Muhammadiqbal v. State of Kerala

## **`IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V MONDAY, THE 29[TH] DAY OF MAY 2023 / 8TH JYAISHTA, 1945`** ## **`CRL.MC NO. 7238 OF 2019 AGAINST CC NO.1128/2019 OF JUDICIAL MAGISTRATE OF FIRST CLASS -I, CHERTHALA`** ## **`PETITIONER/ACCUSED :`** ``` MUHAMMADIQBAL, AGED33YEARS S/OSHAHITHAHAMSA,THARAYIL,6/247, CHERTHALATALUK,KUTHIYATHODVILLAGE, THURAVOORP.O.,ALAPPUZHA-688532. BYADVS. SUNILNAIRPALAKKAT SRI.K.N.ABHILASH SRI.M.A.AHAMMADSAHEER ``` ## **`RESPONDENTS/STATE AND DEFACTO COMPLAINANT :`** ``` 1THESTATEOFKERALA REP.BYPUBLICPROSECUTOROFHIGHCOURTOFKERALA, ERNAKULAM,COCHIN-682031. 2THESTATIONHOUSEOFFICER, KUTHIYATHODEPOLICESTATION, ALAPPUZHADISTRICT-688533. 3K.HARIS, AGED45YEARS S/OKUNJO,KALTHIPARAMBIL, THIRUMALABHAGAMP.O.,CHAVADY, THURAVOOR,ALAPPUZHA,PIN-688532. ``` ``` BYADVC.J.VARGHESEVINU ``` ``` SRIPRASHANTHMP,PP ``` ``` THISCRIMINALMISC.CASEHAVINGCOMEUPFORADMISSIONON 29.05.2023,THECOURTONTHESAMEDAYPASSEDTHEFOLLOWING: ``` Crl.M.C No.7238 of 2019 2 ## **ORDER** The petitioner herein is the accused in CC No.1128/2019 of the files of the Judicial First Class Magistrate Court-I, Cherthala. In the aforesaid case, he is accused of having committed an offence punishable under Section 420 of the IPC. 2. The records reveal that the law was set in motion on the strength of a complaint lodged by the 3rd respondent before the learned Judicial First Class Magistrate Court I, Cherthala. 3. The case of the de facto complainant, as is borne out from the complaint, is as under: On 10th February 2015, the petitioner, who was running an ID name tag business in Cherthala, convinced the 3rd respondent to invest Rs.3,50,000/- in a new venture with promises of substantial profit. On 21.2.2015, the petitioner handed over a sum of Rs.3,50,000/ and they signed an agreement in the presence of witnesses, stipulating that the petitioner would pay the 3rd respondent Rs. 10,000/- monthly unrelated to the profit, and from the profit, 20% would be given to the 3rd respondent Crl.M.C No.7238 of 2019 3 and 80% to the petitioner. The accounts were to be audited annually by March 31st. However, the petitioner failed to pay the agreed profits and, despite repeated demands, did not return the initial investment. Consequently, the 3rd respondent lodged a complaint with the Magistrate, leading to the registration of a crime. 4. The learned counsel appearing for the petitioner submitted that the allegations in the complaint and in the final report laid by the police do not disclose the ingredients of the offence under Section 420 of the IPC. According to the learned counsel, Annexure A2 agreement was executed between the parties, and if there is a case for the 3rd respondent that the petitioner herein had violated the terms of the agreement, it was for him to approach the civil court and seek for the realization of the amount. The mere fact that the petitioner failed to honor the agreement entered into between the parties will not attract the offence under Section 420 of the IPC, contends the learned counsel. 5. The learned counsel appearing for the party respondent submitted that as the police have investigated the matter and have filed a final report, it is for the petitioner to raise these matters before the Trial Court. According to the learned counsel, huge sums of money were Crl.M.C No.7238 of 2019 4 invested by the 3rd respondent based on an understanding that profit would be given to him. However, the petitioner went back on his words and failed to repay even a single paise by way of profit. The amount invested was also not paid back. 6. I have considered the submissions advanced. The only issue which requires adjudication is as to whether the offence under Section 420 of the IPC would be attracted in the facts and circumstances. 5. Section 415 of the IPC defines “cheating” which reads 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”.” 6. The essential ingredients of the offence of cheating are: 1. 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 no so deceived, and Crl.M.C No.7238 of 2019 5 which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property. 7. To attract the offence of cheating, the essential ingredient is a fraudulent or dishonest inducement. 8. Section 420 IPC defines “cheating and dishonestly inducing delivery of property” which reads as under: “ **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 seven years, and shall also be liable to fine.” 9. To establish the offence of cheating in inducing the delivery of property, the following ingredients need to be proved: - (i) The representation made by the person was false. - (ii) The accused had prior knowledge that the representation he made was false. - (iii) The accused made false representation with dishonest intention in order to deceive the person to whom it was made. - (iv) The act where the accused induced the person to deliver the Crl.M.C No.7238 of 2019 6 property or to perform or to abstain from any act which the person would have not done or had otherwise committed. ## 10. In **R.K. Vijayasarathy v. Sudha Seetharam[1]** , it was held as ## follows: - (i) a person must commit the offence of cheating under Section 415; and - (ii) the person cheated must be dishonestly induced to: - (a) deliver property to any person; or - (b) make, alter or destroy valuable security or anything signed or sealed and capable of being converted into valuable security. Thus, cheating is an essential ingredient for an act to constitute an offence under Section 420IPC. ## 11 **.** In **Uma Shankar Gopalika v. State of Bihar[2] ,** the Apex Court, while explaining the ingredients of the offense under Section 420 of the IPC had held thus “ 6. Now the question to be examined by us is as to whether on the facts disclosed in the petition of the complaint any criminal offence whatsoever is made out much less offences under Sections 420/120-BIPC. The only allegation in the complaint petition against the accused persons is that they assured the complainant that when they receive the insurance claim amounting to Rs 4,20,000, they would pay a sum of Rs 2,60,000 to the complainant out of that but the same has never been paid. … It was 1 > 2 (2005) 10 SCC 336 Crl.M.C No.7238 of 2019 7 pointed out on behalf of the complainant that the accused fraudulently persuaded the complainant to agree so that the accused persons may take steps for moving the consumer forum in relation to the claim of Rs 4,20,000. It is well settled that every breach of contract would not give rise to an offence of cheating and only in those cases breach of contract would amount to cheating where there was any deception played at the very inception. If the intention to cheat has developed later on, the same cannot amount to cheating. In the present case, it has nowhere been stated that at the very inception that there was intention on behalf of the accused persons to cheat which is a condition precedent for an offence under Section 420IPC. 7. In our view petition of complaint does not disclose any criminal offence at all much less any offence either under Section 420 or Section 120-BIPC and the present case is a case of purely civil dispute between the parties for which remedy lies before a civil court by filing a properly constituted suit. In our opinion, in view of these facts allowing the police investigation to continue would amount to an abuse of the process of court and to prevent the same it was just and expedient for the High Court to quash the same by exercising the powers under Section 482CrPC which it has erroneously refused.” ## 12. In **Vesa Holdings (P) Ltd. v. State of Kerala**[3] , the Apex ## Court had occasion to observe thus: “13. It is true that a given set of facts may make out a civil wrong as also a criminal offence and only because a civil remedy may be available to the complainant that itself cannot be ground to quash a criminal proceeding. The real test is whether the allegations in the complaint disclose the criminal offence of cheating or not. In the present case, there > 3 (2015) 8 SCC 293 Crl.M.C No.7238 of 2019 8 is nothing to show that at the very inception there was any intention on behalf of the accused persons to cheat which is a condition precedent for an offence under Section 420IPC. In our view, the complaint does not disclose any criminal offence at all. Criminal proceedings should not be encouraged when it is found to be mala fide or otherwise an abuse of the process of the court. The superior courts while exercising this power should also strive to serve the ends of justice. In our opinion, in view of these facts allowing the police investigation to continue would amount to an abuse of the process of the court and the High Court committed [Maniprasad v. State of Kerala, 2011 SCC OnLine Ker 4251] an error in refusing to exercise the power under Section 482CrPC to quash the proceedings.” 13. In the case on hand, it is undisputed that Annexure A2 agreement was executed between the parties when the funds were transferred, outlining the method of profit sharing. The defacto complainant alleges that the accused failed to fulfill the terms of this agreement and did not disburse any of the promised profits. However, there is no allegation in the complaint that the petitioner harbored any deceptive intentions at the time of entering into the agreement. Had the complainant incurred any losses due to the breach of the agreement committed by the petitioner, the appropriate recourse is to seek damages, compensation, and recovery through the Civil court. In the event of a breach of any terms or conditions of the contract, the complainant has the right to initiate proceedings for an Crl.M.C No.7238 of 2019 9 injunction or specific performance. However, such a breach doesn't inherently imply fraudulent intent on the part of the accused. It is pertinent to note that Annexure A2 agreement includes provisions specifying how the defacto complainant may recover funds from both the movable and immovable assets of the petitioner. 14. The legal position is well settled that when a prosecution at the initial stage is asked to be quashed, the test to be applied by the court is as to whether the uncontroverted allegations as made prima facie establish the offence. It is also for the court to take into consideration any special features which appear in a particular case to consider whether it is expedient and in the interest of justice to permit a prosecution to continue. This is so on the basis that the court cannot be utilised for any oblique purpose and where, in the opinion of the court, chances of an ultimate conviction are bleak and, therefore, no useful purpose is likely to be served by allowing a criminal prosecution to continue, the court may, while taking into consideration the special facts of a case also, quash the proceeding even though it may be at a preliminary stage. (See Madhavrao Jiwajirao Scindia and Ors. v. Sambhajirao Chadrojirao Angre and Ors. [AIR 1988 SC 709]; Prof. R.K. Vijayasarathy v. Sudha Seetharam [2019 (1) KLD 532]. Crl.M.C No.7238 of 2019 10 15. Having considered the entire facts and in the light of the above precedents, I am of the view that this is one of those rare and exceptional cases, wherein this Court will be justified in terminating the criminal proceedings by invoking the powers under S.482 of the Code. - In the result, this petition is allowed. Annexure A1 final report in Crime No.622/2019 of the Kuthiyathodu Police station and all further proceedings pursuant thereto against the petitioner in C.C. No.1128 of 2019 - on the file of the Judicial Magistrate of the I Class I Cherthala are quashed. Sd/- **RAJA VIJAYARAGHAVAN V, JUDGE** NS Crl.M.C No.7238 of 2019 11 ## **`APPENDIX OF CRL.MC 7238/2019`** ``` PETITIONERANNEXURES: ``` ``` ANNEXUREA1THECERTIFIEDCOPYOFTHEFINALREPORTDATED 25.6.2019INCCNO.1128/2019ONTHEFILESOF JUDICIALFIRSTCLASSMAGISTRATECOURT-1 CHERTHALA,ALAPPUZHADISTRICT ANNEXUREA2THETRUECOPYOFTHEAGREEMENTDATED21.2.2015 ENTEREDINTOBYTHEPETITIONERANDTHE3RD RESPONDENT ANNEXUREA3THETRUECOPYOFTHEFIRNO.622/2019DATED 4.6.2019OFKUTHIYATHODEPOLICESTATION, ALAPPUZHADISTRICTALONGWITHPRIVATE COMPLAINT ANNEXUREA4THETRUECOPYOFTHE161STATEMENTINFIRNO 622/2019DATED4.6.2019OFKUTHIYATHODEPOLICE STATION,ALAPPUZHADISTRICT ```