Primary ingredient for establishing case u/s 405 of IPC is entrustment of property: Punjab & Haryana HC

Read Order: Pardeep Kumar Dhingra v. State of Punjab and another

Monika Rahar

Chandigarh, February 10, 2022: The Punjab and Haryana High Court has recently held that in order to invoke the provisions of Section 420 of the IPC, the complainant-victim has to establish that the accused had the intention to cheat right from the very beginning and it is also to be proved, from the subsequent conduct of the accused, that the intention was further carried forward. 

In the word of the Court, “In order to invoke the provisions of Section 420 of the IPC, the complaint filed by the complainant has to show intention to the effect that the petitioner-accused intended to cheat the complainant right from the beginning, which intention has been carry forward and the intention to cheat is visible from the subsequent act of the accused as well.”

Also, while looking into the provisions of Section 405 of the IPC, the Bench of Justice Harsimran Singh Sethi opined that the prime ingredient to be proved for attracting the mandate of Section 405 of IPC is the entrustment of the property. 

The Court was approached with a petition seeking quashing of an FIR registered against the petitioner under Sections 406 & 420 of the IPC and all the subsequent proceedings arising therefrom on the ground that the dispute involved in the case was civil in nature.

In the FIR it was alleged by the complainant that an agreement was entered into between the complainant and M/s Sahil Builders (the firm of which the petitioner was a partner). It was further alleged that the complainant executed work in favour of the said firm in pursuance of the said agreement, yet he was not paid the sum he was entitled to get from the petitioner. 

It was the case of the petitioner’s counsel that the alleged claim of the complainant made on the basis of an agreement in respect of the work purportedly executed by him, did not satisfy ingredients of Sections 406 & 420 of the IPC because the complainant had a remedy of filing a civil suit for recovery of the said amount in case, in case he was entitled to the same. 

The state counsel, while conceding to the existence of an agreement between the complainant and M/s Sahil Builders and the work carried out by the complainant in terms of this agreement, argued that the offence of criminal breach of trust was made out, keeping in view the facts and circumstances of the case. 

The Complainant’s counsel argued that the non-payment of money by the petitioner in respect of the complainant’s work proved that the petitioner had an intention to defraud the complainant right from the beginning. The Counsel further submitted that not only charges were framed but, also the witnesses were examined and therefore, he prayed for the dismissal of the petitioner’s plea for quashing of FIR at that stage. 

At the outset, the Court while acknowledging the existence of the said agreement as also the work carried out of the complainant in favour of the petitioner, observed that the complainant’s claim was based on the execution of certain works which was done by him in pursuance to the agreement between the parties. 

The question before the Court was to examine whether the case was a civil dispute or whether the provisions of Sections 406 and 420 of the IPC would be applicable in the present case? 

After having held ‘entrustment of the property’ as the first and the foremost ingredient of Section 405 IPC, the Court opined that in the present case, nothing was brought to the notice of the Court to show that the sum claimed by the complainant was ever entrusted by him in any manner with the petitioner, rather, the Court observed that the said amount was being claimed for the execution of certain works, in terms of the agreement entered into between the parties, therefore, the claim of the complainant arose out of the agreement, which showed that the present dispute was purely civil in nature. 

Further, the Court was of the opinion that the complainant, rather than availing the remedy of initiating civil proceedings for recovery of the said amount, filed the present complaint with the police and even the Investigation Agency, without any application of mind on whether, keeping in view the facts and circumstances of the case, the required ingredients so as to constitute a criminal offence were fulfilled or not, not only recorded the FIR but also present the charge-sheet. 

The Bench further asserted that nothing was mentioned in the complaint even to suggest that the petitioner intended to cheat the complainant at the time of execution of the agreement. 

Additionally, on the jurisdiction of the Court in quashing the FIR, the Court opined that the Supreme Court in various pronouncements has held that the High Court has a jurisdiction to quash an FIR, where the dispute is essentially civil in nature but is given the cloak of a criminal offence and the ingredients required to constitute a criminal offence are not made out even from the bare reading of the complaint. 

Further reference was made by the Court to the decision of the Supreme Court in Mitesh Kumar J. Sha vs. State of Karnataka and others, Criminal Appeal No.1285 of 2021, wherein it was held that unless and until the fraudulent or dishonest intention is shown right at the beginning of transaction, mere breach of contract cannot give rise to criminal prosecution so as to give criminal colour to a civil dispute and such an exercise when brought to the notice of the Court must be discouraged in its entirety so that there is no abuse of process of law.

Thus, the Court concluded that the invoking of criminal proceedings by the complainant was a total abuse of process of law in the facts and circumstances of the present case and the same could not be allowed to proceed.

Therefore, the FIR was quashed and subsequent proceedings were quashed.