# Jitendra Kumar Keshwani v. State of U.P. & Anr

- **Citation:** (2024) 9 ILRA 1218
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2024-09-24
- **Case number:** Application U/S 482 No. 27298 of 2019
- **Bench:** Anish Kumar Gupta
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/jitendra-kumar-keshwani-v-state-of-u-p-anr-52531
- **Pages:** 8

## Headnote

(A) Criminal Law - The Code of Criminal
Procedure, 1973 - Section 482 - Inherent
power, Indian Penal Code, 1860 - Sections
405 - Criminal breach of trust, Sections
420 - Cheating and dishonestly inducing
delivery of property , Section 409 -
Criminal breach of trust by public servant,
or by banker, merchant or agent -
Distinction between cheating and criminal
breach
of
trust
-
Cheating
requires
dishonest intention at the inception, while
criminal
breach
of
trust
involves
entrustment
and
subsequent
misappropriation. (Para -14)

(B) Indian Penal Code, 1860 - Cheating
(Section 420 IPC) and Criminal Breach of
Trust (Section 409 IPC) are mutually
exclusive - An act cannot constitute both
offenses simultaneously - a person cannot
claim to have entrusted any property to
someone and at the same time he can also not
say that he has been cheated by dishonest
inducement to deliver the property - It can
either be entrustment or the cheating, however,
it cannot be both. (Para - 14,15)

(C) The Securities and Exchange Board of
India Act, 1992 - Section 15-F - Penalty
for default in case of stock brokers, Section
26 - Cognizance of offences by courts,
Section 26B - Special courts for trial of
offences - SEBI Act, being a special law,
takes precedence over the IPC and CrPC in
cases involving securities and brokerage.
(Para - 19)

Investor and applicant were in a buyer-seller
relationship - Applicant was a share broker -
investor was aware of risks involved - investor's
grievance was regarding non-payment - which
was a civil dispute.

HELD: - Criminal courts cannot be used for
monetary
recovery;
civil
courts
are
the
appropriate forum. Entire Criminal Proceedings
along with the charge-sheet & cognizance order
quashed.
Investor
can
approach
SEBI
authorities for redressal under Section 15F of
the SEBI Act. (Para -20)

Application u/s 482 Cr.P.C. allowed. (E-7)
List of Cases cited:

## Text

1218 INDIAN LAW REPORTS ALLAHABAD SERIES
continued prosecution of
the appellants for the said
offence is unjustified and
tantamounts to abuse of the
process of Court.
16. As
a
consequence
of
the
discussion
made
herein
above, the impugned orders
dated 14th November, 2022
and 6th December, 2022
passed by the High Court
of Judicature at Allahabad
are quashed and set aside.
Resultantly, the impugned
FIR being Crime Case No.
424 of 2022 for offence
punishable under Section
3(1) of the Gangsters Act,
registered at Police StationBhognipur, District-Kanpur
Dehat
and
all
the
proceedings sought to be
taken thereunder against
the appellants are hereby
quashed."
8.
It
is
further
submitted that except for a
single case, which is also
under challenge in the
connected
matter,
the
applicant is not involved in
any other criminal offence.
9. Learned counsels
for the State/Opposite party
No.
1
and
original
complainant/Opposite party
No. 2 do not oppose the
said submission and agree
to the proposition of law as
placed and argued.
10. The facts and
law on the subject are clear
and not in dispute. The
challenge in the present
matter is of proceedings
under the Uttar Pradesh
Gangsters and Anti-Social
Activities
(Prevention)
Act, 1986 which have
been initiated on the basis
of a single case against
the applicant, which is
also under challenge in
the
connected
petition
being Criminal Misc. 482
Cr.P.C. Application No.
21392
of
2022
-
Awadhesh Agarwal Vs.
State of U.P. and another.

11.
Since
the
connected petition of the
accused applicant for the
predicate
offence
has
been
allowed
by
this
Court and he has been
discharged
of
the
offences in the said case,
the proceedings against
him in the present case
also cannot survive. The
proceedings against him
are thus quashed. The
present application under
Section 482 Cr.P.C. is
allowed.
----------
(2024) 9 ILRA 1218
ORIGINAL JURISDICTION
CRIMINAL SIDE
DATED: ALLAHABAD 24.09.2024

BEFORE

THE HON'BLE ANISH KUMAR GUPTA, J.

Application U/S 482 No. 27298 of 2019

Jitendra Kumar Keshwani ...Applicant
Versus
State of U.P. & Anr. ...Respondents
9 All. Jitendra Kumar Keshwani Vs. State of U.P. & Anr.
1219
Counsel for the Applicant:
Deepak Kumar Kulshrestha, Hitesh Pachori

Counsel for the Respondents:
G.A., Manish Trivedi

(A) Criminal Law - The Code of Criminal
Procedure, 1973 - Section 482 - Inherent
power, Indian Penal Code, 1860 - Sections
405 - Criminal breach of trust, Sections
420 - Cheating and dishonestly inducing
delivery of property , Section 409 -
Criminal breach of trust by public servant,
or by banker, merchant or agent -
Distinction between cheating and criminal
breach
of
trust
-
Cheating
requires
dishonest intention at the inception, while
criminal
breach
of
trust
involves
entrustment
and
subsequent
misappropriation. (Para -14)

(B) Indian Penal Code, 1860 - Cheating
(Section 420 IPC) and Criminal Breach of
Trust (Section 409 IPC) are mutually
exclusive - An act cannot constitute both
offenses simultaneously - a person cannot
claim to have entrusted any property to
someone and at the same time he can also not
say that he has been cheated by dishonest
inducement to deliver the property - It can
either be entrustment or the cheating, however,
it cannot be both. (Para - 14,15)

(C) The Securities and Exchange Board of
India Act, 1992 - Section 15-F - Penalty
for default in case of stock brokers, Section
26 - Cognizance of offences by courts,
Section 26B - Special courts for trial of
offences - SEBI Act, being a special law,
takes precedence over the IPC and CrPC in
cases involving securities and brokerage.
(Para - 19)

Investor and applicant were in a buyer-seller
relationship - Applicant was a share broker -
investor was aware of risks involved - investor's
grievance was regarding non-payment - which
was a civil dispute.

HELD: - Criminal courts cannot be used for
monetary
recovery;
civil
courts
are
the
appropriate forum. Entire Criminal Proceedings
along with the charge-sheet & cognizance order
quashed.
Investor
can
approach
SEBI
authorities for redressal under Section 15F of
the SEBI Act. (Para -20)

Application u/s 482 Cr.P.C. allowed. (E-7)
List of Cases cited:
1. Lalit Chaturvedi & ors. Vs St. of U.P. & anr.,
SLP (Crl.) No. 13485 of 2023
2. Mohammed Ibrahim & ors. Vs St. of Bihar &
anr., (2009) 8 SCC 751

(Delivered by Hon'ble Anish Kumar Gupta, J.)

1. Heard Sri Hitesh Pachori,
learned counsel for the applicant, Sri
Manish Trivedi, learned counsel for the
opposite party no.2 and learned Sri Rajeev
Kumar Singh, A.G.A. for the State.

2. The instant application under
Section 482 Cr.P.C. has been filed seeking
quashing of charge-sheet dated 06.09.2018
and cognizance order dated 12.04.2019 as
well as the entire criminal proceedings in
Case No. 21416 of 2019 (State of U.P. Vs.
Jitendra Kumar Keshwani), arising out of
Case Crime No. 160 of 2018, under
Sections 420, 409 of the India Penal Code
(hereinafter referred to as, 'I.P.C.'), Police
Station- Hariparvat, District- Agra, pending
in the court of Chief Judicial Magistrate,
Agra.

3. The brief facts of the instant
case are that the opposite party no.2 has
lodged an F.I.R. being Case Crime No. 160
of 2018 under Section 420 and 406 I.P.C.
alleging therein that the applicant herein is
the Director/proprietor of M/s LDK Share
and Securities Pvt. Ltd., who was the
licensed share broker. In the F.I.R. it has
been alleged that the opposite party no. 2
and his younger brother Ram Kumar
Sharma were having Demat Accounts with
1220 INDIAN LAW REPORTS ALLAHABAD SERIES
the Stock Holding Corporation of the
applicant, where the equity shares of
differentit companies were deposited by the
opposite party no. 2 and his brother. The
opposite party no. 2 and his brother used to
trade in share equity shares through the
applicant, who was the licensed share
broker. It is alleged that the applicant
herein had contacted the opposite party no.
2 and his brother and asked them to invest
and trade in shares through the applicant,
whereby he will provide various facilities.
On such assurance, the opposite party no. 2
and his brother had invested in equity
shares and also subsequently sold the
aforesaid shares. When the money of shares
sold was asked by the opposite party no.2
from the applicant, he assured that the
payment shall be made after sometime.
Therefore, the aforesaid amount of shares
sold by the opposite party no. 2 was an
amount kept in the entrustment of the
applicant herein and despite repeated
demands made by the opposite party no. 2
the applicant has failed to make the
payment
of
shares
amounting
Rs.
9,69,450/-. When the said payment was not
made by the applicant herein, a legal notice
dated 30.11.2017 was given to the
applicant. Despite the said notice the
applicant had not paid the amount,
therefore, it is alleged that the applicant has
committed
the
breach
of
trust
and
misappropriation of the amount of the
opposite party no.2.

4. It has been further prayed in the
F.I.R. that after registering the F.I.R. and
initiating the legal proceedings against the
applicant, the amount of the opposite party
no. 2 be recovered. The matter was
investigated by the police and the charge
sheet dated 06.09.2018 was filed, on which
cognizance was taken by the Chief Judicial
Magistrate
concerned
on
12.04.2019,
against which the instant application has
been filed by the applicant herein.

5. Learned counsel for the
applicant relying upon the judgement of the
Apex Court dated 06.02.2024 passed in
Criminal Appeal arising out of SLP (Crl.)
No. 13485 of 2023 (Lalit Chaturvedi &
Others vs. State of U.P. and Another),
submits that from the allegations made in
the F.I.R. no offence whatsoever under
Sections 420 and 409 I.P.C. can be said to
have been made out against the applicant
herein.

6. Learned counsel for the
applicant further submits that the applicant
is a broker appointed under the provisions
of the Securities and Exchange Board of
India Act, 1992 (hereinafter referred to as
'the SEBI Act') and opposite party no.2
herein, is an investor and the dispute
between
the
parties
with
regard
to
investment made by opposite party no.2 in
the shares, which were ultimately sold by
opposite party no.2 and the amount of the
same has been misappropriated by the
broker. He submits that the aforesaid
offence is covered under Section 15-F of
SEBI Act. Therefore, he relies upon the
Section 26 of SEBI Act.

7. Learned counsel for the
applicant
submits
that
no
criminal
prosecution can be initiated on the F.I.R.
lodged by any person for the offence under
the SEBI Act. The criminal prosecution
can be initiated only on the complaint
filed by the court under the SEBI Act.
Therefore, he submits that the instant
F.I.R. lodged by the opposite party no.2 is
not sustainable in law. Therefore, he
seeks quashing of the entire proceedings
of the instant case initiated under the
provisions of this Act.
9 All. Jitendra Kumar Keshwani Vs. State of U.P. & Anr.
1221
8. Per contra, learned counsel for
the opposite party no.2 has relied upon
Section 26B of the SEBI Act and has tried
to contend that the criminal prosecution in
the
special
courts
are
permissible,
therefore, he further submits that in the
instant F.I.R., no offence under the SEBI
Act has been alleged by the applicant.
Rather, the prosecution has been lodged for
the offences under Section 409 and 420 of
I.P.C., therefore, the prosecution of the
applicant herein for the offences under
I.P.C. is permissible on the basis of the
F.I.R. Therefore, learned counsel for
opposite party no.2 submits that no
interference is called for. Learned counsel
further submits that if in any case, the
Court comes to a conclusion that the F.I.R.
lodged by opposite party no.2 against the
applicant is not sustainable and barred
under Section 26 of the SEBI Act, then he
may be permitted to file an appropriate
complaint before the SEBI, on which the
delay in filing such complaint due to
pendency of the instant application may be
exempted.

9. Learned A.G.A. also supports
the submissions made by learned counsel
for the opposite party no.2.

10. Having heard the rival
submissions made by learned counsels for
the parties, this Court has carefully gone
through the record of the case. Before
proceeding further it would be relevant to
note provisions of Sections 405, 420 and
409 I.P.C., which reads as under:

Sections 405, 409 and 420
I.P.C.
"405. Criminal breach of
trust.-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".
409. Criminal breach of
trust by public servant, or by
banker, merchant or agent.-
Whoever, being in any manner
entrusted with property, or with any
dominion over property in his
capacity of a public servant or in
the way of his business as a banker,
merchant, factor, broker, attorney
or agent, commits criminal breach
of trust in respect of that property,
shall
be
punished
with
1[imprisonment for life], or with
imprisonment of either description
for a term which may extend to ten
years, and shall also be liable to
fine.
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
converted into a valuable security,
shall
be
punished
with
imprisonment of either description
for a term which may extend to
1222 INDIAN LAW REPORTS ALLAHABAD SERIES
seven years, and shall also be
liable to fine."

11. From the plain reading of
provisions of Section 420 I.P.C. it is
apparent that if any person cheats and
thereby dishonestly induces any person to
deliver any property or to make alter or
destroy the whole or any part of the
valuable security or anything which is
signed or sealed, and which is capable of
being converted into a valuable security,
shall be punishable under Section 420
I.P.C.

12. In the instant case there is no
element
of
cheating
or
dishonest
inducement on the part of the applicant
herein. The applicant herein was a share
broker and the opposite party no. 2 being
fully conversant with the consequences of
investment in shares, as having his eyes
wide open and being aware of risk of such
investment had made the investment
through
applicant.
There
is
some
accounting dispute between the parties, for
which the instant F.I.R. has been lodged
praying therein the recovery of the amount,
which is not permissible by criminal action
as has been held by the Apex Court in Lalit
Chaturvedi (Supra) in the following terms:

"Having gone through the
complaint, which was registered as
an FIR and the assertions made
therein, it is quite clear that
respondent no. 2/complainant -
Sanjay
Garg's
grievance
is
regarding failure of the appellants
to pay the outstanding amount, in
spite
of
the
respondent
no.
2/complainant - Sanjay Garg's
repeated demands. The respondent
no. 2/complainant - Sanjay Garg
states that the supplies were made
between the period 01.12.2015 and
06.08.2017. The appellants had
made the payments from time to
time of Rs. 3,76,40,553/- leaving a
balance of Rs. 1,92,91,358/-.
We will assume that the
assertions made in the complaint
are correct, but even then, a
criminal offence under Section
420 read with Section 415 of the
IPC is not established in the
absence of deception by making
false
and
misleading
representation,
dishonest
concealment or any other act or
omission, or inducement of the
complainant
to
deliver
any
property at the time of the
contract(s) being entered. The
ingredients to allege the offence are
neither stated nor can be inferred
from the averments. A prayer is
made to the police for recovery of
money from the appellants. The
police
is
to
investigate
the
allegations
which
discloses
a
criminal act. Police does not have
the power and authority to recover
money or act as a civil court for
recovery of money.
The chargesheet also refers
to Section 406 of the IPC, but
without pointing out how the
ingredients of said section are
satisfied. No details and particulars
are mentioned. There are decisions
which hold that the same act or
transaction cannot result in an
offence of cheating and criminal
breach of trust simultaneously.
For the offence of cheating,
dishonest intention must exist at
the inception of the transaction,
whereas, in case of criminal
breach of trust there must exist a
9 All. Jitendra Kumar Keshwani Vs. State of U.P. & Anr.
1223
relationship between the parties
whereby
one
party
entrusts
another with the property as per
law, albeit dishonest intention
comes
later.
In
this
case
entrustment is missing, in fact it is
not even alleged. It is a case of sale
of goods. The chargesheet does
refer to Section 506 of the IPC
relying upon the averments in the
complaint. However, no details and
particulars are given, when and on
which date and place the threats
were given. Without the said details
and particulars, it is apparent to
us, that these allegations of threats
etc. have been made only with an
intent to activate police machinery
for recovery of money."
(Emphasis Supplied)

13. In Mohammed Ibrahim and
Others vs. State of Bihar and Another :
(2009) 8 SCC 751, the Apex Court has held
as under:

"18. Let us now examine
whether the ingredients of an
offence of cheating are made out.
The essential ingredients of the
offence
of
"cheating"
are
as
follows:
(i) deception of a person
either by making a false or
misleading representation or by
dishonest concealment or by any
other act or omission;

(ii) fraudulent or dishonest
inducement of that person to either
deliver any property or to consent
to the retention thereof by any
person or to intentionally induce
that person so deceived to do or
omit to do anything which he would
not do or omit if he were not so
deceived; and
(iii) such act or omission
causing or is likely to cause
damage or harm to that person in
body, mind, reputation or property.
19. To constitute an offence
under Section 420, there should not
only
be
cheating,
but
as
a
consequence of such cheating, the
accused should have dishonestly
induced
the
person
deceived
(i) to deliver any property to any
person, or
(ii) to make, alter or
destroy wholly or in part a valuable
security (or anything signed or
sealed and which is capable of
being converted into a valuable
security)."
(Emphasis Supplied)

14. Thus, a person cannot be held
responsible for the offence under Section
409 I.P.C. as well as Section 420 I.P.C. on
the basis on the same allegations as both
the offences are contradictory and operate
in different fields altogether. In the case of
cheating, dishonest intention must be
present
from
the
inception
of
the
transaction, which is categorically missing
in the instant case. Thus, no offence under
Section 420 I.P.C. is made out. For the
offence of criminal breach of trust the precondition
is
valid
entrustment
and
subsequently its misappropriation. In the
instant case, the opposite party no.2 was
dealing in shares through the applicant and
subsequently there is some accounting
dispute between the parties in such dealing
and no determined sum is entrusted. Share
Market has its own risks. Therefore, it
cannot be said that there was any
entrustment of the property by opposite
party no.2 with the applicant. Thus, no
1224 INDIAN LAW REPORTS ALLAHABAD SERIES
offence under Section 409 I.P.C. can be
said to have been made out against the
applicant.

15. Thus, from the aforesaid
judgement it is crystal clear that a person
cannot claim to have entrusted any property
to someone and at the same time he can
also not say that he has been cheated by
dishonest
inducement
to
deliver
the
property. It can either be the entrustment or
the cheating, however, it cannot be both.

16. From the plain reading of the
F.I.R., the tenor and prayer of the F.I.R. is
to get the recovery of money, which has
been specifically deprecated by the Apex
Court in the aforesaid judgement of Lalit
Chaturvedi (Supra), therefore, the F.I.R.
lodged by the opposite party no.2 to initiate
the criminal proceeding for recovery of
money is not sustainable and is self
contradictory. At the most, from the
allegations as made in the F.I.R., there can
be an offence under Section 15-F of the
SEBI Act, which reads as under:

"15F. Penalty for default
in case of stock brokers---- If any
person, who is registered as a stock
broker under this Act,---
(a) fails to issue contract
notes in the form and manner
specified by the stock exchange of
which such broker is a member, he
shall be liable to [a penalty which
shall not be less than one lakh
rupees but which may extend to
[one crore rupees]] for which the
contract note was required to be
issued by that broker;
(b) fails to deliver any
security or fails to make payment of
the amount due to the investor in
the manner within the period
specified in the regulations, he
shall be liable to [a penalty [which
shall not be less than one lakh
rupees but which may extend to one
lakh rupees for each day during
which [such failure continues]
subject to a maximum of one crore
rupees];
(c) charges an amount of
brokerage which is in excess of the
brokerage
specified
in
the
regulations, he shall be liable to [a
penalty [which shall not be less
than one lakh rupees but which
may extend to five times the amount
of brokerage] charged in excess of
the specified brokerage, whichever
is higher."

17. For the aforesaid offences
under Section 15F of the SEBI Act, Section
26 of the SEBI Act prohibits registration of
the F.I.R. for which only complainant can
be filed under Section 26 of this Act, by the
Board.

18. Section 26 of the SEBI Act
reads as under:

Section 26 : Cognizance of
offences by courts.
"26. (1) No court shall take
cognizance
of
any
offence
punishable under this Act or any
rules
or
regulations
made
thereunder, save on a complaint
made by the Board. [ ]
(2) No court inferior to that
of [a Court of Session] shall try
any offence punishable under this
Act."

19. The SEBI Act is an Special
Act, which shall prevail over the general
act, such as I.P.C. or Cr.P.C. It is settled
9 All. Ramautar & Ors. Vs. Awadhesh Narayan Singh & Anr.
1225
position of law that once a special Act
holds the field, the provisions of general
law would not apply and only the
prosecution can be lodged in accordance
with the provisions of such special law and
the provisions of Section 26 of the SEBI
Act, specifically. Reliance placed on
section 26B of the SEBI Act by learned
counsel for the opposite party no. 2 is
misconceived. It is the applicable only for
the purpose of filing of the complaint
before the special courts and not for
criminal prosecution under the provisions
of I.P.C.

20. In view thereof, the instant
application is allowed and the entire
proceedings of cognizance order dated
12.04.2019 as well as the entire criminal
proceedings along with the charge-sheet
dated 06.09.2018, in Case No. 21416 of
2019 (State of U.P. Vs. Jitendra Kumar
Keshwani), arising out of Case Crime No.
160 of 2018, under Section 420, 409 of
I.P.C., Police Station- Hariparvat, District-
Agra, pending in the court of Chief Judicial
Magistrate, Agra, are hereby quashed.

21. However, it is open for the
opposite party no. 2 to approach the
Authorities under the SEBI Act for the
redressal of his grievance, if any, in
accordance with law with the provisions of
SEBI Act. If any such application is made
to the SEBI by the opposite party no.2, the
same shall be considered without any
objection with the regard to the limitation.
----------
(2024) 9 ILRA 1225
APPELLATE JURISDICTION
CRIMINAL SIDE
DATED: LUCKNOW 27.09.2024

BEFORE

THE HON'BLE ATTAU RAHMAN MASOODI, J.
THE HON'BLE AJAI KUMAR SRIVASTAVA-I, J.

Capital Cases No. 2 of 2022
With
Criminal Appeal Nos. 2504 of 2022 & 2524 of
2022

Ramautar & Ors. ...Appellants
Versus
Awadhesh Narayan Singh & Anr.
 ...Respondents

Counsel for the Appellants:
Sri
Akhilesh
Kumar,
Sri
Suresh
Chandra
Srivastava

Counsel for the Respondents:
Sri Ishir Sripat

(A) Criminal Law - Capital case - The Code
of Criminal Procedure, 1973 - Section 366
(1) - Reference for confirmation of death
penalty,
Indian
Penal
Code,
1860
-
Sections 302, 307/34 - Rarest of rare
cases - circumstantial evidence - chain of
evidence - hostility of witnesses - death
penalty - Evidence of a hostile witness not
to be rejected in toto - Testimony of police
personnel should be treated in the same
manner as testimony of other witnesses -
when there is choice between a death
sentence
and
a
sentence
of
life
imprisonment, the latter is the rule and
the
former
is
the
exception.(Para
-
53,60,70)

(B)
Indian
Evidence
Act,
1872
-
Circumstantial Evidence - Conviction can
be
based
on
circumstantial
evidence
inspite of hostility of eye-witnesses -
Evidence provided by hostile witnesses
remains
admissible
if
supported
by
credible corroboration - Conviction can be
based on circumstantial evidence alone
but for that prosecution must establish
chain of circumstances, which consistently
points to the accused and accused alone
and
is
inconsistent
with
their
innocence.(Para - 28,29,30,32)

(C) Five golden principles - Panchsheel of
the
proof
of
a
case
based
on