Gujarat High Court
Yogesh Premjibhai Suvariya vs State Of Gujarat on 17 March, 2026
NEUTRAL CITATION
R/CR.RA/213/2016 JUDGMENT DATED: 17/03/2026
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL REVISION APPLICATION (AGAINST ORDER PASSED BY
SUBORDINATE COURT) NO. 213 of 2016
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE L. S. PIRZADA
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Approved for Reporting Yes No
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YOGESH PREMJIBHAI SUVARIYA & ANR.
Versus
STATE OF GUJARAT & ANR.
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Appearance:
MR MEET M THAKKAR(7766) for the Applicant(s) No. 1,2
MR. JAY M THAKKAR(6677) for the Applicant(s) No. 1,2
MR ANUJ K TRIVEDI(6251) for the Respondent(s) No. 2
MR DHAWAN JAYSWAL, APP for the Respondent(s) No. 1
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CORAM:HONOURABLE MR.JUSTICE L. S. PIRZADA
Date : 17/03/2026
ORAL JUDGMENT
1. The present Revision Application has been preferred
by the petitioners, challenging the Order passed by the
learned Additional Chief Judicial Magistrate, Anjar-Kutch
in Criminal Case No. 584 of 2012 vide Order dated
08.02.2016, whereby the learned Magistrate rejected the
application below Exh.17 seeking discharge. The
petitioners are aggrieved by the said Order and further
by the subsequent Order dated 02.03.2023 passed below
Exh.112/C framing the charge against them. Hence, the
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present Revision Application is preferred before this
Court.
2. The brief facts giving rise to the present Revision
Application are that the complainant, Anilbhai s/o
Vashrambhai Savadiya, lodged a complaint against the
present petitioners-accused alleging, inter alia, that the
petitioners had placed two purchase Orders dated
14.11.2011 and 21.11.2011 with the complainant’s
company for purchase of 293 metric tonnes of TMT steel
Bars, against which they had given ten cheques
amounting to Rs.1.19 Crores. Accordingly, the
complainant had delivered the goods on various dates in
November 2011. Thereafter, the cheques given by the
petitioners were presented in the Bank by the
complainant, however all the ten cheques had returned
dishonoured with the endorsement ‘insufficient balance’.
It was further alleged that since the petitioners-accused
had not paid the amount of cheques and committed
cheating and breach of trust, the complainant had filed
complaints under Section 138 of the Negotiable
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Instruments Act. Subsequently, a complaint/FIR came to
be registered before the Anjar Police Station vide I-C.R.
No. 8 of 2012 for the offences punishable under Sections
406, 420 and 114 of the Indian Penal Code. Pursuant to
registration of the FIR, investigation was carried out and,
upon completion of investigation, the Investigating
Officer filed a charge-sheet on 03.05.2012 before the
learned trial Court, which came to be registered as
Criminal Case No.584 of 2012. In the said criminal case,
the present petitioners preferred an application below
Exh.17 under Section 239 of the Code of Criminal
Procedure seeking discharge. The learned Additional
Chief Judicial Magistrate, Anjar-Kutch, vide Order dated
08.02.2016, rejected the said discharge application.
Being aggrieved and dissatisfied with the aforesaid Order
rejecting the discharge application, the present Revision
Application is preferred under Section 397 read with
Section 401 of the Code of Criminal Procedure before this
Court.
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3. It is pertinent to note that the aforesaid Criminal
Revision Application was initially rejected by this Court
vide Order dated 24.03.2021, mainly on the ground that
the Order rejecting the discharge application was an
Interlocutory Order as per Section 397(2) of the Code of
Criminal Procedure, 1973, and therefore the revision
application was held to be not maintainable. The said
Order of rejection was thereafter challenged by the
present petitioner before the Hon’ble Apex Court of India
by preferring Criminal Appeal No.5430 of 2024 (arising
out of SLP (Criminal) No. 5300 of 2021). The Hon’ble
Apex Court, vide Order dated 18.12.2024, was pleased to
set aside the Order passed by this Court in Criminal
Revision Application No.213 of 2016 and directed that the
said revision application be restored and listed before the
appropriate Bench. It is further submitted that during the
pendency of the present revision application, the learned
trial Court framed charges against the accused persons
vide Exh.112/C on 02.03.2023 for the offences punishable
under Sections 406, 420 and 114 of the Indian Penal
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Code. In view thereof, liberty was granted to the present
petitioner to seek amendment of the revision application
so as to incorporate a challenge to the Order framing
charge. Pursuant to the restoration of the present
revision application, a draft amendment was moved by
the learned advocate for the petitioner, and the same has
been allowed.
4. Submission made by the learned advocate Mr.Jay M.
Thakkar appearing for the applicants submitted that the
petitioner has challenged the Order dated 08.02.2016
passed below Exh.17 in Criminal Case No.584 of 2012,
whereby the learned trial Court rejected the discharge
application preferred by the present petitioner. He has
further submitted that during the pendency of the present
revision application, charges came to be framed and,
pursuant to liberty granted by this Hon’ble Apex Court,
an amendment application was preferred and the same
has been allowed. Learned advocate for the applicants
submitted that as per the charge-sheet, the allegations
against the present petitioner – original accused are that
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the petitioner purchased goods (iron rods) from the
complainant company amounting to Rs. 1,19,25,656/-. It
is alleged that towards the said outstanding dues, the
petitioner issued blank cheques with an assurance that
the same would be honoured upon presentation.
However, when the cheques were presented by the
complainant company, they were dishonoured on account
of insufficient funds. It is further alleged that despite
issuance of notice under Section 138 of the Negotiable
Instruments Act, the amount remained unpaid. According
to the prosecution, the accused purchased goods against
validly issued cheques, assured that the cheques would
be honoured, but ultimately failed to make payment after
selling the goods and receiving consideration, thereby
committing offences punishable under Sections 406, 420
and 114 of the Indian Penal Code. Learned advocate has
further submitted that the complainant has suppressed
material facts in the FIR, particularly that the present
applicants and the complainant company had business
relations since the year 2008 and had entered into
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approximately 46 business transactions. It is further
submitted that the complainant had filed ten separate
complaints under Section 138 of the Negotiable
Instruments Act for dishonour of cheques, including
Criminal Complaint Nos.1723 of 2012 to 1732 of 2012
before the learned Judicial Magistrate First Class,
Ahmedabad (Rural) Court. However, the said complaints
were returned by the concerned Court in view of the
judgment of the Hon’ble Apex Court in the case of
Dashrath Rupsingh Rathod v. State of Maharashtra,
directing filing before the Court having jurisdiction. It is
submitted that thereafter the original complainant did not
represent the complaints before the competent Court. As
such, at present, no complaint under Section 138 of the
Negotiable Instruments Act is pending against the
present applicants-accused.
5. Learned advocate for the applicants further submits
that the allegations made by the prosecution against the
present applicants pertain to the offences punishable
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under Sections 406 and 420 of the Indian Penal Code. It
is submitted that the dispute between the parties is
purely civil in nature. Mere non-payment or
underpayment of the price of goods, by itself, does not
amount to commission of an offence of cheating or
criminal breach of trust. It is further submitted that there
is no act of inducement or entrustment alleged against
the present applicants, nor is there any allegation that
the applicants had any intention to cheat the complainant
from the very inception of the transaction. Learned
advocate further submits that the present applicants and
respondent No. 2 – original complainant have been in a
business relationship since the year 2008 and have
entered into approximately 46 business transactions for
sale and purchase since then. Therefore, it cannot be said
that there was any intention on the part of the applicants
to cheat the complainant from the inception. Further,
learned advocate Mr.Thakkar has relied upon the
Judgment of the Hon’ble Apex Court in the case of Veer
Prakash Sharma v. Anil Kumar Agrawal & Anr., reported
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in 2007 (3) GLH 182, and has submitted that as per the
ratio laid down by the Hon’ble Apex Court, in the absence
of any act of entrustment or inducement on the part of
the accused and in the absence of any allegation that the
accused had the intention to cheat the respondent –
original complainant from the very inception of the
transaction, the provisions of Sections 406, 409, 420 and
417 of the Indian Penal Code would not be attracted.
6. Further, learned advocate Mr.Thakkar has placed
reliance upon the Judgment of the Hon’ble Apex Court in
Lalitbhai Bhanubhai Limbasia v. State of Gujarat & Anr.,
reported in 2004 (4) GLR 3233. In support of his
submissions, reliance is also placed upon the Judgment of
this Hon’ble Court in the case of Yogesh Premjibhai
Suvariya v. State of Gujarat, rendered in Criminal Misc.
Application No.13233 of 2012 vide Order dated
11.05.2018, wherein it has been held that no offence
under Sections 406 and 420 of the Indian Penal Code is
made out. Lastly, learned advocate Mr.Thakkar has
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heavily relied upon the Judgment of the Hon’ble Apex
Court in the case of Shailesh Kumar Singh Alias Shailesh
R. Singh v. State of Uttar Pradesh & Ors., reported in
2025 INSC 869, as well as upon the Judgment of the
Hon’ble Apex Court in Delhi Race Club (1940) Limited Vs.
State of Uttar Pradesh, reported in (2024) 10 SCC 690. It
is submitted that, as per the ratio laid down by the
Hon’ble Apex Court, Sections 406 and 420 of the Indian
Penal Code cannot go together as there being a clear
distinction between the offences of criminal breach of
trust and cheating. It has been held that every breach of
trust would not necessarily amount to criminal breach of
trust, and that in cases arising out of commercial
transactions, including sale of goods, criminal liability
cannot be fastened in absence of essential ingredients of
the respective offences. Therefore, both Sections 406 and
420 of Indian Penal Code cannot be invoked together in a
routine or mechanical manner. Placing reliance upon the
aforesaid judgments, it is submitted that the present
Revision Application is required to be allowed and the
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Order passed by the learned trial Court, rejecting the
discharge application, be quashed and set aside and
consequently, the charge framed against the present
applicants-accused under Sections 406, 420 and 114 of
the Indian Penal Code is also required to be quashed and
set aside.
7. On the other hand, learned Assistant Public
Prosecutor Mr.Dhawan Jayswal has submitted that
sufficient evidence have been found against the present
applicants during the course of investigation. As per the
case of the prosecution, the present applicants-accused
sold the goods and misappropriated the sale proceeds
and not a single penny was paid to the complainant. It is
further submitted that the statements of transporters and
other business persons, to whom the goods were
delivered by the accused, have been recorded by the
investigating agency. From the said statements, it is
established that the accused received payment from the
various vendors but, failed to remit the amount to the
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complainant, thereby dishonestly misappropriated the
same. The learned Assistant Public Prosecutor has
therefore submitted that the Order passed by the learned
trial Court rejecting the discharge application is just and
proper and does not require any interference. It is further
submitted that the scope of revisional jurisdiction under
Section 397 of the Code of Criminal Procedure is very
limited and unless there is manifest illegality or
perversity, this Court ought not to interfere with the
same. In view of the aforesaid submissions, it is urged
that the present Revision Application deserves to be
dismissed.
8. Learned advocate Mr.Anuj K. Trivedi appearing for
the respondent has submitted that, after registration of
the FIR and completion of investigation, the charge-sheet
has been filed against the present applicants-accused for
the offences punishable under Sections 406, 420 and 114
of the Indian Penal Code. It is submitted that in the
present case, the property of respondent No. 2 – original
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complainant was entrusted to the applicants-accused
pursuant to a legal contract. In breach of the said
contractual obligation, the applicants sold the goods to
third parties, unjustly enriched himself, and willfully
chose not to remit the sale proceeds to the complainant.
It is, therefore, submitted that the present applicants
have dishonestly misappropriated the sale proceeds and
converted the property to his own use in violation of the
legal contract, thereby prima facie attracted the offence
under Section 406 of the Indian Penal Code. It is further
submitted that a bare reading of the FIR as well as the
statements of the witnesses, it clearly establishes, that
the complainant was induced by the applicants to deliver
the property on the basis of false assurances and
promises. It is submitted that the applicants intentionally
received the goods under false promises, and had such
assurances not been made, the complainant would not
have delivered the property. Thus, according to the
respondent, ingredients of Section 420 of the Indian
Penal Code are also made out. It is further submitted that
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both the applicants are brothers and were actively
involved in the transactions with the original
complainant. Being fully aware of the acts committed,
they have jointly participated in the alleged offences as
stated in the FIR. It is further submitted that the
revisional jurisdiction of this Court is very limited. Unless
the Order passed by the learned trial Court is shown to
be manifestly illegal or perverse, the same does not
warrant interference. It is submitted that while deciding a
discharge application, the learned trial Court is required
only to examine whether sufficient material is produced
along with the Charge-sheet to proceed against the
accused or not. It is also pointed out that during the
pendency of the present Revision Application, charges
have already been framed against the applicants under
Sections 406, 420 and 114 of the Indian Penal Code.
Therefore, at this stage, no interference is called for in
the impugned Order.
9. In view of the aforesaid submissions, it is urged that
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the present Revision Application is devoid of merits and
deserves to be dismissed.
10. Heard the rival submissions of the learned advocates
for the respective parties and perused the impugned
Order passed by the learned trial Court. At this stage, it
would be apt to refer to the observations made by the
Hon’ble Apex Court in the case of Amit Kapoor and
Another Vs. Ramesh Chander and Another, reported in
(2012) 9 SCC 460. The relevant observations made in
paragraphs 8 and 9 of the said judgment read as under:
“8. …….Section 397 of the Code vests the
court with the power to call for and examine
the records of an inferior court for the
purposes of satisfying itself as to the legality
and regularity of any proceedings or Order
made in a case. The object of this provision
is to set right a patent defect or an error of
jurisdiction or law. There has to be a well-
founded error and it may not be appropriate
for the court to scrutinize the Orders, which
upon the face of it bears a token of careful
consideration and appear to be inPage 15 of 34
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accordance with law. If one looks into the
various judgments of this Court, it emerges
that the revisional jurisdiction can be
invoked where the decisions under
challenge are grossly erroneous, there is no
compliance with the provisions of law, the
finding recorded is based on no evidence,
material evidence is ignored or judicial
discretion is exercised arbitrarily or
perversely. These are not exhaustive
classes, but are merely indicative. Each case
would have to be determined on its own
merits.
9. Another well-accepted norm is that
the revisional jurisdiction of the higher
court is a very limited one and cannot be
exercised in a routine manner. One of the
inbuilt restrictions is that it should not be
against an interim or interlocutory Order.
The Court has to keep in mind that the
exercise of revisional jurisdiction itself
should not lead to injustice ex facie……”
11. Considering the above dictum of the Hon’ble Apex
Court, it is crystal clear that, so far as the jurisdiction
under Section 397 of the Code of Criminal Procedure is
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concerned, the scope of interference and exercise of
jurisdiction under the said provision is extremely limited.
Unless the decision under challenge is grossly erroneous,
or there is non-compliance with the provisions of law, or
the findings recorded by the learned trial Court are based
on no evidence, or material evidence has been ignored, in
that circumstances only the Court can exercise revisional
jurisdiction under Section 397 of the Code of Criminal
Procedure.
12. In the present Revision Application, the Order under
challenge is the rejection of the discharge application and
the subsequent framing of charge against the applicants.
Hence, the present Revision Application has been
preferred.
13. So far as the facts of the present case are
concerned, as per the case of the prosecution, an FIR
came to be registered against the present applicants vide
I-C.R. No. 8 of 2012 before Anjar Police Station, Kutch,
for the offences punishable under Sections 406, 420 and
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114 of the Indian Penal Code on 07.01.2012. Pursuant to
the registration of the said offence, the investigation was
carried out and, upon completion of the investigation, the
Investigating Officer filed Charge-sheet before the
competent Court. The said Charge-sheet was thereafter
registered as Criminal Case No. 584 of 2012. In the said
proceedings, the present applicants – original accused
preferred an application under Section 239 of the Code of
Criminal Procedure at Exh.17 seeking discharge from the
alleged offences. However, the said application came to
be rejected by the learned trial Court vide Order dated
08.02.2016, which is under challenge in the present
Revision Application. It further appears that during the
pendency of the present Revision Application, the learned
Trial Court framed charge against the present applicants
vide Exh.112/C for the offences punishable under
Sections 406, 420 and 114 of the Indian Penal Code on
02.03.2023, and the said Order of framing charge is also
under challenge in the present proceedings.
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14. So far as the case of the prosecution, in nutshell, is
concerned, it is alleged that in the month of April 2011
both the applicants contacted the original complainant
seeking to purchase TMT steel bars. The applicants
introduced themselves as Directors of a company
engaged in the business of steel rods and continued to
make inquiries regarding the purchase. Subsequently, as
per the FIR, one of the applicants visited the company of
the complainant and requested a discount of Rs.4,200 per
ton. However, the complainant refused to grant such a
discount. Thereafter, the applicants again contacted the
complainant and requested to purchase iron rods at a
reasonable price. Pursuant thereto, the applicants
initially placed a purchase Order through email for 225
metric tons of TMT steel bars. Thereafter, on 21.11.2011,
a second purchase Order was placed through email for 68
metric tons. As per the terms agreed between the parties,
the payment was required to be made by the accused
within 20 days from the date of placing the first Order.
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15. Further, as per the case of the prosecution, during
the period from 15.11.2011 to 29.11.2011, the accused
persons purchased iron rods from the complainant
company which were transported through Vishwa Hind
Logistic. The total value of the i1ron rods transported was
Rs.1,1925,656/-. It is alleged that the said goods were
transported by the accused persons through 10 different
trucks. It is further the case of the prosecution that the
accused persons issued post-dated cheques towards
payment of the said goods. The complainant company
deposited the said cheques in its bank account. In total,
10 cheques amounting to approximately Rs.1.19 crores
were issued by the accused persons. However, when the
cheques were presented for encashment, all the cheques
were returned unpaid with the endorsement “Insufficient
Funds.” Thereafter, the present FIR came to be lodged.
Further, during the course of investigation, it was
revealed that the iron rods transported through the said
ten trucks were sold by the accused persons to different
purchaser-third party at different places. It has also been
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revealed that the accused persons received certain
amounts from some of the said third party; however, the
said amounts were not paid to the complainant company.
Moreover, from the charge-sheet papers and the
statements of witnesses, it transpires that the accused
persons have received approximately Rs.19 lakhs and odd
from different purchaser to whom the iron rods were sold.
The statements of such purchasers were recorded by the
Investigating Officer, wherein they have stated that they
had made payment to the accused persons, but the
accused persons failed to pay the said amount to the
complainant company.
16. Further, the statement of the transporter has been
recorded by the learned Trial Court, from which it
transpires that the accused persons have not paid any
amount to the transporter for the transportation of the
iron rods. The transporter has stated that the iron rods
were loaded from the complainant company and were
subsequently, unloaded at different places as per the
instructions of the accused persons and delivered to
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various purchasers.
17. So far as the main arguments advanced by the
learned advocates for the applicants are concerned, it has
been contended that, looking to the contents of the FIR,
the dispute arises out of a purely business transaction
between the parties. It is mainly argued that the
complainant and the accused persons were engaged in
business dealings since the year 2008, and that there had
been prior transactions between them. Therefore,
according to the applicants, the dispute is purely civil in
nature and has been given a criminal colour. In this
regard, it is pertinent to note that the statements of the
workers have been recorded by the Investigating Agency.
Further, in the statement recorded by the police, the
complainant has stated that initially Hans Ispat Limited
Company was owned by the Barnala Group, and its head
office was situated at Muzaffarnagar. Subsequently, the
said Hans Ispat Limited was purchased from the Barnala
Group by Shailesh Bhandari and Mukesh Bhandari.
Therefore, so far as any transactions prior to the said
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acquisition are concerned, the complainant has stated
that he has no knowledge regarding the same. Further, at
this stage it is also required to be considered that while
deciding a discharge application, the Court is not
required to consider the defence taken by the accused or
any documentary evidence produced by them. The Court
is only required to consider the material produced along
with the charge-sheet, and on that basis the Court has to
decide the discharge application. Though the learned
advocate for the applicants has argued that there were
prior transactions between the parties, no cogent
material in support of such contention emerges from the
charge-sheet papers. Moreover, it has been clarified in
the further statement that Hans Ispat Limited was earlier
owned by the Barnala Group and not by the present
management. Therefore, the said argument advanced on
behalf of the applicants cannot be accepted.
18. Further, another argument advanced by the learned
advocate for the applicants is that in the present case
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charges have been framed against the accused persons
under Sections 406 and 420 of the Indian Penal Code. It
is submitted by the learned advocate for the applicants
that the offences under Sections 406 and 420 Indian
Penal Code cannot go together. In support of the said
contention, reliance has been placed upon the judgment
of the Hon’ble Apex Court in the case of Delhi Race Club
(1940) Ltd.. v. State of Uttar Pradesh & Anr.
19. In the said Judgment, the Hon’ble Apex Court, while
considering the facts of the case, has observed as under:
“35. This Court in its decision in S.W.
Palanitkar v. State of Bihar 22 expounded
the difference in the ingredients required
for constituting of an offence of criminal
breach of trust (Section 406 IPC) vis-Ã -vis
the offence of cheating (Section 420). The
relevant observations read as under: (SCC
p. 246, paras 9-10)“9. The ingredients in order to constitute a
criminal breach of trust are: (i) entrusting a
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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 wilfully suffering any other
person so to do in violation (1) 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.
10. The ingredients of an offence of cheating
are: (1) 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.”
36. What can be discerned from the above is
that the offences of criminal breach of trust
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(Section 406 IPC) and cheating (Section 420
IPC) have specific ingredients:
In order to constitute a criminal breach of
trust (Section 406 IPC)(1) There must be entrustment with person
for property or dominion over the property,
and(2) The person entrusted:
(a) Dishonestly misappropriated or
converted property to his own use, or
(b) Dishonestly used or disposed of the
property or wilfully suffers any other person
so to do in violation of:
(i) Any direction of law prescribing the
method in which the trust is discharged; or
(ii) Legal contract touching the discharge of
trust (see:
S.W. Palanitkar¹12).
Similarly, in respect of an offence under
Section 420 IPC, the essential ingredients
are:
(1) Deception of any person, either by
making a false or misleading representation
or by other action or by omission;
(2) Fraudulently or dishonestly inducing any
person to deliver any property, orPage 26 of 34
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(3) The consent that any person shall retain
any property and finally intentionally
inducing that person to do or omit to do
anything which he would not do or omit (see
Harmanpreet Singh Ahluwalia v. State of
Punjab).
37. Further, in both the aforesaid sections,
mens rea i.e. intention to defraud or the
dishonest intention must be present, and in
the case of cheating it must be there from
the very beginning or inception
39. Every act of breach of trust may not
result in a penal offence of criminal breach
of trust unless there is evidence of
manipulating act of fraudulent
misappropriation. An act of breach of trust
involves a civil wrong in respect of which
the person may seek his remedy for
damages in civil courts but, any breach of
trust with a mens rea, gives rise to a
criminal prosecution as well. It has been
held in Hari Prasad Chamaria v. Bishun
Kumar Surekha as under: (SCC p. 824, para
4)
“4. We have heard Mr Maheshwari on behalf
of the appellant and are of the opinion that
no case has been made out against the
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respondents under Section 420 of the Penal
Code, 1860. For the purpose of the present
appeal, we would assume that the various
allegations of fact which have been made in
the complaint by the appellant are correct.
Even after making that allowance, we find
that the complaint does not disclose the
commission of any offence on the part of the
respondents under Section 420 of the Penal
Code, 1860. There is nothing in the
complaint to show that the respondent had
dishonest or fraudulent intention at the time
the appellant parted with Rs 35,000. There
is also nothing to indicate that the
respondents induced the appellant to pay
them Rs 35,000 by deceiving him. It is
further not the case of the appellant that a
representation was made by the
respondents to him at or before the time he
paid the money to them and that at the time
the representation was made, the
respondents knew the same to be false. The
fact that the respondents subsequently did
not abide by their commitment that they
would show the appellant to be the
proprietor of Drang Transport Corporation
and would also render accounts to him in
the month of December might create civil
liability for them, but this fact would not be
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sufficient to fasten criminal liability on the
respondents for the offence of cheating.”
40. To put it in other words, the case of
cheating and dishonest intention starts with
the very inception of the transaction. But in
the case of criminal breach of trust, a
person who comes into possession of the
movable property and receives it legally, but
illegally retains it or converts it to his own
use against the terms of the contract, then
the question is, in a case like this, whether
the retention 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..
41. The distinction between mere breach of
contract and the offence of criminal breach
of trust and cheating is a fine one. In case of
cheating, the intention of the accused at the
time of inducement should be looked into
which may be judged by a subsequent
conduct, but for this, the subsequent
conduct is not the sole test. Mere breach of
contract 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
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when the offence is said to have been
committed. Therefore, it is this intention,
which is the gist of the offence.”
20. From the above dictum of the Hon’ble Apex Court, it
is very clear that for an offence punishable under Section
406 of the Indian Penal Code can be said to have been
committed, there must be an entrustment of property.
Where there is merely a contract for sale and purchase of
property for consideration, the property cannot be said to
have been entrusted temporarily for a limited purpose or
object. In the present case, there is nothing on record to
indicate that the complainant had entrusted the property
to the accused for any temporary period or for any limited
purpose. The FIR also does not disclose that the property
was given to the accused for use on behalf of the
complainant. Therefore, looking to the charge-sheet and
considering the above dictum of the Hon’ble Apex Court
in the case of Delhi Race Club (1940) Ltd. (supra), prima
facie the offence under Section 406 of the Indian Penal
Code is not made out.
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21. So far as Section 420 of the Indian Penal Code is
concerned, it is an admitted position that during the short
period from 15.11.2011 to 29.11.2011, i.e., a period of 14
days, only two purchase Orders were raised. It further
appears that earlier also the accused had contacted the
complainant in the month of April and at that time had
requested to purchase iron rods at a discounted price, but
the complainant refused to supply the iron rods at such
discounted price. Subsequently, the iron rods were
loaded from the complainant’s company in about ten
different trucks and were supplied to different purchasers
in North India. Further, it also transpires from the
charge-sheet papers that an amount of more than Rs.19
lakhs has already been received by the accused persons
from different purchasers. It has also come on record
from the statement of one of the purchasers, whose
statement has been recorded by the police under Section
161 of the CrPC, that despite having received the amount
from the different purchasers, the accused has not paid a
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single penny to the complainant. Therefore, the overall
conduct of the accused is required to be considered,
which prima facie indicates that the accused persons had
put in place a specific plan and design to cheat the
complainant. So far as the authorities relied upon by the
learned advocate for the applicant are concerned, in
those cases the facts reveal that either part payment had
been made or initially payment had been made and
subsequently, due to some financial crunch, the person
was unable to clear the dues. In such circumstances, the
argument that there was no intention from the very
inception to cheat the complainant may be accepted.
However, in the present case, the conduct of the accused
itself indicates that the amount was received from
different purchasers and yet no payment has been made
to the complainant. Further, from the statement of the
transporter, it also reveals that no payment has been
made even to the transporter for transporting the said
goods to the different purchasers. Therefore, considering
these aspects, a clear case of cheating as defined under
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Section 415 of the Indian Penal Code, punishable under
Section 420 of the Indian Penal Code, is made out.
22. Considering the above discussion, so far as the
offence under Section 406 of the Indian Penal Code is
concerned, the same is not made out against the accused
persons. However, so far as the offence under Section
420 of the Indian Penal Code read with Section 114 of the
Indian Penal Code is concerned, a prima facie case is
made out against the accused persons. Therefore, the
Order passed by the learned trial Court rejecting the
discharge application requires to be modified to the
extent that the present applicant-accused persons are
discharged from the offence punishable under Section
406 of the Indian Penal Code. Resultantly, the charge is
required to be altered and framed against the present
applicant-accused persons only for the offence
punishable under Section 420 read with Section 114 of
the Indian Penal Code.
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23. In view of the above directions, the present Revision
Application is partly allowed. The present applicant is
discharged from the offence punishable under Section
406 of the Indian Penal Code. However, the Order
rejecting the discharge application qua the offence under
Section 420 read with Section 114 of the Indian Penal
Code is confirmed. The learned trial Court shall
accordingly alter the charge and frame a modified charge
against the accused persons for the offence punishable
under Section 420 read with Section 114 of the Indian
Penal Code.
24. With the aforesaid directions, the present Revision
Application stands partly allowed. Rule is discharged.
(L. S. PIRZADA, J)
STANCY GOMES
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