Judgment 1. This is an application for quashing the order dated 9.3.2005 passed by the learned Judicial Magistrate, 1st Class, Patna in Com-plaint Case No. 302(C) of 2005 (M/s. Astha Enterprises V/s. M/s. Glenmark Lab. Pvt. Ltd. & Others) by which the learned Judicial Magistrate took cognizance of the offence under Ss. 406, 420 and 467 of the Indian Penal Code and also for quashing the entire prosecution launched against the accused named, on the basis of allegation incorporated in complaint petition. 2. The complaint case in brief is that the complainant is Managing partner of M/s. Astha Enterprises, D-13, S.K. Puri, Patna. The complainant entered into an agreement with M/s. Glenmark Ltd. after Accused No. 3, General Manager, gave out the terms and conditions for starting business with the complainants-company and it was assured that M/s. Glenmark alongwith other accused would not appoint any other distributor in the State of Bihar. The complainant-Company was appointed as Super-Distributor for the entire State of Bihar. As per the agreement arrived at, the representatives of the petitioner No.1, visited the business premises of the complainant and Accused No.1 (Petitioner No.1) was given two blank cheques in the name of M/s. Glenmark Laboratories Pvt. Ltd. as a guarantee as agreed upon which was not connected with any transaction of business, the same was accepted by Regional Manager, Accused No. 4, alongwith D.D. of Rs. 5 lacs for which acknowledgment was given. 3. The complainants case further is that the accused persons made some transactions in order to establish their business for which they were duly paid by drafts for which the details are with the complainant. Allegation is that the intention of the accused from the beginning of the transaction was to cheat the complainant and hence they did not make any agreement as promised through Annexure-1, the letter as stated above for appointment of complainant as Super-Distributor for the entire State of Bihar after charging Rs. 4.50 lacs from them. It is alleged that since the accused persons had intention to cheat, they subsequently made many more Super-Distributors for the State of Bihar. 4.50 lacs from them. It is alleged that since the accused persons had intention to cheat, they subsequently made many more Super-Distributors for the State of Bihar. In view of the callous approach of the accused and intention to cheat the complainant, a registered letter with A/D dated 18.11.2002 was sent by the complainant in the name of M/s. Glenmark drawing attention of Accused No. 3, General Manager, wherein it was requested that since the contract has not been performed by M/s. Glenmark and no formal agreement was being executed, the complainant has reasons to believe that the contract has become void. In the letter it was written that the two blank cheques be returned immediately and other interests be adjusted without further delay. A copy of the said letter has been annexed in the complaint petition. A letter was further written by the complainant to the Chief Manager, S.B.I., S.K. Puri, Patna informing him about issuance of two blank cheques to M/s. Glenmark, giving the details and further not to entertain the above numbered cheques as the accused had failed to perform the contractual obligations. The accused persons were informed to return the cheques without any delay and not to produce it for encashment as the Bankers have been informed not to honour the said cheques. The complainant kept on demanding the return of the said cheques and settlement of other related issues. A Legal notice was given to the complainant by the accused persons, further alleged that forged date on the blank cheques were given and further it is alleged that in the aforesaid cheques mention was also made regarding "Rupees Thirteen lacs Seven thousand Six hundred Fifty Seven" only in their own handwriting. This fabricated and false entry was made by the accused persons with the sole object of cheating the complainant by forging a valuable security which amounts to a criminal breach of trust by a merchant. 4. Allegation further is that after receiving the cheque and demand drafts, the accused persons with their common motive, intention for wrongful gain began to supply short expiry goods which has to be sold in very lower price and further to harass the complainant the accused persons falsely claimed huge amount and filled up a bogus claim for wrongful gain deposited in bank for encashment which is illegal, unwarranted, and breach of trust. In the complaint petition it is stated that in view of the stop-payment by letter dated 18.11.2002 the Bank returned the cheque and thereafter the accused persons sent legal notice aforesaid and filed a complaint case which is illegal, unwarranted, committing fraud making them liable for criminal prosecution under the Indian Penal Code. 5. The case of the petitioners on the other hand is that after filing of the complaint the learned Chief Judicial Magistrate transferred the case to the file of Shri Om Prakash, Judicial Magistrate, for enquiry and disposal and in course of enquiry the learned transferee Court of Judicial Magistrate, 1st Class, examined three enquiry witnesses including the complainant and took cognizance for the offence under Ss. 406, 420 and 467 of the Indian Penal Code and further ordered to issue process against the named accused in the complaint. 6. It is submitted on behalf of the petitioners that the complainant and accused persons entered into agreement of business dealing after finalising the settled terms and conditions which is admitted fact in the complaint petition. It is further admitted by the petitioners that the complainant had handed over demand draft of Rs. 5 lacs alongwith duly signed two blank cheques in the name of M/s.Glenmark Lab. Pvt. Ltd. in terms of security or guarantee to secure the payments of outstanding dues as it was agreed upon. It has been averred in the complaint petition that the accused persons at subsequent stage appointed another Super-Distributor. It has also been averred that when the complainant came to know about the breach of contract due to non-performing part of contractual obligation at the ends of accused he demanded for return back of the aforesaid two cheques which were formerly given for securing repayments of outstanding dues. It is admitted that the payment of cheques was stopped by the Bank at the instance of the complainant and when the accused persons sent a legal notice on 30.09.2004 demanding outstanding dues, which was responded to and replied by the complainant. 7. It is further submitted that in view of the allegation made in the complaint, no offence is made out and as such this quashing petition has been filed, calling for interference as there is no mental act of fraudulent or commission of embezzlement of any sum of money has been established by the claim and counter claim. 7. It is further submitted that in view of the allegation made in the complaint, no offence is made out and as such this quashing petition has been filed, calling for interference as there is no mental act of fraudulent or commission of embezzlement of any sum of money has been established by the claim and counter claim. It is also the case of the petitioner that the allegation of breach of trust is an actionable claim exclusively triable by competent civil forum of law and no offence under Ss. 420 and 406 of the Indian Penal Code is made out in view of the facts contained in the complaint petition. 8. With respect to the averments relating to accounting, claim and counter claim right to use of security, wrongful business loss incurred due to breach of contract, recovery of amount after set off outstanding dues, it is always open to file civil suit and not a criminal proceeding particularly when allegation in complaint petition discloses purely a civil dispute. 9. It is submitted that the petitioner No.1 is having prominent business in Mumbai and expanding his business throughout the country. Therefore, the petitioner No.1 was looking for suitable distributor for their products and he had given wide publicity to the products in the State of Bihar and a number of persons, firms and company had approached petitioner No.1 and expressed their willingness to accept the distribution of petitioner No.1 and Opposite Party No.1 was one of such firm. There were number of meetings held between representatives of petitioner No.1 and probable distributors who desired to enter into an agreement with petitioner No.1 to accept the distributorship. One of the mandatory requirements to be complied by the probable distributors was that the Distributor should deposit an amount of Rs. 10 lakhs within two months from the date of appointment of the distributorship and in the meanwhile the distributor could purchase goods from petitioner No.1 by way of advance Demand Draft. The terms and conditions required to be complied by the prospective distributor was also informed and intimated to Opposite Party No.1, vide Annexure-2 to the petition. 10. Opposite Party No.1 showed his willingness to strictly comply with the terms and conditions of the contract and further promised and assured that the amount of Rs. The terms and conditions required to be complied by the prospective distributor was also informed and intimated to Opposite Party No.1, vide Annexure-2 to the petition. 10. Opposite Party No.1 showed his willingness to strictly comply with the terms and conditions of the contract and further promised and assured that the amount of Rs. 10 lakhs will be paid within the period of two months from the date of their being appointed as the distributor of petitioner No.1. Petitioner No.1 accordingly appointed Opposite Party No.1 as the Distributor for the State of Bihar with an intimation that the detail agreement will soon follow. Opposite Party No.1 expressed his willingness to pay the amount of Rs. 10 lakhs and therefore gave assurance that the demand draft of Rs. 10 lakhs would be paid. Further Opposite Party No.1 with mala fide intention issued a demand draft amounting to Rs. 5 lakhs. There was no signs of Opposite Party No.1 to tender further deposit amount of Rs. 5 lakhs which was one of the conditions of the distributorship contract. The Opposite Party No.1 was reminded a number of occasions for deposit of the said amount. 11. There were dealings and transactions between petitioner No.1 and Opposite party for quite a few months and during the course petitioner No.1 had supplied their products worth Rs. 18,07,657.00 to Opposite Party No.1 and despite the request that they should pay the amount of Rs. 18,07,657.00 to the petitioners, the Opposite Party No.1 had not complied with the terms of the contract to appoint him as its distributor. 12. A notice with the aforesaid contents was served upon Opposite Party No.1 whereupon reply was sent by Opposite Party No.1 denying the liability which the Opposite Party No.1 owed towards petitioner No. 1. Opposite Party No.1 came with a flimsy defence that he had agreed to pay only a sum of Rs. 5 lakhs as security deposit bearing interest @ 11% per annum and also had issued two blank cheques bearing No. 272401 and 272402. 13. Thereafter the petitioners being accused in the instant complaint case filed a complaint case before Metropolitan Magistrate Court, Bandra (Mumbai) against Opposite Party No. 2 and its partner for the dishonour of the cheque bearing No. 272402 as the prima facie case u/s. 138 of the Negotiable Instruments Act was made out against the Opposite Party No.1 and its partners. Thereafter the petitioners being accused in the instant complaint case filed a complaint case before Metropolitan Magistrate Court, Bandra (Mumbai) against Opposite Party No. 2 and its partner for the dishonour of the cheque bearing No. 272402 as the prima facie case u/s. 138 of the Negotiable Instruments Act was made out against the Opposite Party No.1 and its partners. Learned Magistrate took cognizance against them. It is submitted that Opposite Party No.1 and its partner had mala fide intention to cheat and deceive the petitioners and therefore, they are searching for one recourse or the other to avoid making payment of an amount of Rs. 13,07,657.00, causing wrongful gain to themselves by putting the petitioners to wrongful loss and hence this complaint case was filed after two years and hence there is inordinate delay in launching the private complaint case. This complaint case was filed in the year 2005 whereas the petitioners had filed the case in the year 2004 itself and this is a counter blast of the aforesaid complaint case filed by the petitioners only to save themselves in retaliation being a lame attempt on the part of the Opposite Party to run away from the legally enforceable debt which they owe to the petitioners. It is submitted that Opposite Party No.1 just to defraud the petitioner of their legal and lawful claim has come out with a false and bogus story by way of private complaint. 14. Opposite Party has admitted in his complaint that the petitioners had supplied him with certain products of the petitioner and therefore, the allegations of the Opposite party that the cheques were issued as security are also false and concocted story to skip the debts which they owe to the petitioners. It is submitted that the alleged witness Mr. B.K. Sinha, Area Manager of petitioner No.1, was removed from the services by the petitioner and, therefore, the partners of Opposite Party No.1 and Mr. B.K. Sinha have come together to settle their scores against the petitioners. 15. Emphasis has been given to the fact that entire allegations are of civil nature and Opposite Party deliberately avoided to go to a Civil Court as the document on which the Opposite parties are relying upon does not show that Opposite Party No.1 was a original partnership firm. 15. Emphasis has been given to the fact that entire allegations are of civil nature and Opposite Party deliberately avoided to go to a Civil Court as the document on which the Opposite parties are relying upon does not show that Opposite Party No.1 was a original partnership firm. So far as letter dated 18.11.2002 issued by Opposite Party No. 2 is concerned, it is stated that the same is after thought as it is not clear that this letter was actually issued by the Bank. The complaint filed by the Opposite Party No.1 is mala fide and further not maintainable. The allegation in the private complaint even if were taken at the face value and accepted in their entirety do not constitute the offence as alleged and hence the proceeding and order taking cognizance is liable to be quashed. 16. The aforesaid contention of the petitioner has been rebutted in the counter affidavit filed on behalf of Opposite Party No. 2. In the counter affidavit it has been submitted that the letter dated 3.7.2002 alongwith D.D. of Rs. 5.00 lakhs and two blank cheques of State Bank of India, S.K. Puri Branch were handed over to Sri B.K. Sinha, Area Manager of petitioner No.1 in presence of General Manager, Sales of the Company, Accused No. 5, who was staying in Holiday Home, Nageshwar Colony, Patna. The said B.K. Sinha is in employment of the Company and is presently posted at Patna as Area Sales Manager of the Company. 17. Allegation is levelled that the petitioner has resorted to falsehood to mislead this Court. It is further submitted that on the appointment of Super-Distributor after the blank cheques were given to him it was protested by Opposite Party No.2 and apprehending foul play the O.P. No. 2 wrote to the Bank on 18.11.2002 for stopping of cheque payment vide Annexure-C. The blank cheques were handed over on 3.7.2002 and on 18.11.2002 but the same was mala fidely retained by the accused persons and one of the blank cheques was used by filling a date and amount of Rs. 13,07,637.00 as disclosed by them, as if the complainant had issued a cheque to the tune of the aforesaid amount. A false case was lodged against the complainant at Mumbai only to harass him and to pre-empt his liability. 13,07,637.00 as disclosed by them, as if the complainant had issued a cheque to the tune of the aforesaid amount. A false case was lodged against the complainant at Mumbai only to harass him and to pre-empt his liability. It is further submitted that there was no conversation on telephone on the terms and conditions of the agency, as per Annexure-3 to the petition of the petitioners. It has been submitted that if the complainant had not fulfilled the terms and conditions of the agency then it was required to pay in advance for consignment by a Demand Draft and as such there could have been no occasion for supply of goods on credit warranting payment by cheque. 18. On behalf of the complainant it has been submitted that out and out a case under Ss. 406, 420 and 467 of the Indian Penal Code is made out. 19. It is submitted on behalf of the Opposite Party No. 2 that at this stage the case has to be seen from the complainants point of view without adverting in any way to the defence case for embarking on an enquiry whether the offences have been constituted under the aforesaid Sections according to the established principles of law and such views of the Apex Court also have been epitomised in State of Haryana V/s. Choudhary Bhajan Lal and Others, AIR 1992 SC 607 in which categories of cases have been enumerated whereby and whereunder there can be exercise of power u/s. 482 of the Code of Criminal Procedure which, inter alia, included the following factor:- "Whether the allegations made in the First Information Report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make a case against the accused." 20. However, the petitioners maintained that even if the allegations made in complaint is taken at their face value and accepted in their entirety, such allegations do not prima facie constitute an offence under Ss. 406, 420 and 467 of the Indian Penal Code. However, the petitioners maintained that even if the allegations made in complaint is taken at their face value and accepted in their entirety, such allegations do not prima facie constitute an offence under Ss. 406, 420 and 467 of the Indian Penal Code. In this connection the judgment of the Apex Court reported in 2002 1 PLJR 247 has been relied upon stating that mere breach of contract cannot constitute liability for criminal prosecution for cheating unless fraudulent and dishonest intention is shown from right of beginning of the transaction and further in order to constitute an offence of cheating intention to deceive should be in existence at the time when inducement was made, further a mere failure to keep the promise subsequently cannot be presumed as an act leading to cheating. 21. In this connection on behalf of the petitioner 2000 0 CrLJ 174 has also been cited stating that the circumstances manifestly indicate that the complaint was lodged only to counteract a criminal case which was earlier lodged by the petitioner in Mumbai Court and the issuance of process should not be allowed for oppression or needless harassment. 1999 1 PLJR 393, 1998 2 PLJR 288 , AIR 1974 SC 301 , 2006 5 BBCJ 173 have been relied upon to support the contention made on behalf of the petitioner that the offences have not been made out as no dishonest intention or mens rea has been made out from the beginning so that offence for misappropriation or cheating or forgery can be attracted against the petitioners. In this connection it is worthwhile to indicate here that a large number of decisions of the Hon ble Apex Court indicate that mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right from the beginning in transaction and the time when the offence is said to have been committed. It is admitted on behalf of the complainant that there had been business transaction after the agreement between the parties. Dishonest intention can be deduced from the broad tests but such instance is lacking in the complaint petitions, where there appears to be terms and conditions of the business and there had been transaction. 22. It is admitted on behalf of the complainant that there had been business transaction after the agreement between the parties. Dishonest intention can be deduced from the broad tests but such instance is lacking in the complaint petitions, where there appears to be terms and conditions of the business and there had been transaction. 22. It is true that the scope of enquiry u/s. 202 of the Code of Criminal Procedure is very limited and Magistrate has to find a prima facie case which exists on the material placed by the complainant for the limited purpose of finding out whether there is chance for issuance of process for deciding the matter purely on the point of view of the complainant AIR 1976 SC 736. In Indian Oil Corporation V/s. NEPC India Limited, 2006 2 PCCR 279 there is remedy on the criminal law if the allegations in the complaint petition discloses criminal offence. 23. It is stated on behalf of the petitioners as well as on behalf of the complainant that there had been transactions in this case, and from the facts and circumstances of the case fraudulent and dishonest intention at the time of making the promise and culpable intention right at the beginning cannot be presumed from the facts and circumstances of the case. It is true that wrongful or illegal act such as breach or trust, misappropriation, cheating etc. may give rise to action both of civil as well as criminal side when it is clear from the complaint and self-statement that necessary ingredients of constituting an offence are made out but the Magistrate before issuing the process essentially has to keep in mind the claims contained in provisions under Ss. 202 and 203 of the Code of Criminal Procedure keeping in mind the position of law as above. It is true that the power u/s. 482 of the Code of Criminal Procedure is very limited but in case where the ingredients of the alleged wrong are not satisfied, it cannot be said that power u/s. 482 of the Code of Criminal Procedure cannot be exercised to quash the process issued by a Magistrate. 24. This is a case in which there was contractual relationship relating to commercial transaction. 25. 24. This is a case in which there was contractual relationship relating to commercial transaction. 25. Having regard to the facts and circumstances of the case and discussion above, order of taking cognizance and issuance of process against the petitioners is an abuse of the process of the Court and is accordingly set aside. 26. This criminal miscellaneous application is accordingly allowed.