Breach Of Contract | Dishonest Intention U/S 420 IPC Has To Be From Inception Of Transaction, Subsequent Conduct Not Sole Test: J&K&L High Court

The bench comprising Justice Sanjay Dhar was hearing a plea whereby the petitioner had challenged an order passed by Judicial Magistrate, Kulgam, in terms of which criminal complaint filed by the petitioner against the respondent alleging commission of offences under Section 420 and 506 IPC had been dismissed.

In the complaint before the trial court, the petitioner-complaint had alleged that in April, 2015, the respondent/accused approached the petitioner/complainant and offered to purchase bus, owned by the petitioner. It also came to the notice of the court that the sale consideration of the bus was fixed as Rs.5.00 lacs and the respondent paid an amount of Rs.5000 in cash. Subsequently the respondent issued two cheques and promised to liquidate the balance consideration amount of Rs.2.45 lacs within a period of two months. The record further revealed that petitioner delivered possession of the vehicle to the respondent but the cheque for an amount of Rs.1.50 lacs was returned unpaid.

The Magistrate trying the complaint after hearing the parties, passed the impugned order dated 11.05.2017, whereby he had refused to issue process against the respondent and dismissed the complaint by holding that there is no sufficient material on record to proceed against the respondent/accused.

Throwing a challenge to the order of the Magistrate the counsel vehemently questioned the observation of the trial court that the dispute between the petitioner and respondent is purely of civil nature as not well-founded for the material on record clearly disclosed the commission of criminal offences.

Dealing with the argument of the petitioner that a particular set of facts may give rise to both criminal and civil liability and merely because a person has a civil remedy does not mean that criminal proceedings initiated by the said person should be quashed, the bench observed that it is clear that the mere fact that a complaint relates to a commercial transaction or breach of contract, for which a civil remedy is available, is not by itself a ground to quash the criminal proceedings. It is only if it is shown that the complaint, even if taken at its face value does not disclose commission of any offence or if it is found that criminal proceedings have been initiated with malafides/malice for wreaking vengeance that the same can be quashed, the court noted.

Applying the said preposition to the instant case the court observed in order to commit an act of deception of fraud, which is gist of the offence under Section 420 of the RPC, the complainant must have been dishonestly inducted to deliver the property. To deceive is to induce a man to believe that a thing is true, which is false and which the person practicing the deceit knows or believes to be false. This intention of deception or fraud must be existent at the time of commission of the offence. The impugned complaint does not anywhere state that the respondent had a dishonest intention from the very inception, the bench underscored.

In order to buttress the said position of Law the court placed strong reliance on supreme court judgement in Alpic Finance Ltd vs P. Sadasivan And Anr, (2001) wherein Supreme Court held that from a mere denial of a person to keep up promise subsequently, a culpable intention right at the beginning, that is, when he made the promises cannot be presumed. The Supreme Court further observed that mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent dishonest intention is shown at the beginning of the transaction and that substance of complaint is to be seen. Mere use of the expression "cheating" in the complaint is of no consequence.

Deliberating further on the subject the court observed that the transaction between petitioner and the respondent was purely of civil nature whereby the petitioner had agreed to sell and the he respondent had paid part of the sale consideration but failed to liquidate the balance amount. It is, thus, a clear case of breach of terms of contract having no criminal texture to it, the bench underscored.

For the foregoing reasons, I do not find any infirmity or illegality in the impugned order passed by the learned trial Magistrate. The petition lacks merit and is dismissed accordingly, the court concluded.

Case Title: Ghulam Mohammad Naikoo vs Abdul Qayoom Wani

Citation : 2022 LiveLaw (JKL) 76

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