TaxTMI 
TaxTMI 
2017 (5) TMI 851
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....rection quashing FIR No.2 of 2015 registered with Gandhinagar Police Station, Gandhinagar Zone on 23.1.2015 and all proceedings consequent to the same; (B) That pending the hearing and final disposal of this petition, the Hon'ble Court be pleased to stay further proceedings of FIR No.2 of 2015 registered with Gandhinagar Police Station, Gandhinagar Zone on 23.1.2015 and all proceedings consequent to the same; (C ) For such other and further orders as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case." 4 The case of the first informant may be summarized as under; 4.1 The first informant is engaged in the business of jewellery. The writ applicant is also engaged in the business of jewellery. The writ applicant herein is the Chairman and the Managing Director of a company by name Geetanjali Jewellery Retail Limited (for short GJRL). The writ applicant also owns one another company by the name Geetanjali Gems Ltd. (for short, "the GGL"). 4.2 In the year 2010, one Mr. Kaushik Hariya, serving as a Business Development Manager with the GJRL and GGL, visited the residence of the first informant and persuaded him to take the franchisee of t....
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.... 201112 and 57.34 kg in 2013.14 and, accordingly, in a span of three years, 105.853 kg gold bar/ money was transferred to the accused as a deposit. 4.5 The accused persons issued a receipt dated 18th March, 2013 and an agreement dated 25th July, 2013 was also entered into duly signed by the parties. It is the case of the first informant that this is how the accused won over his trust and confidence, unmindful of the fact that the intention was otherwise. Soon, thereafter, disputes cropped up between the first informant and the accused. It is the case of the first informant that the accused failed to act in accordance with the terms of the agreement. The accused was informed about the same by the first informant. It is alleged that as the first informant got suspicious about the functioning of the company, he asked a chartered accountant firm to undertake a search of the affairs of the company. The report of the chartered accountant revealed that there was some tampering with the books of account. When the first informant confronted the accused with the same, the accused is alleged to have got angry and threatened the first informant with dire consequences. 4.6 It is the case ....
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....and the FIR registered against him, respondent No.2 initially tried to lodge an FIR against the petitioner at Bhavnagar. However, as no FIR was registered by the Police authorities at Bhavnagar, respondent No.2 got the FIR registered at Gandhinagar Police Station on 23.01.2015. It is submitted that the impugned FIR is nothing but a counterblast to the Civil Suit and the complaint filed by the petitioner against respondent No.2. 3.2 That the dispute is purely civil in nature and pertains to the alleged breach of an Agreement and contract between the parties. It is being given a criminal colour by respondent No.2, in order to pressurize the petitioner. The FIR does not disclose any primafacie case against the petitioner and the offences alleged against him are not made out, upon a bare perusal of the FIR. 3.3 It is contended that there is no misappropriation on the part of the petitioner, as it is respondent No.2, who owes the petitioner a large amount of money for the stock of the petitioner sold by him. 3.4 That the offence under Section 420 of the Indian Penal Code is also not made out against the petitioner, as the issue revolves around the alleged breach of Agreement. T....
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....value of the stockpile as on date; e. That this Hon'ble Court be pleased to Order and direct' the Defendants to state and declare on oath all the agreement(s) executed by and between Defendant No.4, purporting to act on behalf' of the Plaintiffs and the Defendant Nos. 1 to 3 or any of their associates, and / or affiliates, from 2010 till date; f. That this Hon'ble Court be pleased to direct the Defendants to deliver up the agreements referred to in prayer clause (f) above. and to cancel the same and or declare the same as void ab initio and in any event not binding on the plaintiffs, forthwith." 7 The civil suit came to be filed against the first informant herein being the defendant No.1, M/s. Divyanirman Jewellers, the partnership firm, as the defendant No.2, M/s. Divya Germs & Jewellery, a proprietary concern being the defendant No.3 and one Mr. Santosh Srivastava, an exemployee of the accused company as the defendant No.4. 8 Some of the relevant averments made in the plaint are reproduced herein below; "4. The Defendant No.1 is guilty of defrauding the plaintiffs. Defendant No.2 and 3 are entities that are associated with the Defendant No.1. The Defendant ....
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.... the above stores are the stores that the Plaintiffs are aware of as on date. d. No outside stock of jewellery would be sold in the five designated franchisee outlets; e. GJRL. would retain a lien on [a] the franchisee's investment; and [b] on all memo stocks provided by GJRL to the franchisee; f. All intellectual property rights including but not limited to the product designs, brand name, logos etc. would remain the sole property of the Plaintiffs; g. GJRL would under take: i marketing and advertisement. of the stores; ii the operational activities of the, franchisee stores; and iii; to bear all operational expenses such as rent, electricity expenses, staff salary etc.' h. Necessary leases would have to be executed in relation to the various stores with the property owners of the premises where the stores were situated; i On termination of the arrangement between the parties the Defendants would return the stock of gold and diamond jewellery both owned by GJRL and / or all memo stocks to GJRL; and in turn GJRL would return the investment made by the Defendants after settling the outstanding accounts, if any j. if any scheme(s) were launched by th....
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....os. 1 to 3, at the Franchisee Stores. However, it is evident; that the Mr. Srivastava along With Defendant Nos. 1 to 3 have systematically perpetrated the present fraud upon the Plaintiffs by executing the alleged Agreements which apart from being at a complete variance from the Plaintiffs' standard franchisee terms are highly onerous. 14. Effectively, GJRL's goods were with the Defendants and they refused. to provide any particulars in retrospect, it is evident that these refusals were to enable the Defendants to jointly and severally perpetrate this systematic and massive fraud upon the Plaintiffs. The Defendants continued to provide the Plaintiffs with false assurances from time to time with the intent to steal the goods and defraud the Plaintiffs and are now illegally attempting to sell and / or transfer and / or dispose of and / or alienate the goods / property of the Plaintiffs' in the open market and consequently illegally profiteer from the said transactions. FRAUDULENT PUPORTED AGREEMENTS ENTERED INTO BETWEEN MR. SRIVASTAVA AND MR. JADEJA/DJ/DGL; 15.Despite the assurances madeby the Defendants and Mr. Srivastava as no results were forthcoming and the Defen....
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....iven as regards the scheme. The same is as under; "20, As stated above the understanding between GJRL and the Defendants to enter into various jewellery accumulation schemes. Illustratively, one of the schemes entailed the following: i. the customer would "pay a requisite amount for 11 (eleven) equal monthly installments "to Defendant Nos. 1 to 3. which would then be handed over to GJRL; ii. the 12th (twelfth) monthly installment would be paid by GJRL; and iii. On maturity of the term of the scheme, the customer would. be permitted to. redeem the entire amount by "purchasing 'GJRL manufactured jewellery from the franchisee equivalent to the entire amount. 21.Owing to the brand value and reputation of the Plaintiffs, several customers approached the Defendants to sign up for ( the scheme and avail of the benefits thereunder. 22. Pursuant to the initialinvestigation (which is still ongoing), it has come to light that the Defendants had in fact not been, handing. over the money(ies) deposited by customers under the scheme; to the Plaintiffs; and had in fact been wrongfully retaining the same with the sole aim to unjustly enrich themselves to the detriment and los....
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....Agreements Hereto annexed and marked as EXHIBIT G is a copy of the one page extract of a purported contract / Agreement entered into between the Defendant No. 1 to 3 and Defendant No.4, purportedly on behalf of the Plaintiffs. At this stage; it is repeated and reiterated that the Plaintiffs are unaware of any such agreement that includes the purported extract 26. From the above, it is evident that the defendants act from the very beginning have been to create substantial losses to the Plaintiffs and this is evident from the systematic manner in which the Defendants have jointly colluded with each other. The acts of the Defendants' are solely aimed at causing loss of goodwill and reputation of the Plaintiffs and it is clear that the Defendants' are ready and willingly to do any act including but not limited to illegal acts to achieve this aim. 27.Accordingly, the Plaintiffs' are not only facing monetary losses but also a substantial loss of reputation as it is also dealing with the grievances of the customers so as to ensure that they receive. Their rightful claiml(s) which has been 'wrongfully usurped by the Defendants who have in a clandestine mariner cheated the publi....
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....) the expertise of the Plaintiffs' and also their modern software /systems of carrying out business(es) on a panindia level. Accordingly, in retrospect, it is evident that the Defendants never intended to do business with the Plaintiffs but from the very inception merely engage the Plaintiffs' under a false pretext so as to learn the business of the Plaintiffs and subsequently establish their own business(es) which is based on the goodwill and standing of the Plaintiffs' itself. 31. Typically, every product of the Plaintiffs bears a unique bar code, which enables the system of the Plaintiffs' to record the details/and the sale of the product(s). It has surfaced that the Defendants have been, without authority, replicating the bar codes of the plaintiffs' products and illegally affixing them to their own products; The Defendants have therefore affixed the same bar code on two separate products, one manufactured by Divyanirman and the other by Gitanjali. As a result, with every two sales made by the Defendants, the system of the Plaintiffs will have only one record whereas in fact the Defendants have made excess sales and are pocketing the proceeds of the sale wrongful....
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.... Defendants as special class of investors, the agreements were accordingly negotiated and signed. It is mentioned here that the Plaintiffs were proposing and soliciting even further investments from the Defendants. The Defendants were seriously considering this option. However, in view of subsequent conduct of the Plaintiff's, the Defendants did not go ahead with further investment plan and restricted investment at 105.853 Kg only. Thus, it is ridiculous on the part of the Plaintiff to expect that the party investing to such a large extent will accept franchisee model It is obvious that the investor of such a profile will agree and negotiate his own terms and will not accept standard terms, as alleged. The averments made in Para 11 and 12 are not true and the same are denied. It is denied that the investment was made by the Defendant No.1, 2 and 3 as alleged. The investment was made by the Defendant No.2 only. Moreover, it is also denied that the plaintiff gave stocks worth Rs. 34 crores by March, 2013 as alleged. The defendants reiterate that the transactions were for investment in gold quantity only and rupee value was irrelevant. 58. As a matter of fact, the Defendants her....
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....have defrauded the Defendants by grabbing over 100 Kg pure gold bars deposited by the Plaintiff and by not performing reciprocal obligation of providing jewelery stock at five outlets Operating under various schemes. 62. It is mentioned here that the Defendants commenced operations with the plaintiff during the year 2010 and it may be noted that between 2010 and execution of First Agreement, the Defendants had deposited huge quantity of gold in anticipation of execution of agreement. It is further mentioned here that agreement execution was pending, however, operations had commenced. It is mentioned here that at no point of time, the Defendants were expected to Sign standard agreement as alleged. In fact, the arrangement was different and distinct and therefore, parties decided to have their own agreement. Accordingly, thereafter agreement draft preparation commenced after 2011 and Plaintiffs along with others were involved with the process of drafting of the agreements. It is mentioned here that the entire legal team was involved in preparation of the draft and actual draft agreement was forwarded to the Defendants by Ms. Shikha Palsule, who was Manager Legal by her Mail dated ....
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....ny executives. Email of June, 2014 completely exposes the Plaintiff who have actually robbed the Defendant No.2 by taking custody of Defendant's' pure gold over 100 Kg, under various schemes which were prepared by them, negotiated by them, executed by them and which were within their knowledge even subsequent to execution thereof. Having pocketed Defendants' precious gold under above schemes and by playing fraud with the Defendants, the Plaintiffs did not perform their contractual obligations. The above facts are mentioned only to dispel cloud of doubt created by the plaintiff by repeatedly using the words fraud and fraudulent Whereas, in reality, the Plaintiff and people in management of the Plaintiff Company who are cheaters and who have after taking away Defendants' gold, raised their hands off and are pretending complete ignorance about existence of agreement. t is mentioned here that the Defendant has a huge claim against the plaintiffs as since over TWO years, the Plaintiffs have not paid the dues to the Defendants under the Agreement and have not reimbursed the expenses to the defendant in terms of the Agreement. 12 In para63 of the written statement, the first inf....
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....consequence of plaintiff's failure to maintain the stock and nonpayment of minimum guaranteed returns, reimbursement of expenses etc., besides default committed in performance of other obligations the defendant did not part with the sale proceeds as authorized by the agreement and this was known to the plaintiff as such action was in terms of the agreement owing to the plaintiffs default. E) The defendants therefore starting from March 2013 stopped giving sale proceeds to the plaintiff and as of that day the the plaintiffs were induced to the defendant no.2. After March, 2013, until date of the suit, the plaintiff has never made any payments. F) it is mentioned here that some time during August, 2013, amendment agreement was signed and it was agreed at Clause - 3 that the plaintiff will also bring their running stores at Inorbit Mall, Mumbai under the Agreements with the Defendants and accordingly, the defendants invested further quantity of gold. G) Even, after the defendant no.2 performed in obligations and deposited gold, the plaintiff did not enter into agreement for Inorbit Mall and did not maintain committed stock at stores operating in the state of Gujarat. H) In....
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....also provides that in the event of default committed by the plaintiff, the Defendant No.2 can recover entire stock and such recovery of the stock and realization of the value would be subject to Defendants right to recovery of 105.853 KG 24 karat pure gold bars 67. It is submitted that all the allegations pertaining to Defendants collusion with the erstwhile Managing Director, Defendant No.4 are false; As mentioned hereinabove, the Defendants have deposited huge quantity of pure gold and have nothing in return. It, is mentioned here that the Defendant No.2 has huge pending schemes as detailed more particularly in their notice dated 15.07.2014. 68. As stated hereinabove, after notice was served, false suit has been filed by the plaintiff. It is evident from the suit that the plaintiff is completely pleading ignorance as regards existence of the agreement and is branding the defendants as fraudster. It is settled position of law that only by repeatedly using the word "fraud", fraud is not established and the allegations are completely false. In view of this behaviour, the defendant No.2 had no choice but to terminate the agreement B and D, by serving a Terminator Notice dated 2....
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....ant has not even filed a counterclaim in the suit filed by the accused company. Instead of filing a civil suit against the accused company for recovery of the amount in terms of the agreement, the first informant adopted a dubious tactic of going before the police and filing a first information report so as to exert undue pressure for the purpose of recovering the requisite amount. 14.3 Mr. Joshi submitted that in the first information report, there is no allegation of misappropriation or dishonest conversion of the property by the accused to his personal use. The allegations are that the accused failed to refund the security deposit. Thus, the case of the first informant is that of illegal retention of the property entrusted by him to the accused by way of security deposit. 14.4 Mr. Joshi submits that, on the contrary, it is the accused company, who has to recover a huge amount from the first informant and, for which, the civil suit has been filed in the court concerned. Mr. Joshi pointed out that there are serious disputes as regards the terms agreed between the accused company and the first informant, and the genuineness of the documents, on which reliance, is being placed....
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....put up by the first informant in his written statement runs quite contrary to what he has alleged in the first information report. Mr. Joshi submits that the first informant, somehow, even managed to win over one Srivastava, the exemployee of the accused company and after winning him over, got a written statement filed through him in the civil suit filed by the company supporting the case of the first informant in the civil suit. According to Mr. Joshi, the first informant has to pay more than Rs. 90 crore to the accused company towards the damages as against the claim of the first informant of Rs. 49 crore. Mr. Joshi submits that the stance taken in the F.I.R., if is found to be inconsistent with the stance taken in the civil proceedings, then the same would assume significance. The criminal proceedings are not a shortcut of the other remedies. In support of his submissions, Mr. Joshi, has placed reliance on the following decisions; (1) In the case of B. Suresh Yadav vs. Sharifa Bee & Anr., 2008 Cri. L.J., 431; (2) In the case of Rex vs. V. Krishnan, AIR 1940 Madras 329; (3) In the case of Re Raghava Menon, AIR 1941 Madras 250; (4) In the case of Nageshwar Prasad Singh....
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....a8 of the agreement dated 25.07.2013, AnnexureF collectively to this writ application. Para8 of the said agreement reads as under; "GITANJALI hereby give unconditional promise, assurance and trust to DivyaNirman that in the event of discontinuance/closure of the said business, entire gold bars quantity commodity (without any deduction) mentioned in annexure shall be returned/refunded immediately without fall and without any excuse of any nature whatsoever." 16.5 According to Mr. Nanavati, despite such clear a condition in the agreement, if the property entrusted, is not returned, then a prima facie case of the criminal breach of trust could be said to have been made out. 16.6 Mr. Nanavati pointed out that there are many prosecutions instituted of the similar nature against the accusedcompany and the office bearers. 16.7 In such circumstances referred to above, Mr. Nanavati, the learned senior counsel, prays that there being no merit in both the writ applications, the same be rejected. 16.8 Mr. Mitesh Amin, the learned Public Prosecutor appearing for the State submitted that a prima facie case could be said to have been made out for the police to complete the investig....
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....roup company and that You No.1 company is a part and parcel of commercial organization of You No.2 company. On the basis of such representation made by and on behalf of You No.1 and You No.2 and considering the reputation and financial stability of You No.2 Company, my client entered into agreement with you. Thus, You No.2 are jointly and severally liable with You No.1 Company for all acts and omissions of You No.1 Company. ' 3. That You No.1 Company, at the instance of You No.2 Company has entered into series of negotiations with my clients for carrying out the business of jewellery ornaments etc. The terms and conditions which were fixed orally in "S.Y. 2010 and thereafter of the agreement were reduced to writing ,by four different deeds executed as under: a) "Agreement to confirm deposit of 24 Karat pure Gold Bars" executed on 25th July 2013.' Herein after referred as "AgreementA" b) "Operational and commercial agreement" executed on 13th August 2013. Herein after referred as "AgreementB" c) Amendment of Agreement to confirm deposit of 24 Karat Gold Bars executed on 25th August, 2013. Herein after referred as "AgreementC" d) Amendment of Qperational and Cornme....
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....eA". 8. Under the terms of agreement, you are liable to reimburse to my client, the expenditure to the extent of 50% for furniture, fixtures etc. of all the stores. Till date, under the head of Reimbursement of Expenditure towards furniture, fixtures etc." you are liable to pay amount mentioned as per "table- B" annexed here with. Similarly, you are liable to reimburse to my client as per annexed "tableC", being the amount of expenditure incurred by my client towards business promotion, advance rent / security deposit, and monthly rent of the show rooms, maintenance and electricity charges,insurance, all taxes, other operational expenses etc." 9. You have committed breach of contract by floating various schemes which were beyond the scope of agreement entered into between the parties. Such schemes have operated against the interest of my client. One of such scheme is Gift Voucher. You have delivered substantial gold ornaments under such schemes from my client's stores. My client is entitled to receive from you the amount as detailed the "tableD" annexed here with. Under various schemes such as Shagun, Tamanna, Swarna Mangal Kalash, Swarna Manga lLabh etc. floated by you, you ....
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....e "lnorbit" situated at link road, Malad, Mumbai with agreed stock level. (ii) Please supply gold ornaments and SRP Value Diamond ornaments to the extent of 35% of the 24kt pure gold bars deposited by my client with you. (iii) Please pay all the amount stated in all schedule annexed here with, Which are summarized in "TableH" annexed with this notice, being the total amount due and payable by you under aforesaid heads. Accordingly, you are hereby noticed and called upon jointly and severally to comply with the terms and conditions of all concerned contractual documents and discharge your all duties expressly imposed undertaken, required to protect the interest of my client and within 30 days, positively and without fail, failing which my client shall be constrained to avail appropriate hard action against you as per Clause 8th of Contract "Agreement. D" lt Is needless to say that this is a last notice. This notice is without prejudice to all legal actions available to my client in any form whatsoever. Note: 1. the figures shown hereinabove and below in the ensuing Tables are as it appears from the record available With my clients. Note: 2. the aforesaid agreements an....
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....itional promise, assurance and trust to Divyanirman that in the event of Discontinue / closure of the said business, entire gold bars quantity commodity (without any deduction) mentioned in Annexures shall be return / refunded immediately without fail, and without any excuse of any nature whatsoever. Following termination of Agreements, terminated vide letter No.DNJGJRL/ Termination/08201401 dated 21st August, 2014, resulting into closure/discontinuance of business. I Digvijaysinhji Jadeja, Managing partner of Divyanirman Jewels, in exercise of powers vested in me as per clause 8 of "agreement to Confirm Deposit of 24 karat pure gold bars" executed between the parties on 25th July, 2013, do hereby demand and call upon you to return our 105.853 kgs 24 kt pure gold bars deposited with you in fiduciary capacity on immediate basis. If you fail to comply with the demand, we shall take such further steps for recovery /protection of our rights as may be deemed expedient." 19 On 23rd August, 2014, one another notice was issued by the first informant regarding stock lying at the Bhavnagar Store. It reads as under; "1. M/s. Gitanjali Jewellery Retail Limited Having registered off....
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....013. Prima facie, it appears that the first informant won over the said Srivastava, who, in turn, went to the extent of filing a written statement in the suit filed by the accused persons supporting the first informant. Thus, the sum and substance of the dispute between the parties is the breach of contract dated 25th July 2013, which, according to the first informant, amounts to a criminal breach of trust. On the other hand, the say of the accused is that an agreement was entered into between the parties and it is the first informant, who defaulted in complying with the terms of the agreement, thereby, resulting in huge financial loss to the accused - company. 21 It appears from the materials on record that the first informant has with him in his possession and custody: (i) Approximately invoice gold value of quantity 41.12 kilograms (valued at Rs. 11.92 Crore as on August 12, 2014). (ii) Diamond memo stock approximate value of Rs. 15.09 Crore. (ii) The amount collected through the scheme provided by the accused persons and the first informant which has been illegally retained by the first informant. 22 At this stage, at the cost of repetition, let me take note of t....
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.... are no such documents, which could be termed as the false documents within the meaning of section 464 of the IPC, but probably, in the course of the investigation, the Investigating Officer might be able to obtain one, which could be termed as a forged document. I am not, at all, convinced with such reply of the first informant as well as of the State. Without there being anything on record to even remotely indicate about the forgery, the first information report could not have been registered for the offence punishable under sections 465, 467, 468 and 471 of the IPC. The law in this regard is well settled. Mere incorrect information or a false recital in a document even, if any, does not amount to forgery. Such a document cannot be termed as a false document within the meaning of section 464 of the IPC. 25 The second question, I put to Mr. Nanavati, the learned senior counsel appearing for the first informant and Mr. Mitesh Amin, the learned Public Prosecutor appearing for the State was whether the case is one of cheating or criminal breach of trust. The reply of both the learned counsel was that the allegations constitute, both cheating as well as criminal breach of trust. ....
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....ndian Penal Code respectively being the punishment sections come into operation. However, while doing such legal exercises, it has become imperative for the Court to see that the criminal breach of trust and cheating, though, generally involves dishonest intention, but, both are mutually exclusive and different in the basic concept, in the context that criminal breach of trust is voluntary and cheating, is purely on the basis of inducement with dishonest intention. In this regard, in my view, both the concept of law for the respective offences are totally distinct, different in nature and accordingly, mutually exclusive with each. 28 Further, in both sections, mens rea i.e. intention to defraud or the dishonest intention must be present from the very beginning or inception without which either of these sections cannot be invoked. 29 In my view, the plain reading of the First Information Report fails to spell out any of the aforesaid ingredients noted above. I may only say with a view to clear a serious misconception of law in the mind of the police as well as the courts below that if it is the case of the complainant that an offence of criminal breach of trust as defined unde....
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....on is with dishonest intention or not. Whether the retention involves criminal breach of trust or only a civil liability would depend upon the facts of each case. 32 The distinction between mere breach of contract and the offence of criminal breach of trust and cheating are fine one. In case of cheating, it depends upon the intention of the accused at the time of inducement, which may be judged by a subsequent conduct but for this the subsequent conduct is not the sole test but mere breach of contract which cannot give rise to a criminal prosecution for cheating unless fraudulent or dishonest intention is shown right from the beginning of the transaction i.e. the time when the offence is said to have been committed. Therefore, it is his intention, which is the gist of the offence. Whereas, for the criminal breach of trust, the property must have been entrusted to the accused or he must have dominion over it. The property in respect of which the offence after the breach of trust has been committed must be either the property of some person other than the accused or the beneficial interest in or ownership of it must be of some other person. The accused must hold that property on t....
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....ng the full payment. The matter was, therefore, before the civil court in this respect. The liability, if any, arising out by breaching thereof was civil in nature and not criminal. Accordingly, the appeal was allowed and complaint proceedings were quashed. 34 It was further held by the Supreme Court in the case of Hridaya Ranjan Prasad Verma v. State of Bihar, AIR 2000 SC 2341 at Pp. 234546 of para 16) as below : "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 ....
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....ecovery of the amount due and payable. Again, how could the complainant be sure that the prosecution was bound to succeed and that the Courts were, ultimately, bound to hold that a fraud or cheating has been practiced upon him. It is, therefore, not possible to believe that he would have remained indifferent and waited for long time without instituting any civil suit for recovery of the amount. 39 In the context of the nature of the dispute between the parties, I would like to refer to and rely upon a decision of the Madras High Court in the case of Rex vs. V. Krishnan [AIR 1940 Madras 329]. His Lordship Pandrang Row, J., while addressing the jury, observed as under: "I do not care, I am satisfied if I get a receipt and the document;" in these circumstances, is it an entrustment of money? Secondly whether the accused did anything with that money which would show that it was a misappropriation? Misappropriation is the wrongful setting apart or assigning of a sum of money to a purpose or use to which it should not be lawfully assigned or set apart. It is in this connexion that you have heard a fairly long argument addressed to you about the rights of an agent and the rights of ....
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....th is not in law sufficient to establish that he has committed the offence of criminal breach of trust in the absence of other evidence, unless you prove some kind of conversion, i.e. a wrongful diversion to his own purposes or a purpose not consistent with law or with contract." "Assuming for argument's sake that this Rs. 8000 remained in that account all the time, that he did not actually draw it; if for instance in the account of the accused with the Bank all the time Rs. 8000 was kept without being touched, you cannot say that the mere retention was a criminal breach of trust. It was safer and wiser to keep it in a Bank than at home. I am mentioning this; merely keeping the money and not paying it over as required by law, that is to say, even when an agent may have no claim against the principal, even then if he retains it merely and does not pay it, but does not do anything else with it, there is no criminal breach of trust. It is only a civil liability, and of course the principal can at any time, if he chooses, compel him to pay, send him a notice and file a suit. A criminal complaint is not the way to get one's civil rights established. If money due to a particul....
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....rted allegations, as made, prima facie establish the offence. The Supreme Court observed that it is also open for this Court to take into consideration any special features which appear in a particular case to consider whether it is expedient and in the interest of justice to permit a prosecution to continue. This is so on the basis that the criminal machinery or the Court cannot be utilised for any oblique purpose. In the said case, the Supreme Court observed that a case of breach of trust is both a civil wrong and a criminal offence. There would be certain situations where it would predominantly be a civil wrong and may or may not amount to a criminal offence. 41 I have reached to the conclusion that the case on hand is predominantly a civil wrong and the necessary ingredients to constitute a criminal offence are lacking. 42 In the case of Binod Kumar and others vs. State of Bihar and another [(2014) 10 SCC 663], the Supreme Court, while drawing a fine distinction between the offence of criminal breach of trust and cheating, observed in paras 18 and 19 as under: "18. In the present case, looking at the allegations in the complaint on the face of it, we find no allegation....
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.... mind, reputation or property. 12. While executing the sale deed, the appellant herein did not make any false or misleading representation. There had also not been any dishonest act of inducement on his part to do or omit to do anything which he could not have done or omitted to have done if he were not so deceived. Admittedly, the matter is pending before a competent civil court. A decision of a competent court of law is required to be taken in this behalf. Essentially, the dispute between the parties is a civil dispute. 13. For the purpose of establishing the offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. In a case of this nature, it is permissible in law to consider the stand taken by a party in a pending civil litigation. We do not, however, mean to lay down a law that the liability of a person cannot be both civil and criminal at the same time. But when a stand has been taken in a complaint petition which is contrary to or inconsistent with the stand taken by him in a civil suit, it assumes significance. Had the fact as purported to have been represented befo....
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.... 3,05,39,086 out of the total amount of Rs. 3,38,62,860 was paid leaving balance of Rs. 33,23,774. We need not go into the question of the difference of the amounts mentioned in the complaint which is much more than what is mentioned in the notice and also the defence of the accused and the stand taken in reply to notice because the complainants own case is that over rupees three crores was paid and for balance, the accused was giving reasons as abovenoticed. The additional reason for not going into these aspects is that a civil suit is pending inter se the parties for the amounts in question. 17. In Hira Lal Hari Lal Bhagwati v. CBI, New Delhi [(2003) 5 SCC 257], this Court opined : It is settled law, by a catena of decisions, that for establishing the offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. From his making failure to keep promise subsequently, such a culpable intention right at the beginning that is at the time when the promise was made cannot be presumed. It is seen from the records that the exemption certificate contained necessary conditions which were....
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....the execution of such threats, commits criminal intimidation. Explanation: A threat to injure the reputation of any deceased person in whom the persons threatened is interested, is within this section. An offence under Section 503 has following essentials:1. Threatening a person with any injury; (i) to his person, reputation or property; or (ii) to the person, or reputation of any one in whom that person is interested. 2. The threat must be with intent; (i) to cause alarm to that person; or (ii) to cause that person to do any act which he is not legally bound to do as the means of avoiding the execution of such threat; or (iii) to cause that person to omit to do any act which that person is legally entitled to do as the means of avoiding the execution of such threat. 46 A bare perusal of Section 506 of the Indian Penal Code makes it clear that a part of it relates to criminal intimidation. Before an offence of criminal intimidation is made out, it must be established that an accused had an intention to cause alarm to the complainant. Mere threats given by the accused not with an intention to cause alarm to the complainant, but with a view to deterring him fr....