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2025 DIGILAW 346 (TS)

B. Veera Venkata Prasad v. State of Telangana

2025-04-17

ANIL KUMAR JUKANTI

body2025
ORDER : 1. This Criminal Petition is filed under Section 528 of the Bharatiya Nagarik Suraksha Sanhita (for short ‘ BNSS ’) by petitioner/accused No.1 to quash the proceedings against him in Crime No.270 of 2024 of Adibatla Police Station, Rachakonda for offences under Sections 406 and 420 of IPC . 2. This Court on 17.03.2025, passed the following order: “This Criminal Petition is filed under Section 528 of the Bharatiya Nagarik Suraksha Sanhita (for short ‘ BNSS ’) by petitioner/accused No.1 No.1 to quash the proceedings against him in Cr.No.270 of 2024 of Adibatla Police Station, Rachakonda District. There was no representation on behalf of petitioner on 23.12.2024 and 11.03.2025. On 12.03.2025, when the matter was called, there was no representation on behalf of petitioner and the matter was posted under the caption “for dismissal”. Today, when the matter is called, there is no representation on behalf of petitioner. It is observed from the record that Mr.N.Ravi Kumar, learned counsel for petitioner, filed this petition, however, he has not appeared before the Court on the last four occasions. This Court is not inclined to dismiss the criminal petition for non-prosecution and deems it appropriate to give an opportunity to one of the youngsters in the Bar to present the case. Therefore, this Court deems it appropriate to appoint Mr. Mohammad Nabeel Ali (Phone No.8074729358) as amicus curiae to assist the Court by making submissions on the facts and also on law. Registry is directed to inform petitioner through a letter along with notice that Mr.N.Ravi Kumar, learned counsel for petitioner has not appeared before the Court to present the case and for non-appearance, this Court appointed Mr. Mohammad Nabeel Ali (Phone.No.8074729358) as amicus curiae and petitioner shall pass instructions to Mr. Mohammad Nabeel Ali (Phone.No.8074729358). Post the matter on 07.04.2025.” 3. Heard Mr. Mohammad Nabeel Ali, learned amicus curiae for petitioner and Mr. Surepalli Prashanth, learned Assistant Public Prosecutor for respondent No.1-State. Perused the material on record. Notice issued to respondent No.2, no representation. 4. An FIR.No.270 of 2024, dated 10.05.2024, is lodged in Adibatla Police Station, on the basis of a complaint filed by respondent No.2. It is averred in the complaint that respondent No.2 came into contact with petitioner/accused No.1 and petitioner had informed respondent No.2 that he entered into an agreement with one Mr.Antony with regard to plot bearing No.108 admeasuring 400 sq. It is averred in the complaint that respondent No.2 came into contact with petitioner/accused No.1 and petitioner had informed respondent No.2 that he entered into an agreement with one Mr.Antony with regard to plot bearing No.108 admeasuring 400 sq. yards in Sy.Nos.536, 537, 657 and 658 at Manneguda. It is averred that the cost of one sq. yard is to be sold at a price of Rs.11,500/-. On 24.07.2023, that a day before the agreement, respondent No.2 transferred an amount of Rs.5,00,000/- to accused No.1 and on 25.07.2023, day of agreement Rs.7,00,000/- was given to petitioner. It is further averred that petitioner promised to register the said parcel of land in the name of respondent No.2 within 45 days. That on 06.08.2023, when accused No.1 requested respondent No.2 transferred an amount of Rs.2,10,000/- from his bank account to accused No.1’s bank account, an amount of Rs.90,000/- was paid through Phonepe, an amount of Rs.1,00,000/- cash was given to petitioner. That a total amount of Rs.16,00,000/- is given to petitioner. That on 05.09.2023, accused No.1 called respondent No.2 and stated that owner Antony is coming to speak that after speaking to Antony, respondent No.2 transferred an amount of Rs.9,20,000/- from his bank account to account of Antony. That when respondent No.2 asked about registration, accused No.1 informed respondent No.2 to prepare DD’s for registration for amount of Rs.5,00,000/-, Rs.50,000/- and Rs.5,30,000/-. The rest of the amount was agreed to be given in the cash. That later respondent No.2 called petitioner, however, there was no response from accused No.1 and it was informed to respondent No.2 that he would register the said plot on so and so dates but never registered. It is averred that an amount of Rs.25,20,000/- has been given till date, however no registration has taken place and that both of them (accused No.1 and Antony) have cheated. Hence, the complaint. 5. Learned amicus for petitioner submitted that there is no inducement of respondent No.2 from inception. It is further submitted that respondent No.2 being aware has entered into an agreement on 25.07.2023 and paid the amount. It is also submitted that respondent No.2 has a remedy of filing a suit for specific performance and that there is no element of inducement from the inception. Hence, the ingredients of Section 420 of IPC are not made out. It is further submitted that respondent No.2 being aware has entered into an agreement on 25.07.2023 and paid the amount. It is also submitted that respondent No.2 has a remedy of filing a suit for specific performance and that there is no element of inducement from the inception. Hence, the ingredients of Section 420 of IPC are not made out. It is pointed out that the offence of criminal breach of trust is not attracted in view of the law laid down by the Hon’ble Apex Court in Delhi Race Club (1940) Limited and Others v. State of Uttar Pradesh and Another, (2024) 10 SCC 690 . 6. Learned amicus further placed reliance upon the judgment of the Hon’ble Apex Court in Radheyshyam and Others v. State of Rajasthan and Another,  Criminal Appeal No. 3020 of 2024 for the proposition that the act of petitioner/accused No.1 at best constitutes a civil wrong and does not call for any criminal actions. It is pointed out that the Hon’ble Apex Court in Radheyshyam and Others (supra 2) was dealing with similar Sections as in the present case. Hence, the judgment is applicable in the facts of present case. 7. On the other hand, learned Assistant Public Prosecutor submitted that it is a clear case of cheating as petitioner induced respondent No.2. That respondent No.2 paid an amount of Rs.25,20,000/- to petitioner in good faith and trusting petitioner/accused No.1 and another person by name Antony. Hence, the ingredients of the Sections are attracted and the proceedings be permitted to continue and no interference is necessitated. 8. Heard learned counsels, perused the record and considered the rival submissions. 9. From the complaint/FIR, it is observed that respondent No.2 entered into an agreement for purchase of a parcel of land admeasuring 400 sq yards at Manneguda, Rs.11,500/- was fixed per sq. yard. A total amount of Rs.25,20,000/- was paid by respondent No.2 to petitioner/accused No.1 and another person by name Antony on different dates. Initial amount of Rs.5,00,000/- was paid on 24.07.2023, to petitioner/accused No.1. An agreement was entered on 25.07.2023, on 06.08.2023, Rs.2,10,000/- was deposited in the bank account of petitioner/accused No.1, an amount of Rs.90,000/- was paid through ‘Phonepe’, an amount of Rs.1,00,000/- cash was given. On 05.09.2023, another sum of Rs.9,20,000/- was paid. A total sum of Rs.25,20,000/- was paid by respondent No.2 to petitioner/accused No.1 and Antony. 10. An agreement was entered on 25.07.2023, on 06.08.2023, Rs.2,10,000/- was deposited in the bank account of petitioner/accused No.1, an amount of Rs.90,000/- was paid through ‘Phonepe’, an amount of Rs.1,00,000/- cash was given. On 05.09.2023, another sum of Rs.9,20,000/- was paid. A total sum of Rs.25,20,000/- was paid by respondent No.2 to petitioner/accused No.1 and Antony. 10. It is observed that series of financial transactions have taken place between respondent No.2 and petitioner/accused No.1 and Antony. Last of such transaction as per the complaint is on 05.09.2023. Complaint is dated 10.05.2024. There is a delay of 10 months in filing the complaint from the date of last transaction. Entire controversy revolves around transaction(s) regarding a sale and purchase of parcel of land. Offences are registered under Sections 406 and 420 of IPC . 11. The Hon’ble Apex Court in Delhi Race Club (1940) Limited and Others (supra), while dealing with Sections 406 and 420 of IPC i.e., the offence of criminal breach of trust and cheating made distinction between the offences and held as follows: “34. In Sunil Bharti Mittal, this Court interpreted the expression "sufficient grounds for proceeding" and held that there should be sufficiency of materials against the accused No.1 concerned before proceeding under Section 204 CrPC. It was held thus: (SCC pp. 644-45, ???? 53) "53. However, the words "sufficient ground for proceeding" appearing in Section 204 are of immense importance. It is these words which amply suggest that an opinion is to be formed only after due application of mind that there is sufficient basis for proceeding against the said accused No.1 and formation of such an opinion is to be stated in the order itself. The order is liable to be set aside if no reason is given therein while coming to the conclusion that there is prima facie case against the accused No.1, though the order need not contain detailed reasons. A fortiori, the order would be bad in law if the reason given turns out to be ex facie incorrect." Difference between criminal breach of trust and cheating 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-a-vis the offence of cheating (Section 420). The relevant observations read as under: (SCC p. 246, paras 9-10) "9. 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-a-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; (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. (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 420 IPC , 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). 37. Further, in both the aforesaid sections, mens rea i.e. intention to defraud or the dishonest intention must be present, and in the case of cheating it must be there from the very beginning or inception. 38. In our view, the plain reading of the complaint fails to spell out any of the aforesaid ingredients noted above. We may only say, with a view to clear a serious misconception of law in the mind of the police as well as the courts below, that if it is a case of the complainant that offence of criminal breach of trust as defined under Section 405 IPC , punishable under Section 406 IPC , is committed by the accused No.1, then in the same breath it cannot be said that the accused No.1 has also committed the offence of cheating as defined and explained in Section 415 IPC , punishable under Section 420 IPC . 39. Every act of breach of trust may not result in a penal offence of criminal breach of trust unless there is evidence of manipulating act of fraudulent misappropriation. An act of breach of trust involves a civil wrong in respect of which the person may seek his remedy for damages in civil courts but, any breach of trust with a mens rea, gives rise to a criminal prosecution as well. It has been held in Hari Prasad Chamaria v. Bishun Kumar Surekha as under: (SCC p. 824, para 4) "4. We have heard Mr Maheshwari on behalf of the appellant and are of the opinion that no case has been made out against the respondents under Section 420 of the Penal Code, 1860. For the purpose of the present appeal, we would assume that the various allegations of fact which have been made in the complaint by the appellant are correct. For the purpose of the present appeal, we would assume that the various allegations of fact which have been made in the complaint by the appellant are correct. Even after making that allowance, we find that the complaint does not disclose the commission of any offence on the part of the respondents under Section 420 of the Penal Code, 1860. There is nothing in the complaint to show that the respondent had dishonest or fraudulent intention at the time the appellant parted with Rs 35,000. There is also nothing to indicate that the respondents induced the appellant to pay them Rs 35,000 by deceiving him. It is further not the case of the appellant that a representation was made by the respondents to him at or before the time he paid the money to them and that at the time the representation was made, the respondents knew the same to be false. The fact that the respondents subsequently did not abide by their commitment that they would show the appellant to be the proprietor of Drang Transport Corporation and would also render accounts to him in the month of December might create civil liability for them, but this fact would not be sufficient to fasten criminal liability on the respondents for the offence of cheating." 40. To put it in other words, the case of cheating and dishonest intention starts with the very inception of the transaction. But in the case of criminal breach of trust, a person who comes into possession of the movable property and receives it legally, but illegally retains it or converts it to his own use against the terms of the contract, then the question is, in a case like this, whether the retention is with dishonest intention or not, whether the retention involves criminal breach of trust or only a civil liability would depend upon the facts of each case. 41. The distinction between mere breach of contract and the offence of criminal breach of trust and cheating is a fine one. In case of cheating, the intention of the accused No.1 at the time of inducement should be looked into which may be judged by a subsequent conduct, but for this, the subsequent conduct is not the sole test. 41. The distinction between mere breach of contract and the offence of criminal breach of trust and cheating is a fine one. In case of cheating, the intention of the accused No.1 at the time of inducement should be looked into which may be judged by a subsequent conduct, but for this, the subsequent conduct is not the sole test. Mere breach of contract cannot give rise to a criminal prosecution for cheating unless fraudulent or dishonest intention is shown right from the beginning of the transaction i.e. the time when the offence is said to have been committed. Therefore, it is this intention, which is the gist of the offence. 42. Whereas, for the criminal breach of trust, the property must have been entrusted to the accused No.1 or he must have dominion over it. The property in respect of which the offence of breach of trust has been committed must be either the property of some person other than the accused No.1 or the beneficial interest in or ownership of it must be of some other person. The accused No.1 must hold that property on trust of such other person. Although the offence i.e. the offence of breach of trust and cheating involve dishonest intention, yet they are mutually exclusive and different in basic concept. 43. There is a distinction between criminal breach of trust and cheating. For cheating, criminal intention is necessary at the time of making a false or misleading representation i.e. since inception. In criminal breach of trust, mere proof of entrustment is sufficient. Thus, in case of criminal breach of trust, the offender is lawfully entrusted with the property, and he dishonestly misappropriated the same. Whereas, in case of cheating, the offender fraudulently or dishonestly induces a person by deceiving him to deliver any property. In such a situation, both the offences cannot co-exist simultaneously. 54. When dealing with a private complaint, the law enjoins upon the Magistrate a duty to meticulously examine the contents of the complaint so as to determine whether the offence of cheating or criminal breach of trust as the case may be is made out from the averments made in the complaint. 54. When dealing with a private complaint, the law enjoins upon the Magistrate a duty to meticulously examine the contents of the complaint so as to determine whether the offence of cheating or criminal breach of trust as the case may be is made out from the averments made in the complaint. The Magistrate must carefully apply its mind to ascertain whether the allegations, as stated, genuinely constitute these specific offences/In contrast, when a case arises from an FIR, this responsibility is of the police to thoroughly ascertain whether the allegations leveled by the informant indeed fall under the category of cheating or criminal breach of trust. Unfortunately, it has become a common practice for the police officers to routinely and mechanically proceed to register an FIR for both the offences i.e. criminal breach of trust and cheating on a mere allegation of some dishonesty or fraud, without any proper application of mind. 55. It is high time that the police officers across the country are imparted proper training in law so as to understand the fine distinction between the offence of cheating vis-a-vis criminal breach of trust. Both offences are independent and distinct. The two offences cannot coexist simultaneously in the same set of facts. They are antithetical to each other. The two provisions of IPC (now BNS, 2023) are not twins that they cannot survive without each other. 56. In view of the aforesaid, the appeal succeeds and is hereby allowed.” 12. The Hon’ble Apex Court while dealing with Sections 420 and 406 of IPC in the case of Radheyshyam and Others (supra) held as follows: “7. Section 420 , IPC provides that: "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.” For an offence under Section 420 , IPC , the following ingredients must be present: i. Cheating as defined under Section 415, IPC , that is, there should be a fraudulent or dishonest inducement of a person; ii. An intention to deceive; and iii. An intention to deceive; and iii. The person cheated must be dishonestly induced to a. Deliver property to any person; or b. Make, alter or destroy valuable security or anything signed or sealed and capable of being converted into valuable security. 8. Thus, cheating forms an essential ingredient to constitute and offence under Section 420 , IPC . Further, to constitute cheating as defined under Section 415, IPC , it is necessary that a fraudulent or dishonest inducement is done and the deceived person is made to deliver any property owing to the fraud. Section 415, IPC , defines 'cheating', as: "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”.” 9. From the bare perusal of the FIR, it is evident that there was no act of cheating, that is, the complainant was nowhere fraudulently induced or dishonestly deceived by the appellants. A commercial transaction took place between the parties during which the parties consensually agreed for the sale of the property of the appellants and respondent no. 2 paid the part consideration. The default in payment of their loan dues on part of the appellants is not reflective of their deceitful intention towards the complainant. Mere non- registration of the sale or its refusal cannot amount to cheating. The delivery of the advance payment towards consideration was made in furtherance of an Agreement to Sell and it is not the case of the respondent that he was in anyway deceived or duped to make such payments to the appellants. It is a civil dispute and gives rise to the complainant's right to resort to the remedies provided under civil law by filing a suit for specific performance. 10. Additionally, the appellants have also been accused No.1 of committing the offence of criminal breach of trust under Section 406 , IPC . It is a civil dispute and gives rise to the complainant's right to resort to the remedies provided under civil law by filing a suit for specific performance. 10. Additionally, the appellants have also been accused No.1 of committing the offence of criminal breach of trust under Section 406 , IPC . This offence is defined under Section 405, IPC as follows: "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 off 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"." 11. For an offence punishable under Section 406 , IPC , the following ingredients must exist: i. The accused No.1 was entrusted with property, or entrusted with dominion over property; ii. The accused No.1 had dishonestly misappropriated or converted to their own use that property, or dishonestly used or disposed of that property or wilfully suffer any other person to do so; iii. Such misappropriation, conversion, use or disposal should be in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract which the person has made, touching the discharge of such trust. 12. In the present case, the appellants were not entrusted with any property by respondent no.2 complainant. The only delivery made was of part payment towards an Agreement to Sell between the parties. The amount paid towards consideration cannot be said to have been entrusted with the appellants by respondent no. 2. Additionally, merely because the appellants are refusing to register the sale, it does not amount to misappropriation of the advance payment. Since there was no entrustment of property, the offence of misappropriation of such property and thereby criminal breach of trust cannot be said to be made out. 13. Therefore, the ingredients of none of the offences alleged in the FIR are made out against the appellants and thus, no offence can be said to have been committed by them. Since there was no entrustment of property, the offence of misappropriation of such property and thereby criminal breach of trust cannot be said to be made out. 13. Therefore, the ingredients of none of the offences alleged in the FIR are made out against the appellants and thus, no offence can be said to have been committed by them. The act of the appellant at best constitutes a civil wrong and does not call for any criminal action against them. A civil wrong cannot be given a criminal colour merely to coerce the appellants into registering the sale. The judicial process cannot be used as a tool to enforce specific performance of an agreement. Respondent No.2 has ample remedies under the civil law and he has already resorted to the same by filing a civil suit for specific performance which is pending adjudication before the relevant forum. Thus, such a criminal proceeding cannot be allowed to continue. 14. Accordingly, the appeal is allowed. The impugned judgment and order is set aside. The impugned FIR is quashed.” 13. Perused the record, it is observed that the transactions are civil in nature. There was an agreement for purchase of property. Amounts were transferred by respondent No.2 to accused No.1. Pursuant to agreement, accused No.1 received amounts to register the property. First of the transaction was on 24.07.2023, last transaction on 05.09.2023, complaint is lodged on 10.05.2024, what transpired after the last transaction for 6 months is not forthcoming, nothing is stated. Apparently, it appears to be a transaction for sale and purchase of a parcel of land, it is after 10 months the complaint is lodged. There is a delay in lodging the complaint, no explanation is forthcoming for the delay of 6 months after the last transaction and the date of complaint. In the absence of any explanation for delay, it appears the complaint is filed to coerce accused No.1 and Antony to get the parcel of land registered. 14. As per the law declared by Hon’ble Apex Court in both the aforesaid sections, mens rea i.e. intention to defraud or the dishonest intention must be present, and in the case of cheating it must be there from the very beginning or inception. In the facts and circumstances of the case, the act(s) of accused No.1 at best constitute a civil wrong and does not call for criminal action. In the facts and circumstances of the case, the act(s) of accused No.1 at best constitute a civil wrong and does not call for criminal action. A civil wrong cannot be given a criminal flavor/colour to coerce petitioner/accused No.1 into registering the property. Respondent No.2 has ample civil remedies. 15. For reasons aforesaid, the proceedings in Crime No. 270 of 2024 of Adibatla Police Station, Rachakonda District, against accused No.1 are liable to be quashed and are hereby quashed. 16. Accordingly, the criminal petition is allowed. Miscellaneous applications pending, if any, shall stand closed.