Judgment :- The above Criminal Original Petition has been filed to call for the records in respect of the complaint filed in C.C.No.485 of 2007 on the file of the Judicial Magistrate No.1 at Vellore and quash the same. 2. On the basis of a complaint lodged by one Mr. S.S. Pattabiraman, a case in Cr.No.549 of 2006 for the alleged offences under Sections 420 and 420 r/w 34 I.P.C. was registered against the accused/petitioners herein. After completing the investigation, the charge sheet has been filed and the same has been taken on file as C.C.No.485 of 2007 by the Judicial Magistrate No.1, Vellore. 3. The accused/petitioners have filed the above Criminal Original Petition for quashing all further proceedings in the case contending that the dispute between the petitioners and the defacto complainant is purely a civil dispute and the failure of the petitioners to repay the loan amount obtained from the defacto complainant is sought to be converted into the criminal case and even admitting the entire allegations in the complaint are to be true, no offence is made out under Section 420 I.P.C. 4. The learned counsel for the petitioners contended that a reading of the complaint in the case shows that there is no whisper of any deceit or cheating except vague allegations about cheating. The allegations contained in the complaint do not disclose the ingredients of the offence under Section 420 I.P.C. and therefore, contended that the very registration of the case itself is bad and the learned Judicial Magistrate ought not to have taken the case on file. 5. In support of his contentions, the learned counsel relied upon the decision of the Apex Court reported in (2005) 10 SCC 228 (ANIL MAHAJAN V. BHOR INDUSTRIES LTD. AND ANOTHER). In the said decision, the Apex Court has observed as under:- "A distinction has to be kept in mind between mere breach of contract and the offence of cheating. It depends upon the intention of the accused at the time of inducement. The subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent, dishonest intention is shown at the beginning of the transaction." 6. In the said decision, the Apex Court has relied upon the decision of the Apex Court in ALPIC FINANCE LTD. The subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent, dishonest intention is shown at the beginning of the transaction." 6. In the said decision, the Apex Court has relied upon the decision of the Apex Court in ALPIC FINANCE LTD. V. P. SADASIVAM ( (2001) 3 SCC 513 ), wherein, the Apex Court observed as under:- “10. The facts in the present case have to be appreciated in the light of the various decisions of this Court. When somebody suffers injury to his person, property or reputation, he may have remedies both under civil and criminal law. The injury alleged may form the basis of civil claim and may also constitute the ingredients of some crime punishable under criminal law. When there is dispute between the parties arising out of a transaction involving passing of valuable properties between them, the aggrieved person may have a right to sue for damages or compensation and at the same time, law permits the victim to proceed against the wrongdoer for having committed an offence of criminal breach of trust or cheating. Here the main offence alleged by the appellant is that the respondents committed the offence under Section 420 IPC and the case of the appellant is that the respondents have cheated him and thereby dishonestly induced him to deliver property. To deceive is to induce a man to believe that a thing is true which is false and which the person practising the deceit knows or believes to be false. It must also be shown that there existed a fraudulent and dishonest intention at the time of commission of the offence. There is no allegation that the respondents made any wilful misrepresentation. Even according to the appellant, the parties entered into a valid lease agreement and the grievance of the appellant is that the respondents failed to discharge their contractual obligations. In the complaint, there is no allegation that there was fraud or dishonest inducement on the part of the respondents and thereby the respondents parted with the property. Even according to the appellant, the parties entered into a valid lease agreement and the grievance of the appellant is that the respondents failed to discharge their contractual obligations. In the complaint, there is no allegation that there was fraud or dishonest inducement on the part of the respondents and thereby the respondents parted with the property. It is trite law and common sense that an honest man entering into a contract is deemed to represent that he has the present intention of carrying it out but if, having accepted the pecuniary advantage involved in the transaction, he fails to pay his debt, he does not necessarily evade the debt by deception. 11. Moreover, the appellant has no case that the respondents obtained the article by any fraudulent inducement or by wilful misrepresentation. We are told that the respondents, though committed default in paying some instalments, have paid substantial amount towards the consideration.” .7. The learned counsel also relied on the decision of the Apex Court reported in (2000) 4 SCC 168 (HRIDAYA RANJAN PRASAD VERMA AND OTHERS VS. STATE OF BIHAR AND ANOTHER). In the said decision, the Apex Court has observed as under: .“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 his mere failure to keep up promise subsequently such a culpable intention right at the beginning, that is, when he made the promise cannot be presumed.” 8. 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 his mere failure to keep up promise subsequently such a culpable intention right at the beginning, that is, when he made the promise cannot be presumed.” 8. Basing reliance on the aforesaid decisions, the learned counsel submitted that the case on hand is a mere breach of contract and the allegations contained in the complaint do not reveal that the accused had fraudulent or dishonest intention right at the beginning of the transaction, that is the time when the offence is said to have been committed. 9. The learned counsel submitted that it is not even alleged in the complaint that the accused had fraudulent and dishonest intention at the time of making the promise and from the mere fact that in spite of security/equitable mortgage created by the accused, the culpable intention of cheating the complainant cannot be inferred or presumed. 10. I have considered the said submissions made by the learned counsel, the allegations in the complaint, the statement of three witnesses made available in the typed set of papers and the decisions relied upon. .11. In the complaint, it is alleged that the second accused is the wife of the first accused and the third accused is their son and by depositing the title deed of the properties standing in the name of the second accused and creating an equitable mortgage, the three of them received a sum of Rs.1,00,000/- as loan on 30.6.1999 from the complainant; again after three months another sum of Rs.50,000/- was borrowed on the promise that the entire loan amount will be repaid and believing such representation the complainant in the presence of witnesses paid the said amount; thereafter, they did not contact the complainant and whenever they were approached they were dodging and abusing the complainant and the complainant became suspicious of their conduct and hence applied for encumbrance certificate for the immovable property given as security which revealed that even in the year 2000 itself, the secured property had been sold away to one Mrs. C. Kumari, w/o. Sait; the said conduct of the accused caused great mental agony to the complainant and it is further alleged that the petitioners schemingly have cheated the complainant. 12. C. Kumari, w/o. Sait; the said conduct of the accused caused great mental agony to the complainant and it is further alleged that the petitioners schemingly have cheated the complainant. 12. It is no doubt, true that in the complaint it is no where alleged that the accused had fraudulent or dishonest intention at the time when they borrowed the loan amounts by making the promise to repay. Therefore, it has to be seen whether from the subsequent conduct of the accused in alienating the secured property to one Smt. Kumari, the intention of the accused at the time of inducement can be inferred. As laid down by the Apex Court in the aforesaid two decisions, the distinction between mere breach of contract and the offence of cheating is a fine one and it depends upon the intention of the accused at the time of inducement which may be judged by subsequent conduct but for this subsequent conduct is not the sole test. The above dictum is to be applied to the facts of the case. 13. In (2000) 4 SCC 168 , the Honble Apex Court quashed the proceedings after observing as under:- (emphasis supplied by us) “16........Reading the averments in the complaint in entirety and accepting the allegations to be true, the ingredients of intentional deception on the part of the accused right at the beginning of the negotiations for the transaction has neither been expressly stated nor indirectly suggested in the complaint. All that Respondent 2 has alleged against the appellants is that they did not disclose to him that one of their brothers had filed a partition suit, which was pending. The requirement that the information was not disclosed by the appellants intentionally in order to make Respondent 2 part with the property is not alleged expressly or even impliedly in the complaint. Therefore the core postulate of dishonest intention in order to deceive the complainant-Respondent 2 is not made out even accepting all the averments in the complaint on their face value. In such a situation continuing the criminal proceeding against the accused will be, in our considered view, an abuse of the process of the court.” Therefore, it is clear that only on the basis of the aforesaid facts the Honble Apex Court quashed the proceedings therein but the facts of this case are slightly different. In such a situation continuing the criminal proceeding against the accused will be, in our considered view, an abuse of the process of the court.” Therefore, it is clear that only on the basis of the aforesaid facts the Honble Apex Court quashed the proceedings therein but the facts of this case are slightly different. Similarly, in the decision reported in (2005) 10 SCC 228 , the Apex Court was dealing with a case, where there was a Memorandum of Understanding between the parties and a subsequent failure to fulfil the terms of the MOU and such failure was sought to be converted into a criminal liability and in that context, the Apex Court held that mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent, dishonest intention is shown at the beginning of the transaction. It is further held that the subsequent failure of the party to fulfil its liability arising under the MOU, which is the subsequent conduct, cannot be taken as the sole test to decide as to whether an offence has been made out or not. In the considered view of this court, the facts of that case also are slightly different from the case on hand. 14. It is pertinent to point out that in the case on hand, the accused have borrowed money from the defacto complainant by creating a equitable mortgage belonging to the second accused and such collateral security was executed by the accused 2 and 1 and the same was attested by their son, the third accused and that was on 30.6.1999. Subsequent thereto the second accused had executed a sale deed in respect of the said secured immovable property in favour of one Tmt. Kumari on 3. 2000 but the said fact had not been revealed to the defacto complainant and it came to the knowledge of the defacto complainant only after he obtained an encumbrance certificate in respect of the said property. Therefore, it is clear that in this case, the criminal case has not been registered merely for the failure on the part of the accused to repay the loan amount to the defacto complainant. 15. Therefore, it is clear that in this case, the criminal case has not been registered merely for the failure on the part of the accused to repay the loan amount to the defacto complainant. 15. It is pertinent to point out that though in the final report, the respondent has cited nine witnesses and enclosed six documents, the petitioners, for reasons best known to them, have produced the Section 161 statements recorded from L.Ws.5, 6, 7 and 9 only and have not produced any of the documents except the final report and the complaint of the respondent. Without the section 161 statements of the material witnesses, namely, L.Ws.1 to 4 and the sale deed executed by the second accused in favour of the said Smt. Kumari, it will not be possible to come to a definite conclusion that there was no intention on the part of the accused to cheat the complainant. 16. It has to be pointed out that the subsequent conduct relied upon to infer the fraudulent intention on the part of the accused is not their failure to repay the loan amount, but their fraudulent execution of the sale deed in favour of the said Kumari in respect of the immovable property given as security to the defacto complainant. Therefore, the terms and covenants contained in the sale deed executed by the second accused in favour of the said Smt. Kumari and other attending circumstances have to be considered in its entirety by the trial court to decide as to whether there was fraudulent intention on the part of the accused even at the time when they borrowed the amount from the complainant. At this stage, such an exercise cannot be undertaken by this court. It is for the trial court to come to a definite conclusion as to whether an offence under Section 420 I.P.C. has been made out or not from the evidence to be adduced in the trial. For the aforesaid reasons, the above Crl.O.P. fails and the same is dismissed. Connected M.Ps. are also dismissed.