1 Reserved on : 19.12.2024 Pronounced on : 22.01.2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 22ND DAY OF JANUARY, 2025 BEFORE THE HON'BLE MR. JUSTICE M. NAGAPRASANNA WRIT PETITION No.12307 OF 2024 (GM – RES) BETWEEN: 1 . MR.KOLA THIRUMALARAJU AGED ABOUT 43 YEARS, S/O LATE KOLA VEERA SWAMY, R/O NO.70 18 12/3, SAITCHUTHA GREEN MEDOWS, VILLA NO.4, SOWJANYA NAGAR, KAKINADA, BESIDE VS LAKSHMI WOMENS COLLEGE, KAKINADA (URBAN), APSP CAMP, EAST GODAVARI, ANDHRA PRADESH – 533 005. 2 . M/S. VENKATESHWARA SEA FOODS REGISTERED UNDER PARTNERSHIP ACT, 1932 HAVING ITS REGISTERED OFFICE AT FLAT NO.D1, NARAYANA GIRI HEIGHTS, POSTAL EMPLOYEES COLONY, SANTHI NAGAR, KAKINADA – 533 003 2 REPRESENTED BY ITS MANAGING PARTNER. ... PETITIONERS (BY SRI KRISHNA S.VYAS, ADVOCATE) AND: 1 . STATE OF KARNATAKA DEPARTMENT OF HOME, VIDHANA SOUDHA, AMBEDKAR VEEDHI, BENGALURU – 560 001 REPRESENTED BY HOME SECRETARY. 2 . THE STATE BY MARATHAHALLI POLICE STATION BENGALURU, REPRESENTED BY HIGH COURT GOVERNMENT PLEADER, HIGH COURT OF KARNATAKA, BENGALURU – 560 001. 3 . MR.CHAITANYA PUNDRU AGED ABOUT 66 YEARS S/O PUNDRU SOMESHWARA RAO RESIDENT OF NO.63 IDEA INFO LABS PVT. LTD., HELIOUS BUSINESS PARK TOWER E 2ND FLOOR CHANDANA, KADUBEESANAHALLI BENGALURU – 560 103. 4. M/S. ICICI BANK LTD., NO.1, SHOBHA PEARL, 2ND FLOOR, M.G.ROAD, COMMISSIARIAT ROAD, BENGALURU – 560 025 3 REPRESENTED BY ITS CHIEF MANAGER. ... RESPONDENTS (BY SRI B.N.JAGADEESHA, ADDL.SPP FOR R-1 AND R-2; SMT.SANJANA RAO, ADVOCATE FOR R-3, NOTICE TO R-4 IS DISPENSED V/C/O DT.4.7.2024) THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA READ WITH SECTION 482 OF CR.P.C., PRAYING TO i. CALL FOR THE ENTIRE RECORDS IN MARATHAHALLI PS, CR.NO. 152/2024 FOR THE OFFENCES PUNISHABLE UNDER SEC 406, 420, 120B R/W 34 OF THE IPC, PENDING ON THE FILE OF THE HON’BLE 3RD ACMM VIDE ANNEXURES-A AND B RESPECTIVELY; ii. EXERCISE INHERENT POWERS UNDER SEC. 482 OF CR.P.C, TO QUASH THE COMPLAINT AND THE FIR BEARING MARATHAHALLI PS CR.NO. 152/2024 FOR THE OFFENCES PUNISHABLE UNDER SEC. 406, 420, 120-B R/W 34 OF THE IPC PENDING ON THE FILE OF THE HON’BLE 3RD ACMM VIDE ANNEXURES-A AND B IN SO FAR AS IT PERTAINS TO THE 1ST PETITIONER. THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 19.12.2024, COMING ON FOR PRONOUNCEMENT THIS DAY, THE COURT MADE THE FOLLOWING:- CORAM: THE HON'BLE MR JUSTICE M.NAGAPRASANNA CAV ORDER The petitioners are before this Court calling in question registration of a crime in Crime No.152 of 2024 registered for offences punishable under Sections 406, 420, 120B and 34 of the 4 IPC and pending before the 3rd Additional Chief Metropolitan Magistrate, Bengaluru. 2. Heard Sri Krishna S. Vyas, learned counsel appearing for the petitioner, Sri B.N. Jagadeesha, learned Additional State Public Prosecutor appearing for respondents 1 and 2 and Smt. Sanjana Rao, learned counsel appearing for respondent No.3. 3. Facts, in brief, germane are as follows:- The 3rd respondent is the complainant. The complainant works with M/s Ninjacart. Ninjacart operates under a “Bill to Ship” model of business wherein Ninjacart purchases produces from wholesale suppliers which are in turn sold to subsequent buyers. It is averred in the petition that in the course of ordinary trade, Ninjacart makes upfront and complete payment to its wholesale suppliers. Thereafter, when the items are resold to subsequent buyers, payment is accepted by Ninjacart which was given on a credit of 65 – 70 days to the buyers to make good necessary payment. The petitioners and Ninjacart have a business agreement. The petitioners are a partnership firm. Ninjacart enters into an 5 arrangement with Nekkanti for supply of shrimps. In furtherance of the trade, Ninjacart communicated mails from January 2023 to June 2023 offering to supply different quantities of shrimp at the prices mentioned therein. The complainant is said to have entered into sale and purchase agreement dated 20-12-2022 with accused No.1 for availing supply of agricultural goods including shrimp. In terms of the said arrangement or agreement, accused No.1 was required to supply these goods as and when Ninjacart places purchase orders for the same and accused No.1 was required to deliver goods directly to Ninjacart’s customers. 4. The complainant places various orders for supply of shrimp which was required to be delivered to Nekkanti. In turn accused No.2 issued Goods Received Note (‘GRN’) to Ninjacart confirming receipt of shrimp on behalf of Nekkanti. Thereafter, Ninjacart raised various invoices to Nekkanti and these were being cleared from time to time. Likewise, between 23-05-2023 and 30-06-2023 the offers were made to Nekkanti. Accused No.2 accepted these offers on behalf of Nekkanti and Ninjacart contacted accused No.1 for supply of shrimp. After a few days Nekkanti through accused 6 No.2 issued GRN in the form of mail confirming quantity of shrimps. Ninjacart from its coffers releases payment of ₹9,35,96,343/- to accused No.1 after deducting TDS. The complainant thus fulfilled all the obligations. But, accused No.1 refused to pay the amount that was to be paid to the complainant. Projecting it to be a criminal breach of trust or cheating, the complaint comes to be registered by the complainant which becomes a crime in crime No.152 of 2024 pursuant to which, the accounts of the petitioners are frozen. Aggrieved by registration of crime and freezement of accounts, the petitioners are before the doors of this Court in the subject petition. 5. The learned counsel appearing for the petitioners would vehemently contend that the issue in the lis is a pure breach of agreement, if at all it is, and what is called in question is an alleged loss caused on account of acts of the petitioners. Therefore, it is a case of recovery of money. It is his further contention that the incident happens between 23-05-2023 and 30-06-2023 but the crime is registered on 02-04-2024, 9 months thereafter. He would submit that there is gross delay in registering the crime which would vitiate the entire crime and seeks quashment of entire crime. 7 6. Per contra, the learned counsel Ms. Sanjana Rao representing the 3rd respondent/complainant would vehemently refute the submissions to contend that the case at hand would in the first blush look like breach of agreement. But, the issue is Nekkanti placed orders for delivery of shrimp. The amount is credited to the account of accused No.1 who had to deliver shrimp. Time passes by. Today there is neither the shrimp nor the amount which the complainant has already paid to accused No.1. Therefore, there is a clear case of cheating and criminal breach of trust in the agreement, as the complainant do not know where the shrimp is nor accused No.1 has returned the money. It is, therefore, a matter of investigation in the least is what the learned counsel would contend. 7. I have given my anxious consideration to the submissions made by the respective learned counsel and have perused the material on record. 8 8. The afore-narrated facts are not in dispute. The arrangement of supply of goods and payment of money has been the business between Ninjacart and the petitioners. One such consignment goes wrong. The consignment was delivery of shrimp. Since the entire issue has now sprung from the complaint, I deem it appropriate to notice the contents of the complaint insofar as they are germane. They read as follows: “…. …. …. 2. As per Ninjacart’s business model, the wholesale supplier directly delivers the products to the subsequent buyer without Ninjacart being involved in this process. On receiving delivery of the products, the subsequent buyer confirms the quality and quantity of the products over email in the form of a "Goods Received Note" or "GRN". The GRN Establishes that the products receded are in satisfaction of the contract between Ninjacart and the subsequent buyer. On receiving the GRN from the subsequent buyer, Ninjacart raises an invoice in favour of the subsequent buyer for supply of products. The subsequent buyer is then required to make payment for the products supplied within the agreed credit period. 3. In furtherance of the Bill to Ship to business model described above, Ninjacart entered into an arrangement with Nekkanti for the supply of shrimps. In furtherance of the trades, Ninjacart issued various emails from January, 2023 to June, 2023 offering to supply different quantities of shrimp at prices mentioned therein. The offers made by Ninjacart in various emails were accepted by Nekkanti in the form of emails. It is pertinent to note that all emails were issued by Accused No. 2 from his official ID. 9 4. Ninjacart had also entered into a Sale and Purchase Agreement dated 20.12.2022 with Accused No. 1 for availing supply of agricultural goods, including shrimp. In terms of this agreement, Accused No. 1 was required to supply these goods as and when Ninjacart placed purchase orders for the same. Accused No.1 was required to deliver the goods directly to Ninjacart's customer. 5. To fulfill the contract with Nekkanti, Ninjacart placed various orders for supply of shrimp on Accused No. 1, who was required to deliver the same to Nekkanti. In turn, Accused No.2 issued GRNs to Ninjacart confirming receipt of the shrimp on behalf of Nekkanti. Thereafter, Ninjacart raised its invoices to Nekkanti and these invoices were cleared by Nekkanti from time to time. 6. As has been the practice, Ninjacart made offers to Nekkanti for supply of shrimp under emails dated 23.05.2023 and 30.06.2023 and the offers were accepted by Nekkanti. It is pertinent to note that Accused No. 2 accepted these offers on behalf of Nekkanti. On acceptance of the offers, Ninjacart contacted Accused No. 1 for supply of shrimp. Thereafter, on the same days, Nekkanti through Accused No. 2 issued GRNs in the form of emails on 23.05.2023 and 30.06.2023 confirming receipt of the entire quantity of shrimps. Ninjacart immediately released payment of Rs. 9,35,96,343/- (Rupees Nine Crores Thirty Five Lakhs Ninety Six Thousand Three Hundred and Forty Three) to Accused No. 1, after deducting the applicable TDS amounts. 7. As Ninjacart had fulfilled its obligations, Ninjacart raised invoices against Nekkanti for the successful supply of shrimp under emails of 23.05.2023 and 30.06. 2023. Nekkanti was thereafter obligated to pay Ninjacart an amount of INR 10,00,51,200/- (Rupees Ten Crores Fifty One Thousand and Two Hundred) by 15th September 2023. However, Nekkanti failed to make any payment by the said date. Despite several follow-ups, payment was not forthcoming. In these circumstances, Ninjacart was constrained to issue a legal notice on 15.11.2023 calling upon Nekkanti to pay the amounts due and outstanding. In response to the legal notice, 10 Ninjacart received the following shocking communications: a) Email from Accused No.2 dated 16.11.2023 stating that as an employee of Nekkanti and he issued GRNs to Ninjacart despite the goods not being received by Nekkanti. Further, he stated that he undertakes personal responsibility for the same, and Nekkanti is not liable to make any payments. b) Email response from Mr. N Nagesh, Director and CEO of Nekkanti dated 17.11.2023 alleging that Ninjacart did not deliver any products and Nekkanti is accordingly not liable to make payments for which no products have been received. 8) Ninjacart has successfully fulfilled its obligations under its contracts with Nekkanti and Accused No. 2. Shockingly, based on the information provided by Nekkanti, it appears that Accused No. 1 and Accused No. 2 have colluded with each other and acted in cahoots to misappropriate vast sums of money from Ninjacart. Nekkanti has repeatedly claimed that its management has no involvement in this deception and fraud. Ninjacart, as on date, has been deceived and lost INR 10,00,51,200/- (Rupees Ten Crores Fifty One Thousand and Two Hundred), on account of the acts of Accused No. 1 and 2 and which was payable by Nekkanti. 9. Submission: The facts presented above reveal a meticulously planned scheme executed by Accused No. 1 and Accused No. 2 to defraud Ninjacart. Their actions demonstrate a deliberate pattern of deception, aimed at exploiting Ninjacart's standard business practices. The initial successful transactions served a dual purpose: to establish a false sense of legitimacy and to entice Ninjacart into larger, more profitable subsequent transactions. The subsequent issuance of valid GRNs by Accused No.2 underscores their criminal intent. The case strongly suggests conspiracy, coercion and a willful disregard for the agreed-upon contractual obligations. 10. Criminal Conspiracy and Intent to Defraud: The actions of Accused 1 and Accused 2 as informed by Nekkanti demonstrate a pattern of coordinated and deceptive behavior, clearly establishing a criminal conspiracy to defraud Ninjacart. The initially successful 11 transactions between Ninjacart and Nekkanti, performed by Accused No.2 on behalf of Nekkanti indicate a calculated plan to establish a false sense of trust. This was likely done to induce Ninjacart into larger subsequent transactions. The issuance of false GRNs point to a deliberate attempt to perpetrate fraud. 11 Collusion and Criminal Conspiracy Between Accused Parties: The close timing of events, including the issuance of orders and false GRNs by Accused No.2 suggests collusion between Accused No.1 and Accused No.2. 12. Ninjacart has been running from pillar to post between Nekkanti, and Accused No. 1 to recover amounts due to it. Accused No.1 maintained that Nekkanti had issued valid GRNs, thereby confirming successful delivery of products, by virtue of which Accused No.1 is not liable to return any amounts to Ninjacart. Nekkanti maintains that it never received any products and the GRNs were issued based on collusion between Accused No.1 and Accused No.2 and hence are not valid. However, despite repeated requests, Nekkanti has failed to produce any credible evidence for non-receipt of goods. Further, while Nekkanti claimed that it has confirmation from Accused No.1 that it had not supplied goods, Nekkanti has not shared any document in support thereof. In this entire ordeal, Ninjacart is the only entity that has truly suffered losses on account of malicious conduct of interested parties. 13. We hope that a meticulous review of all communication between Accused No.1 and Accused No. 2 could expose patterns of coordination, revealing their orchestration of the fraudulent scheme. An in-depth investigation of financial records, including bank statements and payment histories, between the two accused parties could unveil suspicious monetary transactions. These may act as evidence of the movement of defrauded funds. We therefore respectfully request your good office to recognize the seriousness of this complaint, initiate a full 12 criminal investigation, and hold the accused parties accountable. We hereby enclose the details of the accused parties. Ninjacart and its officials pledge full cooperation and will provide all necessary evidence in support of the investigation. The contact details of Accused No. 1 and Accused No. 2, as available us with us are set out below: Accused No.1 – M/S Sri Venkateshwara Sea Foods represented by Mr. Kola Thirumalaraju Address: D. No 3-16B. 80/2, Flat No D1, Narayana Giri Heights, Postal Employees Colony, Shanti Nagar, Kakinada – 533 003 PAN: ACUFS2316K, Mobile: 9553384444 Accused No. 2- Mr. Bhogadi Satyanarayan Mobile: 9848199739” (Emphasis added) The afore-quoted is the complaint by the 3rd respondent against the petitioners. The complaint then becomes a crime in Crime No.152 of 2024 for offences punishable under Sections 406 and 420 of the IPC. Pursuant to registration of crime a debit freeze of the account of the petitioners is directed by the Investigating Officer. The communication reads as follows: “To: The Manager, ICICI BANK, Bangaluru. 13 Sir, Sub: Request to Debit freeze A/c and furnish the accounts details- reg. Ref: Marathahalli Police Station Crime No. 152/2023 Under Section 120(B), 406, 420 R/w. 34 IPC... ***** With respect to the above subject, I hereby requesting you that, based on Mr. Chaitanya Pandru's complaint a case was registered in Marathahalli Police Station Crime No.152/2024 Under Section 120(B), 406, 420 R/w. 34 of IPC. For the purpose of investigation of this case, you are hereby requested to Debit freeze the below mentioned ICICI BANK accounts and furnish the following particulars of the following account No's at the earliest. Sl. No. Account No Name of the Account holder 1. 028005003331 Kola Thirumalaraju 2. 028005005545 - 1. Statement of account from Date: 01-05-2023 to till date. 2. Name of the Branch and contact E-mail id and phone No's of the concerned branch. 3. Account opening form and identity proof and other relevant documents submitted by the account holder at the time of opening the account. 4. KYC form along with ID Proof's and other Enclosures. 14 5. Send all the documents in hardcopies, copies should be counter signed by the authorized signatory along with the bank seal.” The issue now would be, whether the crime requires to be obliterated on its registration. The learned counsel for the 3rd respondent has taken this Court through the statement of objections. The objections appended to it certain documents. A communication from accused No.2 reads as follows: “Dear sir, I have actual in blind faith in Tirumalaraju due to my relationship with him. I was under the impression that i was helping him by approving invoices & GRN's of Ninjakart which product was never supplied to Nekkanti. I take the complete responsibility for this wrongdoing Nekkanti is not liable for my wrong doing. Nekkanti is not liable for any payments as the product was never supplied by Ninjacart. The board of Nekkanti served a notice to which I have replied. Attached is the reply to the chairman of Nekknati. satya On Wed. Nov 15, 2023 at 10:20 PM Legal compliance <legal@ninjacart.com> wrote: Dear Sir/Madam, On behalf of 63Ideas Infolabs Private Limited (Ninjacart), having its registered office at WeWork Vaishnavi Signature, 78/9, Outer Ring Road, Bellandur Village, Varthur, Hobli, Bengaluru, Karnataka 560103 (hereinafter referred to as "Ninjacart"), we do hereby bring to your notice as Follows: 1. Ninjacart is a seller of fresh vegetables, fruits and other products via mobile application platform under the 15 name and style of 'Ninjacart' (hereinafter collectively referred to as the "Platform"). Under its Bill to Ship to model of business, Ninjacart procures fresh agricultural produce and other raw materials from a wholesale supplier and sells such products to suitable buyers, wherein the buyers are typically required to make payments within a credit period of 60-75 days. 2. For the purpose of clarity, as per Ninjacart's Standard Operating Procedure (SOP), once a Purchase Order ("PO") is finalised and confirmed by the buyer over mail, Ninjacart procures these products and facilitates the delivery of the Goods as mentioned in such furnished PO and issues the invoice for payment for such Goods to the buyer. Once the Goods are delivered to the buyer, the buyer confirms on the quality and quantity of the Goods and the buyer generates a Goods Received Note (GRN) Upon generation of the GRN, the buyer needs to make payment for the purchased Goods in favour of Ninjacart within the stipulated time period. 3. Accordingly, further to the business model as mentioned above, you wanted Ninjacart to supply shrimps to you and we were engaged in the trade of shrimps (Goods) since January 2023, as evidenced through the first Purchase Order (PO) dated 4th January, 2023. 4. In furtherance of our business association and in line with Ninjacart's internal SOP as mentioned in para 2, pursuant to your POs dated 23 May 2023 and 30 June 2023, Ninjacart supplied the Goode in multiple batches and the last GRN was generated by you on 30th June, 2023, which was duly executed by you. As per the said POs, you are obliged to pay to Ninjacart for Goods purchased by you within 75 days from date of last generated GRN, which in your case has expired on 15th September, 2023. 5. However despite repeated follow ups by a dedicated team on Ninjacart, you have been unresponsive and have failed to honour your payment obligations. As on date of this Notice, an amount of INR 10,00,00,000/ (Rupees Ten Crores Only) is 16 outstanding from you, which amount needs to be paid by you. 6. In light of the above, it is clear that you always had the intention to dishonour our mutually agreed terms of the trade, with an ulterior motive to evade any payment related obligations. Relying on our understanding, we diligently supplied the goods to you, which are admittedly received by you, as evidenced by the enclosed GRN furnished by you. Now, by way of your conduct of refusing to pay the outstanding amounts, you have not only violated your promises and contravened applicable laws, but also committed criminal breach of trust. It is now clear that you do not have any intent to pay the outstanding amount. We hereby call upon you to pay to Ninjacart, within 15 (fifteen) days of receipt of this notice, an amount of INR 10,00,00,000/- (Rupees Ten Crores Only), failing which Ninjacart shall be constrained to initiate appropriate legal proceedings against you, including insolvency and winding up proceedings, solely at your costs and consequences. Enclosed Documents 1. Purchase Order (PO) dated 23rd May, 2023 and 30th June, 2023. 2. Goods Receipt Note (GRN) dated 30th June, 2023.” (Emphasis added) The communication is clear that accused No.2 has issued goods received notes. Therefore, obligation for payment commences from the date on which the goods are delivered to the complainant. It is not a case of non-delivery of goods by the petitioners. Goods are delivered. Now the goods appear to have vanished in thin air. The 17 goods in the case at hand is the shrimp. Now the question would where the shrimp has gone. It is neither delivered to the end customer nor digested by anybody. But, the payment close to ₹10/- crores is already received by accused No.1. Therefore, it is not a case where the crime can be obliterated at the outset. 9. Criminal breach of trust as obtaining under Section 406 of the IPC has its ingredients in Section 405 of the IPC. The shrimp has vanished. The money has left the coffers of the complainant. Therefore, there is undoubtedly breach of trust as is obtaining under Section 406 of the IPC. Insofar as cheating is concerned, its ingredients are found in Section 415 of the IPC. There should be luring of the victim by the accused with a dishonest intention right from the inception. The breach, in the case at hand, is an agreement. If it is an agreement, it is between two parties entered into with eyes being wide open. Therefore, there can be no question of cheating in the case at hand but, undoubtedly a case of criminal breach of trust. In that light permitting further investigation qua Section 420 of the IPC would become contrary to 18 law. However, the petitioners shall be investigated into for the offence under Sections 406 and 120B of the IPC. 10. Permitting both the offences under Sections 406 and 420 of the IPC would run foul of the judgment of the Apex Court in the case of DELHI RACE CLUB (1940) LIMITED v. STATE OF UTTAR PRADESH1, wherein it is held as follows: “…. …. …. 27. In our view, the plain reading of the complaint fails to spell out any of the aforesaid ingredients noted above. We may only say, with a view to clear a serious misconception of law in the mind of the police as well as the courts below, that if it is a case of the complainant that offence of criminal breach of trust as defined under Section 405 of IPC, punishable under Section 406 of IPC, is committed by the accused, then in the same breath it cannot be said that the accused has also committed the offence of cheating as defined and explained in Section 415 of the IPC, punishable under Section 420 of the IPC. 28. Every act of breach of trust may not result in a penal offence of criminal breach of trust unless there is evidence of manipulating act of fraudulent 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 Hari Prasad Chamaria v. Bishun Kumar Surekha, reported in (1973) 2 SCC 823 as under: “4. We have heard Mr. Maheshwari on behalf of the appellant and are of the opinion that no case has 1 2024 SCC OnLine SC 2248 19 been made out against the respondents under Section 420 Penal Code, 1860. 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 not disclose the commission of any offence on the part of the respondents under Section 420 Penal Code, 1860. 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.” 29. To put it in other words, the case of cheating and dishonest intention starts with the very inception of the transaction. But in the case of criminal breach of trust, a person who comes into possession of the movable property and 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 each case. 30. The distinction between mere breach of contract and the offence of criminal breach of trust and cheating is a fine one. In case of cheating, the intention of the accused at the time of inducement should be looked into which may be judged by a subsequent conduct, but for this, the subsequent conduct is not the sole test. Mere breach of contract 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 this intention, which is the gist of the offence. Whereas, for 20 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 of 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. Although the offence, i.e. the offence of breach of trust and cheating involve dishonest intention, yet 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 making a false or misleading representation i.e., since inception. In criminal breach of trust, mere proof of entrustment is sufficient. Thus, in case of criminal breach of trust, the offender is lawfully entrusted with the property, and he dishonestly misappropriated the same. Whereas, in case of cheating, the offender fraudulently or dishonestly induces a person by deceiving him to deliver any property. In such a situation, both the offences cannot co-exist simultaneously. … … … 42. When dealing with a private complaint, the law enjoins upon the magistrate a duty to meticulously examine the contents of the complaint so as to determine whether the offence of cheating or criminal breach of trust as the case may be is made out from the averments made in the complaint. The magistrate must carefully apply its mind to ascertain whether the allegations, as stated, genuinely constitute these specific offences. In contrast, when a case arises from a FIR, this responsibility is of the police - to thoroughly ascertain whether the allegations levelled by the informant indeed falls under the category of cheating or criminal breach of trust. Unfortunately, it has become a common practice for the police officers to routinely and mechanically proceed to register an FIR for both the offences i.e. criminal breach of trust and cheating on a mere allegation of some dishonesty or fraud, without any proper application of mind. 43. It is high time that the police officers across the country are imparted proper training in law so as to 21 understand the fine distinction between the offence of cheating viz-a-viz criminal breach of trust. Both offences are independent and distinct. The two offences cannot coexist simultaneously in the same set of facts. They are antithetical to each other. The two provisions of the IPC (now BNS, 2023) are not twins that they cannot survive without each other.” (Emphasis supplied) In the light of the judgment of the Apex Court in the DELHI RACE CLUB case supra, the offences under Sections 406 and 420 of the IPC cannot co-exist. Section 406 of the IPC as elucidated by the Apex Court clearly holds that a person entrusted with a property has misappropriated the said property with a dishonest intention which would become open for an allegation of criminal breach of trust. It is exactly the issue in the case at hand. Therefore, while obliterating the crime under Section 420 of the IPC, I deem it appropriate to permit continuance of investigation for the offence under Section 406 of the IPC. 11. For the aforesaid reasons, the following: O R D E R (i) Writ Petition is partly allowed. 22 (ii) The crime insofar as the offence under Section 420 of the IPC is quashed. (iii) The crime registered for offence under Sections 406 and 120B of the IPC stands sustained. Investigation shall continue only for offences punishable under Sections 406 and 120B of the IPC. Consequently, I.A.No.1 of 2024 also stands disposed. bkp CT:MJ Sd/- ______________________ JUSTICE M.NAGAPRASANNA