)."

32. In State of Orissa v. Debendra Nath Padhi, (2005)  SCC (Cri.) 415, the Supreme Court held that the High  Court   could   take   into   account   materials   of  "unimpeachable   character   of   sterling   quality"   while  exercising   its   inherent   powers   to   quash   a   criminal  proceeding and observed as follows :­  "29. Regarding the argument of accused having to face the   trial  despite  being  in a position  to  produce  material  of   unimpeachable  character  of sterling  quality,  the width of   the powers of the High Court under Section 482 of the Code   and Article 226 of Constitution is unlimited whereunder in   the   interests   of   justice   the   High   Court   can   make   such   orders as may be necessary to prevent abuse of the process   of   any   Court   or   otherwise   to   secure   the   ends   of   justice   within the parameters laid down in Bhajan Lals case.

33. In   Vijaya   Rao   v.   State   of   Rajasthan   &   another  (2005) SCC (Cri.) 1600, the Supreme Court held that  merely   using   expressions   like   "fraudulent  representation"   and   "malafide   intention"   does   not  give   rise   to   an   inference   that   the   complaint  discloses the ingredients of the offence of cheating. 

34. In Hridaya Ranjan Prasad Verma & others v. State  of Bihar & another (2000) SCC (Cri.) 786, the Supreme  Court   succinctly   laid   down   the   distinction   between  breach   of   contract   in   one   hand   and   the   offence   of  cheating in the other.

"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  to inducement  which   may   be   judged   by   his   subsequent   conduct   but   for   this   subsequent   conduct   is   not   the   sole   test.   Mere   breach   of   Page 16 of 20 R/CR.MA/6327/2012 CAV JUDGMENT 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."

35. Criticizing   the   institution   of   malicious   and  frivolous criminal proceeding against individuals, the  Supreme Court in PEPSI Foods Ltd. & another v. Special  Judicial   Magistrate   &   Ors.,   (1998)   SCC   (Cri.)   1400,  held as follows: 

"28.   Summoning   of   an   accused   in   a   criminal   case   is   a   serious matter. Criminal law cannot be set into motion as   a matter of course. it is not that the complainant has to   bring only two witnesses to support his allegations in the   complaint   to   have   the   criminal   law   set   into   motion.   The   order of the magistrate summoning the accused must reflect   that he has applied his mind to the facts of the case and   the  law  applicable  thereto.  He  has  to examine  the  nature   of allegations made in the complaint and the evidence both   oral and documentary in support thereof and would that be   sufficient   for   the   complainant   to   succeed   in   bringing   charge home to the accused. It is not that the Magistrate   is   a   silent   spectator   at   the   time   of   recording   of   preliminary   evidence   before   summoning   of   the   accused.   Magistrate   has   to   carefully   scrutinise   the   evidence   brought   on   record   and   may   even   himself   put   questions   to   the   complainant   and   his   witnesses   to   elicit   answers   to   find out the truthfulness of the allegations  or otherwise   and  then  examine  if any  offence  is prima  facie  committed   by all or any of the accused."

36. In   B.Suresh   Yadav   v.   Sharifa   Bee   &   another,   JT  (2007) 12 SC 341, the Supreme Court again highlighted  the distinction between a mere breach of contract and  the offence of cheating. 

37. In   Inder   Mohan   Goswami   &   another   v.   State   of  Uttaranchal   &   others,   (2007)12   SCC   1,   the   Supreme  Court analysed inherent powers of the High Court under  Page 17 of 20 R/CR.MA/6327/2012 CAV JUDGMENT Section 482 as follows : 

"23.   This   court   in   a   number   of   cases   has   laid   down   the   scope   and   ambit   of   courts'   powers   under   section   482   Cr.P.C.   Every   High   Court   has   inherent   power   to   act   ex   debito   justitiae   to   do   real   and   substantial   justice,   for   the administration of which alone it exists, or to prevent   abuse   of   the   process   of   the   court.   Inherent   power   under   section 482 Cr.P.C. can be exercised: 
(i) to give effect to an order under the Code; 
(ii) to prevent abuse of the process of court, and 
(iii) to otherwise secure the ends of justice. 

24. Inherent powers under section 482 Cr.P.C. though wide   have   to   be   exercised   sparingly,   carefully   and   with   great   caution   and   only   when   such   exercise   is   justified   by   the   tests   specifically   laid   down   in   this   section   itself.   Authority   of   the   court   exists   for   the   advancement   of   justice. If any abuse of the process leading to injustice   is   brought   to   the   notice   of   the   court,   then   the   Court   would   be   justified   in   preventing   injustice   by   invoking   inherent   powers   in   absence   of   specific   provisions   in   the   Statute." 

38. In my view, Section 420 of the Indian Penal Code  has no application worth the name even if the entire  allegations levelled by the complainant are accepted  as   true.   The   learned   Magistrate   could   have   examined  the complaint from the view point of the offence of  the criminal breach of trust as defined and explained  under   Section   405   of   the   Indian   Penal   Code   and  punishable under Section 406 of the Indian Penal Code.  However, in my view no case of even criminal breach of  trust is made out. The complainant will have to obtain  a decree from the Civil Court as regards her share in  the property and it is only after such declaration is  granted by the Civil Court, then probably the picture  would   be   clear.   Although   the   complainant   has   placed  strong reliance on the settlement between herself and  the applicants reduced into writing, yet the same has  Page 18 of 20 R/CR.MA/6327/2012 CAV JUDGMENT been disputed by the applicants. In my opinion, mere  breach   of   the   terms   of   the   settlement,   even   if  believed, would not constitute a criminal offence so  as to prosecute the applicants. 

39. In the result, this application is allowed.  The  further   proceedings   of   the   Criminal   Case   No.600   of  2011 pending in the Court of the learned Metropolitan  Magistrate, Court No.15, Ahmedabad are hereby ordered  to be quashed. All consequential proceedings pursuant  thereto also stand terminated. Rule is made absolute. 

40. Since the root of all problems and dispute is the  property, I deem fit to direct the learned City Civil  Judge   to   take   up   the   Regular   Civil   Suit   No.1547   of  2009 and the Regular Civil Suit No. 1663 of 2009 for  hearing expeditiously and see to it that the same are  disposed of within a period of six months from today. 

41. It   is   needless   to   clarify   that   none   of   the  observations made by this Court in this judgment shall  have   any   bearing   so   far   as   the   civil   rights   of   the  parties   are  concerned.   The  two   civil   suits   shall   be  decided by the Civil Court on their own merits and on  the   basis   of   the   evidence   that   may   be   led   by   the  parties,   oral   as   well   as   documentary.     The   learned  Civil Judge shall in no manner be influenced by any of  the observations made by this Court in this judgment.

42. In view of the order passed in the main matter,  the connected Criminal Misc. Application No.11550 of  Page 19 of 20 R/CR.MA/6327/2012 CAV JUDGMENT 2013   has   become   infructuous   and   is   accordingly  disposed of.   

(J.B.PARDIWALA, J.) Manoj Page 20 of 20