Jammu & Kashmir & Ladakh High Court: Mere Fact That Someone Cannot Liquidate Their Liability Doesn’t Itself Mean They Are Guilty Of Cheating Or Criminal Breach Of Trust
The Jammu & Kashmir and Ladakh High Court quashed an FIR registered under Sections 420, 406, and 109 of the IPC against the Petitioner.
Justice Sanjay Dhar, Jammu and Kashmir and Ladakh High Court
The Jammu & Kashmir and Ladakh High Court held that the mere fact that someone cannot liquidate their liability does not, in itself, mean that they committed the offence of cheating or criminal breach of trust.
The Court quashed an FIR registered under Sections 420, 406, and 109 of the IPC against the Petitioner. The Court allowed the Petition filed under Section 482 of the CrPC while stating that the dispute appeared to be more about the recovery of money, a civil matter, rather than cheating or criminal breach of trust.
A Single Bench of Justice Sanjay Dhar held, “This intention of deception or fraud must be existent at the time of commission of offence. According to the complainant, petitioner No. 1 made payment of Rs. 37,50,700/- whereafter, the petitioners defaulted. This clearly shows that the petitioners at the inception were having the intention of honouring their commitments to respondent No. 4. If a person fails to liquidate his liability, it does not necessary mean that he has committed the offence of cheating or criminal breach of trust.”
Advocate Mayank Gupta appeared for the Petitioners, while Government Advocate Suneel Malhotra represented the Respondents.
Brief Facts
An Application filed by the Respondent under Section 156(3) of the Cr.P.C. before the Magistrate, where he alleged that the Petitioners conspired to cheat and extract money from him. The Respondent, a member of the Police Department, alleged that he was induced to invest in a scheme promising 18% annual interest and transferred money to the Petitioners' account between 2019 and November 2022. He further alleged that while some of it was returned to him, the remaining amount was misappropriated.
The Magistrate directed the Police to register an FIR and investigate the matter. The Petitioners challenged this FIR, arguing that the allegations were false, and the dispute was civil in nature.
Court’s Observations
The Supreme Court stated that the dispute appeared to be more about the recovery of money, a civil matter, rather than cheating or criminal breach of trust. “The fact that the respondent No. 4 has challenged the compromise deed in a civil proceeding goes on to support the contention of the petitioners that the transaction between the parties was purely of civil nature which respondent No. 4 has rightly taken for adjudication before the civil court,” it stated.
“From the circumstances relating to compromise between the parties, it can be safely inferred that the purpose of lodging the impugned FIR was to ensure recovery of outstanding amount from the petitioners, which it appears did not fructify, perhaps due to inability of the petitioners to repay the whole of the outstanding amount. Thus, it appears to be more a case of recovery of money than a case of cheating or criminal breach of trust,” the Court held.
Consequently, the Court ordered, “In view of the above discussion, it is clear that the present case is a fit one in which this Court should exercise its power under section 482 Cr.P.C. to prevent the abuse of process of law and to secure the ends of justice...For the foregoing reasons, the present petition is allowed. The FIR impugned bearing No. 431/2023 of Police Station Kathua is quashed.”
Accordingly, the High Court allowed the Petition.
Cause Title: Susheel Kumar Rana & Ors. v. UT of J&K & Ors. (CRM(M) No. 905/2023)
Appearance:
Petitioners: Advocate Mayank Gupta
Respondents: Government Advocate Suneel Malhotra; Advocate Jagmohan Singh