2013 ALL MR (Cri) 90


Mr. Dattaprasad Ramvilas Lakhotia & Anr. Vs. The State Of Maharashtra & Anr.

Criminal Application No. 3197 of 2010

27th September, 2011

Petitioner Counsel: Shri R.F. TOTLA
Respondent Counsel: Smt. S.D. SHELKE, Shri M.M. JOSHI

(A) Penal Code (1860), Ss.420, 406 - Breach of promise - Whether amounts to cheating - Accused partners of firm sold assets of partnership firm to another party on failure of complainant i.e. proposed buyer to perform his part of promise in due time - Held, change of mind on such failure being breach of promise, would be a civil wrong - The same would not amount to cheating. (Para 15)

(B) Penal Code (1860), Ss.420, 406 - Cheating - Alleged suppression of fact of existence of third partner by accused partners of registered partnership firm - Due to alleged suppression complainant i.e. proposed buyer of assets of firm, failed to obtain Bank loan - Held, constitution of a registered firm is a matter of record open to public - However, complainant made no enquiry as to status of constitution of firm - Hence, even if said fact remained untold by accused - The same would not amount to any suppression - Complainant not entitled to raise plea of cheating. (Paras 9, 11)

Cases Cited:
Smt. Chand Dhawan Vs. Jawahar Lal, AIR 1992 SC 1379 [Para 4]
M/s Medchl Chemicals and Pharma Pvt. Ltd. Vs. M/s Biological ER. Ltd., 2000 ALL MR (Cri) 999 (S.C.) =AIR 2000 SC 1869 [Para 4]
M. Krishnan Vs. Vijay Singh, 2001 ALL MR (Cri) 2406 (S.C.) =AIR 2001 SC 3014 [Para 4]
Kamaladevi Agarwal Vs. State of W.B., 2002 ALL MR (Cri) 176 (S.C.) =AIR 2001 SC 3846 [Para 4]


A. H. JOSHI, J. :- Rule. Rule made returnable forthwith, and heard finally, by consent.

2. This Application is for quashing complaint dated 17.7.2010 i.e. Crime No. I-277/2010 registered with Kranti Chowk Police Station, Aurangabad, for offences punishable under Sections 406 and 420 of the Indian Penal Code. The copy of complaint is at page 16.

3. Learned Advocate for the petitioner has argued in support of the application. The points pressed by him, are summarized as follows:-

(i) The dispute/subject-matter of the contract is of purely civil nature.

(ii) There is no element of cheating in the initial stage of the promise or representation.

(iii) When a party fails to perform promise on his/her part, other side elects to treat it as a breach of promise, in no case, treating it to be a case of breach, amounts to cheating.

(iv) Even upon accepting every word and sentence contained in the complaint to be true, still no offence is made out.

4. The learned Advocate for respondent No.2-complainant has relied on following judgments.

(i) Smt. Chand Dhawan vs. Jawahar Lal AIR 1992 SC 1379

(ii) M/s. Medchl Chemicals and Pharma Pvt. Ltd. vs. M/s Biological ER. Ltd. AIR 2000 SC 1869 : [2000 ALL MR (Cri) 999 (S.C.)].

(iii) M. Krishnan vs. Vijay Singh AIR 2001 SC 3014 : [2001 ALL MR (Cri) 2406 (S.C.)].

(iv) Kamaladevi Agarwal vs. State of W.B. AIR 2001 SC 3846 : [2002 ALL MR (Cri) 176 (S.C.)].

These judgments are relied on, to urge that when the contents of the complaint describe the commission of offence, whether those are true and would be scrutinised at the time of trial. Therefore, worthiness thereof is not a matter to be seen while scrutinizing the worthiness of the complaint for investigation.

5. The substance of the grievance of the complainant can be described in short, as follows:-

(i) The applicants are partners of Messrs Bhalchandra Packeging Industries.

(ii) They agreed to sell the business and assets of partnership firm to the complainant, for total consideration of ' 37,50,000/-.

(iii) Out of agreed amount, a sum of ' 5,00,000/- was paid as advance/ earnest money. Amount of ' 7,00,000/- was to be paid on getting loan liability transferred in the name of buyer.

(iv) According to the complainant, the bank did not sanction the loan, as it had revealed during scrutiny of documents by the bank that there was third partner in the said partnership firm, who was not signatory to the agreement to sell.

(v) Applicants have sold out the assets of the firm to another party, falsely alleging failure to perform the promise in due time by the complainant.

(vi) According to the complainant, the acts of applicants of suppression of fact of existence of third partner and sale of the property to another person amount to commission of offence of cheating, and hence, the complaint for offences under Sections 406 and 420 of the Indian Penal Code, was filed, and was registered as Crime No.I-277/2010 at Kranti Chowk Police Station, Aurangabad.

6. Learned Advocate for the respondent has opposed the application, contending that :-

(a) The contents of the complaint adequately describe the commission of offences

(b) There existed element of cheating, as the accused persons had suppressed the fact that partnership was composed of three partners.

(c) Cause of complainant's failure to perform the part is due to suppression by the accused.

(d) Element of cheating existed at the very threshold.

(e) The petition deserves to be dismissed.

7. We have perused the complaint. It is not in dispute that M/s Bhalchandra Packeging Industries is a registered partnership firm. Being a registered firm, constitution thereof is a matter governed by partnership deed, and copy thereof is lodged with the Registrar of Firms, and names of partners are to be recorded in the Register-to be maintained by him.

8. It is not the plea of complainant that the firm is not registered.

9. Respondent-complainant's contention that the applicants had suppressed existence of third partner in the firm, is thus a matter relating to a fact and which is a matter of record open to public for inspection and supply of copies, being the record of a public office. It would, therefore, be stretching too far to say that the applicants had suppressed the fact that there existed third partner.

10. Admittedly:-

(a) The complainant had not paid the balance amount which was payable on account of his inability to obtain loan from the bank.

(b) There was exchange of notices between the complainant and the accused complaining breach on the part of one another, and complainant has already approached the civil court.

11. The contents of the complaint do not describe as to how at the inception, the element of cheating existed. Moreover, if the suppression is cheating, the material which was discoverable by bare enquiries, and even if it is not told, this does not amount to suppression. Even according to the complainant, it is not a case of "deliberate" and active "misrepresentation", complaint does not contain any statement that alleged fact was latent.

12. The description contained in the complaint is thus defficient of description of commission of offences, namely, as to how suppression of existence of third partner amounted to cheating on the face of registration of the firm which is a matter of public record.

13. Articulation of words and a statement in the body of the complaint that accused has "cheated", cannot be blindly accepted as adequate description. This court cannot be oblivious to the fact that when the enquiry as to status of constitution of firm, on the basis of the facts which were available i.e. registration of partnership firm, was not made by the complainant, such a complainant would not be entitled to raise a plea of cheating.

Therefore, the plea of suppression is absurd on the very face, and no prudent man can be led to believe it to be possible. The complaint sounds like tell-tale.

14. When admittedly complainant was not able to pay balance amount and get loan liability transferred, it would be far fetching to be persuaded that sale by vendor after the date stipulated for payment, would amount to cheating. By any presumption, such act cannot be related back to the date of promise i.e. inception.

15. The intention to cheat has to be described to be existing at the very inception, which is essential ingredient of the offence of cheating. Change of mind on failure to perform the promise, or even otherwise, would be a civil wrong being breach of promise. This breach, ipso facto, would not amount to cheating, being a matter of civil contract.

16. We have perused the said judgments relied upon by the respondent. The general principle laid down therein is that the doors of criminal justice system ought not be throttled, and if the complaint describes commission of offence, a crime would not result into quashing of FIR .

We hold that, in the present case, the complainant has failed to describe commission of offences, and present is a fit case to quash the complaint on that ground.

17. We, therefore, allow the application in terms of prayer clause (B) and make the Rule absolute. Crime No. I-277/2010 registered with Kranti Chowk Police Station, Aurangabad, for offences punishable under Sections 406 and 420 of the Indian Penal Code, is quashed.

Application allowed.