# Smt. Archana Gupta & Ors v. State of U.P. & Anr

- **Citation:** (2020) 6 ILRA 88
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2020-02-18
- **Case number:** U/S 482/378/407 No. 2801 of 2012
- **Bench:** Sudhir Agarwal
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/smt-archana-gupta-ors-v-state-of-u-p-anr-45815
- **Pages:** 10

## Headnote

A. Criminal Law - Indian Penal Code (45 of
1860) - Section 415- Section 420 - Offence
of Cheating - distinction between mere breach
of contract & the offence of cheating - for
cheating - fraudulent or dishonest intention to
cheat/ deceive must be shown to exist right at
the time of making of promise -"mens rea" on
the part of accused must be established at the
6 All. Smt. Archana Gupta & Ors. Vs. State of U.P. & Anr.
89
very beginning/inception of the transaction - in
case of mere failure to keep up promise
subsequently culpable
intention
to
deceive
cannot be presumed at the beginning when the
accused made the promise (Para 11)

B. Criminal Law - Indian Penal Code (45 of
1860) - Section 405 - Section 406 -
Criminal breach of trust - first requirement
is 'entrustment of property' by victim to
accused
There were dues payable by accused-applicants
to complainant in respect whereof a cheque was
issued by Accused-applicants but when it was
submitted
for
collection
the
same
was
dishononoured - Opposite Party filed complaint -
Magistrate summoned applicant u/s 406, 420 -
Held - complaint basically refers to offence
under Section 138 of Negotiable Instruments
Act, 1881 - dues payable by Accused -
Applicants satisfy liability as 'debt' but cannot be
treated to be entrustment of property by
Complainant to Accused persons and when
there is no entrustment, question of dishonest
misappropriation or conversion of such property
to own use by such persons does not arise -
ingredients
of
'cheating
and
dishonest
inducement
for
delivery
of
property'
or
'entrustment of property' as required u/Ss.
420,406 not satisfied- Offence not made out -
Proceedings, quashed (Para 26)

Application allowed (E-5)

List of case cited :

1.Mahadeo Prasad Vs St. of W.B. AIR (1954) SC
724

2.JaswantraiManilalAkhaney Vs St. of Bom AIR
(1956) SC 575

3.G.V. Rao Vs L.H.V. Prasad & ors. (2000) 3 SCC
693

4.HridayaRanjan Prasad Verma & ors. Vs St. of
Bihar & anr. (2000) 4 SCC 168
5.S.W. Palanitkar & ors Vs St. of Bihar & anr.
(2002) 1 SCC 241

6.Hira Lal Hari lalBhagwati Vs CBI, New Delhi
2003(5) SCC 257

7.Devender Kumar Singla Vs Baldev Krishan
Singh (2004) 2 JT 539 SC

8.I.O.C. Vs NEPC India Ltd. (2006) 6 SCC 736

9.Rajesh Bajaj Vs St. NCT of Delhi, (1999) 3
SCC 259

10.Vir Prakash Sharma Vs Anil Kumar Agarwal &
anr. (2007) 7 SCC 373

11.Sh. Suneel Galgotia & anr. Vs St. of U.P. &
ors. (2016) 92 ACC 40

12.R.K.
Vijayasarathy
&
ors.
Vs
SudhaSeetharam & ors. (2019) 3 SCALE 563

## Text

88 INDIAN LAW REPORTS ALLAHABAD SERIES
after application of judicial mind. There is
principle of legislative expectancy that
when a dispute is there, both sides are filing
their reply and documents in support of
their claim then the man, who is making
decision, has to mention both sides'
contentions and the documents filed by
them in support of their respective claim,
then the reasons for taking the decision and
then only the order can be held to be on
application of judicial mind. Hence both
the impugned orders are not to be
sustained, as such they are under abuse of
process of law.

9. The dispute regarding office of
management
of
Society,
registered
under Societies Registration Act, can
never be held as a dispute regarding
ownership and possession of immovable
property and for this Legislature has
given Societies Registration Act with
rules framed there under. Assistant
Registrar has the authority to decide the
dispute regarding management of office
of Society. In case of its failure,
reference is to be made to the Sub
Divisional Magistrate of the area under
Rule of the above Act for adjudication.
But by these impugned orders, under
challenge, the City Magistrate has
decided to take over possession of the
property
and
has
appointed
some
receiver for making management of the
above property, which was of Almighty
having
no
dispute
regarding
its
ownership and possession. Under garb
of attachment order, receiver has been
appointed, which power never vests
with
the
Executive
Magistrate,
particularly when a civil suit has
already been filed by O.P. No. 2. There
is a chapter under Code of Civil
Procedure for appointment of receiver
to protect the property in dispute.
Hence this application merits to be
allowed.

10. The application under section 482
Cr.P.C. is allowed and both the impugned
orders passed by the City Magistrate u/s
145(1) and 146(1) Cr.P.C. are hereby
quashed with this specific mention that an
officer of City Magistrate rank i.e. a senior
Executive officer should be careful in
future in making such type of decision
without any reason in order.

11. The file is being remanded back to
the Magistrate concerned to make decision
in accordance with law, provisions of Code
of
Criminal
Procedure
along
with
precedents of Apex Court and this court.
----------
(2020)06ILR A88
ORIGINAL JURISDICTION
CRIMINAL SIDE
DATED: LUCKNOW 18.02.2020

BEFORE
THE HON'BLE SUDHIR AGARWAL, J.

U/S 482/378/407 No. 2801 of 2012

Smt. Archana Gupta & Ors. ...Applicants
Versus
State of U.P. & Anr. ...Opposite Parties

Counsel for the Applicants:
Arun Sinha, Riyaz Ahmad

Counsel for the Opposite Parties:
Govt. Advocate, Vinay Kumar Singh

A. Criminal Law - Indian Penal Code (45 of
1860) - Section 415- Section 420 - Offence
of Cheating - distinction between mere breach
of contract & the offence of cheating - for
cheating - fraudulent or dishonest intention to
cheat/ deceive must be shown to exist right at
the time of making of promise -"mens rea" on
the part of accused must be established at the
6 All. Smt. Archana Gupta & Ors. Vs. State of U.P. & Anr.
89
very beginning/inception of the transaction - in
case of mere failure to keep up promise
subsequently culpable
intention
to
deceive
cannot be presumed at the beginning when the
accused made the promise (Para 11)

B. Criminal Law - Indian Penal Code (45 of
1860) - Section 405 - Section 406 -
Criminal breach of trust - first requirement
is 'entrustment of property' by victim to
accused
There were dues payable by accused-applicants
to complainant in respect whereof a cheque was
issued by Accused-applicants but when it was
submitted
for
collection
the
same
was
dishononoured - Opposite Party filed complaint -
Magistrate summoned applicant u/s 406, 420 -
Held - complaint basically refers to offence
under Section 138 of Negotiable Instruments
Act, 1881 - dues payable by Accused -
Applicants satisfy liability as 'debt' but cannot be
treated to be entrustment of property by
Complainant to Accused persons and when
there is no entrustment, question of dishonest
misappropriation or conversion of such property
to own use by such persons does not arise -
ingredients
of
'cheating
and
dishonest
inducement
for
delivery
of
property'
or
'entrustment of property' as required u/Ss.
420,406 not satisfied- Offence not made out -
Proceedings, quashed (Para 26)

Application allowed (E-5)

List of case cited :

1.Mahadeo Prasad Vs St. of W.B. AIR (1954) SC
724

2.JaswantraiManilalAkhaney Vs St. of Bom AIR
(1956) SC 575

3.G.V. Rao Vs L.H.V. Prasad & ors. (2000) 3 SCC
693

4.HridayaRanjan Prasad Verma & ors. Vs St. of
Bihar & anr. (2000) 4 SCC 168
5.S.W. Palanitkar & ors Vs St. of Bihar & anr.
(2002) 1 SCC 241

6.Hira Lal Hari lalBhagwati Vs CBI, New Delhi
2003(5) SCC 257

7.Devender Kumar Singla Vs Baldev Krishan
Singh (2004) 2 JT 539 SC

8.I.O.C. Vs NEPC India Ltd. (2006) 6 SCC 736

9.Rajesh Bajaj Vs St. NCT of Delhi, (1999) 3
SCC 259

10.Vir Prakash Sharma Vs Anil Kumar Agarwal &
anr. (2007) 7 SCC 373

11.Sh. Suneel Galgotia & anr. Vs St. of U.P. &
ors. (2016) 92 ACC 40

12.R.K.
Vijayasarathy
&
ors.
Vs
SudhaSeetharam & ors. (2019) 3 SCALE 563

(Delivered by Hon'ble Sudhir Agarwal, J.)

1. Sri Arun Sinha, Advocate for the
applicants is present. None appeared on
behalf of opposite party 2 though name of Sri
Vinay Kumar Singh, Advocate, is shown in
cause list as counsel for opposite party. Hence
I proceed to decide the application after
hearing learned counsel for applicants and
learned A.G.A.

2. Opposite party 2 Complainant Babu
Lal Gaur filed an application under Section
156(3) Cr.P.C., which has been treated as
complaint and after recording statements of
complainant and witnesses under Sections
200 and 202 Cr.P.C., Magistrate has
summoned applicants for trial under Sections
406, 420 IPC vide order dated 29.02.2012.

3. It is contended that perusal of
complaint shows that if allegations made in
the complaint are taken to be correct, yet no
offence under Sections 406, 420 IPC is made
out.
90 INDIAN LAW REPORTS ALLAHABAD SERIES

4.

The
complaint
filed
by
complainant-opposite party 2 reads as
under :

^^1- ;g fd izkFkhZ mijksDr irs dk
LFkkbZ fuoklh gS]tks Jheku th ds {ks=kf/kdkj esa
vkrk gSA

2- ;g fd mijksDr foi{khx.k esllZ
fjyk;Ul dE;qfuds'kUl ds fy, Bsdsnkjh dk dke
djrs gSA mijksDr foi{khx.kksa us izkFkhZ dks esllZ
esllZ ,0oh0vkbZ0 daLVaD'kUl dEiuh] ,&17]
vkLFkk dqat] lkÅFk flVh] jk;cjsyh jksM] Fkkuk
eksguykyxat] y[kuÅ ds fy, lc dkUVaSDV ds
:i esa dke djus dk vkWQj fn;kA

3- ;g fd izkFkhZ us mijksDr foi{khx.kksa
dk vkWQj Lohdkj dj fy;k rFkk fnukad
16@03@2008 ls 16@06@2008 rd ds fy,
izkFkhZ dks Hkwfexr dsfcy fcNkus dk dke feykA
izkFkhZ us mijksDr dke esa yxHkx :0
5]50]000@&1⁄4iakp yk[k ipkl gtkj :i;k1⁄2
yxk;kA

4- ;g fd izkFkhZ us viuk dke le;
ij iwjk dj fn;k rFkk viuh fjiksVZ foi{khx.kksa dks
lkSai nhA foi{khx.k izkFkhZ ds dk;Z ls larq"V o
[kq'k FksA

5- ;g fd tc izkFkhZ us vius isesUV dh
ekax dh] rks foi{khx.kksa }kjk crk;k x;k fd izkFkhZ
fjyk;Ul dE;wfuds'kUl easa iSLkk ugha feyk gSA tc
fey tk;sxk] rc vidh isesUV dj nsaxsA

6- ;g fd bl rjg foi{khx.k izkFkhZ
dks yxkrkj Vgykrs jgsA izkFkhZ }kjk :i;k ekaxus
ij izkFkhZ ij uktk;t ncko cukus yxsA izkFkhZ dks
ckn esa ;g Hkh Kkr gqvk fd foi{khx.kksa dks esllZ
fjyk;Ul dE;wfuds'ku ls cdk;k isesUV izkIr gks
pqdk gSA

7- ;g fd izkFkhZ }kjk ckj&ckj viuk
:i;k ekaxus ij foi{khx.kksa us izkFkhZ dks psd ua0
224449]
fnukafdr
10@12@08
:i;k
1]99]000@& ,p0Mh0,Q0lh0 cSad in ns; Fkk]
izkFkhZ dks fn;kA izkFkhZ us tc mls vius ,dkmaV esa
yxk;k] rks og psd ÞbulfQfl;sUV QaMß fy[kdj
okil vk x;hA

8- ;g fd tc izkFkhZ og psd ysdj
foi{khx.kksa ds ikl x;k] rks foi{khx.kksa us dgk fd
vki ,d nwljk psd ys yhft;sA izkFkhZ dks tc
nwljk psd ua0 224450 fnukafdr 11@06@09 :0
4]50]000@& ,p0Mh0,Q0lh0 cSad ij ns; Fkk]
fn;k x;kA tc izkFkhZ us og psd vius ,dkmaV esa
yxk;k] rks og psd ,dkmaV can fy[kdj okil
vk x;kA foi{khx.kksa us tkucw>dj] /kks[kk nsus dh
fu;r ls] Ny diV iwoZd] ,dkmaV Dykst dh
psd nh] tks ckmal gksdj okil vk x;hA

9- ;g fd izkFkhZ dks foi{khx.k ckj&ckj
/kks[kk nsrs jgs rFkk izkFkhZ dk iSlk okil ugha
fd;kA izkFkhZ dks blds ckn nks psds ua0 752922
fnukafdr
26@06@11
:0
4]50]000@&
,l0ch0vkbZ0] y[kuÅ ,oa psd ua0 752923
fnukafdr
26@06@11
:0
13]500@&
,l0ch0vkbZ0 y[kuÅ ij dk fn;k x;kA

10- ;g fd mijksDr nksuksa psds Hkh cSad
esa yxkrs gh ÞbulfQfl;sUV QaMß fy[kdj okil
vk x;hA

11- ;g fd izkFkhZ dks ekywe gqvk fd
mijksDr
foi{khx.kksa
ds
f[kykQ
Fkkuk
eksguykyxat esa Jh izohu ckxM+s us eq0v0la0
287@11 /kkjk 406@506 esa izFke lwpuk fjiksVZ
ntZ djk j[kh gS] izkFkhZ tc viuh fjiksVZ fy[kkus
x;k] rks Fkkuk& eksguykyxat }kjk izkFkhZ dh
fjiksVZ ugha fy[kh x;hA

12- ;g fd Fkkuk&eksguykyxat }kjk
dksbZ dk;Zokgh u fd;s tkus ij izkFkhZ }kjk mDr
?kVuk ds lEcU/k esa fnukad 26@07@2011 dks
izkFkZuk i= iathd`r Mkd }kjk Jheku~ iqfyl
v/kh{kd egksn;] y[kuÅ dks Hkh Hksth x;h gS]
ftl ij Hkh vHkh rd dksbZ dk;Zokgh ugha dh x;h
gSA izkFkZuk i= ,oa jftLVah jlhn dh Nk;kizfr
ekuuh; egksn; ds le{k lqyHk voyksdukFkZ gsrq
layXud la[;k 1] layXu gSA

13- ;g fd izkFkhZ ds mDr iathd`r
izkFkZUkk&i=ksa ij Hkh tc dksbZ ugha dh x;h] rc
izkFkhZ }kjk foo'k gksdj U;k;k ikus ds mn~ns'; ls
mijksDr izkFkZUkk i= ekuuh; egksn; ds le{k
lafLFkr dj jgk gSA

14- ;g fd vfHk;qDrx.k cgqr gh ncax
,oa igqap okys O;fDr gSA ;fn vfHk;qDrx.kksa ds
f[kykQ vfoyEc dksbZ dk;Zokgh ugha dh x;h] rks
vfHk;qwDrx.k lkft'k jp djds izkFkhZ ,oa mlds
ifjokj okyksa dks fdlh >wBs eqdnesa esa Hkh Qalok
ldrs gSa rFkk tku ls Hkh ejok ldrs gSaA
6 All. Smt. Archana Gupta & Ors. Vs. State of U.P. & Anr.
91

15- ;g fd mDr ?kVUkk Jheku~ dh
LFkkuh; vf/kdkfjrk okyh lhekvksa esa ?kfVr gqbZ gS]
blfy;s mDr vijk/k dh tkap ,oa fopkj.k
djokus dk iw.kZ vf/kdkj Jheku~ th dks izkIr gSA

16- ;g fd mijksDr ifjfLFkfr;ksa] rF;ksa
,oa dkj.kksa dks n`f"Vxr j[krs gq, vUrxZr /kkjk
1561⁄431⁄2 n0iz0la0 ds izkfo/kkuksa ds vUrxZr okn
iathd`r fd;s tkus ,oa foospuk fd;s tkus dk
vkns'k@funsZ'k izHkkjh fujh{kd Fkkuk d`".kkuxj]
tuin&y[kuÅ dks fn;k tkuk U;k;fgr esa
furkUr vko';d o U;k; laxr gS vU;Fkk izkFkhZ
U;k; ikus ls oafpr jg tk;sxkA

izkFkZuk

vr% lEekuh; U;k;ky; ls ;kpuk gS
fd U;k;fgr esa izkFkZuk i= esa of.kZr rF;ksa] dkj.kksa
,oa yxs lk{;ksa ds vk/kkj ij Fkkuk/;{k
eksguykyxat dks funsZf'kr djsa] fd og izkFkhZ dh
izFke lwpuk fjiksVZ vafdr dj foospuk ds ifj.kke
ls ekuuh; U;k;ky; dks lwfpr fd;s tkus dk
vkns'k ikfjr djus dh d`ik djsaA^^

"1.
That
the
applicant
is
permanent resident of aforementioned
address
which
falls
within
your
jurisdiction.

2. That the aforesaid opposite
parties are engaged as contractor for M/s
Reliance Communications. The aforesaid
opposite parties had offered to work as a
sub-contract for M/s A.V.I. Constructions
Company, A-17, Aastha Kunj, South City,
Raibareli Road, Police Station - Mohanlal
Ganj, Lucknow.

3.
That
the
applicant
has
accepted the offer of aforesaid opposite
parties and got the work of laying
underground cable from 16/03/2008 to
16/06/2008. The applicant had invested
about Rs. 5,50,000/- (Rupees Five Lacs and
Fifty Thousand) in the aforesaid work.

4. That the applicant completed
his work in time and handed over his report
to the opposite parties. The opposite parties
were satisfied and happy with the work of
applicant.

5. That when the applicant raised
demand for payment, it had been told by
the opposite parties that they had not
received
money
form
Reliance
Communications and they would make pay
him after receiving it.

6. That in this manner the
opposite parties kept on equivocating the
applicant continuously. When the applicant
asked for money, the began to mount undue
pressure on the applicant. Later on the
applicant got to know that the opposite
parties had received the left over payment
from M/s Reliance Communications.

7. That when the applicant
repeatedly demanded his money, the
opposite parties gave Cheque No. 224449
dated 10/12/08 Rupees 1,99,000/- payable
at H.D.F.C. Bank to the applicant. When
the applicant deposited this cheque in his
account, the same had returned with
"Insufficient Fund" endorsed on it.

8. When the applicant went to the
opposite parties with that cheque, the
opposite parties asked him to take another
cheque. The applicant had been given the
other cheque bearing number 224450 dated
11/06/2009 Rupees 4,50,000/- payable at
H.D.F.C.
Bank.
When
the
applicant
deposited this cheque in his account, the
cheque was returned with "account closed"
endorsed on it. The opposite parties with
an
intention
to
commit
cheating,
fraudulently gave a cheque of closed
account
which
got
dishonoured
and
returned.

9. That the opposite parties kept
on cheating the applicant repeatedly and
did not return the money of applicant.
Thereafter, the applicant had been given
two cheques bearing No. 752922 dated
26/06/11 Rupees 4,50,000/- S.B.I. Lucknow
and No. 752923 dated 26/06/11 Rupees
13,500/-
S.B.I.
Lucknow.
92 INDIAN LAW REPORTS ALLAHABAD SERIES

10. That as soon as both the
aforesaid cheques had been deposited in
the bank, it returned with "Insufficient
Fund" endorsed on it.

11. That the applicant came to
know that Shri Pravin Bagde had lodged
the First Information Report against the
aforesaid opposite parties in Case Crime
No. 287/11 under Section 406/506. When
the applicant went to lodge the report, the
report of the applicant had not been lodged
by Police Station Mohanlalganj.

12. That when Police Station
Mohanlalganj had not taken any action, the
applicant has sent application dated
26/07/2011 regarding the said incident
through
Registered
Post
to
the
Superintendent of Police, Lucknow. Still, no
action
has
been
taken
on
it.
The
photocopies of application and receipt of
the Registered Post is annexed as Annexure
No. 1 for your kind perusal.

13. That when no action has been
taken on the said registered letters of the
applicant, then being compelled and with
an object to get justice, the applicant is
instituting the aforesaid application before
you.

14. That the accused persons are
very dominating and sourceful persons. If
no action is taken up promptly against the
accused persons, the accused persons may
conspire and even implicate the applicant
or his family membersin any false case or
get them even killed.

15. That the said incident has
occurred within your local jurisdiction,
therefore you have full authority to get
conducted the investigation and trial of the
said offence.

16. That having regard to the
aforesaid circumstances, facts and causes,
it is essential and just in the interest of
justice to register the case under the
provisions of Section 156 (3) Cr.P.C. and to
issue the order/ direction to In-charge
Inspector Police Staion Krishna Nagar,
District
Lucknow
to
conduct
the
investigation or else the applicant shall be
deprived from getting justice.

Prayer

Therefore it is urged to the
learned Court that in the interest of justice,
on the basis of described facts, causes and
annexed evidences, directions may be
issued to Police Station Mohanlalganj to
lodge the First Information Report of the
applicant, and an order may please be
passed to apprise the outcome of the
investigation to the learned Court."

(English Translation by Court)

5. Section 420 is "cheating" which is
defined in Section 415 and both these
provisions read as under:

"415. Cheating.- 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."

"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
6 All. Smt. Archana Gupta & Ors. Vs. State of U.P. & Anr.
93
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."

6. In order to attract allegations of
"cheating", following things must exist:

(i) The person deceived, delivered
to someone or consented that certain
person shall retain property.

(ii) Person deceived was induced
by accused to do as above.

(iii) Such person acted upon such
inducement and consequently was deceived
by the accused.

(iv) Accused acted fraudulently or
dishonestly.

(v) Accused did it intentionally.

(vi) such act or omission caused
or likely to cause damage or harm to that
person
in
body,
mind,
property
or
reputation.

(Emphasis added)

7. Then in order to attract Section 420
I.P.C., essential ingredients are:

(i) cheating;

(ii)
dishonest
inducement
to
deliver property or to make or destroy any
valuable security or any thing which is
sealed or signed or is capable of being
converted into a valuable security; and,

(iii) mens rea of accused at the
time of making inducement and which act
of omission.

8. In Mahadeo Prasad Vs. State of West
Bengal, AIR 1954 SC 724 it was observed that
to constitute offence of cheating, intention to
deceive should be in existence at the time when
inducement was offered.

9. In Jaswantrai Manilal Akhaney Vs.
State of Bombay, AIR 1956 SC 575, Court
said that a guilty intention is an essential
ingredient of the offence of cheating. For the
offence of cheating, "mens rea" on the part of
that person, must be established.

10. In G.V. Rao Vs. L.H.V. Prasad and
others, 2000(3) SCC 693, Court said that
Section 415 has two parts. While in the first
part, the person must "dishonestly" or
"fraudulently" induce the complainant to deliver
any property and in the second part the person
should intentionally induce the complainant to
do or omit to do a thing. In other words in the
first part, inducement must be dishonest or
fraudulent while in the second part, inducement
should be intentional.

11. In Hridaya Ranjan Prasad
Verma and others Vs. State of Bihar and
another, 2000(4) SCC 168 Court said that
in the definition of 'cheating', 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, inducing must be fraudulent or
dishonest. In the second class of acts, the
inducing must be intentional but not
fraudulent or dishonest. It was pointed out
that there is a fine distinction between mere
breach of contract and the offence of
cheating. It depends upon the intention of
accused at the time to 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
94 INDIAN LAW REPORTS ALLAHABAD SERIES
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. In order to hold a person
guilty of cheating it would be obligatory to
show that he had fraudulent or dishonest
intention at the time of making the promise.
Mere
failure
to
keep
up
promise
subsequently such a culpable intention right
at the beginning, i.e, when he made the
promise cannot be presumed.

12. In S.W. Palanitkar and others
Vs. State of Bihar and another, 2002(1)
SCC 241, while examining the ingredients
of
Section
415
IPC,
the
aforesaid
authorities were followed.

13. In Hira Lal Hari lal Bhagwati
Vs. CBI, New Delhi, 2003(5) SCC 257,
Court said that to hold a person guilty of
cheating under Section 415 IPC it is
necessary to show that he has fraudulent or
dishonest intention at the time of making
promise with an intention to retain
property. The Court further said:

"Section 415 of the Indian Penal
Code
which
defines
cheating,
requires
deception of any person (a) inducing that
person to: (i) to deliver any property to any
person, or (ii) to consent that any person shall
retain any property OR (b) intentionally
inducing that person 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, anybody's mind, reputation or
property. In view of the aforesaid provisions, the
appellants state that person 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."

 (Emphasis added)

14. In Devender Kumar Singla Vs.
Baldev Krishan Singh 2004 (2) JT 539 (SC),
it was held that making of a false representation
is one of the ingredients of offence of cheating.

15. In Indian Oil Corporation Vs.
NEPC India Ltd., 2006(6) SCC 736 in similar
circumstances of advancement of loan against
hypothecation, the complainant relied on
Illustrations (f) and (g) to Section 415, which
read as under:

"(f) A intentionally deceives Z
into a belief that A means to repay any
money that Z may lend to him and thereby
dishonestly induces Z to lend him money, A
not intending to repay it. A cheats."

"(g). A intentionally deceives Z
into a belief that A means to deliver to Z a
certain quantity of indigo plant which he
does not intend to deliver, and thereby
dishonestly induces Z to advance money
upon the faith of such delivery. A cheats;
but if A, at the time of obtaining the money,
intends to deliver the indigo plant, and
afterwards breaks his contact and does not
deliver it, he does not cheat, but is liable
only to a civil action for breach of
contract."

16. Court said that crux of the
postulate is intention of the person who
induces victim of his representation and not
the nature of the transaction which would
become decisive in discerning whether
there was commission of offence or not.
Court also referred to its earlier decisions in
Rajesh Bajaj Vs. State NCT of Delhi,
6 All. Smt. Archana Gupta & Ors. Vs. State of U.P. & Anr.
95
1999(3) SCC 259 and held that it is not
necessary that a
complainant should
verbatim reproduce in the body of his
complaint all the ingredients of the offence
he is alleging. Nor is it necessary that the
complainant should state in so many words
that the intention of the accused was
dishonest or fraudulent.

17. In Vir Prakash Sharma Vs. Anil
Kumar Agarwal and another, 2007(7)
SCC 373 it was held that if no act of
inducement on the part of accused is
alleged and no allegation is made in the
complaint that there was any intention to
cheat
from
the
very
inception,
the
requirement of Section 415 read with
Section 420 IPC would not be satisfied.
The Court relied on the earlier decisions in
Hridaya Ranjan Prasad Verma (supra)
and Indian Oil Corporation Vs. NEPC
India Ltd.(supra).

18. The aforesaid authorities have
been referred to and relied on in reference
to offence under Section 420 I.P.C. by a
Division Bench of this Court in which one
of us (Hon'ble Sudhir Agarwal, J.) was also
a member in Sh. Suneel Galgotia and
another Vs. State of U.P. and others 2016
(92) ACC 40.

19. Looking to allegation made in
complaint and in the light of exposition of
law in respect of Section 420 IPC, as
discussed above, I find that in the present
case there is no allegation of dishonest
inducement on the part of applicants. The
basic ingredients of Section 420 read with
415 IPC i.e. dishonest inducement to
person so deceived to deliver any property
is clearly absent.

20. Once necessary ingredient is
absent, offence under the said provision
cannot
be
made
out.
In
R.K.
Vijayasarathy and others vs. Sudha
Seetharam and others 2019(3) SCALE
563, in similar circumstances, Supreme
Court, in para 18 said :

"The condition necessary for an
act to constitute an offence under Section
415 of the Penal Code is that there was
dishonest inducement by the accused. The
first respondent admitted that the disputed
sum was transferred by the son of the
appellants to her bank account on 17
February 2010. She alleges that she
transferred the money belonging to the son
of the appellants at his behest. No act on
part of the appellants has been alleged that
discloses an intention to induce the delivery
of any property to the appellants by the first
respondent. There is thus nothing on the
face of the complaint to indicate that the
appellants dishonestly induced the first
respondent to deliver any property to them.
Cheating is an essential ingredient to an
offence under Section 420 of the Penal
Code.
The
ingredient
necessary
to
constitute the offence of cheating is not
made out from the face of the complaint
and consequently, no offence under Section
420 is made out." (emphasis added)

21. For constituting offence under Section
420 IPC, it has to be a Cheating and dishonest
inducement for delivery of property. Cheating is
defined in Section 415 IPC and ingredient, I
have already discussed above, are not available
in the case in hand. In fact complaint basically
refers to offence under Section 138 of
Negotiable Instruments Act, 1881 (hereinafter
referred to as "Act, 1881") but Complainant
having failed to act in accordance with
requirement of Section 138 of Act, 1881 and
was not in a position to lodge a complaint under
the said provision, has implicated applicants
under Sections 406, 420 IPC though from
96 INDIAN LAW REPORTS ALLAHABAD SERIES
contents of complaint, ingredients of aforesaid
provision are not satisfied at all. In the
circumstances, proceedings against Accusedapplicants under Section 420 IPC is illegal and
gross abuse of process of law.

22. Similarly, Section 406 I.P.C. also I do
not find is attracted in the case in hand. It talks
of punishment for "criminal breach of trust"
which is defined in Section 405 I.P.C. and both
these provisions read as under:

"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".

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, 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."

"406. Punishment for criminal
breach of trust.

Whoever
commits
criminal
breach of trust shall be punished with
imprisonment of either description for a
term which may extend to three years, or
with fine, or with both."

23. In order to attract allegation of
"criminal breach of trust", following things
must exist :

i. Accused was entrusted with
some property.

ii. Accused had dominion over
certain property.

iii. Accused (i) misappropriated,
(ii) converted to his own use, (iii) used or
disposed off that property or wilfully
suffered any person to dispose off that
property.

iv. Accused did in violation of (i)
any direction of law, (ii) any legal contract
express or implied relating to carrying out
the trust.

v. He did so dishonestly.

24. "Criminal breach of trust" talks of
entrustment of property and dishonest
6 All. Yashpal & Ors. Vs. State of U.P. & Anr.
97
misappropriation or conversion thereof for
own use or dishonest use or disposal of
property in violation of any direction of law
prescribing mode in which property in
which such trust is to be discharged, or of
any legal contract by a person who has
contravened the said provision.

25. Complaint in the present case
shows that there was dues payable by
Accused-applicants to Complainant in
respect whereof a cheque was issued by
Accused-applicants
being
Cheque
No.224449
dated
10.12.2008
for
Rs.1,99,000/- payable at HDFC Bank but
when it was submitted for collection, the
same was dishonoured on the ground of
'insufficient fund'. Complainant again went
to Accused-applicants, who issued another
Cheque No.224450 dated 11.06.2009 for
Rs.4,50,000/- payable at HDFC Bank but
this was returned on the ground that
account has been closed. There is no
averment in the complaint that thereafter
any demand was made by giving any
notice, as provided under Section 138 of
Act, 1881 and compliance thereof was
made. Instead, Complainant has filed above
complaint for trial under Section 406/506
IPC
but
Magistrate,
after
recording
evidence under Sections 200 and 202
Cr.P.C., has summoned applicants under
Sections 406, 420 IPC.

26. Section 406 IPC deals with
offence of criminal breach of trust which is
defined in Section 405 IPC. The first
requirement
of
Section 406
IPC
is
'entrustment of property' by victim to
Accused but there is no such entrustment.
As per complaint, dues payable by
Accused-Applicants
according
to
averments made by Complainant satisfy
liability as 'debt' but cannot be treated to be
entrustment of property by Complainant to
Accused persons and when there is no
entrustment,
question
of
dishonest
misappropriation or conversion of such
property to own use by such persons does
not arise. Even Explanation 1 and 2 of
Section 405 IPC are not attracted in the
case in hand since there is no deduction of
wages by employer for deposit in concern
fund under Employees' Provident Funds
and Miscellaneous Provisions Act, 1952
and Employees' State Insurance Act, 1948.
Therefore, Section 406 is not at all
attracted.

27. In view of discussions made
hereinabove and considering the allegations
contained in the complaint in the case in
hand, in the light of above authorities,
proceedings are liable to be quashed.

28. The application is allowed.
Criminal proceedings in Complaint Case
No. 2688 of 2011, Babu Lal Gaur vs. Smt.
Archana Gupta and others, under Sections
406 and 420 IPC, pending in the Court of
Special Chief Judicial Magistrate (Custom),
Lucknow are hereby quashed.
----------
(2020)06ILR A97
ORIGINAL JURISDICTION
CRIMINAL SIDE
DATED: ALLAHABAD 03.02.2020

BEFORE
THE HON'BLE RAJENDRA KUMAR-IV, J.

Application U/S 482 No. 3032 of 2020

Yashpal & Ors. ...Applicants
Versus
State of U.P. & Anr. ...Opposite Parties

Counsel for the Applicants:
Sri Suresh Kumar Verma

Counsel for the Opposite Parties:
A.G.A.