M. Palanichamy v. V. Asharaf and State of Kerala (Crl.M.C. No.1417 of 2010)

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE A.HARIPRASAD THURSDAY, THE 17TH DAY OF JULY 2014/26TH ASHADHA, 1936 Crl.MC.No. 1417 of 2010 ( ) ---------------------------- CC 230/2010 of JUDICIAL FIRST CLASS MAGISTRATE COURT,MALAPPURAM PETITIONER(S)/ACCUSED: ------------------------------------------ M.PALANICHAMY,MANAGING DIRECTOR, GALAXY AMEZE KINGDOM LTD.NO.14, MAIN STREET VENUGOPAL NAGAR, CHENNAI. BY ADV. SRI.P.VENUGOPAL (1086/92) RESPONDENT(S)/DEFACTO COMPLAINANT & STATE: ------------------------------------------------------------------------------------ 1. V.ASHARAF,S/O.AHAMMEDKUTTY, M/S.MOBILE INDIA MARKETING AGENCY, OTHUKKUNGAL(P.O) MALAPPURAM DISTRICT. 2. STATE OF KERALA,REPRESENTED BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA ERNAKULAM REPRESENTING THE SUB INSPECTOR OF POLICE KOTTAKKAL POLICE STATION. R1 BY ADV. SRI.T.K.SAIDALIKUTTY R1 BY ADV. SRI.A.A.ZIYAD RAHMAN R2 BY PUBLIC PROSECUTOR SHRI JUSTIN JACOB THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON 17-07-2014, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: CRL.MC NO.1417/2010 ## APPENDIX PETITIONER'S EXHIBITS: ANNEXURE-A CERTIFIED COPY OF THE FINAL REPORT/CHARGE SHEET IN CRIME NO.390/2008 OF KOTTACKAL POLICE STATION NOW PENDING AS CC NO.230/2010 OF THE COURT OF JUDICIAL FIRST CLASS MAGISTRATE COURT, MALAPPURAM RESPONDENTS' EXHIBITS: NIL //TRUE COPY// ## **A.HARIPRASAD, J.** **-------------------------------------Crl.M.C. No.1417 of 2010 -------------------------------------Dated this the 17[th] day of July, 2014.** ## **ORDER** Accused in C.C.No.230 of 2010 on the file of the Judicial First Class Magistrate Court, Malappuram called up to answer a charge under Section 420 of the Indian Penal Code (in short, “IPC”) is before this Court under Section 482 of the Code of Criminal Procedure (in short, “Cr.P.C”). 2. Facts borne out from Annexure-A final report is as follows: There was a business deal struck towards the end of 2002 between the petitioner and the 1[st] respondent/defacto complainant. Petitioner received a demand draft for `5,00,000/- from the 1[st] respondent by extending a promise to supply certain articles. Petitioner committed a breach in the contract and rescinded the contract and supplied the articles to another person. So the 1[st] respondent demanded money from the petitioner. `25,000/- was paid in cash by the petitioner to the 1[st] respondent and three cheques were issued for the balance amount towards the discharge of the liability. During the course of investigation, it was found that the petitioner issued cheques to an account maintained in another man's name. It is, therefore, alleged that the petitioner intended to cheat the 1[st] respondent and he is liable for punishment under the above 2 Crl.M.C.No.1417/2010 provision of law. 3. Heard the learned counsel for the petitioner and the learned counsel for the 1[st] respondent. Learned Public Prosecutor is also heard. 4. Learned counsel for the petitioner submitted that the petitioner is not liable to be punished under Section 420 IPC as he has not committed an offence of cheating defined under Section 415 IPC. Section 415 IPC reads as follows: ## _“_ _**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.”_ In order to attract this Section, the following ingredients will have to be satisfied: 3 Crl.M.C.No.1417/2010 _I. Deception of any person._ _2.(a) Fraudulently or dishonestly inducing that_ _person:_ _(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 in body, mind, reputation or property.”_ 5. Learned counsel for the petitioner submitted that neither in the complaint, nor in the final report, the prosecution has a case that the petitioner/accused induced the 1[st] respondent to deliver some articles on the basis of the alleged cheques. In other words, the cheques were issued to a transaction, which happened long prior to the issuance of the cheques. Therefore, none of the ingredients in Section 415 IPC is attracted in this case. In answer to this argument, learned counsel for the 1[st] respondent submitted that the original contract between the 1[st] respondent and the petitioner had been rescinded is an admitted fact. According to him, subsequent to the termination of the original contract, the petitioner entered 4 Crl.M.C.No.1417/2010 into another contract with the 1[st] respondent and agreed to repay money and for discharging that liability, the cheques were issued. Per contra, learned counsel for the petitioner would submit that even if that be so, no offence of cheating as defined under Section 415 IPC is attracted because there was no delivery of any article pursuant to the issuance of the cheques. In order to support the petitioner's contention, learned counsel placed reliance on **Ismail Pillai v. Meera Sahib Abdul Jaleel and another (2010 KHC 549)** wherein a learned Single Judge of this Court considered almost an identical question. That was also a case wherein the accused issued a cheque on an account maintained by another person. The point decided is as follows: _“Here, in this case, the summary of the allegation is that the first respondent drew a cheque on an account maintained by the 2[nd] respondent and delivered it to the revision petitioner in discharge of an existing liability. Giving regard to the ingredients to constitute offence under S.420 IPC, assuming that the first respondent suppressed that the cheque in dispute was drawn by the first respondent on an account maintained by the second respondent, it would not amount to an offence under S.420 IPC, because there is no_ 5 Crl.M.C.No.1417/2010 _pleadings at all to the effect that at the time when the cheque was delivered, any property was parted or that there was any inducement to part with the property; or made, altered, destroyed 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 so as to cheat the revision petitioner. Probably, with the pleadings on record, in the process of issuing cheque in discharge of existing liability, it can be assumed that the first respondent might have played fraud. Such fraud would not establish an offence under S.420 IPC.”_ ## In **M.S.Muraleedharan v. P.S.Vijayakumar (2006 KHC 1020)** , this Court held that in a money transaction, in order to attract an offence under Section 420 IPC, there must be some inducement by the accused to the complainant at the initial stage of the transaction. In another decision, ## **Chandran K. V. Ponnappa Moothan and Another (2012 (4) KHC 213)** , this Court considered a situation whether issuance of a cheque to an account already closed would attract an offence of cheating punishable under Section 420 IPC. It was held that even though a cheque was issued in discharge of an existing debt, concealment of the fact that the account 6 Crl.M.C.No.1417/2010 was closed at the time when the cheque was issued would not satisfy the requirement of cheating, because there is no deception following the concealment. 6. The decisions on the point were considered by this court in Crl.M.C.No.279 of 2013 and found that in order to attract an offence punishable under Section 420 IPC, it has to be established that pursuant to the fraudulent deception, the affected person was caused to deliver a property or to consent that he shall retain the property or he would do or omit to do something on the basis of the promise extended. In the absence of such ingredients, the offence punishable under Section 420 IPC will not be attracted. 7. Learned counsel for the 1[st] respondent submitted that the totality of averments in the complaint coupled with the allegations in the final report will show that an offence under Section 418 IPC will be attracted. Section 418 IPC deals with cheating with a knowledge that wrongful loss may ensue to the person whose interest the offender is bound to protect. The ingredients of the offence are as follows: (i) the accused cheated some person; (ii) that he was under a legal obligation to protect the interest of that person; (iii) that the cheating had relation thereto; and(iv) that he knew that he was likely to cause wrongful loss to such person. In this case, as I have already seen that the definition of cheating is not satisfied, there is no question of bringing the offence under Crl.M.C.No.1417/2010 7 Section 418 IPC. Further, none of the materials before the court prompts me to think that the petitioner/accused was under a legal obligation to protect the interest of the 1[st] respondent. Therefore, the offence under Section 418 IPC is also not attracted. 8. It may be true that the petitioner is guilty of cheating or fraudulent representation in the common parlance, but that will not make him liable under the provisions of IPC. Hence I find that the continuance of the proceedings is an unwanted exercise and an abuse of process of the court. In the result, the petition is allowed. Final report in Crime No.390 of 2008 of Kottackal Police Station registered under Section 420 IPC, pending in C.C.No.230 of 2010 before the Judicial First Class Magistrate Court, Malappuram is hereby quashed. All pending interlocutory applications will stand dismissed. ## **A. HARIPRASAD, JUDGE.** **cks**