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2026 DAILYLAW 21186 (JHR)

Manish Karsija v. State of Jharkhand

2026-02-20

Anil Kumar Choudhary

body2026
JUDGMENT : ANIL KUMAR CHOUDHARY, J. Heard the parties. 2. This Criminal Miscellaneous Petition has been filed invoking the jurisdiction of this Court under Section 482 of the Code of Criminal Procedure with the prayer to quash and set aside the entire criminal proceeding arising out of Complaint Case C/1 No.1750 of 2017 including the order dated 20.12.2017 passed by learned Judicial Magistrate-1st Class, Jamshedpur whereby and where under the learned Judicial Magistrate-1st Class, Jamshedpur has found prima facie case for the offences punishable under Sections 420/406 of the Indian Penal Code against the petitioner. 3. The brief fact of the case is that the complainant booked two flats in a project of the co-accused company. The co-accused namely Mazhar and Mrityunjay Tiwari on behalf of the company negotiated with the complainant in respect of the purchase of the flats. The complainant paid Rs.14 lakhs, but only the brick work was done and beyond that the project did not proceed. 4. On the basis of the complaint, statement on solemn affirmation and the statement of the enquiry witnesses, the learned Judicial Magistrate-1st Class, Jamshedpur has found a prima facie case to proceed against all the accused persons of the case for the offences punishable under Section 406/420 of the Indian Penal Code and passed the summoning order. 5. Learned counsel for the petitioner submits that the case is fixed for appearance of the accused person and charge have not yet been framed. It is next jointly submitted by the learned counsel for the petitioner and the learned counsel for the opposite party no.2 that in the meanwhile, the accused persons of the case have paid Rs.64,08,513/- to the complainant that includes the Rs.40 lakhs given by the complainant and the interest thereon. 6. Learned counsel for the petitioner next relies upon the judgment of the Hon’ble Supreme Court of India in the case of Radheyshyam & Others vs. State of Rajasthan & Another reported in 2024 SCC OnLine SC 2311 , para-12 of which reads as under:- “12.xxxx In the present case, the appellants were not entrusted with any property by respondent no. 2 - complainant. The only delivery made was of part payment towards an Agreement to Sell between the parties. The amount paid towards consideration cannot be said to have been entrusted with the appellants by respondent no. 2. 2 - complainant. The only delivery made was of part payment towards an Agreement to Sell between the parties. The amount paid towards consideration cannot be said to have been entrusted with the appellants by respondent no. 2. Additionally, merely because the appellants are refusing to register the sale, it does not amount to misappropriation of the advance payment. Since there was no entrustment of property, the offence of misappropriation of such property and thereby criminal breach of trust cannot be said to be made out.” (Emphasis supplied) wherein it was held that the amount paid towards consideration cannot be said to have been entrusted with the accused person by the complainant and merely because the seller is refusing to register the sale, the same does not amount to misappropriation of the advance amount paid. 7. Learned counsel for the petitioner further relies upon the judgment of the Hon’ble Supreme Court of India in the case of Sunil Bharti Mittal vs. Central Bureau of Investigation reported in (2015) 4 SCC 609 paragraph-43 & 44 of which reads as under:- 43. Thus, an individual who has perpetrated the commission of an offence on behalf of a company can be made an accused, along with the company, if there is sufficient evidence of his active role coupled with criminal intent. Second situation in which he can be implicated is in those cases where the statutory regime itself attracts the doctrine of vicarious liability, by specifically incorporating such a provision. 44. When the company is the offender, vicarious liability of the Directors cannot be imputed automatically, in the absence of any statutory provision to this effect. One such example is Section 141 of the Negotiable Instruments Act, 1881. In Aneeta Hada [Aneeta Hada v. Godfather Travels & Tours (P) Ltd., (2012) 5 SCC 661 : (2012) 3 SCC (Civ) 350 : (2012) 3 SCC (Cri) 241] , the Court noted that if a group of persons that guide the business of the company have the criminal intent, that would be imputed to the body corporate and it is in this backdrop, Section 141 of the Negotiable Instruments Act has to be understood. Such a position is, therefore, because of statutory intendment making it a deeming fiction. Such a position is, therefore, because of statutory intendment making it a deeming fiction. Here also, the principle of “alter ego”, was applied only in one direction, namely, where a group of persons that guide the business had criminal intent, that is to be imputed to the body corporate and not the vice versa. Otherwise, there has to be a specific act attributed to the Director or any other person allegedly in control and management of the company, to the effect that such a person was responsible for the acts committed by or on behalf of the company.´ (Emphasis Supplied). and submits that therein the Hon’ble Supreme Court of India has settled the principle of law that when the company is the offender, the vicarious liability of the Directors cannot be imputed automatically, in the absence of any statutory provision to this effect. It is next submitted that there being no provision for any vicarious liability in the Indian Penal Code, certainly, the petitioner who did not play any role himself cannot be saddled with any criminal liability. 8. Learned counsel for the petitioner then relies upon the judgment of the Hon’ble Supreme Court of India in the case of Arshad Neyaz Khan vs. The State of Jharkhand & Another reported in 2025 INSC 1151 and submits that in para-19 of which the Hon’ble Supreme Court of India has reiterated the settled principle of law that for establishing the offence of cheating, the complainant was required to show that the accused person had a fraudulent or dishonest intention at the time of making a promise or representation, of not fulfilling the agreement for sale of the said property. 9. Learned counsel for the petitioner next submits that the petitioner was appointed as a nominee Director of the co-accused company on 30.06.2014 whereas the date of occurrence as mentioned in the complaint is 25.09.2010, so on the date of occurrence, the petitioner was no way associated with the co-accused company and being nominee Director, petitioner was even not involved in the day to day affairs of the company and the complaint has been filed for the purpose of wreaking vengeance and arm-twisting method to realize money which is not permissible in law. It is next submitted that even if the allegations against the petitioner are considered to be true in their entirety, still neither the offence punishable under Section 420 of the Indian Penal Code nor the offence punishable under Section 406 of the Indian Penal Code is made out. It is lastly submitted that the prayer as prayed for by the petitioner in this Cr.M.P., be allowed. 10. Learned Addl.P.P. appearing for the State and the learned counsel for the opposite party No.2 on the other hand vehemently oppose the prayer of the petitioner made in the instant Cr.M.P and submit that the entire allegations if considered to be true in their entirety, then both the offences punishable under Section 420 & 406 of the Indian Penal Code is made out. Therefore, it is submitted that this Cr.M.P., being without any merit, be dismissed. 11. Having heard the rival submissions made at the Bar and after carefully going through the materials available in the record, it is pertinent to mention here that it is a settled principle of law as has been held by the Hon’ble Supreme Court of India in the case of Murari Lal Gupta vs. Gopi Singh reported in (2005) 13 SCC 699 that merely because an agreement to sell was entered into and which agreement, the accused person of the case failed to honour, it cannot be said that the seller has cheated the respondent and no case for prosecution under Section 420 or Section 406 of the Indian Penal Code is made out. It is relevant to refer to to para-6 of the said judgment, which reads as under:- “6. We have perused the pleadings of the parties, the complaint and the orders of the learned Magistrate and the Sessions Judge. Having taken into consideration all the material made available on record by the parties and after hearing the learned counsel for the parties, we are satisfied that the criminal proceedings initiated by the respondent against the petitioner are wholly unwarranted. The complaint is an abuse of the process of the court and the proceedings are, therefore, liable to be quashed. Even if all the averments made in the complaint are taken to be correct, yet the case for prosecution under Section 420 or Section 406 of the Penal Code is not made out. The complaint is an abuse of the process of the court and the proceedings are, therefore, liable to be quashed. Even if all the averments made in the complaint are taken to be correct, yet the case for prosecution under Section 420 or Section 406 of the Penal Code is not made out. 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 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 pressurise the petitioner for coming to terms with the respondent.” (Emphasis supplied) 12. Now coming to the facts of the case, the real dispute is regarding an agreement for sale of a project in which some advance amount was paid by the petitioner to the co-accused company and the project could not be completed within the stipulated time. During the pendency of the case, the advance amount along with interest has already been paid by the co-accused company to the complainant. 13. Perusal of the record reveals that there is absolutely no allegation against the petitioner of having any role in his personal capacity. The undisputed fact remains that though the agreement for sale transaction was entered into in the year 2010, but the petitioner has joined the co- accused company in the year 2014 that too in capacity of nominee Director. As has been held by the Hon’ble Supreme Court of India in the case of Sunil Bharti Mittal vs. Central Bureau of Investigation (supra) that when the company is offender, the vicarious liability of the Directors cannot be imputed automatically, in the absence of any statutory provision to this effect. As has been held by the Hon’ble Supreme Court of India in the case of Sunil Bharti Mittal vs. Central Bureau of Investigation (supra) that when the company is offender, the vicarious liability of the Directors cannot be imputed automatically, in the absence of any statutory provision to this effect. It is needles to mention that there being no provision of any vicarious liability in the Indian Penal Code. 14. It is a settled principle of law as has been held by the Hon’ble Supreme Court of India in the case of Uma Shankar Gopalika vs. State of Bihar & Another reported in (2005) 10 SCC 336 paragraph-6 of which reads as under:- 6. “Xxxx xxxx xxxx It is well settled that every breach of contract would not give rise to an offence of cheating and only in those cases breach of contract would amount to cheating where there was any deception played at the very inception. If the intention to cheat has developed later on, the same cannot amount to cheating. In the present case it has nowhere been stated that at the very inception there was any intention on behalf of the accused persons to cheat which is a condition precedent for an offence under Section 420 IPC.” (Emphasis supplied) wherein it was held that every breach of contract would not give rise to an offence of cheating and only in those cases breach of contract would amount to cheating; where there was any deception played at the very inception, if the intention to cheat has developed later on, the same will not amount to cheating. 15. Now, coming to the facts of the case, there is absolutely no allegation against the petitioner that the petitioner played deception since the beginning of the transaction between the parties, therefore, this Court is of the considered view that even if the allegations against the petitioner are considered to be true in their entirety still the offence punishable under Section 420 of Indian Penal Code is not made out. 16. 16. So far as the offence punishable under Section 406 of the Indian Penal Code is concerned, it is pertinent to mention here the essential ingredients to constitute the offence punishable under Section 406 are as follows:- (i)There must be an entrustment; and (ii) there must be misappropriation or conversion to one’s own use or use in violation of a legal direction or of legal contract. as has been held by the Hon’ble Supreme Court of India in the case of Ram Narayan Popli vs. C.B.I. reported in (2003) 3 SCC 641 17. Now, coming to the facts of the case, there is absolutely no allegation against the petitioner of being entrusted with any property nor there is any allegation against the petitioner of committing any dishonest misappropriation of any entrusted property. In absence of the same, this Court has no hesitation in holding that even if the allegations against the petitioner are considered to be true in their entirety, still the offence punishable under Section 406 of the Indian Penal Code is not made out. 18. In view of the discussions made above as neither the offence punishable under Section 420 of the Indian Penal Code nor the offence punishable under Section 406 of the Indian Penal Code is made out against the petitioner is even if the entire allegations are considered to be true in their entirety, hence, this Court is of the considered view that the continuation of this criminal proceeding against the petitioner will amount to abuse of process of law and this is a fit case where the entire criminal proceeding arising out of Complaint Case C/1 No.1750 of 2017 including the order dated 20.12.2017 passed by learned Judicial Magistrate-1st Class, Jamshedpur, be quashed and set aside. 19. Accordingly, the entire criminal proceeding arising out of Complaint Case C/1 No.1750 of 2017 including the order dated 20.12.2017 passed by learned Judicial Magistrate-1st Class, Jamshedpur, is quashed and set aside qua the petitioner. 20. In the result, this Cr.M.P., stands allowed.