Patna High Court - Orders
Ashok Kumar Saha & Ors vs The State Of Bihar & Ors on 26 June, 2014
Author: Aditya Kumar Trivedi
Bench: Aditya Kumar Trivedi
IN THE HIGH COURT OF JUDICATURE AT PATNA
Criminal Writ Jurisdiction Case No.566 of 2013
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Shibamoy Dutta, S/O Late Sati Ranjan Dutta, resident of Rgm 25/3010,
Raghunathpur Vip Road, P.S- Airport, District 24, Parganas, Kolkata.
.... .... Petitioner/s
Versus
The State of Bihar & Ors
.... .... Respondent/s
======================================================
with
Criminal Writ Jurisdiction Case No.709 of 2013
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1. Ashok Kumar Saha, S/O Shri Ramesh Chandra Saha Resident Of Shiv
Nager College Road Extension, P.S. West Agartalla, Tripura
2. Ram Lal Goswami, S/O Late Gopal Chandra Goswami Resdent Of
Vurjanmura, Udaypur, P.S. West Agartalla, Tripura
3. Abir Kundu, S/O Mr. Ganpati Kundu Resident Of Gsk Deb Road, 5th
Bye Lane, P.S. Lade Town, Kolkata, West Bengal
4. Lakhmi Narain, S/O Shri K.S.Ramanujam, Resident Of Muktmala
Complex, Srikishnapur, P.O. Kajipara, P.S. Barasat, Kolkata
.... .... Petitioner/s
Versus
1. The State Of Bihar
2. Mahendra Prasad Gupta, Circle Officer, Sadar Anchal, P.S.- Gandhi
Maidan, Town And District- Patna
3. The Senior Superintendent of Police, Patna
4. The City Superintendent of Police, Patna
5. The Officer-In-Charge, Gardanibagh Police Station, Patna
.... .... Respondent/s
======================================================
with
Criminal Writ Jurisdiction Case No.608 of 2013
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Goutam Kundu, S/O Late Sati Ranjan Dutta, resident of Rgm 25/3010,
Raghunathpur Vip Road, P.S.- Airport, District- 24 Parganas, Kolkata
.... .... Petitioner/s
Versus
1. The State Of Bihar
2. Mahendra Prasad Gupta, Circle Officer, Sadar Anchal, P.S.- Gandhi
Maidan, Town And District- Patna
3. The Senior Superintendent of Police, Patna
4. The City Superintendent of Police, Patna
5. The Officer In-Charge, Gardanibagh Police Station, Patna
.... .... Respondent/s
======================================================
Appearance :
2
(In Cr. WJC No.566 of 2013)
For the Petitioner/s : Mr. S. D. Sanjay-Sr. Advocate
Mr. Chitranjan Sinha-Sr. Advocate
Mr. Ramakant Sharma- Sr. Advocate
Mr. Arjun Kumar-Advocate
Mr. Alok Kumar-Advocate
Priya Gupta-Advocate
For the Respondent/s : Mr. J.P. Karn-AAG-4
Mr. Anjani Kumar Jha-AC to AAG-4
(In Cr. WJC No.709 of 2013)
For the Petitioner/s : Mr. S. D. Sanjay-Sr. Advocate
Mr. Chitranjan Sinha-Sr. Advocate
Mr. Ramakant Sharma- Sr. Advocate
Mr. Arjun Kumar-Advocate
Mr. Alok Kumar-Advocate
Priya Gupta-Advocate
For the Respondent/s : Mr. Ashok Kumar Chaudhary-AAG-13
Mr. Shailendra Kumar Jha-AC to AAG-13
(In Cr. WJC No.608 of 2013)
For the Petitioner/s : Mr. S. D. Sanjay-Sr. Advocate
Mr. Chitranjan Sinha-Sr. Advocate
Mr. Ramakant Sharma- Sr. Advocate
Mr. Arjun Kumar-Advocate
Mr. Alok Kumar-Advocate
Priya Gupta-Advocate
For the Respondent/s : Mr. Ashok Kumar Chaudhary-AAG-13
Mr. Shailendra Kumar Jha-AC to AAG-13
======================================================
CORAM: HONOURABLE MR. JUSTICE ADITYA KUMAR TRIVEDI
CAV ORDER
23 26-06-2014Heard the learned counsel for the petitioners as well as learned counsels representing respondents. Because of the fact that petitioners of all the three petitions are Directors/ Employees of Rose Valley Hotels and Entertainment Limited asking for same relief relating to quashing of their prosecution under Gardanibagh P. S. Case no.141 of 2013, hence heard together and are being disposed of by this common order.
2. At an earlier occasion vide order dated 04.07.2013, 3 coercive steps against petitioners was forbidden and since thereafter, there happens to be dilly delaying tactics and for that petitioners were warned vide order dated 22.08.2013. The subsequent order sheets further show at the instance of petitioners, adjournments were being granted and then, lastly keeping the direction given by the Hon'ble Apex Court in Imtiyaz Ahmad v. State of Uttar Pradesh and others reported in (2012) 2 SCC Page-688 stay was withdrawn. For proper appreciation para-55 is incorporated below:-
Certain directions are given to the High Courts for better maintenance of the Rule of Law and better administration of justice:
While analyzing the data in aggregated form, this Court cannot overlook the most important factor in the administration of justice. The authority of the High Court to order stay of investigation pursuant to lodging of FIR, or trial in deserving cases is unquestionable. But this Court is of the view that the exercise of this authority carries with it the responsibility to expeditiously dispose of the case. The power to grant stay of investigation and trial is a very extraordinary power given to High Courts and the same power is to be exercised sparingly 4 only to prevent an abuse of the process and to promote the ends of justice. It is therefore clear that:
(i) Such an extraordinary power has to be exercised with due caution and circumspection.
(ii) Once such a power is exercised, High Court should not lose sight of the case where it has exercised its extraordinary power of staying investigation and trial.
(iii) The High Court should make it a point of finally disposing of such proceedings as early as possible but preferably within six months from the date the stay order is issued.
3. Against the aforesaid order, petitioners have preferred SLP (Cri.) No.950 of 2014 before the Hon‟ble Apex Court wherein on 04.07.2013, apart from noticing the respective parties, it has been ordered, "in the meanwhile, there shall be an interim order not to take any coercive steps against the petitioners in pursuance to the impugned interim order. However, the petitioners shall not alienate or create encumbrance on the assets of the company i.e. Rose Valley Hotels Entertainment Limited as well as on the assets of the petitioners". As the hearing of these petitions have not been stayed directly or impliedly, on account thereof, matter has been heard and is being disposed of. 5
4. One Mahendra Prasad Gupta, Circle Officer, Sadar, Patna, along with Balram Prasad, Officer-in-Charge, Gardanibagh P.S. jointly inspected the Regional Office of Rose Valley Hotels and Entertainment Limited located at Anisabad, where they arrived on account of assemblage of unruly mob of depositors over murmuring of disappearance of Rose Valley Hotels & Entertainments Limited, which happens to be dealing with non-banking operation fraudulently. On query, the people have said that they have deposited the amount on monthly as well as yearly basis, but now the payment is being deferred on one pretext or the other. They have also come to know that the company is going to disappear with their deposits. Then have disclosed the names of account holder Smt. Samia Devi, Meena Devi, Punam Kumari, Rajiv Kumar, Om Prakash Tiwari, Veena Devi, Ranjit Kumar, Chinta Devi along with dozens of people who after coming to know about disappearance of the Rose Valley Hotels and Entertainment Limited have rushed along with their certificates and demanded money, but neither they (company) are paying the amount nor they are disclosing the date, on which, the payment is to be made. They have further disclosed that on query from the bank officials, they have disclosed that the amount was being deposited against the expenses to be incurred during stay as 6 well as availing lodging and fooding facility while the agents have lured the deposits on an assurance that within five years they will get the double amount being the establishment as non-banking institution. During interrogation, 29 staffs have given in writing that as per standard fixed by the Reserve Bank of India, it happens to be the non-banking institution and got deposits in terms thereof from depositors assuring return of double amount within five years on the pretext of providing holiday resorts, and on account thereof, duped the depositors as well as by such fraudulent action, got the state money siphoned to outside causing financial loss to the State. However, when asked to place relevant license, circular having in favour of company by the RBI or SEBI, they have not produced the same. They have also seized the papers, bonds, cash and accordingly, the aforesaid report happens to be the basis of instant first information report.
5. By referring contents of original petition as well as supplementary affidavit along with annexures, it has been submitted by the learned counsels of the petitioners that the institution of Gardanibagh P.S. Case No.141 of 2013 (Annexure-
1) happens to be illegal as well as suffers from personal grudge and vendetta as is also out of vengeance. It has also been submitted that it happens to be malicious prosecution. It has 7 further been submitted that from plain reading of the written report, it is evident that the informant happens to be unaware with the legal provision and in likewise manner, application of relevant Sections whereunder case has been registered is denunciative because of the fact that neither the allegation justify institution of the case nor the application of sections justify its credence.
6. To buttress their plea, it has been submitted that Rose Valley Hotels and Entertainment Limited (henceforth used as company) has got independent legal identity duly recognized under Company Law having its Head Office at Kolkata, having branch office spread over all-around. Its business happens to be to promote tourism by way of providing accommodation, hospitality during stay to its customers as well as engaged in acquiring properties at different places in the country, for which, no licence is required from any quarter, what to talk about SEBI, or RBI. Prosecution being well aware of the fact that company is doing business duly permissible in the eye of law, as such intentionally and purposely left to implead company as an accused. Because of the fact that petitioners are employees and are engaged in their duty so assigned by the company, and as, the company has not been made an accused, hence criminal prosecution of employees in absence thereof, is not permissible.
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7. It has also been submitted that petitioners are office bearer and not the Board of Directors, responsible for formulating policy of the company. They are simply an employee having no control over affairs of company as well as the deposits made by depositors in favour of the company. Further stressing over status of petitioner Gautam Kundu, it has been submitted that he is yet to come on Company Board. Therefore, their prosecution happens to be illegal.
8. The learned counsel for the petitioners further detailed the working pattern of the company and submitted that to promote and develop its business, the Company has invented Multi-form modal whereunder different kinds of scheme have been launched. Taking into account the recent financial recession which majority of the population is facing leading to financial crunch putting adverse impact upon hotel/ tourism business, forced the company to give certain relaxation/ bonanza/ scheme, whereunder customers were given an option to choose destination, stay, avail quality of service, and for that expenses have been calculated which they may deposit in installment with an assurance that as soon as they deposit the full amount, they will be entitled for availing the facility. However, again at this Stage an option is made available to the depositors either to avail the 9 service or to get the amount returned back. Because of deposit of amount to such long period at the end of company, the company thought under its moral obligation to give some sort of incentive thereupon. But, it does not mean that the company is indulged in non-banking activity, nor the incentive happens to be in form of interest.
9. In order to justify action of the company, by way of supplementary affidavit, apart from averments different annexures have been attached to show different mode of payment against different form of service and further, the option to retain back the amount having different quantum of incentive. By such conduct, it has been submitted that the business activity of the company is not only transparent one, rather depositors are fully acknowledged before opting the scheme and being so, no one could allege that for the purpose of deposit the depositors are being lured or deceived or beguiled.
10. It has also been submitted that up-till-now no complain from any corner has been made by any of the customer regarding non-payment of deposit amount, misappropriation, deception and in likewise manner of false assurance of getting the money doubled in five years. As such, it has been submitted that apart from the fact that whatever allegation has been put under 10 written report happens to be imaginary one, even at a glance did not make out any kind of cognizable offence, hence is fit to be quashed.
11. In its continuity, the learned counsel for the petitioners submitted that admittedly, the company accepts deposits against particular scheme. After its maturity, two options are available before customer. The first one to avail hospitality in an alternative to get back the amount with an incentive. Because of the fact that company has not misappropriated single farthing of depositors nor deceived, allured, beguiled the depositors for the purpose of deposits, as such instant criminal prosecution happens to be unwarranted, uncalled for, nor for such accusation, the prosecution has got prima facie material.
12. It has also been submitted that company is not at all non-banking institution and on account thereof, no license is required from SEBI or RBI. Whatever schemes have been launched, happens to be relating to promotion of hotel industry and nothing more. Furthermore, having no allegation from any corner regarding business transaction, did not justify instant prosecution which is outrightly based upon conjecture and surmises.
13. Learned counsel for the petitioners further 11 submitted that act or omission of petitioners to be seen to justify application of Section whereunder case has been registered. As there happens to be no incidence of misappropriation of amount, therefore, Section 408, 409 of the I.P.C. is not made out. In likewise manner, none of the depositors has been deceived, nor for such purpose forged and fabricated documents have been prepared used, hence no offence under Sections 420, 467, 468 of the I.P.C. is made out. Because of the fact that neither Sections 408, 409, 467, 468, 420 of the I.P.C. is made out, hence question of criminal conspiracy to facilitate aforesaid offence does not arise. Therefore, application of Section 120B of the I.P.C. does not arise.
14. Furthermore, status of informant has also been brought under challenge. In this connection, it has been submitted that at the time of arrival of informant along with O/c of the P.S. concerned, office was already opened. Business was going on. Then in that event, rumour pertaining to disappearance of Company is found not at all appreciable. In likewise manner, the persons whose account numbers have been shown without allegation of non-payment/ deferred payment have also no leg to stand, because of the fact none of those got their tenure matured. Therefore, there was no occasion which could have justified apprehension at the end of prosecution party regarding 12 commission of cognizable offence, hence institution of case is based upon non-est facts.
15. It has also been submitted that bona fide conduct of company has also to be seen. After having the account frozen, company was facing hardship in getting the amount returned to its customer on its maturity and on account thereof, filed C.W.J.C. before this Court, wherein order has been passed de-freezing the accounts paving way to return back deposited amount along with incentive to its customers on its maturity which the company is doing and further undertakes to pay the amount to its customers whenever the term is found matured. In the background of aforesaid factual as well as legal adhering, none of the ingredients of the offences whereunder case has been registered, is made out.
16. Coming to discloser made regarding written information given by 29 employees of the institution, it has been submitted that aforesaid document was not at all out of freewill of the concerned employees rather it was obtained putting them under threat, duress and on account thereof, has got no legal entity. Not only this, the concerned employees have already disclosed the same on supplementary affidavit. Hence, no reliance could be placed thereupon nor is admissible piece of evidence.
17. It has further been submitted that SEBI had laid 13 hand against the petitioners and for that C.W.J.C. has already been filed before the Gowahati High Court, wherefrom, temporary stay has been granted. As such, it has been submitted that for the present SEBI has nothing to say, more particularly in the background of stay granted by the Gauhati High Court. Thus, in sum and substance, it has been pleaded that no offence is coming out from the allegation, hence the criminal prosecution launched against the petitioners are fit to be quashed. In support of contention referred A.I.R. 1960 (SC) 866, 2013(1) P.L.J.R. 710, 2011(1) P.L.J.R. 934, 2012(3) P.L.J.R. 817, 2006(6) SCC 736, 2008(5) SCC 668, 2005(8) SCC 89.
18. On the other hand, learned AAG-4 as well as learned AAG-13 counter meeting with the submission raised on behalf of petitioners have submitted that actually non-banking institution is running under the garb of hotel business which could be perceived from the mode of transaction whereunder by promising to offer lucrative return against the deposits (double within five years), the innocent depositors are being allured to deposit under recurring account, fixed deposit as well as other kinds of deposit to give a slipshod to the R.B.I. as well as SEBI as, for such activities, license was required. Doing the business of non-banking, without any license itself speaks regarding criminal 14 intention because of the fact that on account of aforesaid legal infirmity, the accused has got every opportunity to disappear, whenever it so desires without having effective, proper mode of besieger
19. Furthermore, it has also been submitted that from the First Information Report itself, it is evident that during course of inspection, 29 employees of the institution already reported regarding illegal activities and on account thereof, prima facie case is made out. It is not an offence against depositors only, rather to deceive the R.B.I. as well as SEBI defeating the relevant law on this score, the accused has prepared forged and fabricated document and under the garb of promoting tourism by way of providing hotels and resorts, the company in real sense is engaged in non-banking activity and which happens to be punishable in the eye of law. Furthermore, by preparing such documents, the interest of depositors are always at stake having no legal protection and being so, there is every possibility of disappearance of company at any moment without any legal obligation to repay the amount. It has also been submitted that it is not the proper stage to consider the assertion of petitioners that aforesaid 29 employees have controverted genuineness of assertion of prosecution.
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20. It has also been submitted that mere registration of a case under particular section whereunder there may be deficiency visualizing will not justify quashing of the First Information Report, because of the fact that investigation is the process through which there happens to be ascertainment of the truth and in likewise manner, police report under Section 173 of the Cr.P.C. will guide the future prospect with regard to application of particular section, but afterall, it has to be followed by an order of the Magistrate in terms of Section 190 of the Cr.P.C. on the basis of material collected during course of investigation. In likewise manner, there is every opportunity available before the Investigating Officer to array as an accused whose complicity is found during commission of offence while continuing with investigation, hence, it is premature to say that as the company has not been impleaded as an accused, therefore, prosecution is non-permissible.
21. It has further been submitted that whatever allegation has been levelled that happens to be on account of information having received at that very time. Justifying application of relevant sections in the background of allegation so coming out during interrogation/ inspection of the office as well as from the statement of employees, depositors. Not only this, having 16 perceived the nature of activities, apart from violation of relevant laws relating to running of non-banking institution, investigation will also expose the kind of illegal activity, adopted by the company facilitated by its employee. It has also been submitted that according to own Annexure coupled with submission raised on behalf of petitioners, it is evident that the matter has been taken up seriously by the SEBI and being so, violating the mandate of law on that very score will also attract different sections of the Penal Code as well as other Acts.
22. It has further been submitted that while appreciating the contention raised on behalf of petitioner, class of depositors have also to be seen. The depositors are innocent, rustic, illiterate persons who are hand to mouth. Whether one could expect such kind of persons have their impetus to avail holiday staying at costly hotels and resorts and these activities are sufficient to infer that under garb of tourism business, activity of non-banking institution is being run and to save itself from compliance of legal obligation, forged documents have been prepared.
23. It has further been submitted that terms „incentive‟ has purposely been used. During course of argument petitioners failed to disclose calculation of incentive being paid on 17 the different scheme in different manner. Word „incentive‟ has purposely been introduced to give an eyewash to the whole event, otherwise the payment as incentive is nothing but an interest, which comes under purview of non-banking operation and for that license is required and only to defeat the same, the act of payment of interest has been substituted by incentive. Hence, the written report on its cursory perusal speaks about commission of cognizable offence. Also relied upon 2003(6) SCC 175, 2008(1) SCC 212, 2007(3) 637, AIR (SCW) 2007-44, 2006(6) SCC 728, 2002(1) 652, AIR 2006 (SCW) 1322, AIR 2006(SCW) 5172, AIR 2003 SC 2612.
24. As stated above, acceptance of amount is admitted one and, the amount is being accepted in lieu of providing hospitality by way of fooding and lodging facility going to be availed by the customer under different schemes so launched by the company in order to promote its business of tourism and for that certain criterian have been fixed with an option that in case, the aforesaid facility is not being availed by the customer, the amount so deposited by the customer will be returned at the end of petitioner to the customer along with incentive. While the same has been controverted by the respondents by suggesting that actually non-banking institution is being run under the aforesaid 18 banner, and further overweeningly, used incentive instead of interest in deceitful manner to defeat different laws on this score, which happens to be cumbersome.
25. It is needless to say that right from R.P. Kapoor‟s Case, the Hon‟ble Apex Court is consistent in explaining the criterias whereupon prosecution could be quashed. Aforesaid issues have alaborately been dealt with in State of Hariyana & Ors. Versus Bhajan Lal & Ors reported in AIR 1992 SC 604. whereunder following criterion have been identified justifying quashing of prosecution.
"(1) 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.
(2) 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 of Section 155 (2) of the Code.
(3) Where the uncontroveretd allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of 19 any offence and make out a case against the accused.
(4) Where, the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, on investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code.
(5) 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 grounds for proceedings against the accused.
(6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceedings 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.
(7) Where a criminal proceeding is manifestly attended with malafide 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."
26. Now, the facts of the case has to be seen in the background of rival contentions in order to appreciate whether any 20 of the criterion so propagated by the Hon‟ble Apex Court in Bhajan Lal (Supra) is found applicable or not. After analyzing rival contentions, pleading annexures, it is admitted at the end of petitioners that company accepts deposit which are being executed by its employees. It is also admitted that in case customer did not opt to avail hospitality, money is returned back along with incentive one. Furthermore, deposits are accepted as one time or recurring or through othermodes. According to petitioner, it happens to be as per policy of the company while as per respondents, it happens to be activities of non-banking institution, which has been wrapped with criminal design. Furthermore, apart from disclosure made by employees of the company on this score, depositors have also to be interrogated, hence, needs thorough investigation.
27. Mere registration of case under particular section is not the isometric of the case rather it happens to be guided by the framing of charge. During course of investigation, there happens to be collection of evidence, documentary as well as oral followed with submission of police report in terms of Section 173 of the Cr.P.C. and then thereafter, proper application of relevant sections will be determined at the time of framing of charge as observed In State of Gujarat vs. Girish Radhakrishnan Varde 21 reported in 2014(1) BLJ SC-150 at para-16.
"In spite of this unambiguous course of action to be adopted in a case based on police report under Chapter XII and a magisterial complaint under Chapter XIV and XV, when it comes to application of the provisions of the Cr.P.C. in a given case, the affected parties appear to be bogged down often into a confused state of affairs as it has happened in the instant matter since the magisterial powers which is to deal with a case based on a complaint before the magistrate and the police powers based on a police report/ FIR has been allowed to overlap and the two separate course of actions are sought to be clubbed which is not the correct procedure as it is not in consonance with the provisions of the Cr.P.C. The affected parties have to apprise themselves that if a case is registered under Section 154 Cr.P.C. by the police based on the FIR and the chargesheet is submitted after investigation, obviously the correct stage as to which sections would apply on the basis of the FIR and the material collected during investigation culminating into the chargesheet, would be determined only at the time framing of charge before the appropriate trial court. In the alternative, if the case arises out of a complaint lodged before the Magistrate, then the procedure laid down under 22 Sections 190 and 200 of the Cr.P.C. clearly shall have to be followed".
28. Though, the discussion in depth is being avoided keeping the interest of the parties immuned, however, for the present purpose, it looks pertinent to refer Arun Bhandari v. State of Uttar Pradesh & Others reported in 2013 (2) SCC 801 on the score of cheating:-
"15. Scanning the definition of „cheating‟ the Court opined that there are two separate classes of acts which the persons deceived may be induced to do. In the first place he may be induced fraudulently or dishonestly to deliver any property to any person. The second class of acts set-forth in the section is the doing or omitting to do anything which the person deceived would not do or omit to do if he were not so deceived. In the first class of cases the inducing must be fraudulent or dishonest. In the second class of acts, the inducing must be intentional but not fraudulent or dishonest. Thereafter, the Bench proceeded to state as follows:-
(Hridaya Ranjan Prasad Verma v. State of Bihar, (2000) 4 SCC 168: 2000 SCC (Cri) 786.
"16. 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 23 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."
16. After laying down the principle the Bench in Hridaya Ranjan Prasad Verma v. State of Bihar, (2000) 4 SCC 168: 2000 SCC (Cri) 786 referred to the complaint and opined that : (SCC p.177, para 16) "16. ...Reading the averments in the complaint in entirety and accepting the allegations to be true, the ingredients of intentional deception on the part of the accused right at the beginning of the negotiations for the transaction had neither been expressly stated 24 nor indirectly suggested in the complaint. All that the respondent No.2 had alleged against the appellants was that they did not disclose to him that one of their brothers had filed a partition suit which was pending. The requirement that the information was not disclosed by the appellants intentionally in order to make the respondent No.2 part with property was not alleged expressly or even impliedly in the complaint. Therefore, the core postulate of dishonest intention in order to deceive the complainant- respondent No. 2 was not made out even accepting all the averments in the complaint on their face value and, accordingly, ruled that in such a situation continuing the criminal proceeding against the accused would be an abuse of process of the Court.
17. From the aforesaid decision it is quite clear that this Court recorded a finding that there was no averment in the complaint that intention to deceive on the part of the accused was absent right from the beginning of the negotiation of the transaction as the said allegation had neither been expressly made nor indirectly suggested in the complaint. This Court took note of the fact that only non- disclosure was that one of their brothers had filed a 25 partition suit which was pending and the allegation that such a disclosure was not made intentionally to deceive the complainant was absent. It is worthy to note that this Court referred to certain averments in the complaint petition and scrutinized the allegations and recorded the aforesaid finding.
18. The present case, as we perceive, stands on a different factual matrix altogether. The learned Sessions Judge has returned a finding that there was intention to deceive from the very beginning, namely, at the time of negotiation but the High Court has dislodged the same on the foundation that the respondent No.2 was merely present and there was no privity of contract between the complainant and her. We will advert to the said factual analysis at a later stage after discussing the other authorities which have been placed reliance upon by the learned senior counsel for the respondents.
19. In Murari Lal Gupta (supra) a two-Judge Bench quashed the criminal complaint instituted under Sections 406 and 420 of the IPC on the following analysis: (SCC p.701, para 6) "6. ...The complaint does not make any averment so as to infer any fraudulent or dishonest inducement having been made by the petitioner pursuant to which the respondent parted with the 26 money. It is not the case of the respondent that the petitioner does not have the property or that the petitioner was not competent to enter into an agreement to sell or could not have transferred title in the property to the respondent. Merely because an agreement to sell was entered into which agreement the petitioner failed to honour, it cannot be said that the petitioner has cheated the respondent. No case for prosecution under Section 420 or Section 406 IPC is made out even prima facie. The complaint filed by the respondent and that too at Madhepura against the petitioner, who is a resident of Delhi, seems to be an attempt to pressurize the petitioner for coming to terms with the respondent."
In our considered opinion the factual position in the aforesaid case is demonstrably different and, hence, we have no hesitation in stating that the said decision is not applicable to the case at hand.
20. In B. Suresh Yadav (supra) the complainant, who was defendant in the suit, had filed a written statement from which it was manifest that she at all material times was aware of the purported demolition of the rooms standing on the suit property. It was contended in the written statement that the suit properties were different from the subject-matter of the deed of sale. After filing the written statement 27 the respondent had filed the complaint under Section 420 of the IPC. The Court took note of the fact that there existed a dispute as to whether the property whereupon the said two rooms were allegedly situated was the same property forming the subject-matter of the deed of sale or not and a civil suit had already been filed pertaining to the said dispute. The Court also took note of the fact that at the time of execution of the sale deed the accused had not made any false or misleading representation and there was no omission on his part to do anything which he could have done. Under these circumstances, the Court opined that the dispute between the parties was basically a civil dispute. It is apt to note here that the Court also opined that when a stand had been taken in a complaint petition which is contrary to or inconsistent with the stand taken by him in a civil suit, the same assumes significance and had there been an allegation that the accused got the said two rooms demolished and concealed the said fact at the time of execution of the deed of sale, the matter would have been different. Being of this view, this Court quashed the criminal proceeding as that did amount to abuse of the process of the court. On an x-ray of the factual score, it can safely be stated that the said pronouncement renders no assistance to the lis in question.
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21. Before we proceed to scan and analyse the material brought on record in the case at hand, it is seemly to refer to certain authorities wherein the ingredients of cheating have been highlighted. In State of Kerala v. A. Pareed Pillai and another[8], a two-Judge Bench ruled that : (SCC p.667, para 16) "16. ...To hold a person guilty of the offence of cheating, it has to be shown that his intention was dishonest at the time of making the promise and such a dishonest intention cannot be inferred from a mere fact that he could not subsequently fulfil the promise.
22. In G.V. Rao v. L.H.V. Prasad and others[9], this Court has held thus: (SCC pp. 696-97, para 7) "7. As mentioned above, Section 415 has two parts. While in the first part, the person must "dishonestly" or "fraudulently"induce the complainant to deliver any property; in the second part, the person should intentionally induce the complainant to do or omit to do a thing. That is to say, in the first part, inducement must be dishonest or fraudulent. In the second part, the inducement should be intentional. As observed by this Court in Jaswantrai Manilal Akhaney v. State of Bombay[10] a guilty intention is an essential ingredient of the offence of cheating. In order, therefore, to secure conviction of a person for 29 the offence of cheating, "mens rea" on the part of that person, must be established. It was also observed in Mahadeo Prasad v. State of W.B.[11] that in order to constitute the offence of cheating, the intention to deceive should be in existence at the time when the inducement was offered."
23. In S.W. Palanitkar and others v. State of Bihar and another (2002) 1 SCC 241: 2002 SCC (Cri) 129: AIR 2001 SC 2960, it has been laid down that (SCC p. 250, para 21) "21. ...In order to constitute an offence of cheating, the intention to deceive should be in existence at the time when the inducement was made. It is necessary to show that a person had fraudulent or dishonest intention at the time of making the promise, to say that he committed an act of cheating. A mere failure to keep up promise subsequently cannot be presumed as an act leading to cheating."
24. In the said case while dealing with the ingredients of criminal breach of trust and cheating, the Bench observed thus: -(S.W. Palanitkar Case (2002) 1 SCC 241: 2002 SCC (Cri) 129: AIR 2001 SC 2960, SCC p.246, paras 9-10) "9. The ingredients in order to constitute a criminal breach of trust are: (i) entrusting a person 30 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), 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."
29. Petitioners, by way of supplementary affidavit have made the situation hazy on account of placing different certificate belonging to some of the account holder to show that maturity date is yet to come, controverting the assertion of its 31 employee which they had given to prosecution party at the time of inspection disclosing the mode of working of company, as well as placing the order of the Gauhati High Court exposing presence of SEBI over their activity as well as by way of publishing General Public Notice on that very score.
30. Apart from this, the status of depositors, and the perception whereunder depositors have deposited the amount with company has to be seen whether they deposited the amount to earn interest thereupon, or to avail hospitality along with working pattern of the company. The cumulative effect of aforesaid incidence need thorough investigation as, it not only, expose the mode of entrustment rather functioning of company as non- banking institution or otherwise. In likewise manner, the status of Gautam Kundu one of the petitioners is also to be looked into.
31. The Hon'ble Apex Court in Preeti Gupta and Another v. State of Jharkhand and another reported in (2010)7 SCC 667 at para-19 has observed:-
"The High Court should normally refrain from giving a prima facie decision in a case where all the facts are incomplete and hazy; more so, when the evidence has not been collected and produced before the court and the issues involved, whether factual or legal, are of such magnitude that they cannot be seen in their true 32 prospective without sufficient material. Of course, no hard-and-fast rule can be laid down in regard to cases in which the High Court will exercise its extraordinary jurisdiction of quashing the proceeding at any stage".
32. As such, all the petitions are found devoid of merit and are accordingly dismissed.
(Aditya Kumar Trivedi, J) Vikash/-