ORDER To quash the FIR in Crime No. 262 of 2006 of Mahankali Police Station, Hyderabad, the present criminal petition is filed. 2. The brief facts the are necessary for disposal of this criminal petition may be stated as follows: A private complaint is lodged against the present petitioners alleging that Chairman and Managing Director of A-1 company developed lot of confidence and reposed immense trust in A-2 and A-3 on account of their close relationship. A-3 was the Chief Executive of Mahaboobnagar unit and Tirupur sales depot, and for the purpose of the two units, the complainant was required to issue cheques drawn in favour of third parties. It is further alleged that as the Chairman and Managing Director Mr. L.N. Agarwal is stationed in Hyderabad, it was taking considerable time for issuance of cheques in favour of third parties. In that context, negotiations took place between L.N. Agarwal and A-2 and A-3, in which A-2 and A-3 represented that all transactions are accounted and as the process of obtaining cheques from L.N. Agarwal on behalf of the company was taking considerable time, it would be advisable that signed blank cheques be left in the hands of A - 2 and A -3 for efficient management of Mahaboobnagar unit and Tirupur sales depot. A-2 and A-3 also stated that they would not misuse the said blank cheques and that they would be used only for the purpose of business of Mahaboobnagar unit. L.N. Agarwal entirely believed the representation made by A-2 and A-3 and as per their inducement, he had given certain signed blank cheques to them. Thereafter, disputes cropped up between family of L.N. Agarwal and A-2 and A-3. Then, A-2 and A-3 incorporated A-1 company on 1-9-2004. A Company Petition was filed before this Court to approve the scheme of arrangement arrived at between A-1 company and the complainant company. As per the scheme of arrangement, Mahaboobnagar unit was transferred in favour of A-1 company. This Court by its Order dated 22-3-2005, approved the scheme of arrangement. In pursuance of the scheme of arrangement, Mahaboobnagar unit of the complainant company was demerged and it vested in A-1 company. The scheme has been fully implemented and A-2 and A-3 issued a letter dated 22-4-2005 that they would not demand any payment relating to Mahaboobnagar unit. This Court by its Order dated 22-3-2005, approved the scheme of arrangement. In pursuance of the scheme of arrangement, Mahaboobnagar unit of the complainant company was demerged and it vested in A-1 company. The scheme has been fully implemented and A-2 and A-3 issued a letter dated 22-4-2005 that they would not demand any payment relating to Mahaboobnagar unit. In view of the differences between L.N. Agarwal and A-2 and A-3, the former requested the latter to return unused signed blank cheques which were with them. The Company Secretary also requested A-2 and A-3 to return the unused cheques. A-2 and A-3 entered into a conspiracy to misuse the said cheques. Thereupon the complainant lodged a complaint on 20-10-2006 with Mahankali police. However, police endorsed that there was no role for the police at that stage. It is further alleged that as per the understanding letter dated 1-10-2004, a telegram was received from A-1 to the effect that institutional liability of A-1 crosses Rs.13.25 crores and it was issued by L.N. Agarwal of complainant company. To clear the same, a cheque for Rs.6.28 crores purportedly drawn by the complainant company in favour of A-1 company, being the difference amount has been deposited for collection. It is further stated that the unused signed blank cheques were given to A-2 and A-3 only for the purpose of making payment to third parties in respect of business transactions of Mahaboobnagar unit as well as Tirupur sales depot. The said cheques were issued on the endorsement made by A-2 and A-3 that they would not misuse the same. The bank statement shows that series of cheques bearing Nos. 444850 (sic 444840) to 444850 were issued on 4-6-2002. The subject cheques bearing Nos. 444840, 444841 and 444842 were misused by the accused form one part of the cheque book. Hence, the complaint. 3. The learned Counsel for the petitioners contended that as per the understanding entered into between A-2 and L.N. Agarwal on 1-10-2004, the complainant issued cheque for 13.25 crores for institutional liability and arising out of the same personal understanding, another cheque was given for Rs.6.28 crores; that in order to pre-empt dishonour of the cheque, the present complaint is lodged; that there are no ingredients of inducement on the part of the petitioners in insisting the complainant to give the cheques; hence, he prayed to quash the impugned proceedings. The learned Counsel relied on some decisions which will be referred to at appropriate time. 4. On the other hand, the learned Senior Counsel Sr. C. Padmanabha Reddy appearing for the second respondent contended that on the inducement made by the accused, the complainant issued blank signed cheques for the purpose of issuing the same to third parties, and because of their inducement only, the cheques were given; that they used the said cheques for other purposes thereby cheating the complainant. He further contended that as seen from the statement of Andhra Bank, the cheques in question were issued on 4-6-2002 and therefore, question of giving them in the year 2006 does not arise; that the same would indicate dishonest intention of the accused to cheat the complainant; hence, there are no grounds to quash the impugned proceedings. 5. The offences alleged against the petitioners are, firstly under Section 406 IPC which is punishment for criminal breach of trust. The essential ingredients to constitute an offence of criminal breach of trust as defined in Section 405 IPC are that the accused must have been entrusted with some property or with any other dominion or power over it; that the accused must have misappropriated the property or disposed of that property in violation of such trust. According to Section 405 IPC dishonest misappropriation or conversion to his own use or dishonest use or disposal of the property in violation of any direction of law or of any legal contract is necessary to constitute the offence. 6. To establish the offence under Section 420 IPC the complainant must show not only that he was induced to do or not to be something, but that this induced act or omission or his part caused or was likely to cause him some harm or damage in body, mind, reputation or property. Therefore, there must be dishonesty or fraud in obtaining delivery of the property and an intentional inducement of complainant to do or omit to do some act. The essence of charge of cheating is that the complainant should have been deceived. Therefore, there must be dishonesty or fraud in obtaining delivery of the property and an intentional inducement of complainant to do or omit to do some act. The essence of charge of cheating is that the complainant should have been deceived. The necessary ingredients to constitute forgery as defined under Section 463 IPC are as follows: (a) A person makes any false document or apart of a document; (b) His intention is- (i) to cause damage or injury to the public or to any person, or (ii) to support any claim or title, or (iii) to cause any person to part with property, or' (iv) to enter into any express or implied contract, or (v) to commit any fraud or that fraud may be committed. 7. Unless Section 120-B IPC whoever it a party to criminal conspiracy to commit an offence, is liable for punishment. The essential ingredients to constitute an offence of 'Criminal Conspiracy' as defined in Section 120-A IPC are as follows: "(a) Two or more persons agree to do or cause to be done an act; (b) The act agreed must be- (i) an illegal act or, (ii) an act which is not illegal but is done by illegal means. (c) If the agreement is not to commit an offence then some act besides the agreement is- (i) by one or more parties to such agreement. (ii) In pursuance of the agreement. 8. It is not in dispute before this Court that A-2 and A-3 incorporated A-1 company on 1-9-2004. A company petition was filed before this Court to approve the scheme of arrangement arrived at between the complainant company and A-1 company. As per the scheme of arrangement, apart from others, Mahaboobnagar unit has to be transferred in favour of A-1 company. It is not in dispute before this Court that the petitioners filed a complaint before the XI Additional Chief Metropolitan Magistrate for the offence under Section 138 of the Negotiable Instruments Act, 1881 for dishonour of cheques bearing Nos. 444840, 444841 and 444842 against the first respondent herein, and the same was taken cognizance. 9. The learned Counsel for the petitioners relied on a decision in Sunil Kumar v. M/s. Escorts Yamuna Motors Ltd. and others (1) 2000 (1) ALT (Crl.) 225 (SC)=2000 Crl.L.J. 174. 444840, 444841 and 444842 against the first respondent herein, and the same was taken cognizance. 9. The learned Counsel for the petitioners relied on a decision in Sunil Kumar v. M/s. Escorts Yamuna Motors Ltd. and others (1) 2000 (1) ALT (Crl.) 225 (SC)=2000 Crl.L.J. 174. From the above decision, it is clear that if the allegations in FIR do not disclose ingredients of cheating or criminal breach of trust or forgery, and the attendant circumstances indicate that the FIR was lodged to pre-empt filing of a criminal complaint, then the proceedings can be quashed. 10. The apex Court in a decision in M/s. Zandu Pharmaceutical Works Ltd. and others v. Ms. Sharaful Haque and others (2) AIR 2005 SC 9 , considering the scope of Section 482 Cr.P.C. held as follows: "Exercise of power under Section 482 of the Code in a case of this nature is the exception and not the rule. The section does not confer any new powers on the High Court. It only saves the inherent power which the Court possessed before the enactment of the Code. It envisage three circumstances under which the inherent jurisdiction may be exercised, namely, (i) to give effect to an order under the Code; (ii) to prevent abuse of the process of Court, and (iii) to otherwise secure the ends of justice. It is neither possible nor desirable to lay down any inflexible rule which would govern the exercise of inherent jurisdiction... .." There is no dispute about the aforesaid proposition of law. 11. It is neither possible nor desirable to lay down any inflexible rule which would govern the exercise of inherent jurisdiction... .." There is no dispute about the aforesaid proposition of law. 11. In another decision in Dhirendra Kumar Banerjee and others v. State of Bihar and another (3) 2005 Crl.L.J. 4791, it is held as follows: (Para 14) "From the nature of allegation, it appears to be a case of civil nature because there is no criminal intent of cheating and whatever money will be taken and whatever will be done that will be done under the purview of Jharkhand Co-operative Societies Act, 2002 and this will not be done for personal gain and in this connection reliance may be placed upon Hari Prasrrd Chamaria v. Bishun Kumar Surekha and others: AIR 1974 SC 301 = 1974 Crl.L.J. 352, wherein it has been held that appellant intending to start business giving in full faith a large amount to respondents for the same and respondents starting business in their own names and refusing to render accounts or return money and in such a situation whether respondents could be held criminally liable under Section 420, it was held that no case of cheating is made out." 12. In the case on hand, the allegations in the complaint are that Chairman and Managing Director Mr. L.N. Agarwal is stationed at Hyderabad and so it was taking considerable time for issuance of cheques in favour of third parties. In that context, certain negotiations took place between L.N. Agarwal and A-2 and A-3 in which on behalf of the complainant company, the former signed blank cheques for effective management of Mahaboobnagar unit and Tirupur sales depot of the complainant company. To hold a person guilty of offence of cheating, it has to be shown that his intention was dishonest at the time of making promise and such a dishonest intention can be inferred from the mere fact that he could not subsequently fulfil the promise. Even if the allegations in the complaint are taken as true and correct at this stage, in pursuance of the agreement only the cheques must have been given. There was no inducement or deception played by A-2 and A-3 at the time of inception. Even if the allegations in the complaint are taken as true and correct at this stage, in pursuance of the agreement only the cheques must have been given. There was no inducement or deception played by A-2 and A-3 at the time of inception. To constitute an offence of criminal breach of trust, it is essential that the prosecution must show first of all that the accused was entrusted with some property or with dominion or power over it. It has further to be established that in respect of the property so entrusted there was dishonest misappropriation or dishonest conversion or dishonest use in violation of directions of law. 13. The understanding dated 1-10-2004 that was entered into between the second petitioner herein and L.N. Agarwal is not in dispute before this Court. The contents of the understanding read as follows: 'As per the understanding following properties will be transferred to the new company viz., Rajvir Industries Limited. 1. Suryalakshmi Mahabubnagar Unit along with Dyeing Plant. In case institution stipulates a liability greater than Rs. 13.25 Crores for Mahabubnagar, it will be borne by Suryalakshmi. 2. Further, Rs. 7 Crores will be invested before March, 2005 in capital Expenditure by present company in Mahabubnagar. 3. Further out of the existing Working Capital limits, Rs. 25.5 Crores DP will be provided to new company along with margin money. 4. Further 4000 Sq. Ft. in 1st Floor, Surya Towers Office Block will be provided for new Company for their own office premises. 14. The case of the complainant is that the blank cheques in question were given for the purpose of making payment to third parties in the business transaction of Mahaboobnagar unit and Tirupur sales depot in between the years 2000 and 2004. From the complaint allegations, it is also clear that Mahaboobnagar unit was transferred in favour of A-1 company on 1-9-2004. The arrangement between the complainant company and A-1 company was approved by this Court. Thereafter, some differences cropped up between the Managing Director of the complainant company and A-2and A-3. In such a situation, if really blank cheques were taken by A-2 and A-3, a normal prudent person issues a notice. The complainant has not issued any written notice to A-2 and A-3 at any point of time calling upon them to return the blank cheques that were taken in between the years 2000 and 2004. In such a situation, if really blank cheques were taken by A-2 and A-3, a normal prudent person issues a notice. The complainant has not issued any written notice to A-2 and A-3 at any point of time calling upon them to return the blank cheques that were taken in between the years 2000 and 2004. As per the mutual understanding, the complainant has agreed to bear any liability in the capacity of Chairman and Managing Director of A-1 company in excess of Rs. 13.25 crores to financial institutions as a representative of the accused. As per the case of the accused, the dues to the institutions such as IDB1, SBI, 1DBI Trusteeship Services Ltd., as per the separate books of accounts and as per the Scheme of Arrangement, stood at Rs. 19.53 crores. To discharge the said debt, the case of the accused is that the complainant issued a cheque and when it was presented, the same was returned with an endorsement stopped payment. Before presentation of the cheque, a telegraphic notice was also issued by the accused, but it was returned on 25-10-2006 with endorsement payment stopped by the drawer. Now the present complaint is filed on 6-11-2006 after receipt of telegraphic notice. Therefore, the present complaint appears to have been filed only to prevent the accused in view of the fact that the accused filed a complaint under Section 138 of the N.1. Act. Cheque leavesnumbering500 were given to A-2 and A-3 between the years 2000 and 2004. No notice was given to return those 500 cheques alleged to have been given to the complainant before filing the complaint. For about four long years, the complainant did not raise any little finger with regard to the cheques that were entrusted to the accused on 4-6-2002. From 2004 onwards the relationship between the parties were not cordial and some differences have been cropped up. There is no allegation in the complaint that inferences could be drawn from the circumstances of the case to the effect that the accused entertained a dishonest intention at the time of taking of the cheques in the year 2002. From 2004 onwards the relationship between the parties were not cordial and some differences have been cropped up. There is no allegation in the complaint that inferences could be drawn from the circumstances of the case to the effect that the accused entertained a dishonest intention at the time of taking of the cheques in the year 2002. Whether the cheques were given for discharge of any legally enforceable debt or liability, or whether they were given for the purpose of payments to be made to third parties as contended by the complainant, has to be decided in the complaint filed by the accused under Section 138 of the Negotiable Instruments Act, 1881. Therefore, from the facts and circumstances, the present complaint appears to have been filed to pre-empt the accused from filing a complaint under Section 138 of the Act. Therefore, even if the allegations in the complaint are taken as true and correct, at this stage, they do not make I out prima facie case of cheating or criminal I breach of trust or forgery. Therefore, continuation of proceedings against the present petitioner is nothing but abuse of process of Court. 15. The criminal petition is, accordingly, allowed quashing the FIR in Crime No. 262 of 2006 of Mahankali Police Station, Hyderabad. Any observations made in this criminal petition are only for the purpose of disposal of the petition. None of the findings comes in the way of the complainant in his defence that may be taken when a complaint filed against the complainant under Section 138 of the Negotiable Instruments Act, 1881.