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2004 DIGILAW 796 (PAT)

Amit Prakash v. State Of Bihar

2004-08-06

MRIDULA MISHRA

body2004
Judgment Mridula Mishra, J. 1. Petitioners in these two applications are accused in Complaint Case No. 193 (c) of 2001 and both have challenged the order dated 28.11.2001, passed by the Judicial Magistrate, Ist Class, Begusarai by which cognizance under Secs. 420 and 406 of the Indian Penal Code has been taken against theme. 2. Complaint Case No, 193 (c) of 2001 was filed by the complainant Ashok Kumar alleging that the accused Ajit Kumar Managing Director, Supplementary Food (India) Limited and Amit Kumar, Incharge of Supplementary Food (India) Limited for Bihar region have cheated the firm M/s. Saket Enterprises Agency, the Proprietor of which is Mrs. Deepa Agrawal, the wife of the complainant M/s. Supplementary Food (India) Limited produces "Zaika" Salt and it had appointed Saket Enterprises its distributor and commission agent in the year 1997 for distribution and sale of Zaika Salt. The complainants firm had deposited Rs. 1,20,000.00 through three demand drafts dated 12.9.1997 with the accused persons for supply of salt and receipt for the same was given by the accused on 13.9.1997. The accused persons even after receiving an amount of Rs, 1,20,000.00 did not supply Zaika salt even after repeated reminder. This fact is proved from the letter dated 18.3.1998 sent by accused No. 2 wherein he has shown his inability in supplying Zaika Salt due to some financial disturbance in the company. Again by letter dated 10.4.1998 and letter dated 8.3.1998 the accused No. 2 expressed his inability in supplying Zaika Salt on account of Financial disturbance and the loss suffered by the company. By letter dated 27.8.1999 accused No. 1 informed that the complainants firm can take supply of Zaika Sait from M/s. Verma Agency, Mahindra Complex Purani Basti Road, Jugsalai, Jamshedpur, but the complainant was not supplied Zaika Salt from there also. The accused persons have defalcated the money and cheated the complainant, as after repeated reminders they are not supplying the Zaika Salt on one or other pretext. They have committed offence under Secs. 406 and 420 of Indian Penal Code. 3. Petitioner Ajit Kumar in Cr. Misc. No. 26605 is the Managing Director of Supplementary Food (India) Limited. The company is situated at Mumbai which produces salt in the Brand name of "Zaika". The company for sale and distribution of salt tried to appoint commission agent at different places in India. 406 and 420 of Indian Penal Code. 3. Petitioner Ajit Kumar in Cr. Misc. No. 26605 is the Managing Director of Supplementary Food (India) Limited. The company is situated at Mumbai which produces salt in the Brand name of "Zaika". The company for sale and distribution of salt tried to appoint commission agent at different places in India. Saket Enterprises was appointed distributor of "Zaika" Salt at Begusarai. Petitioner No. 2 being the Manager of Supplementary Food (India) Limited used to looks after the business of the company at Bihar. 4. It has been submitted by the counsel for the petitioners that the allegations made in the complaint-petition is baseless. No criminal breach of trust or misappropriation of money has been done by them. Money was given by the complainant to Supplementary Food (India) Limited a company during the course of routine business transaction. This genuine commercial activity was purely civil in nature. There was no ingredient of cheating or criminal breach of trust. Whatever money was given by the complainant it was given to the company and not to the petitioners. Since petitioners have not taken money there is no question of misappropriation of money by the petitioners. The petitioners have not been benefited any way, in person by the transaction. The transaction was with a public limited company which has a legal entity in itself, and totally independent of both the accused petitioners. The Bank Drafts through which Rs. 1,20,000.00 was deposited by the complainant was received by the company and the petitioners have nothing to do with this transaction. In the complaint-petition itself the complainant has mentioned about the receipts showing acceptance of bank draft dated 13.9.1997, the letter dated 18.3.1998, 10.4.1998 and 27.8,1998. From these letters it is apparent that the Supplementary Food (India) Limited had no intention to cheat or to misappropriate the money deposited by the complainant. On account of Financial crisis the company was incapacitated to supply the salt to the complainant. In these letters it has specifically been stated that the company was trying its best to compensate the complainant company. Supply of salt was also made to complainant, for its distribution. All these facts clearly indicate that there is no ingredient to make out a prima facie case under Secs. 420 and 406 of the Indian Penal Code, 1860 . 5. Supply of salt was also made to complainant, for its distribution. All these facts clearly indicate that there is no ingredient to make out a prima facie case under Secs. 420 and 406 of the Indian Penal Code, 1860 . 5. Further, it has been submitted by the counsel for the petitioners, that in the complaint-petition no where it has been alleged that at the time when agreement was made and the money was deposited with the company, there was any intention on the part of the accused to misappropriate or cheat. A guilty intention is an essential ingredient for an offence of cheating. Unless mens rea on the part of the accused is established no offence of cheating is made out. There is no allegation in the complaint that there was mens rea on the part of the accused at time when the inducement was offered. Unless it is shown that the accused had dishonest or fraudulent intention at the time when the complainant parted with the money it would not amount an offence u/s. 420 and it can only be termed as breach of trust, 6. It has further been submitted that for making out an offence under Section 409 of the Indian Penal Code, two ingredients are essential (i) the accused being agent was entrusted with the property for which he was duty bound to account for and (ii) he had committed criminal breach of trust. Criminal breach of trust is defined u/s. 406 of the Indian Penal Code, 1860 . The ingredient of the offence of criminal breach of trust are (i) entrustment with the property or dominion over the property, (ii) dishonest misappropriation of entrusted property in violation of any direction in which such trust is to be discharged or of any legal contract. In the present case the entrustment of the money is with the company which has separate legal entity, independent of its employees, shareholders and others. The money which was deposited by the complainant did not offer dominion of the petitioners over that money. Petitioners were neither benefited out of that money nor had misappropriated or converted it to the their own use. In these circumstance no case u/s. 420 or 409 is made out against the petitioners. The order taking cognizance is illegal and must be quashed. 7. Petitioners were neither benefited out of that money nor had misappropriated or converted it to the their own use. In these circumstance no case u/s. 420 or 409 is made out against the petitioners. The order taking cognizance is illegal and must be quashed. 7. The petitioners have placed their reliance on three decisions of the Supreme Court in the case of Ajay Mitra V/s. State of M.P. and Ors., 2003 (2) East Cr C 255 (SC) ; 2003 (2) JCR 42 (SC) : 2003 (1) JCJR 229 (SC) : 2003 (3) SCC 11 , the case of Kailash Kumar Sanwatia V/s. The State of Bihar and Anr., 2003 (3) East Cr C 159 (SC) : 2003 (2) JCJR 15 (SC) : 2003 (7) SCC 339, and in the case of S. W. Palnitkar and Ors. V/s. State of Bihar and Anr., 2002 (1) East Cr C 11 (SC) : 2002 (1) SCC 241 . In all these decisions the finding of the Supreme Court is that mens rea at the time of inducing a person to deliver property is essential ingredient to make out a case u/s. 420 of the Indian Penal Code, It has been held that a guilty intention is an essential ingredient for the offence of cheating. In other words the mens rea on the part of the accused must be established before he can be convicted of an offence of cheating. In order to constitute the offence of cheating, the intention to deceive should be in existence at the time when the inducement was offered. Unless the complaint showed that the accused had dishonest or fraudulent intention at the time when complainant parted with the money, it would not amount to an offence under Sec. 420 of the Indian Penal Code and it may only amount to breach of contract. 8. Counsel for the opposite party has also placed his reliance on these very judgment stating that in the complaint-petition it has been specifically mentioned that money was entrusted to the petitioners as they were the Directors of the company. They fully participated in business transaction- There is active participation of petitioners as such they cannot claim aloofness from their participation in commission of offence. Since the money was received by them and the salt was not supplied to the complainant, it is a clear case in which the offence under Secs. They fully participated in business transaction- There is active participation of petitioners as such they cannot claim aloofness from their participation in commission of offence. Since the money was received by them and the salt was not supplied to the complainant, it is a clear case in which the offence under Secs. 406 and 420 is made out against the petitioners. 9. After going through the complaint-petition and the letters whose reference have been made in the complaint-petition itself it is clear that the complainant was appointed as a commission agent. The agreement was made in between the complainant and the Supplementary Food (India) Limited in the year 1997, subsequent to that transactions were made in between the parties, but due to some financial crisis the supply was not being made properly and in time. The letters mentioned in the complaint-petition clearly indicate that the company was willing to supply the salt, rather alternative arrangements were also made for supply of salt to the complainant. The legal notice which has been attached with the petition indicates that the complainant was claiming refund of fixed security deposits made by the complainant at the time of entering agreements. A money suit has also been filed by the complainant for refund of that amount. Since it was a case of breach of trust involving civil wrong the complainant has already taken steps for his redress by filing a suit in the Civil Court. 10. In the present case entrustment of property to the petitioners and intention to misappropriate the entrusted property by the petitioners is not there this is a case of breach of contract. Allegations which are there in the complaint petition do not make out a case of criminal breach of trust. There is no evidence of cheating or fraudulent misappropriation of money by the petitioners. Simple act of breach of trust involves civil wrong for which the aggrieved persons may seek remedies in Civil Court but a breach of trust with "mens rea" give rise to criminal prosecution. Since essential ingredients to make out prima facie case under Secs. 409 and 420 of the Indian Penal Code is not there petitioners can not be prosecuted for the same. 11. Under the circumstances, the order taking cognizance is hereby quashed and both these applications are allowed.