Mere breach of contract does not attracts offence of criminal breach of trust and for offence under Section 405 IPC entrustment is necessary - Allahabad HC

Case :- APPLICATION U/S 482 No. - 2229 of 2022

Applicant :- Yogeshwar Sood

Opposite Party :- State Of Uttar Pradesh

Through Its Principal Secretary Home And Another Counsel for Applicant :- Vineet Vikram,Dhirendra Kumar Srivastava,Hari Krishna Singh,Imran Ullah Counsel for Opposite Party :- G.A.,Bhanu Prakash Verma,Shashi Kant Shukla

With Case :- APPLICATION U/S 482 No. - 4627 of 2022

Applicant :- Gianeshwar Sood

Opposite Party :- State Of U.P. Through Principal Secretary, Home And Another Counsel for Applicant :- Vineet Vikram,Dhirendra Kumar Srivastava,Hari Krishna Singh Counsel for Opposite Party :- G.A.,Amarnath Tripathi,Bhanu Prakash Verma,Pankaj,Shashi Kant Shukl

Hon'ble Sameer Jain,J.

1. Both the Applications U/S 482 Cr.P.C. No. 2229 of 2022 and 4627 of 2022 are connected matters and in both the applications cognizance order dated 05.11.2020 as well as entire proceedings of Case No. 1327 of 2020 pending in the Court of ACJM, Court No.1, Mathura arising out of Case Crime No. 648 of 2019, under Section 409, 420 IPC, Police Station Kotwali, District Mathura have been challenged, therefore, both the applications are being decided by the common order.

2. Learned AGA does not propose to file any counter affidavit. However, pleadings between applicants and opposite party no.2 (informant) have been exchanged.

3. Heard Sri Dhirendra Kumar Srivastava and Sri Hari Krishna Singh, learned counsels for the applicants, Sri Amarnath Tripathi, Sri Bhanu Prakash Verma and Sri Shashi Kant Shukla, learned counsels for opposite party no.2 and Dr. S.B.Maurya, learned AGA-I, for the State.

4. The instant applications under Section 482 Cr.P.C. have been filed by the applicants with a prayer to quash the cognizance order dated 05.11.2022 as well as entire proceeding of Case No. 1327 of 2020 pending in the Court of ACJM, Court No.1, Mathura arising out of Case Crime No. 648 of 2019, under Sections 409, 420 IPC, Police Station Kotwali, District Mathura. Factual Matrix

5. Opposite party no.2 lodged FIR against applicants under Sections 409, 420 IPC on 31.08.2019 at Case Crime No. 648 of 2019 at Police Station Kotwali, District Mathura and as per allegation made in the FIR, informant/opposite party no.2 made a Golden Chatra on the order of the applicants weighing about 3.352 Kilogram and 420 miligram valuing about 1,31,36,289/- and handed over the same to the applicants on 06.04.2018 and applicants promised him that within a week they will make the payment and on 09.05.2018 applicants donated the Golden Chatra at Badrinath Dham and when more than a month passed then informant demanded his money but applicants stated that within 2-4 months they will make the payment but they did not make the payment and thereafter they refused to make any payment. According to the FIR, applicants were having intention to cheat informant since beginning and thus they committed fraud.

6. After registration of the FIR, investigation was conducted and during investigation Investigating Officer recorded the statement of 2 of 23 opposite party no.2, the informant and he reiterated the version of the FIR. During investigation, Investigating Officer also recorded the statements of some independent witnesses and they stated that applicants did some interior work of the house of the informant and estimate of the renovation was rupees 9.5 Crore but informant i.e. opposite party no.2 paid only Rs. 1.2 Crore and due to this reason some dispute arose between applicants and informant and applicants also filed a civil suit in this regard against informant before Civil Judge (Junior Division), Ludhiana vide Case No. 7461 of 2019 and only due to this reason informant lodged FIR of the present case against the applicants after cooking up false and fabricated story and in fact informant did not want to pay the remaining amount to the applicants. These independent witnesses also stated that after the alleged date of handing over the Golden Chatra to the applicants, informant deposited Rs. 10 Lakhs in the account of the firm of the applicants. After investigation on 16.12.2019 Investigating Officer submitted final report in the present matter.

7. From the record, it reflects that during pendency of final report before the court concerned informant i.e. opposite party no.2 moved an application for further investigation before Inspector General of Police, Agra and on 06.01.2020, Inspector General of Police, Agra transferred the investigation from District Mathura to District Agra and directed the SSP, Agra to allot further investigation of the case to some competent police officer and on the direction issued by Inspector General, Agra further investigation of the case was commenced and during further investigation subsequent statement of informant i.e. opposite party no.2 was recorded and he reiterated his earlier version recorded by earlier Investigating Officer although in his subsequent statement he admitted the fact that applicants 3 of 23 informed him that they are in the business of interior decoration and he gave them a contract to renovate his house. He further stated that applicants provided him estimate of Rs. 9.5 Crore for renovation. Informant i.e. opposite party no.2 also stated that on different dates he transferred number of amounts in the account of the firm of applicants and made a request to them to start the renovation work of his house and thereafter applicants sent some materials of about Rs. 8,48,000/- and in the meantime applicants stated to him that they wanted to donate a Golden Chatra at Badri Nath Dham and they placed the order in this regard to him and on their verbal order he prepared a Golden Chatra of about 3.352 Kilogram and 420 miligram and cost of the Chatra was Rs. 1,31,36,289/- and handed over the same to the applicants on 06.04.2018 but they did not make the payment. In his second statement opposite party no.2 further stated that as applicants were doing the renovation work of his house, therefore, he deposited Rs. 10 lakhs on 12.06.2018 in the account of the firm of the applicants i.e. after handing over the Golden Chatra to the applicants. Opposite party no.2 further stated that on 12.06.2019 applicants sent legal notice to him and also filed civil suit against him in the court of Civil Judge (Junior Division), Ludhiana and thereafter on 31.08.2019 he lodged FIR of the present case.

8. During further investigation, Investigating Officer also recorded the statement of Pundereep Goswami Ji Maharaj. He stated that Golden Chatra was made by the informant.

9. During further investigation, again investigation was transferred from District Agra to Mathura by the order of the Inspector General of Police, Agra on the application of the informant i.e. opposite party no.2 and thereafter on 14.10.2020 statement of Ashok Kumar Agrawal, the brother of the informant was recorded and he also stated that informant handed over the work of renovation of his house to the applicants and they provided estimate of about rupees 9.5 Crore and thereafter opposite party no.2 transferred 1.10 Crore in the account of the firm of the applicants and thereafter applicants sent materials of about Rs. 1,48,000/- but they did not start any work of renovation and thereafter they by playing fraud got manufactured Golden Chatra from the informant amounting to Rs. 1,31,36,289/- weighing about 3.352 Kilogram and 420 miligram and donated the same at Badri Nath Dham and did not make the payment of Golden Chatra. Ashok Kumar Agrawal, the brother of the informant also stated that on 12.06.2018 i.e. after alleged handing over the Golden Chatra to the applicants by the informant, Rs. 10 Lakhs were transferred by opposite party no.2 in the account of the firm of applicants.

10. From the record, it further reflects that during further investigation, Investigating Officer made query from Badri Nath Kedar Nath Samiti and on 07.02.2020 Samiti provided its reply and as per reply, applicants on 09.05.2018 donated a Golden Chatra at Badri Nath Dham weighing about 3.354 Kilogram and entry of the same was made on 24.10.2018 at the register of the temple. It appears from the record that after further investigation on 16.10.2020 charge-sheet was submitted against the applicants in the present matter and after submission of the charge-sheet cognizance was taken and summons were issued to the applicants on 05.11.2020.

11. Hence the present application. Submission on behalf of the applicants

12. Learned counsel for the applicants submitted that entire allegations made against the applicants are totally false and baseless 5 of 23 and in fact applicants never placed any order to the opposite party no.2 with regard to the Golden Chhatra. He submits, applicants are in the business of interior designing and informant engaged them for the purpose of renovation of his house and in this regard an estimate of Rs. 9.5 Crore was given by the applicants to him and thereafter work of renovation of the house of the informant (Opposite Party No. 2) was started and Opposite Party No. 2 transferred Rs. 1.2 crore in the account of the firm of the applicants but thereafter some dispute arose between the parties with regard to the remaining payment and in this regard firm of the applicants sent a legal notice to the Opposite Party No. 2 on 12.6.2019 through its counsel and demanded the remaining dues of Rs. 8.3 crore and Opposite Party No. 2 gave reply to the same through his advocate on 26.6.2019 and stated in his reply that in spite of advance payment of Rs. 1.2 crore applicants did not even start renovation work of his house and alleged that applicants committed fraud.

13. He further submits, in reply dated 26.6.2019 Opposite Party No. 2 did not state about the fact of Golden Chhatra and this fact clearly suggest that only due to the dispute arose between the parties with regard to the payment of renovation of the house of the informant the FIR of the present case was lodged against the applicants by setting up a false and concocted story.

14. He further submitted that firm of the applicants also replied on 19.9.2019 but in the meantime on 31.8.2019 Opposite Party No. 2 has lodged FIR of the present case against the applicants. He further submitted that there is no admissible evidence on record which can show that applicants placed any order for making of Golden Chhatra. He further submitted that the present dispute is purely civil dispute and even if applicants failed to keep promise to make payment of 6 of 23 golden chhatra as alleged then also no criminal liability could be fastened against them.

15. He further submitted that from the subsequent statement of the Opposite Party No. 2 and his brother Ashok Kumar Agrawal recorded during further investigation, it is evident that the amount of Rs. 10 lac was transferred by Opposite Party No. 2 in the account of the firm of the applicants after about two months from the date of alleged handing over the Golden Chhatra to the applicants and this fact clearly suggest that there was no dispute pending between the parties with regard to the Golden Chhatra rather the dispute was pending with regard to the renovation of the house of informant which was being done by the firm of the applicants.

16. He further submitted that as informant/ Opposite Party No. 2 failed to make the payment of the balance amount of Rs. 8.3 crore to the applicants, therefore, the firm of the applicant filed a civil suit for damages against Opposite Party No. 2 on 21.9.2019 which is still pending. He further submitted that except the verbal allegation there is also no evidence on record which can show that Opposite Party No. 2 handed over the Golden Chhatra to the applicants.

17. He further submitted that in fact the Golden Chhatra was not individually donated by the applicants at Badrinath Dham but it was handed over by the group of devotees at Badrinath Dham and this fact is evident from the letter of Maharshi Mukta Seva Mission which has been annexed as Annexure No. 19 to the affidavit filed in support of the present application. He further submitted that Uttarakhand Government in the year 2021 has constituted Uttarakhand Char Dham Management Board (in short Board) to look after the working of the temples in the State and abolished Badrinath Kedarnath Mandir Samiti which earlier looked the working of the 7 of 23 temples in the State and Maharshi Mukta Seva Mission through its letter dated 15.4.2021 informed the newly constituted Uttarakhand Char Dham Management Board that on 09.05.2018 the Golden Chhatra was donated by groups of devotees and also apprised the Board about the wrong information furnished by the earlier Samiti to the Investigating Officer and also requested to issue correct information. He further submits, after that on 26.04.2021 the Board sent letter to Maharshi Mukta Sewa Mission and informed that Golden Chhatra was collectively donated by large numbers of devotees on 09.05.2018 and entry of the same has been made in the record of the temple. He further submits, therefore, it is evident that the Golden Chhatra was donated collectively by number of devotees and not by applicants individually.

18. He further submitted that even if the allegations are accepted then also no offence under Section 409, 420 IPC is made out against the applicants as there is no evidence on record which can show that applicants were having any intention to cheat the informant/Opposite Party No. 2 since beginning.

19. He further submitted that admittedly applicants are neither public servant nor banker nor merchant nor broker nor attorney nor agent, therefore, offence under Section 409 IPC is not made out against them. He further submitted that without any application of mind in routine manner cognizance was taken by the Court concerned, therefore, cognizance order dated 5.11.2020 and proceedings pending against the applicants before the Court concerned are liable to quashed. Submission made on behalf of the respondents

20. Learned counsels for the informant as well as learned AGA submitted that from the perusal of the record it appears that 8 of 23 applicants committed offence under Section 409, 420 IPC and they were having intention since beginning to deceit the informant and in spite of receiving the Golden Chhatra of about Rs. 1,31,36,289/- they did not pay the amount and donated the Chhatra at Badrinath Dham, thus committed offence of cheating and criminal breach of trust and it cannot be said that it was merely a breach of a promise.

21. Learned counsel for the informant further argued that from the perusal of the statement of the Opposite Party No. 2 and other witnesses it is apparant that on the order placed by applicants Golden Chhatra was made by the informant and he handed over the same to them but they failed to make the payment of the same and this fact shows that applicants were having intention to cheat the informant. He further submitted that from the letter of Badrinath Kedarnath Mandir Samiti which was sent by the Samiti to the Investigating Officer it reflects that applicants were the persons who donated the Golden Chhatra at Badrinath Dham and at this stage it cannot be said that the Golden Chhatra was donated collectively by the devotees rather there is evidence on record which can clearly shows that applicants were the persons who donated the same at Badrinath Dham.

22. He further submitted that as applicants being interior decorator were doing some work of renovation of the house of Opposite Party No. 2, therefore, in fiduciary relationship without any written agreement, on the verbal order placed by the applicants Opposite Party No. 2 made the Golden Chhatra and handed over it to them and as work of renovation of the house of the Opposite Party No. 2 was under way, therefore, Opposite Party No. 2 even after handing over the Golden Chhatra to the applicants transferred the amount of Rs. 10 lacs in the account of the firm of the applicants with regard to renovation work and from this fact it cannot be presumed that no dispute with regard to Golden Chhatra was pending between the parties.

23. He further submitted that as the dispute with regard to the payment of the renovation of the house of the informant and Golden Chhatra were two different disputes, therefore, in reply to the legal notice of the applicants, Opposite Party No. 2 did not disclose the fact about Golden Chhatra and therefore, it also cannot be presumed on the basis of the reply of the legal notice given by the Opposite Party No. 2 that no such dispute with the regard to the payment of the Golden Chhatra was existed.

24. He further submitted that applicants by playing fraud with deceitful intention duped amount of more than Rs. 1,31,00,000 of the informant. He further submitted that as there is prima facie sufficient evidence against the applicants on record, therefore, Court concerned rightly took the cognizance and issued the summons.

25. He further submitted that the previous investigation could not be properly conducted and with the connivance of the applicants, first Investigating Officer submitted final report in the present matter and after further investigation on the basis of evidence collected during further investigation charge-sheet was filed against applicants, therefore, the instant applications filed on behalf of the applicants are devoid of merits and are liable to be dismissed.

Analysis

26. I have given my thoughtful consideration on the rival submissions advanced by learned counsels for both the parties and perused the material placed on record.

27. The power of this Court with regard to its inherent jurisdiction has been discussed by Three Judges Bench of the Apex Court in case of R.P. Kapur Vs. State of Punjab AIR 1960 SC 866 and Three Judges Bench of the Apex Court summarised the categories of cases where inherent power can or should be exercised to quash the proceedings:- (i) Where it manifestly appears that there is a legal bar against the institution or continuance of proceedings for example want of sanction, (ii) Where allegation in the first information report or complaint if taken at its face value and accepted in their entirety do not constitute the offence alleged, (iii) Where the allegations constituted an offence but there is no legal evidence adduced or the evidence adduced clearly or manifestly fails to prove the charges.

28. The Apex Court in its celebrated judgement of State of Haryana and others Vs. Bhajan Lal and other 1992 Supp (1) SCC 335 considered in detail the scope of this Court under Section 482 Cr.P.C. and/ or Articles of 226 of Constitution of India and identified the following categories in which proceedings can be quashed and observed in paragraph 102 as:- "102. In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under Section 482 of the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised. (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 uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused. (4) Where, the allegations in the FIR do not constitute a cognizable offence but constitute only a noncognizable offence, no 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 ground for proceeding 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 proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party. (7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge."

29. Recently Three Judges Bench of the Supreme Court in the case of M/s Neeharika Infrastructure Pvt. Ltd. Vs. State of Maharashtra and others AIR (2021) SC 1918 also occasioned to discuss the scope of Section 482 Cr.P.C. and Article 226 of Constitution of India and observed that if a case falls under the parameters of R.P. Kapur case (supra) and Bhajan Lal case (supra) then this Court is having jurisdiction to quash the proceedings by invoking its jurisdiction under Section 482 Cr.P.C.

30. The Three Judges Bench of the Apex Court in case of Prabhatbhai Aahir alias Parbatbai Bhimsinhbhai Karmur and others Vs. State of Gujarat and another (2017) 9 SCC 641 observed that Section 482 Cr.P.C. is pre-faced with an overriding provision and this Court being a superior Court has the inherent power to make such order as necessary (i) to prevent an abuse of the process of any Court; or (ii) otherwise to secure the ends of justice.

31. Again apex Court in case of Kapil Agarwal and others Vs. Sanjay Sharma and others (2021) 5 SCC 524 observed with regard to power of this Court under Section 482 Cr.P.C. as:- "As observed and held by this Court in catena of decisions, inherent jurisdiction under Section 482 Cr.P.C. and/or under Article 226 of the Constitution is designed to achieve salutary purpose that criminal proceedings ought not to be permitted to degenerate into weapon of harassment. When the Court is satisfied that criminal proceedings amount to an abuse of process of law or that it amounts to bringing pressure upon accused, in exercise of inherent powers, such proceedings can be quashed."

32. The law with regard to the power of this Court under Section 482 Cr.P.C. is settled that this Court cannot scuttle a legitimate prosecution at its inception and the inherent power should be used sparingly with abundant caution but at the same time if it appears that even if entire allegations are accepted and even then no offence is made out or proceedings has been initiated with mala-fide intention only to harass the accused persons then in the interest of justice and to secure the ends of justice this Court should invoke its jurisdiction under Section 482 Cr.P.C. and may quash the proceedings.

33. In case at hand, proceedings pending against the applicants relates to Sections 409, 420 IPC and therefore, question before this Court is, whether the offences of cheating and criminal breach of trust have been made out from the face value of the allegations. Following the well settled principle of law, contents of the allegations would have to be taken as a whole to deduce as to whether the ingredients of the offence have been duly established.

34. In the present matter, the FIR was lodged on 31.8.2019 and according to the FIR applicants placed an order for Golden Chhatra and on the order of the applicants a Golden Chhatra was made by the informant and it was handed over to them and applicants promised that within a week they will make the payment but when more than one month was passed then informant demanded their dues but applicants did not make the payment, therefore, as per allegation made against the applicants, they failed to fulfil their promise. Therefore, question arises if allegations made against the applicants are accepted then offences under Section 420, 409 are made out or not.

35. The ingredients of the offence of cheating and dishonestly inducing delivering of property are spelt out in Section 420 of IPC it reads as follows: 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.

36. Therefore, for offence under Section 420 IPC cheating and dishonest inducement to deliver the property is necessary.

37. In Hridaya Ranjan Prasad Verma Vs. State of Bihar (2000) 4 SCC 168, the Apex Court interpreted Section 415 and 420 of IPC and hold that fraudulent and dishonest intention is a pre-condition to constitute the offence of cheating the relevant extract from the judgment are as followes:- “14. On a reading of the section it is manifest that in the definition there are set forth two separate classes of acts which the person 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. 15 of 23 15. In determining the question it has to be kept in mind that the distinction between mere breach of contract and the offence of cheating is a fine one. It depends upon the intention of the accused at the time of inducement which may be judged by his subsequent conduct but for this subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, that is the time when the offence is said to have been committed. Therefore it is the intention which is the gist of the offence. To hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise. From his mere failure to keep up promise subsequently such a culpable intention right at the beginning, that is, when he made the promise cannot be presumed.” (emphasis supplied)

38. In Dalip Kaur Vs. Jagnar Singh (2009) 14 SCC 696, Apex Court held that a dispute arising out of a breach of an agreement would not amount to an offence of cheating under Section 415 and 420 IPC and observed as:- “9. The ingredients of Section 420 of the Penal Code are: “(i) Deception of any persons; (ii) Fraudulently or dishonestly inducing any person to deliver any property; or (iii) To consent that any person shall retain any property and finally intentionally inducing that person to do or omit to do anything which he would not do or omit.” 10. The High Court, therefore, should have posed a question as to whether any act of inducement on the part of the appellant has been raised by the second respondent and whether the appellant had an intention to cheat him from the very inception. If the dispute between the parties was essentially a civil dispute resulting from a breach of contract on the part of the appellants by non-refunding the amount of advance the same would not constitute an offence of cheating. 16 of 23 Similar is the legal position in respect of an (2009) 14 SCC 696 offence of criminal breach of trust having regard to its definition contained in Section 405 of the Penal Code. (See Ajay Mitra v. State of M.P. [(2003) 3 SCC 11 : 2003 SCC (Cri) 703])” (emphasis supplied)

39. Therefore, from the prenciple laid down by the Apex Court with regard to an offence under Section 420 IPC it appears that for offence under Section 420 IPC it is necessary that a person had fraudulent or dishonest intention at the time of making the promise and 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.

40. Applying the above principle in case at hand, I find no offence under Section 420 IPC is made out against the applicants as from the allegation it appears that applicants failed to keep their promise to make the payment of alleged Golden Chhatra and there is no evidence on record which can suggest that applicants were having dishonest and fradulent intention at the time of making the promise and from the allegation it appears that they merely breached the promise which does not attract Section 420 IPC.

41. Section 409 IPC deals with criminal breach of trust by public servant or by banker, merchant or agent and reads as follows:- 409. Criminal breach of trust by public servant, or by banker, merchant or agent.—Whoever, being in any manner entrusted with property, or with any dominion over property in his capacity of a public servant or in the way of his business as a banker, merchant, factor, broker, attorney or agent, commits criminal breach of trust in respect of that property, shall be punished with [imprisonment for life], or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine. 17 of 23

42. Therefore from the perusal of Section 409 IPC it appears that who ever being public servant or in way of his business as banker, merchant, factor, broker, attorney or agent commits offence of criminal breach of trust then he will be liable under Section 409 IPC.

43. In case at hand, applicants are neither public servants nor they are bankers nor they in way of their business as a merchant or broker or attorney or agent committed the alleged offence, therefore, offence under Section 409 IPC against the applicant is also not made out.

44. However, charge-sheet against the applicants has not been filed under Section 406 IPC but question also arises whether offence of criminal breach of trust stipulated under Section 405 IPC against the applicants is made out.

45. In Section 406 IPC punishment has been provided for offence of criminal breach of trust and offence of criminal breach of trust has been defined under Section 405 IPC which read as followes :- 405. Criminal breach of trust.—Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits “criminal breach of trust”. Explanation 2[1].—A person, being an employer 3[of an establishment whether exempted under section 17 of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952), or not] who deducts the employee’s contribution from the wages payable to the employee for credit  to a Provident Fund or Family Pension Fund established by any law for the time being in force, shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said law, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid.] [Explanation 2.—A person, being an employer, who deducts the employees’ contribution from the wages payable to the employee for credit to the Employees’ State Insurance Fund held and administered by the Employees’ State Insurance Corporation established under the Employees’ State Insurance Act, 1948 (34 of 1948), shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said Act, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid.”

46. The offence of criminal breach of trust contains two ingredients (a) entrusting any person with property, or with any dominion over the property, and (b) the person entrusted dishonestly misappropriated or converts to his own use that property to the detriment of the person to entrusted it.

47. In Anwar Chand Sab Nanadikar Vs. State of Karntaka (2003) 10 SCC 521, the Apex Court observed as:- “7. The basic requirement to bring home the accusations under Section 405 are the requirements to prove conjointly (1) entrustment, and (2) whether the accused was actuated by the dishonest intention or not misappropriated it or converted it to his own use to the detriment of the persons who entrusted it. As the question of intention is not a matter of direct proof, certain broad tests are envisaged which would generally afford useful guidance in deciding whether in a particular case the accused had mens rea for the crime.”

48. In Vijay Kumar Ghai Vs. State of West Bengal (2022) 7 SCC 124 held as followes:- “28. “Entrustment” of property under Section 405 of the Penal Code, 1860 is pivotal to constitute an offence under this. The words used are, “in any manner entrusted with property”. So, it extends to entrustments of all kinds whether to clerks, servants, business partners or other persons, provided they are holding a position of “trust”. A person who dishonestly misappropriates property entrusted to them contrary to the terms of an obligation imposed is liable for a criminal breach of trust and is punished under Section 406 of the Penal Code.”

49. Therefore, from the above principles laid down by the Apex Court, merely breach of contract does not attracts offence of criminal breach of trust and for offence under Section 405 IPC entrustment is necessary.

50. In case at hand, there is no legal evidence of the entrustment of Golden Chhatra to the applicants on record except the verbal allegation made by the informant. Further, there is also no legal evidence on record, which can show that applicants placed an order to the informant for Golden Chhatra except the verbal allegation made by the imformant. It further appears that evidence adduced by prosecution is not sufficient to prove the charges against the applicants.

51. The three judges Bench in the case of R.P. Kapoor (supra) held that if there is no legal evidence available on record or evidence adduced fails to prove the charges, then proceedings can be quashed.

52. Thus, in view of the principle laid down in the case of R.P. Kapoor (supra) offence under Section 405 IPC is also not made out against the applicants.

53. Further, from the perusal of the material placed on record, it appears that applicants were in the business of interior decoration and informant engaged them for renovation of his house and applicants provided him an estimate of Rs. 9.5 crore for renovation and some dispute of amount arose between the parties and in this regard a legal notice was sent by the firm of the applicants to the informant in the month of May, 2019 and informant in the month of June, 2019 replied the same but in the reply it is no where stated about the dispute with regard to Golden Chhatra and thereafter on 31.8.2019 FIR of the present case was lodged. This fact suggest that a dispute with regard to payment of renovation of the house of informant was pending between applicants and the informant and this fact also has been admitted by the informant and his brother in their statements recorded during further investigation, therefore, it appears that informant instituted the present proceeding with mala fide intention and ulterior motive for wrecking vengeance due to private and personal grudge. The Apex Court in case of Bhajan Lal (supra) held that if any proceeding has been initiated with mala fide intention due to personal grudge then it should be quashed.

54. Further, the dispute in hand appears to be primarily civil dispute and law is settled that a criminal prosecution should not be allowed to continue if it attracts civil liability. In case of Indian Oil Corporation Vs. NEPC India Ltd. (2006) 6 SCC 736, the Apex Court observed as:  13..... any effort to settle civil dispute and claim which do not involve any criminal offence by applying pressure through criminal prosecution should be deprecated and discouraged.

55. Therefore, from this point of view too, the proceeding pending against the applicants is liable to be scuttled at its inception.

56. Further, there is one more important aspect in the present case, the FIR of the present case was lodged on 31.8.2019 and from the statements of the informant and his brother recorded under Section 161 Cr.P.C. it reflects that informant after two months from the date of lodgement of the FIR of the present case transferred Rs. 10 lacs in the account of the firm of the applicants with regard to the dispute arose between them in respect of the payment of the renovation of his house and this fact again shows that the FIR of the present case appears to be lodged with mala fied intention as if after two months from the lodgement of the FIR informant transferred such a huge amount towards the applicants then it indicates that no dispute with regard to non-payment of the Golden Chhatra existed till then and this fact again strengthen the version of the defence that due to the dispute with regard to the payment of renovation of the house of the informant the FIR of the present case was lodged.

57. Further, as per allegation, on 06.04.2018 alleged Golden Chhatra was handed over by the informant to the applicants but FIR of the present case was lodged on 31.08.2019 i.e. after about more than a year. Therefore, it appears that when in May, 2019 a legal notice was given by applicants to the informant for non-payment of their dues with regard to the payment of renovation of the house of informant then FIR was lodged in August, 2019.

58. Further, it is hard to believe that an article of more than 1.25 Crores was made by informant on mere verbal order without any advance and it was even handed over to the applicants without any payment.

59. Therefore, from the discussion made above, in my considered view, proceedings pending against the applicants in the aforesaid case are liable to be quashed.

60. Accordingly, proeedings of the aforesaid case pending against the applicants are hereby quashed.

61. Accordingly, both the applications are allowed.

Order Date :- 01.03.2023