Ch.Anjaneyulu, Medak Sangareddy v. The State Of Telangana 17 mar 2022

THE HON’BLE Dr. JUSTICE G. RADHA RANI  

CRIMINAL PETITION No.10576 of 2017 

ORDER:  

This petition is filed by the petitioner-A1 under Section 482 Cr.P.C.  to quash the proceedings in Crime No.259 of 2017 on the file of  Sadashivapet Police Station, Sangareddy District.  

2. The case of the petitioner in brief was that the 2^nd respondent-de  facto complainant filed a report against him before the Sadashivpet police  on 03.09.2017 at 2.00 PM alleging that he was the Managing Director of  M/s. Agastya Agro Limited and was engaged in the business of  manufacturing pesticides and was distributing the same through dealers,  agents and merchants. The petitioner and his son were the partners of M/s.  Shiva Seeds and Pesticides and was their dealer who would purchase the  pesticides from his company and used to sell the same and pay back the  amount. Since 2002, their business relation was going on and since 2011  the petitioner failed to remit the amount. Whenever he contacted him, he  was postponing the same on some pretext or the other and was avoiding  them. Basing on the said report, the police registered a case in Crime  No.259 of 2017 for the offences under Sections 409, 406, 418, 420 read  with 34 IPC against the petitioner. 

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3. Heard the learned counsel for the petitioner, the learned Assistant  Public Prosecutor and the learned counsel for the 2^nd respondent.  

4. Learned counsel for the petitioner submitted that the allegations  in the FIR even if taken as true, would not constitute the alleged offences.  The allegations would only show that they defaulted in payment of value of  the pesticides purchased from the complainant company, but there was no  entrustment of property or dishonest or fraudulent intention on the part of  the petitioner since inception of the business transaction to attract the  offences under Sections 418 or 420 IPC. The allegations would disclose  that the amount became due five or six years back, but the present FIR was  filed with a malafide intention to harass the petitioner for taking up  dealership of rival business concerns like Gharda Chemicals and Rhyme  Organics and Chemicals Ltd. The petitioner was aged about 61 years and  was under surgical management by Omega Hospitals, Hyderabad. He was  not in a position to move. Subjecting him to trial was an abuse of process  of law and prayed to quash the proceedings against the petitioner.  

5. Learned counsel for the 2^nd respondent, on the other hand,  contended that the pesticides were entrusted to the petitioner with a belief  that he would pay the money. The sale would be completed only when the 

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money was paid. But, the petitioner failed to make the payments. The  allegations in the FIR would make out a prima facie case against the  petitioner. The police examined LWs.1 to 4. The investigation was also  completed and only filing of charge sheet was pending and prayed to  dismiss the petition.  

6. Learned Assistant Public Prosecutor also opposed the petition  and prayed to allow the investigation to be completed to file the charge  sheet.  

7. Perused the record. The allegations in the FIR would disclose  that the petitioner took the agency from the 2^nd respondent company for  selling the pesticides belonging to the 2^nd respondent and they were having  business relations since the year 2002. But, he was not paying the amounts  regularly since 2011 and was due an amount of Rs.42,21,369/- and was  avoiding to pay the said balance amount. Sections 406 and 409 IPC are  pertaining to criminal breach of trust and breach of trust by public servant,  or by banker, merchant or agent and Sections 418 IPC is pertaining  cheating with knowledge that wrongful loss may ensue to person whose  interest offender is bound to protect and Section 420 IPC is pertaining to  cheating and dishonestly inducing delivery of property. The ingredients of 

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an offence of cheating are: (i) there should be fraudulent or dishonest  inducement of a person by deceiving him, (ii) (a) the person so deceived  should be induced to deliver any property to any person, or to consent that  any person shall retain any property; or (b) the person so deceived should  be intentionally induced to do or omit to do anything which he would not  do or omit if he were not so deceived; and (iii) in cases covered by (ii) (b),  the act of omission should be one which causes or is likely to cause damage  or harm .to the person induced in body, mind, reputation or property.  

The ingredients to constitute the offence under criminal breach of  trust are: (1) entrusting a person with property or with any dominion over  property (ii) that person entrusted (a) dishonestly misappropriating or  converting that property to his own use; or (b) dishonestly using or  disposing of that property or willfully suffering any other person so to do in  violation (i) of any direction of law prescribing the mode in which such  trust is to be discharged (ii) of any legal contract made touching the  discharge of such trust.  

8. The Hon’ble Apex Court in Hridaya Ranjan Prasad Verma v.  State of Bihar¹ held that:  

¹ (2000) 4 SCC 168 

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“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.”  

9. Learned counsel for the petitioner relied upon the judgment of  the Hon’ble Apex Court in S.W. Palanitkar v. State of Bihar² on the  aspect that:  

“Every breach of trust may not result in a penal offence of  

criminal breach of trust unless there is evidence of a  

mental act of fraudulent misappropriation. An act of  

breach of trust involves a civil wrong in respect of which  

the person wronged may seek his redress for damages in a  

civil court but a breach of trust with mens rea gives rise to  

a criminal prosecution as well.”  

He also relied upon the judgment of the Hon’ble Apex Court in  International Advanced Research Centre for Powder Metallurgy and  New Materials (ARCI) and others v. Nimra Cerglass Technics Private  Limited and another³, wherein it was held that:  

² (2002) 1 SCC 241  

³ (2016) 1 SCC 348 

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“The distinction between mere breach of contract and the  

cheating would depend upon the intention of the accused  

at the time of alleged inducement. If it is established that  

the intention of the accused was dishonest at the very time  

when he made a promise and entered into a transaction  

with the complainant to part with his property or money,  

then the liability is criminal and the accused is guilty of  

the offence of cheating. On the other hand, if all that is  

established that a representation made by the accused has  

subsequently not been kept, criminal liability cannot be  

foisted on the accused and the only right which the  

complainant acquires is the remedy for breach of contract  

in a civil court. Mere breach of contract cannot give rise to  

criminal prosecution for cheating unless fraudulent or  

dishonest intention is shown at the beginning of the  

transaction.”  

He also relied upon the judgment of the Hon’ble Apex Court in Archana  Rana v. State of Uttar Pradesh and another⁴ wherein the ingredients that  are necessary to constitute the offences under Sections 419 and 420 IPC are  reiterated by the Hon’ble Apex Court.  

10. Considering the judgments of the Hon’ble Apex Court in the  above cases the intention to deceit should be in existence at the time when  the inducement was made. But, if a representation was made and  subsequently it was not been kept, criminal liability cannot be foisted and  the only remedy which the complainant acquires is the remedy for breach  of contract in a civil court. In the present case, the petitioner after taking  the agency from the 2^nd respondent remitted back the amounts due to the  

⁴ (2021) 3 SCC 751 

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2^nd respondent from 2002 to 2011, hence it cannot be said that he had an  intention to cheat the 2^nd respondent from the inception itself. As per the  contention of the 2^nd respondent in the complaint, the petitioner was due  payment of amounts since the year 2011. Hence, the remedy for recovery  of the amount due would by filing a case in the civil court. Mere breach of  contract cannot give rise to a criminal prosecution for cheating or criminal  breach of trust as reiterated by the Hon’ble Apex Court in the above cases.  

11. As the foundational facts to attract the offences alleged against  the petitioner under Sections 409, 406, 418 and 420 IPC are lacking, it is  considered fit to allow the petition quashing the proceedings against the  petitioner in Crime No.259 of 2017 on the file of Sadishivpet Police  Station, Sangareddy District.  

12. In the result, the Criminal Petition is allowed quashing the  proceedings in Crime No.259 of 2017 on the file of Sadashivapet Police  Station, Sangareddy District against the petitioner – A1.  

Miscellaneous petitions pending, if any, shall stand closed.  

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Dr. G. RADHA RANI, J  

March 17, 2022 

KTL