Research › Search › Judgment

Andhra High Court · body

2024 DIGILAW 366 (AP)

G. Nagaraja Reddy v. State of Andhra Pradesh

2024-03-15

V.SRINIVAS

body2024
JUDGMENT : V. SRINIVAS, J. 1. Assailing the judgment dated 13.06.2007 in Crl. Appeal No. 29 of 2006 on the file of the Court of learned V Additional Sessions Judge, Tirupati, confirming the conviction and sentence passed against the accused by the judgment dated 01.02.2006 in C.C. No. 469 of 2003 on the file of the Court of learned II Additional Judicial Magistrate of First Class, Tirupati, for the offences under section 420 of Indian Penal Code (hereinafter referred to as “IPC”) the petitioner/accused filed the present criminal revision case under Section 397 r/w. 401 of the Criminal Procedure Code, 1973. 2. The revision case was admitted on 18.06.2007 and the sentence of imprisonment imposed against the petitioner was suspended, vide orders in Crl. R.C.M.P. No. 1151 of 2007. 3. The shorn of prosecution case is that: (i) On 16.03.1991, accused borrowed a sum of Rs.50,000/- from PW-1 by duly promising him to repay the same with interest and hypothecated his house bearing D. No. 132 under a simple mortgage deed and executed it on the same day. (ii) Similarly on 25.04.1991, accused also borrowed a sum of Rs.50,000/- from PW-2 and LW-3 C. Sridhar by promising them to repay the said amount with interest and hypothecated the house bearing No. 132 and also vacant site adjacent to the above said house under a simple mortgage deed and executed it on the same day. (iii) As the accused failed to discharge the above said debts, PW-1 filed a suit in O.S. No. 110 of 1998, obtained a final decree, for realization of the decreetal amount, he filed E.P. No. 223 of 2000, the said hypothecated properties were brought to the sale and a sale notice was published on 06.10.2002 and 05.11.2002 in Telugu News daily i.e. Enadu. (iv) In that context, one Veeraswamy Naidu filed a claim petition informing that the accused also sold portion of his house property under a registered sale deed dated 04.05.1990 and accordingly the auction was not held on 05.11.2002. (v) On came to know about the cheating made by the accused, PWs. 1, 2 and LW-3 C. Sridhar filed a private complaint before the trial Court. The same was forwarded to the Central Crime Station, Tirupati and registered in Cr. No. 559 of 2002 by PW-5-S.I. of Police under Section 420 of IPC and investigated into. 4. (v) On came to know about the cheating made by the accused, PWs. 1, 2 and LW-3 C. Sridhar filed a private complaint before the trial Court. The same was forwarded to the Central Crime Station, Tirupati and registered in Cr. No. 559 of 2002 by PW-5-S.I. of Police under Section 420 of IPC and investigated into. 4. After completion of investigation, PW-6 laid charge sheet and the same was numbered as C.C. No. 469 of 2003 on the file of the Court of learned II Additional Judicial Magistrate of First Class, Tirupati, trial was conducted, found the accused guilty of the offence under Section 420 of IPC and sentenced him to undergo rigorous imprisonment of one (1) year and to pay fine of Rs.3,000/- in default to suffer simple imprisonment of three (3) months, for the said offence. 5. Aggrieved by the same, the petitioner/accused preferred an appeal, vide Crl. Appeal No. 29 of 2006, before the Court of learned V Additional Sessions Judge, Tirupati and the same was dismissed, vide judgment dated 13.06.2007, by confirming the conviction and sentence passed by the trial Court. 6. Against the said judgment of the first Appellate Court, the present criminal revision case was preferred by the petitioner/accused. 7. Heard Sri G. Divya Theja learned counsel for the petitioner/accused and Sri S. Dheera Kanishk, learned Special Assistant Public Prosecutor for the respondent-State. 8. Now the point that arises for determination in this revision is “whether there is any manifest error of law or flagrant miscarriage of justice in the findings recorded by the Trial Court as well first Appellate Court?” 9. Sri G. Divya Theja, learned counsel for the petitioner/accused submits that the matter is civil nature and there is no element of cheating; that the de facto complainant has to realize the decrees by way of other execution modes against the petitioner instead of filing criminal complaint; that the Civil court rejected the claim of one E. Veera Swamy Naidu and claim application was dismissed by observing that he has no interest over the schedule property; that PWs. 1 and 2 recovered the amounts covered under Exs.P.2 and P.3 by selling the mortgaged property; that the petitioner has no dishonest intention to cheat or defraud the creditor; that the Trial Court as well Sessions Court failed to appreciate the material on record in a proper perspective and erroneously convicted the petitioner and the same is liable to be set aside. 10. As against the same, Sri S. Dheera Kanishk, learned Special Assistant Public Prosecutor for the respondent submits that the acts of the accused in borrowing the amounts under Exs.P.2 and P.3 by executing said mortgage deeds in favour of PWs. 1 and 2, later not repaying the same inspite of demand and also sell the said property to one thirty party, discloses that the accused has the intention of cheating; that the silence on the part of the accused during the enquiry in E.A. No. 721 of 2002 in E.P. No. 228 of 2000 in O.S. No. 112 of 1998 and at the time of sale is also form part of cheating made by him; the testimony of PWs. 1 and 2 categorically proves the dishonest and fraudulent intention of the accused; that the prosecution proved the guilt of the accused beyond all reasonable doubt by examining PWs. 1 to 6 and producing Exs.P.1 to P.13. 11. In view of the above rival contentions, this Court perused the material available on record. The main contention raised by the learned counsel for the petitioner is that the dispute is purely civil in nature and that no element of cheating was established by the prosecution. 12. Now, the short point that arises for determination is, whether the prosecution is able to place any material to show that the petitioner/accused had an intention of cheating at the time of execution of mortgage deeds in favour of PWs. 1 and 2. 13. In this context, it is relevant to refer the testimonies of PWs. 1 and 2 that accused borrowed an amount of Rs.50,000/- on 16.03.1991 from PW-1 by executing a mortgage deed in respect of his house property under Ex.P.2. Again, he approached PW-2 on 25.04.1991, who is son of PW-1, and borrowed an amount of Rs.50,000/- from PW-2 by executing a mortgage deed in respect of same house along with vacant site under Ex.P.3 in favour of PW-2 and LW-3 C. Sridhar. Again, he approached PW-2 on 25.04.1991, who is son of PW-1, and borrowed an amount of Rs.50,000/- from PW-2 by executing a mortgage deed in respect of same house along with vacant site under Ex.P.3 in favour of PW-2 and LW-3 C. Sridhar. But he did not repay the said amounts. On that they filed two civil suits in O.S.Nos.110 and 112 of 1998 and obtained decrees in their favour. Thereafter PW-2 filed an execution petition and put said property under sale on 05.11.2002. During sale proceedings, one Veerswamy Naidu filed claim petition claiming half of the share in the said house on the plea of execution of registered sale deed by the accused dated 04.05.1990 i.e. prior to Exs.P.2 and P.3. Thereby, the accused committed fraud and cheating against PWs. 1 and 2. 14. In view of the testimony of PWs. 1 and 2, it is clear and categorical that PW-2 is son of PW-1 and there are civil disputes between the accused and PWs. 1 and 2 in respect of the said house property. Furthermore, it is clear from their testimony that firstly accused borrowed an amount of Rs.50,000/- from PW-1 by mortgaging the house property only and again he borrowed Rs.50,000/- from PW-2, who is son of PW-1, and LW-3 G. Sridhar, by mortgaging the said house property along with vacant site. 15. In this connection, learned counsel for the petitioner brought to the notice of this Court a judgment of the Hon’ble Supreme Court in M.N.G. Bharateesh Reddy v. Ramesh Ranganathan, (2022) SCC Online 1061 wherein the Apex Court relied upon two-judge Bench judgment of Hon’ble Supreme Court in Hridaya Ranjan Verma v. State of Bihar, (2000) 4 SCC 168 and held at paragraph Nos. 14 to 16 as follows: “14. The ingredients of the offence under Section 415 emerge from a textual reading. Firstly, to constitute cheating, a person must deceive another. 14 to 16 as follows: “14. The ingredients of the offence under Section 415 emerge from a textual reading. Firstly, to constitute cheating, a person must deceive another. Secondly, by doing so the former must induce the person so deceived to (i) deliver any property to any person; or (ii) to consent that any person shall retain any property; or (iii) intentionally induce the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived and such an act or omission must cause or be likely to cause damage or harm to that person in body, mind, reputation or property. 15. Section 420 deals with cheating and dishonestly inducing delivery of property. It reads as follows: “420. Cheating and dishonestly inducing delivery of property - Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being capable of converting into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.” 16. In Hridaya Ranjan Prasad Verma v. State of Bihar (supra), a two-judge bench of this Court interpreted sections 415 and 420 of IPC to hold that fraudulent or dishonest intention is a precondition to constitute the offence of cheating. The relevant extract from the judgment reads thus: “14. On a reading of the section it is manifest that in the definition there are set forth two separate classes of acts which the person deceived may be induced to do. In the first place he may be induced fraudulently or dishonestly to deliver any property to any person. The second class of acts set forth in the section is the doing or omitting to do anything which the person deceived would not do or omit to do if he were not so deceived. In the first class of cases the inducing must be fraudulent or dishonest. In the second class of acts, the inducing must be intentional but not fraudulent or dishonest. 15. In the first class of cases the inducing must be fraudulent or dishonest. In the second class of acts, the inducing must be intentional but not fraudulent or dishonest. 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.” 17. Learned counsel for the petitioner also relied upon another judgment of the Hon’ble Supreme Court in S.W. Palanitkar v. State of Bihar, (2002) 1 SCC 241 wherein also the Apex Court referred the Hridaya Ranjana case (referred to supra) and gave categorical findings on the ingredients of offence under Section 420 of IPC. 18. In view of the above legal position, it is clear that 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. 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. Form 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. 19. 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. Form 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. 19. In the present case on hand, it is not in dispute that the documents under Exs.P.2 and P.3 are relating to civil litigation and the said litigation has to be concluded by the civil Court and that on perusing the entire material on record prosecution failed to attribute any fraudulent or dishonest intention on the part of the accused in executing Exs.P.2 and P.3 documents. Furthermore, mere breach of contract under Exs.P.2 and P.3 cannot give any rise to criminal prosecution of cheating. More so, it is the categorical defence taken by the accused as DW-1 that he denied the execution of document in favour of PWs. 1 and 2 as well said Veeeraswamy Naidu, which is pending as civil litigation. However, mere failure of keep up promise subsequent such a culpable intention right at the beginning, that is, when he made the promise cannot be presumed. More so, the prosecution could not establish the claim in respect of the said property made by said Veeraswamy Naidu is genuine or not. Furthermore, if the dispute between the parties was essentially a civil dispute resulting from a breach of contract on the part of the accused by non-refunding the amount the same wound not constitute an offence of cheating. The trial Court as well first Appellate Court failed to appreciate the ingredients of the offence alleged against the accused and thereby erroneously convicted the accused for the said offence. 20. Having regard to the above discussion and in view of the above pronouncements of the Hon’ble Supreme Court, this Court is of the considered opinion that the trial Court as well first Appellate Court failed to appreciate the ingredients to constitute the offence alleged against the accused and committed error in convicting the accused for the said offence, thereby the present revision has merits and the same is liable to be considered. 21. 21. In the result, the Criminal Revision Case is allowed, the conviction and sentenced imposed against the petitioner/accused by the judgment dated 01.02.2006 in C.C. No. 469 of 2003 on the file of the Court of learned II Additional Judicial Magistrate of First Class, Tirupati, which was confirmed by the judgment dated 13.06.2007 in Crl. Appeal No. 29 of 2006 on the file of the Court of learned V Additional Sessions Judge, Tirupati, are hereby set aside. Thereby, the revision petitioner/accused is acquitted of the offence under Section 420 of IPC. The fine amount paid by the petitioner, if any, shall be refunded to him. 22. Interim orders granted earlier if any, stand vacated. 23. As a sequel, miscellaneous applications pending, if any, shall stand closed.