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2026 DAILYLAW 21211 (JHR)

Deepak Sarawagi v. State of Jharkhand

2026-02-09

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, 1973 with a prayer to quash the entire criminal proceeding in connection with Complaint Case No. 7773 of 2020 including the order taking cognizance dated 24.02.2023 passed by the Judicial Magistrate 1st Class XXVII, Ranchi whereby and whereunder, learned Judicial Magistrate has taken cognizance of offences punishable under Sections 406 and 420 of the Indian Penal Code, 1860 against the petitioner. 3. The brief facts of the case is that the allegation against the petitioner is that the petitioner was doing business along with the complainant from March 2020 to September 2020. In the month of March 2020, both the parties went to Mumbai, Ahmedabad to visit different manufacturers and distributors for purchasing goods and medical items. Between the period from March 2020 to September 2020, when the goods were supplied to different hospitals and government institutions. In the meanwhile, on 04.06.2020 the petitioner sent a legal notice to the O.P. No.2 demanding outstanding dues of Rs.29,95,152/- (Rupees twenty nine lakhs ninety five thousand and one hundred and fifty two)arising out of non-payment of invoices raised against the company of complainant. Thereafter, on 23.06.2020 the complainant replied to the legal notice and denied the outstanding dues of Rs. 29,95,152 and raised questions about arriving at this amount without settling the books of accounts and deduction of 50% profit share of the complainant and adjustment of credit notes to be issued for overpriced invoices. Thereafter, complainant showed the petitioner the entire calculation of accounts and after finalization a pending dues of Rs.41,91,707.54 being due and payable by the accused, but the accused refused to accept the accounts. Though the complainant offered to settle the disputes mutually but the petitioner did not agree with the same and refused to give the accounts in respect of the business involving the transaction of about Rs. 41 lakhs. 4. Learned counsel for the petitioner relied upon the judgment of the Hon’ble Supreme Court of India in the case of Uma Shankar Gapalika vs. State of Bihar and Another reported in (2005) 10 SCC 336 paragraph 6 of which reads as under: "6. 41 lakhs. 4. Learned counsel for the petitioner relied upon the judgment of the Hon’ble Supreme Court of India in the case of Uma Shankar Gapalika vs. State of Bihar and Another reported in (2005) 10 SCC 336 paragraph 6 of which reads as under: "6. ….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) and submits that therein the Hon’ble Supreme Court of India has reiterated the settled principle of law that in order to constitute the offence of cheating the accused persons must play deception at the very inception and if such intention to cheat has developed later on, the same will not amount to cheating. 5. Learned counsel for the petitioner next submits that in this case there is no allegation against the petitioner of playing deception since the beginning of transaction between the parties nor there is any allegation of any entrustment of any property to the petitioner, hence 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 even if the entire allegations are considered to be true in their entirety. 6. The learned counsel for the petitioner next relies upon the judgment of the Hon’ble Supreme Court of India in the case of Vijay Kumar Ghai and Others vs. State of West Bengal and Others reported in (2022) 7 SCC 124 para 35, 39 and 40 of which read as under: "35. To establish the offence of cheating in inducing the delivery of property, the following ingredients need to be proved: (i) The representation made by the person was false. (ii) The accused had prior knowledge that the representation he made was false. (iii) The accused made false representation with dishonest intention in order to deceive the person to whom it was made. (ii) The accused had prior knowledge that the representation he made was false. (iii) The accused made false representation with dishonest intention in order to deceive the person to whom it was made. (iv) The act where the accused induced the person to deliver the property or to perform or to abstain from any act which the person would have not done or had otherwise committed. 39. In Vesa Holdings (P) Ltd. vs. State of Kerala, this Court made the following observation: "13. It is true that a given set of facts may make out a civil wrong as also a criminal offence and only because a civil remedy may be available to the complainant that itself cannot be a ground to quash a criminal proceeding. The real test is whether the allegations in the complaint disclose the criminal offence of cheating or not. In the present case there is nothing to show 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. In our view the complaint does not disclose any criminal offence at all. The criminal proceedings should not be encouraged when it is found to be mala fide or otherwise an abuse of the process of the court. The superior courts while exercising this power should also strive to serve the ends of justice. In our opinion, in view of these facts allowing the police investigation to continue would amount to an abuse of the process of the court and the High Court committed an error in refusing to exercise the power under Section 482 of the Criminal Procedure Code to quash the proceedings." 40. Having gone through the complaint/FIR and even the charge-sheet, it cannot be said that the averments in the FIR and the allegations in the complaint against the appellant constitute an offence under Sections 405 and 420 IPC, 1860. Even in a case where allegations are made in regard to failure on the part of the accused to keep his promise, in the absence of a culpable intention at the time of making promise being absent, no offence under Section 420 IPC can be said to have been made out. Even in a case where allegations are made in regard to failure on the part of the accused to keep his promise, in the absence of a culpable intention at the time of making promise being absent, no offence under Section 420 IPC can be said to have been made out. In the instant case, there is no material to indicate that the appellants had any mala fide intention against the respondent which is clearly deductible from the MoU dated 20-8-2009 arrived at between the parties." (Emphasis supplied) and submits that even in a case where allegations are made in regard to failure on the part of the accused to keep his promise, in the absence of a culpable intention at the time of making initial promise being absent, no offence under Section 420 of the Indian Penal Code can be said to have been made out. 7. The learned counsel for the petitioner next relies upon the judgment of the Hon’ble Supreme Court of India in the case of Anand Kumar Mohatta and Another vs. State (NCT of Delhi) Department of Home and Another reported in (2019) 11 SCC 706 wherein the Hon’ble Supreme Court of India referred to the observations of that Court made in the case of Indian Oil Corporation vs. NEPC (India) Limited reported in (2006) 6 SCC 736 that any effort to settle dispute and claims which do not involve any criminal offence by applying pressure through criminal prosecution should be deprecated and discouraged and also found it strange that the complainant before the Hon’ble Supreme Court of India did not make any attempt for recovery of the money except by filing the criminal complaint and observed that the said action appears to be malafide and unsustainable. 8. The learned counsel for the petitioner then relies upon the judgment of the Hon’ble Supreme Court of India in the case of Vesa Holdings Private Limited and Another vs. State of Kerala and Others reported in (2015) 8 SCC 293 wherein the Hon’ble Supreme Court of India reiterated the settled principle of law as has been held in the case of Uma Shankar Gopalika vs. State of Bihar and Another (supra) mentioned above. 9. 9. Learned counsel for the petitioner lastly relies upon the judgment of the Hon’ble Supreme Court of India in the case of Vir Prakash Sharma vs. Anil Kumar Agarwal and Another reported in (2007) 7 SCC 373 and submits that in a case wherein the dispute between the parties is essentially civil dispute, nonpayment or underpayment of the price of the goods; by itself does not amount to commission of an offence of cheating or criminal breach of trust. 10. It is then submitted by learned counsel for the petitioner that allegations against the petitioner are false. The complaint case has been filed for the purpose of wrecking vengeance against the petitioner for issuing the legal notice to the complainant. Hence, it is submitted that the prayer as prayed for in the Cr.M.P, be allowed. 11. The learned P.P. and the learned counsel for the O.P. No.2 on the other hand vehemently opposed the prayer and submits that there is direct and specific allegation against the petitioner, which if considered to be true in their entirety, is sufficient to constitute both the offences punishable under Sections 406 and 420 of the Indian Penal Code, hence, it is submitted that this Cr.M.P without being any merit, be dismissed. 12. Having heard the rival submissions made at the Bar and after going through the materials available in the record, it is pertinent to mention here that so far as the offence punishable under Section 420 of the Indian Penal Code is concerned, 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 and Another (supra) that every breach of contract would not give rise to the 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 and if the intention to cheat has developed later on, the same will not amount to cheating. 13. Now coming to the facts of the case, the undisputed facts remains that both the petitioner and the accused person had a business relationship from March 2020 to September 2020. 13. Now coming to the facts of the case, the undisputed facts remains that both the petitioner and the accused person had a business relationship from March 2020 to September 2020. There is no allegation against the petitioner of having played any deception since the beginning of the transaction between the parties, it is apparent that dispute arose between the parties as the petitioner first issued a legal notice to the O.P. No.2 demanding payment of Rs.29,95,152/-. 14. Under such circumstances, this Court is of the considered view that even if the entire allegation made in the petition are considered to be true in their entirety, still the offence punishable under Section 420 of the Indian Penal Code is not made out against the petitioner. 15. So far as the offence punishable under Section 406 of the Indian Penal Code is concerned, the essential ingredients of that offence is that, there must be an entrustment of property or dominion over it of the accused, followed by dishonest misappropriation, conversion to their own use, or dishonest disposal in violation of a legal direction or any legal contract. 16. Now coming to the facts of the case there is absolutely no allegation against the petitioner of entrustment of any property. There is also no allegation of any dishonest misappropriation of any entrusted property. In the absence of any allegation regarding these essential ingredients, this Court has no hesitation in holding that even if the entire allegations made against the petitioner are considered to be true in their entirety, still the offence punishable under Section 420 of the Indian Penal Code is not made out. 17. In view of the discussion made above, since neither the offence punishable under Section 420 nor the offence punishable under Section 406 is made out, even if the entire allegations made against the petitioner are considered to be true in their entirety, hence, this Court is of the considered view that the continuation of the criminal proceeding against the petitioner will amount to abuse of process of law. Therefore, this is a fit case where the entire criminal proceedings including the order dated 24.02.2023 passed by the learned Judicial Magistrate 1st Class, Ranchi in connection with Complaint Case No. 7773 of 2020, be quashed and set aside against the petitioner. 18. Therefore, this is a fit case where the entire criminal proceedings including the order dated 24.02.2023 passed by the learned Judicial Magistrate 1st Class, Ranchi in connection with Complaint Case No. 7773 of 2020, be quashed and set aside against the petitioner. 18. Accordingly, the entire criminal proceedings including the order dated 24.02.2023 passed by the learned Judicial Magistrate 1st Class, Ranchi in connection with Complaint Case No. 7773 of 2020 is quashed and set aside qua the petitioner named above. 19. In the result, the Criminal Miscellaneous Petition is allowed.