Research › Search › Judgment

Jharkhand High Court · body

2025 DIGILAW 1928 (JHR)

Sandeep Rana S/o D. S Rana v. State of Jharkhand

2025-09-19

ANANDA SEN

body2025
JUDGMENT : ANANDA SEN, J. In this writ petition the petitioners have prayed for: “issuance of an appropriate writ/order/direction for quashing the entire criminal proceeding arising out of Ranchi Sadar Kotwali P.S. Case No. 264/2024 registered u/s 318(4)/ 316(2)/61(2) of the B.N.S. The case is pending in the court of CJM at Ranchi for submission of final form.” 2. The First Information Report (FIR) being Ranchi Sadar Kotwali PS Case No. 264 of 2024 has been registered on 02.10.2024 for offences under sections 318(4), 316(2) and 61(2) of the Bharatiya Nyaya Sanhita, 2023 against the petitioners on the basis of written statement of the informant-respondent no. 5. 3. As per the First Information Report, in August 2019, ABFRL approached the informant for setting up a showroom in Ramgarh. Prior to entering into any agreement, the company shared a ROI Sheet (Return on Investment) and Term Sheet, projecting attractive returns and assuring that (i) rent of the showroom would be paid by the company, and (ii) employee salaries (except the store manager) would be borne by the informant and reimbursed at a specified rate. Mr. Prasoon Mukherjee confirmed via WhatsApp on 31.8.2019 that the total monthly salary cost would be Rs.2,25,000/- and the company would compensate the informant Rs. 25,000/- per month for 60 months due to the difference between rent and salary. Further, Mr. Prabhakar Pandey negotiated with the landlord for the Ramgarh store, as is evident from WhatsApp chats and emails dated 4.8.2019, 14.8.2019, 19.8.2019, and 10.9.2019, and falsely induced the informant to enter into the rent agreement in his personal capacity by misrepresenting the facts and modifying the terms deceitfully through an email dated 17.10.2019. However, after the store became operational, the actual salary expenses were found to be only Rs.1,40,000/- per month, as per the salary sheet prepared by the company’s store manager. Due to this false representation, the informant suffered a recurring monthly loss of Rs.1,10,000/- amounting to a total of Rs.41,80,000/- over 38 months. The informant did not even get 1/3rd return from his investments, rather incurred a loss of approximately 1.65 crores. Further, it is stated that a similar fraudulent transaction occurred in the Banaras store, where the informant, based on assurances and LOI and agreement dated 14.12.2020 and 08.04.2022, invested a huge amount under the belief that the store space was exclusively allocated for ABFRL’s Style Up brand. Further, it is stated that a similar fraudulent transaction occurred in the Banaras store, where the informant, based on assurances and LOI and agreement dated 14.12.2020 and 08.04.2022, invested a huge amount under the belief that the store space was exclusively allocated for ABFRL’s Style Up brand. However, it later emerged that the company had secretly entered into a separate agreement with the landlord, permitting a significant portion of the store to be used for selling unrelated products like toys and books. This misrepresentation and suppression of facts caused a huge financial loss of Rs.82,81,025/-. The informant clearly stated that any internal thing that happened between ABFRL and the landlord were never told to him nor before making the agreement nor was any mention of it made in the agreement of Banaras. Additionally, it was falsely promised by Mr. Prasoon Mukherjee via message dated 13.3.2019, that in the event of premature termination of either store, the company would pay back the entire investment made in furniture, fixtures, and fittings at Written Down Value (WDV). Contrary to this promise, both stores were abruptly terminated (Banaras in 2 years, Ramgarh in 3.5 years), and the company refused to reimburse the capital expenditure, causing a further loss of Rs.67,15,339. Despite issuing a legal notice to ABFRL on 13.05.2024, no amicable settlement was reached. In total, the informant suffered a cumulative loss of approximately Rs.3.57 crores due to the deliberate acts of fraud, misrepresentation, and breach of trust by the company and its named officials. 4. Learned counsel for the petitioners submits that no offence is made out. A pure business transaction has been converted into a criminal case. A franchise was obtained by the respondents and as the business failed, this criminal case has been registered which is absolutely misuse of the process of law. If some provision of the agreement has not been adhered to, it cannot be said there was criminal intention. Further submits that mere non- fulfillment of the obligation cannot be said to be a criminal offence. 5. It is further submitted by learned counsel for the petitioners that to bring home the charge under sections 318(4), 316(2) and 61(2) of the Bharatiya Nyaya Sanhita there should be an intention to defraud or dishonest intention from the very beginning of the transaction but in this case the same is missing. 5. It is further submitted by learned counsel for the petitioners that to bring home the charge under sections 318(4), 316(2) and 61(2) of the Bharatiya Nyaya Sanhita there should be an intention to defraud or dishonest intention from the very beginning of the transaction but in this case the same is missing. Thus, the First Information Report being Ranchi Sadar Kotwali PS Case No. 264 of 2024 is liable to be quashed. 6. Learned counsel appearing on behalf of the informant and the State submit that even if the contract was terminated but the intention of the petitioners was to cause loss to the informant. They induced them to enter into business transaction and to invest huge amount but they did not fulfill their obligation. Further they submit that only on the inducement of the petitioners the amount was invested and it was found that the petitioners were responsible for the loss caused to the informant and the same was done intentionally. 7. The law in respect of quashing of a First Information Report is well settled. The Hon’ble Supreme Court in the case of “ State of Haryana and others vs. Bhajan Lal and others reported in (1992) Supp (1) SCC 335 held that a criminal proceeding can only be quashed in exceptional cases, such as where the First Information Report is false, frivolous, or is an abuse of the legal process. After discussing the law and several judgments, the Hon’ble Supreme Court, in paragraph 102 of the said judgment has laid down the following principles: - (1) Where 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 out a case against the accused. (2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code. (3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused. (3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused. (4) Where, the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code. (5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused. (6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party. (7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge. 8. In the case of “ Union of India vs. Prakash P. Hinduja & Another ” reported in (2003) 6 SCC 195 , the Hon’ble Supreme Court, after considering the judgments, including the judgment of Bhajan Lal (supra) has held that Section 482 of the Code of Criminal Procedure can be exercised to quash the criminal proceeding in following cases: - 1. Where the allegations made in the FIR or complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused; 2. Where the uncontroverted allegations made in the FIR or the complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused 3. Where there is an express legal bar engrafted in any of the provisions of the Code of Criminal Procedure or the Act concerned to the institution and continuance of the proceedings. Where there is an express legal bar engrafted in any of the provisions of the Code of Criminal Procedure or the Act concerned to the institution and continuance of the proceedings. But this power has to be exercised in a rare case and with great circumspection. 9. From the aforesaid judgments and also from several judgments of the Hon’ble Supreme Court, wherein the law has been laid down in relation to quashing of First Information Report, it is now settled principle that if any offence is made out from bare perusal of a First Information Report, the First Information Report cannot be quashed. 10. Though it is true that a First Information Report cannot be throttled at the initial stage but in cases of absolute commercial business transaction, failure of which leads to criminal case the Courts should be cautious in scrutinizing the complaint or the First Information Report. It has also to be seen as to whether criminal case has been instituted to bypass the civil remedy or whether a civil wrong has been given a colour of criminality. The Hon’ble Supreme Court in the case of “ Vinod Natesan vs. State of Kerala ” reported in (2019) 2 SCC 401 has upheld quashing of the proceeding wherein the allegation was civil in nature and a civil dispute was tried to be converted into a criminal dispute. The Hon’ble Supreme Court in the case of “ Vesa Holdings (P) Ltd. & Another vs. State of Kerala & Others ” reported in (2015) 8 SCC 293 has observed in paragraphs 12 and 13 of the said judgment as follows: - 12. …. The settled proposition of law is that every breach of contract would not give rise to an offence of cheating and only in those cases breach of contract would amount to cheating where there was any deception played at the very inception. … 13. It is true that a given set of facts may make out a civil wrong as also a criminal offence and only because of civil remedy may be available to the complainant that itself cannot be a ground to quash a criminal proceeding. The real test is whether the allegations in the complaint disclose the criminal offence of cheating or not. 11. The real test is whether the allegations in the complaint disclose the criminal offence of cheating or not. 11. The Hon’ble Supreme Court in the case of “ Binod Kumar & Others vs. State of Bihar & Another ” reported in (2014) 10 SCC 663 has held that civil liability cannot be converted to criminal liability and had also held that criminal proceedings are not a shortcut for other remedies. 12. Further, the Hon’ble Supreme Court in the case of “ Anand Kumar Mahatta vs. State (NCT of Delhi) ” reported in (2019) 11 SCC 706 had taken note of the growing trend in business circle to convert purely civil dispute into a criminal case. In the aforesaid judgment, reliance was placed on “ Indian Oil Corporation vs. NEPC India Ltd. & Others ” reported in (2006) 6 SCC 736 wherein the Hon’ble Supreme Court at paragraph 13 observed as follows:- “13. ………… Any effort to settle civil disputes and claims, which do not involve any criminal offence, by applying pressure through criminal prosecution should be deprecated and discouraged….” 13. When the facts and circumstances of the present case are considered, I find that agreements have been entered into between ABFRL and the informant for setting up showrooms at Ramgarh and Banaras on 12.12.2019 and 08.04.2022 respectively. These agreements clearly outlined the rights and obligations of both the parties. The terms of the agreement clearly state the financial responsibility of both the parties. Later on, the agreement in respect of showroom at Ramgarh stood terminated by notice dated 25.01.2023 and also agreement in respect of showroom at Banaras stood terminated by notice dated 9.04.2023. In the First information report, which was lodged after one year on 02.10.2024, the informant has alleged a cumulative loss of approximately Rs 3.57 crore. The dispute which arises between the parties is purely a commercial dispute related to agreements, as aforesaid, and cannot be said to be having any criminal aspects. 14. It is true that commercial transaction may have the element of offence of cheating or criminal breach of trust but the ingredients of the offence must exist. A particular transaction can give a rise to civil wrong and criminal offence but the Court has to see actually what is the fact and whether the ingredients of criminal offence are made out or not. 15. A particular transaction can give a rise to civil wrong and criminal offence but the Court has to see actually what is the fact and whether the ingredients of criminal offence are made out or not. 15. In this case offence is alleged to have been committed under sections 318(4), 316(2) and 61(2) of the Bharatiya Nyaya Sanhita. 16. Section 318 (4) of the Bharatiya Nyaya Sanhita is corresponding provision to the section 420 of the Indian Penal Code, which reads as follows: “318. Cheating (1)…………. (2)…………. (3)…………. (4) 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 converted 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.” 17. Section 316 (2) of the Bharatiya Nyaya Sanhita is corresponding to the section 406 of the Indian Penal Code reads as follows: “316. Criminal breach of trust.- (1)………. (2) Whoever commits criminal breach of trust shall be punished with imprisonment of either description for a term which may extend to five years, or with fine, or with both.” 18. Section 61 (2) of the Bharatiya Nyaya Sanhita reads as follows: “61. Criminal conspiracy- (1)……………. (2) Whoever is a party to a criminal conspiracy,— (a) to commit an offence punishable with death, imprisonment for life or rigorous imprisonment for a term of two years or upwards, shall, where no express provision is made in this Sanhita for the punishment of such a conspiracy, be punished in the same manner as if he had abetted such offence; (b) other than a criminal conspiracy to commit an offence punishable as aforesaid shall be punished with imprisonment of either description for a term not exceeding six months, or with fine or with both.” 19. To bring home the charge of cheating there has to be sufficient materials to suggest that from the very inception there was intention to commit the said offence. 20. Hon’ble Supreme Court in the judgment of in “Delhi R ace Club (1940) Ltd. vs . To bring home the charge of cheating there has to be sufficient materials to suggest that from the very inception there was intention to commit the said offence. 20. Hon’ble Supreme Court in the judgment of in “Delhi R ace Club (1940) Ltd. vs . State of U.P.” reported in (2024) 10 SCC 690 taking into consideration the decision of “ S.W. Palanitkar vs. State of Bihar ” reported in (2002) 1 SCC 241 in paragraphs 35 and 36 has noted that what would be the ingredients to constitute a criminal breach of trust. It is necessary to quote paragraphs 35 and 36: “35. This Court in its decision in S.W. Palanitkar v. State of Bihar expounded the difference in the ingredients required for constituting of an offence of criminal breach of trust (Section 406 IPC) vis-à-vis the offence of cheating (Section 420). The relevant observations read as under: (SCC p. 246, paras 9-10) “9. The ingredients in order to constitute a criminal breach of trust are : (i) entrusting a person with property or with any dominion over property; (ii) that person entrusted : (a) dishonestly misappropriating or converting that property to his own use; or (b) dishonestly using or disposing of that property or wilfully suffering any other person so to do in violation (i) of any direction of law prescribing the mode in which such trust is to be discharged, (ii) of any legal contract made, touching the discharge of such trust. 10. The ingredients of an offence of cheating are : (i) there should be fraudulent or dishonest inducement of a person by deceiving him, (ii)(a) the person so deceived should be induced to deliver any property to any person, or to consent that any person shall retain any property; or (b) the person so deceived should be intentionally induced to do or omit to do anything which he would not do or omit if he were not so deceived; and (iii) in cases covered by (ii)(b), the act of omission should be one which causes or is likely to cause damage or harm to the person induced in body, mind, reputation or property.” 36. What can be discerned from the above is that the offences of criminal breach of trust (Section 406 IPC) and cheating (Section 420 IPC) have specific ingredients: In order to constitute a criminal breach of trust (Section 406 IPC) (1) There must be entrustment with person for property or dominion over the property, and (2) The person entrusted: (a) Dishonestly misappropriated or converted property to his own use, or (b) Dishonestly used or disposed of the property or wilfully suffers any other person so to do in violation of: (i) Any direction of law prescribing the method in which the trust is discharged; or (ii) Legal contract touching the discharge of trust (see : S.W. Palanitkar). Similarly, in respect of an offence under Section 420IPC, the essential ingredients are: (1) Deception of any person, either by making a false or misleading representation or by other action or by omission; (2) Fraudulently or dishonestly inducing any person to deliver any property, or (3) The consent that any person shall retain any property and finally intentionally inducing that person to do or omit to do anything which he would not do or omit (see: Harmanpreet Singh Ahluwalia v. State of Punjab).” The Hon’ble Supreme Court further in paragraph 37 has held that in both the sections mens rea, that is, the intention to defraud or dishonest intention must be present. The Hon’ble Supreme Court also pointed out that in the case of cheating it must be there from the very beginning or inception. 21. Cheating is defined under section 318 of the Bharatiya Nyaya Sanhita which reads as follows: “318. Cheating.—(1) Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces 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 which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to cheat. Explanation.—A dishonest concealment of facts is a deception within the meaning of this section.” 22. Criminal breach of trust is defined under section 316 of the Bharatiya Nyaya Sanhita which reads as under: 316. Explanation.—A dishonest concealment of facts is a deception within the meaning of this section.” 22. Criminal breach of trust is defined under section 316 of the Bharatiya Nyaya Sanhita which reads as under: 316. Criminal breach of trust.—(1) Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits criminal breach of trust. Explanation 1.—A person, being an employer of an establishment whether exempted under Section 17 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952) or not who deducts the employee's contribution from the wages payable to the employee for credit to a Provident Fund or Family Pension Fund established by any law for the time being in force, shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said law, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid. Explanation 2.—A person, being an employer, who deducts the employees' contribution from the wages payable to the employee for credit to the Employees' State Insurance Fund held and administered by the Employees' State Insurance Corporation established under the Employees' State Insurance Act, 1948 (34 of 1948) shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said Act, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid.” 23. Criminal conspiracy is defined under section 61 of the Bharatiya Nyaya Sanhita which reads as under: “61. Criminal conspiracy is defined under section 61 of the Bharatiya Nyaya Sanhita which reads as under: “61. Criminal conspiracy.—(1) When two or more persons agree with the common object to do, or cause to be done— (a) an illegal act; or (b) an act which is not illegal by illegal means, such an agreement is designated a criminal conspiracy: Provided that no agreement except an agreement to commit an offence shall amount to a criminal conspiracy unless some act besides the agreement is done by one or more parties to such agreement in pursuance thereof. Explanation.—It is immaterial whether the illegal act is the ultimate object of such agreement, or is merely incidental to that object. (2) Whoever is a party to a criminal conspiracy,— (a) to commit an offence punishable with death, imprisonment for life or rigorous imprisonment for a term of two years or upwards, shall, where no express provision is made in this Sanhita for the punishment of such a conspiracy, be punished in the same manner as if he had abetted such offence; (b) other than a criminal conspiracy to commit an offence punishable as aforesaid shall be punished with imprisonment of either description for a term not exceeding six months, or with fine or with both.” 24. From perusal of the entire First Information Report, it is clear that though the words cheating, dishonest intention and inducement are used but mere using of these words will not establish any offence. As observed earlier, the dispute between the parties arose out of agreements for setting up showrooms and mainly revolve around non fulfilment of terms of agreements and/or deviations from the agreed terms and the loss sustained by the informant. In my view these allegations do not constitute ingredients for making out offences under sections 318(4), 316(2) and 61(2) of the Bharatiya Nyaya Sanhita. 25. I find that the entire dispute is civil in nature arising out of commercial transaction and an attempt has been made to give the same a criminal colour. It is clear from the First Information Report that because of financial loss arising out of business transaction this case has been lodged. Thus, the First Information Report being Ranchi Sadar Kotwali PS Case No. 264 of 2024 is quashed. 26. This writ petition is, accordingly, allowed. 27. Pending I.A.(s), if any, stands disposed of.