Fraudulent inducement in a hire purchase transaction cannot be tested at quashing stage when deception is alleged.

Criminal proceedings arising from a hire purchase transaction were not quashed at the threshold because the complaint alleged deception, suppression of a subsisting charge, and issue of a false no-lien certificate. The court held that, for cheating, the decisive question is whether dishonest or fraudulent intention existed from the inception of the transaction, and that this could not be conclusively resolved on the available materials. It also held that deemed notice under sections 125 and 126 of the Companies Act, 1956 did not answer the allegations at the quashing stage. The dispute therefore required evidence and trial.

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Issues: Whether criminal proceedings alleging cheating, forgery and use of forged documents arising out of a hire purchase transaction could be quashed at the threshold on the ground that the dispute was civil in nature and that the complainant was deemed to have knowledge of prior charges.

Analysis: The complaint alleged that the accused induced the finance company to enter into the transaction by suppressing the subsisting charge in favour of IDBI and by issuing a false no lien certificate. For the offence of cheating, the essential question is whether dishonest or fraudulent intention existed from the inception of the transaction. The plea based on sections 125 and 126 of the Companies Act, 1956, and deemed notice of registered charges was held not to conclusively answer the accusation at the quashing stage. The contention that the dispute was purely civil was also rejected because the complaint contained allegations of deception and fraudulent inducement, which require evidence and trial for proper adjudication.

Conclusion: The proceedings were not liable to be quashed at this stage and the petition was dismissed.

Ratio Decidendi: In a petition to quash criminal proceedings, allegations of fraudulent inducement and dishonest intention at the inception of a transaction must ordinarily be tested at trial when the question cannot be conclusively resolved on the available materials.

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