In CRM-15352-2023- PUNJ HC- In order to bring act or omission within tentacles of offence of cheating, where case rests on failure to perform contractual obligation, it has to be shown that intention of accused was dishonest since inception & agreement was an instrument to defraud victim: P&H HC
Justice Harsh Bunger [02-06-2023]

Read Order:Shikha Gupta And Another Vs. State Of Haryana

Tulip Kanth

Chandigarh, June 5, 2023:  While observing that custodial interrogation may not seem necessary when offence primarily revolves around documents and all the material facts are already laid before the Investigating Agency, the Punjab and Haryana High Court has confirmed the order extending the benefit of interim bail to the petitioners-accused in a case of embezzlement.

“It is trite that mere failure to perform a contractual obligation does not amount to an offence of cheating. To bring the act or omission within the tentacles of offence of cheating, where the case rests on failure to perform contractual obligation, it has to be shown that the intention of the accused was dishonest since inception of the transaction and the agreement, in whatever form, was an instrument to defraud the victim”, Justice Harsh Bunger said.

It was stated in the FIR that the complainant, running a Company which takes Government contracts, and his brother met the accused and in order to rope in the complainant, he made tall claims that he had big orders of Indian Railways and in case the complainant and his brother would invest money in their company then they could earn huge profits from the contracts of Indian Railways, wherein they could have a share holding.

It was stated that the complainant and his family members came in the sweet talks of the accused and thereafter the complainant started investing in the Firm of the accused and on several occasions, the complainant sent the money from his Firm to the Firm of accused. It was the complainant’s case that the accused took undue advantage of the fairness of the complainant and extracted about an amount of Rs 2 crore from the complainant, however, when the complainant asked about the profit from the accused then they started threatening the complainant and his family members. 

Even after a legal settlement was drawn, the accused kept on cheating the complainant and now they had flatly refused to pay any money to the complainant. Accordingly, legal action was sought against the accused with a prayer to get the embezzled amount recovered from them. 

The petitioners applied for the grant of anticipatory bail before the Court of Additional Sessions Judge, however the same was dismissed. Accordingly, the petition had been filed by the petitioners for grant of anticipatory bail in the FIR in question.

The Bench opined that in a given set of facts, an act or omission on the part of a party may give rise to civil action as well as furnish a ground for criminal prosecution. It is not an immutable rule of law that a purely civil dispute does not involve any element of criminality, in all the cases. However, the distinction between a mere failure to perform the promise, and inducing a party to enter into a transaction with dishonest intention needs to be kept in view, the Bench added.

The High Court was of the opinion that the failure on the part of the petitioners to make certain payments in pursuance of the said Memorandum of Understanding would not prima facie justify an interference that the intention of the petitioners was dishonest since the very inception of the said agreement, especially when both the parties were claiming violation of the terms of Memorandum of Understanding on the part of each other and parties had taken recourse to their legal remedies.

It was noticed that  the complainant party had parted with the substantial amount and on the other hand, the petitioners were  not entitled to retain said amount. “There is no dispute regarding the proposition that custodial interrogation may be required to facilitate effective investigation, however in my opinion, if the offence primarily revolves around documents and all the material facts are already laid before the Investigating Agency, as in the instant case, in that eventuality, custodial interrogation may not seem necessary”, the Bench held. 

Thus, the Bench confirmed the order extending interim bail to the petitioners. However, the Court passed a direction that the petitioners shall cooperate with the Investigating Agency and appear before the Investigating Officer concerned, as and when directed to do so.