ARUN BHANDARIversusSTATE OF U.P. AND OTHERS

                     [2013] 3 S.C.R. 961


                      ARUN BHANDARI                                 A
                               v.
               STATE OF U.P. AND OTHERS
              (Criminal Appeal No. 78 of 2013)

                     JANUARY 10, 2013
                                                                    B
   [K. S. RADHAKRISHNAN AND DIPAK MISRA, JJ.]

      Constitution of India, 1950 - Art. 226 - Commercial
transaction - Subsequently, purchaser filed criminal case
against the sellers u/ss.406 and 420 /PC - Police report that       C
the case was of civil nature and no criminal offence made out
- In protest petition by the complainant, CJM took cognizance
of the case - Writ petition against order of CJM - High Court
quashed the criminal case in respect of one of the accused
- Held: A case which may apparently look to be of civil nature      D
may also contain ingredients of criminal offences - The facts
of the instant case show that it was not purely civil in nature -
Neither the FIR nor the protest petition was ma/a fide, frivolous
or vexatious, hence interference of High Court in exercise of
its jun·sdiction u/Art. 226 was not justified - Prima facie case    E
is made out against the accused that they had the intention
to cheat - Penal Code, 1860 - ss. 406 and 420.

     Respondent No.2 and her husband respondent No.3,
claimed to be the owners of the property in question and
offered to sell the same to the appellant. They jointly             F
received a sum of Rs.1,05,00,00/- from the appellant
towards part payment of the sale consideration. The
agreement was executed on the basis of a registered
agreement executed in favour of respondent No.3 by the
original allottee to sell the property in question. The             G
appellant came to know that respon1ent No;2, in whose
favour the original allottee had e::'-cuted a power of
attorney, had already transferred the property in question

                              961                                   H
    962      SUPREME COURT REPORTS              [2013] 3 S.C.R.


A to some other person. The appellant demanded refund
  of the advance amount. As the same was not refunded,
  he lodged an FIR. The police gave its report that the case
  was of civil nature and no criminal offence was made out.
  On the protest petition of the appellant, the Chief Judicial
B Magistrate (CJM) held that even if the suit could be filed,
  the facts of the case revealed criminal culpability and
  hence he took cognizance u/ss.420 and 406 IPC. The
  Criminal Revision, against the order was dismissed
  approving the order of CJM. Respondent filed writ
c petition. High Court dismissed the writ petition so far as
  respondent No.3 (husband) was concerned holding hat
  there was prima facie case for offences u/ss.406 and 420
  IPC. The petition was allowed so far as respondent No.2
  (wife) was concerned holding that there was no privity of
  contract between respondent No.2 and the complainant.
0
  Hence the present appeal by the complainant.

          Allowing the appeal, the Court

       HELD: 1. The High Court, while exercising power
E under Article 226 of the Constitution or Section 482 of the
  CrPC, has to adopt a very cautious approach. The
  powers possessed by the High Court u/s. 482 Cr.P.C. are
  very wide and the very plentitude of the power requires
  great caution in its exercise. The court must be careful
F to see that its decision in exercise of this power is based
  on sound principles and such inherent powers should
  not be exercised to stifle a legitimate prosecution. It is not
  proper for the High Court to analyse the case of the
  complainant in the light of all probabilities in order to
G determine whether a conviction would be sustainable
  and on such premises arrive at a conclusion that the
  proceedings are to be quashed. It would be erroneous
  to assess the material before it and conclude that the
  complaint could not be proceeded with. The meticulous
H
         ARUN BHANDARI v. STATE OF U.P.                   963


analysis of the case is not necessary and the complaint          A
has to be read as a whole and if it appears that on
consideration of the allegations in the light of the
statement made on oath of the complainant that the
ingredients of the offence or offences are disclosed and
there is no material to show that the complaint is ma/a          B
fide, frivolous or vexatious, in that event there would be
no justification for interference by the High Court. One of
the paramount duties of the superior court is to see that
person who is absolutely innocent is not subjected to
prosecution and humiliation on the basis of a false and          c
wholly untenable complaint. [Paras 27] (983-C-G; 984-A]

     Central Bureau of Investigation v. Ravi Shanker
Srivasta..,·a, /AS and Anr. (2006) 7 SCC 188: 2006 (4) Suppl.
SCR 450; R. Kalyani v. Janak C. Mehta and Ors. (2009) 1
SCC 516: 2008 (14) SCR 1249; Gian Singh v. State of Punjab       D
and Anr. (2012) 10 SCC 303: 2012 (8) SCR 753 - relied on.

     Janeta Dal v. H.S. Chowdhary (1992) 4 SCC 305: 1992 ·
(1) Suppl. SCR 226; Raghubir Saran (Dr.) v. State of Bihar
AIR 1964 SC 1: 1964 SCR 336; Hamida v. Rashid (2008) 1 E
SCC 474: 2007 (5) SCR 937; State of Orissa v. Saroj Kumar
Sahoo (2005) 13 SCC 540: 2005 (5) Suppl. SCR 548 -
referred to.

     2. In the present case, neither the FIR nor the protest
petition was ma/a fide, frivolous or vexatious. It is also not   F
a case where there is no substance in the complaint. The
manner in which the investigation was conducted by the
officer who eventually filed the final report and the
transfer of the investigation earlier to another officer who
had almost completed the investigation and the entire            G
case diary which has been adverted to in detail in the
protest petition prima facie makes out a case against the
husband and the wife regarding collusion and the
intention to cheat from the very beginning, inducing him
to hand over a huge sum of money to both of them. Their          H
    964     SUPREME COURT REPORTS              (2013] 3 S.C.R.


A conduct of not stating so many aspects, namely, the
  Power of Attorney executed by the original owner, the will
  and also the sale effected by the wife in the name of 'M'
  on 28.7.2008 cannot be brushed aside at this stage. [Para
  31] [985-E-H; 986-A]
B
       3. Some times a case may apparently look to be of
  civil nature or may involve a commercial transaction but
  such civil disputes or commercial disputes in certain
  circumstances may also contain ingredients of criminal
  offences and such disputes have to be entertained
C notwithstanding they are also civil disputes. The present
  case falls in the category which cannot be stated at this
  stage to be purely civil in nature on the basis of the
  admitted documents or the allegations made in the FIR
  or what has come out in the investigation or for that
D matter what has been stated in the protest petition. Prima
  facie there is allegation that there was a guilty intention
  to induce the complainant to part with money. It is not a
  case where a promise initially made could not be lived up
  to subsequently. It is not a case where it could be said
E that even if the allegations in entirety are accepted, no
  case is made out. [Paras 24 and 27] [981-A-B; 983-A-C]

      Mohammed Ibrahim and Ors. v. State of Bihar and Anr.
  (2009) 8 SCC 751; Rajesh Bajaj v. State NCT of Delhi (1999)
F 3 sec 259: 1999 (1) SCR 1012 - relied on.
        All Cargo Movers (/) Pvt. Ltd. v. Dhanesh Badarmal Jain
    and Anr. AIR 2008 SC 247: 2007 (11) SCR 271 - referred
    to.

G      4. Therefore, the High Court, while exercising the
  extraordinary jurisdiction, had not proceeded on the
  sound principles of law for quashment of order taking
  cognizance. The High Court has been guided by the non-
  existence of privity of contract and without appreciating
H the factual scenario has observed that the wife was
         ARUN BHANDARI v. STATE OF U.P.                 965


merely present. When the wife had the Power of Attorney        A
in her favour and was aware of execution of the will, had
accepted the money along with her husband from the
complainant, it is extremely difficult to say that an
innocent person is dragged to face a vexatious litigation
or humiliation. The entire conduct of the respondent Nos.      B
2 and 3 would show that a prima facie case is made out
and allegations are there on record in this regard that they
had the intention to cheat from the stage of negotiation.
[Para 31] [986-A-D]

    Hridya Rajan Pd. Verma and Ors. v. State of Bihar and      C
Anr. AIR 2000 SC 2341: 2000 (2) SCR 859; Muran· Lal
Gupta v. Gopi Singh (2006) 2 SCC (Crl.) 430; B. Suresh
Yadav v. Sharita Bee and Anr. (2007) 13 SCC 107: 2007 (11)
SCR 238 - distinguished.
                                                               D
     State of Haryana v. Bhajan Lal 1992 Supp (1) SCC 335:
1990 (3) Suppl. SCR 259; Rupen Deal Bajaj (Mrs.) v.
Kanwar Pal Singh Gill AIR 1996 SC 309: 1995 (4) Suppl.
SCR 237; State of Kera/av. O.C. Kuttan AIR 1999 SC 1044:
1999 (1) SCR 696; State of Kera/a v. A. Pareed Pillai and      E
Anr. AIR 1973 SC 326; G. V. Rao v. L.H. V. Prasad and Ors.
(2000) 3 SCC 693: 2000 (2) SCR 123; Jaswantrai Manila/
Akhaney v. State of Bombay AIR 1956 SC 575:1956 SCR
483; Mahadeo Prasad v. State of W.B. AIR 1954 SC 724;
S.N. Palanitkar and Ors. v. State of Bihar and Anr. AIR 2001   F
SC 2960: 2001 (4) Suppl. SCR 397 - referred to.

                    Case Law Reference:
  2000 (2) SCR 859             distinguished       Para 11
  (2006) 2 sec (Cri) 430       distinguished       Para 11     G

  2007
  ,. ' (11) · SCR
                .
                  238     distinguished            Para 11
  1990 (3) Suppl. SCR 259 referred to              Para 14
  1995 (4) Suppl. SCR 237      referred to         Para 14     H
    966      SUPREME COURT REPOFns                  (2013] 3 S.C.R.


A     1999 (1) SCR 1012               referred to          Para 14

      1999 (1) SCR 696                referred to          Para 14

      AIR 1973 SC 326                 referred to          Para 19

      2000 (2) SCR 123                referred to          Para 20
B
      1956 SCR 483                   referred to           Para 20

      AIR 1954 SC 724                 referred to          Para 20

      2001 (4) Suppl. SCR 397 referred to                  Para 21
c     (2009) 8   sec 751             relied on             Para 24

      2007 (11) SCR 271              referred to           Para 25
      1999 (1) SCR 1012              relied on             Para 26
D     2006 (4) Suppl. SCR 450        relied on             Para 27'

      1992 (1) Suppl. SCR 226 referred to                  Para 27

      1964 SCR 336                   referred to           Para 27

E     2008 (14) SCR 1249             relied on             Para 28
      2007 (5) SCR 937               referred to           Para 28

      2005 (5 ) Suppl. SCR 548 referred to                Para 28
      2012 (8) SCR 753               relied on            Para 30
F
        CRIMINAL AP PELLA TE JURISDICTION : Criminal Appeal
    No. 78 of 2013.

        From the Judgment & Order dated 29.01.2011 of the High
G   Court of Judicature at Allahabad in Cirminal Misc. Writ Petition
    No. 69 of 2011.

          Amit Khemka, Ambhoj Kumar Sinha, Sanorita D. Bharali
    for the Appellant.

H
           ARUN BHANDARI v. STATE OF U.P.                     967


     Chetan Sharma, Marijit Si'ngh Ahluwalia, Kamal Mohan             A
 Gupt~ for the.Respondent.

      The Judgment of the Cou~t was delivered by

      DIPAK MISRA, J. 1. Leave granted.
                                                                      8
        2. Calling in question the legal pregnability of the order
  dated 29.1.2011 passed by the High Court of Judicature at
   Allahabad in Criminal Misc. Writ Petition No. 69 of 2011
   whereby the learned single Judge in exercise of jurisdiction
   under Articles. 226 and 227 of the Constitution has quashed the    c
   order dated 5.6.2010 passed by the .learned Chief Judicial
   Magistrate,. Gautam Budh Nagar, taking cognizance under
   Sections 406 and 420 of the Indian Penal Code (for short "the
   IPC") against the respondent No. 2 in exercise of power under
   Section 190(1 )(b) of the Code ofCriminal Procedure (for short     0
   "the CrPC") and the order dated 4.12.2010 passed by the
   learned Sessions Judge, Gautam Budh Nagar affirming the
   said order, on the foundation thatthe allegations made neither
   in the FIR nor in the protest petition constitute offences under
   the aforesaid sections, the present appeal by special leave has    E
.. been preferred.

      3. The factual score as depicted are that the appellant is
 a Non-Resident Indian (NRI) living i~ Germany and while
 looking for a property in Greater Noida, he came in contact with
 respondent No. 2 and her husband, Raghuvinder Singh, who             F
 claimed to be the owner of the property in question and offered
 to sell the same. On 24.3.2008, as alleged, ·both the husband
 and wife agreed to sell the residential plot bearing No. 131,
 Block - (Cassia-Fastula Estate), Sector CHl-4, Greater Noida,
 U.P. for a consideration of Rs.2,43,97,880/- and an agreement        G
 to that effect was executed by the respondent No. 3, both the
 husband and wife jointly received a sum of Rs.1,05,00,000/-
 from the appellant towards part payment of the sale
 consideration. It was further agreed that the respondent Nos.
 2 and 3 would obtain permission from Greater Neida Ai;thority        H
    968      SUPREME COURT REPORTS                   [2013] 3 S.C.R.


A to transfer the property in his favour and execute the deed of
  transfer within 45 days from the grant of such permission.

          4. As the factual antecedents would further reveal, the said
    agreement was executed on the basis of a registered
B   agreement executed in favour of the respondent No. 3 by the
    original allottee, Smt. Vandana Bhardwaj to sell the said plot.
    After expiry of a month or so, the appellant enquired from the
    respondent No. 3 about the progress of delivery of possession
    from the original allottee, but he received conflicting and
    contradictory replies which created doubt in his mind and
C   impelled him to rush to Neida and find out the real facts from
    the Greater Neida Authority. On due .enquiry, he came to know
    that there was a registered agreement in favour of the 3rd
    respondent by Smt. Vandana Bhardwaj; that a power of attorney
    had been executed by the original allottee in favour of the
D   respondent No. 2, the wife of respondent No. 3; that the original
    allottee, to avoid any kind of litigation, had also executed a will
    in favour of the respondent No. 3; and that the respondent No.
    2 by virtue of the power of attorney, executed in her favour by
    the original allottee, had transferred the said property in favour
E   of one Monika Goel who had got her name mutated in the
    record of Greater Neida Authority. Coming to know about the
    aforesaid factual score, he demanded refund of the money from
    the respondents, but a total indifferent attitude was exhibited,
    which compelled him to lodge an FIR at the Police Station,
F   Kasna, which gave rise to the Criminal Case No. 563 of 2009.

       5. The Investigating Officer, after completing the
  investigation, submitted the final report stating that the case was
  of a civil nature and no criminal offence had been made out.
  The appellant filed a protest petition before the learned
G Magistrate stating, inter alia, that the accused persons had
  colluded with the Investigating Officer and the Station House
  Officer as a result of which the Investigation Officer, on
  22.10.2009, had concluded the investigation observing that the
  dispute was of the civil nature and intended to submit the final
H
           ARUN BHANDARI v. STATE OF U.P.                     969
                  [DIPAK MISRA, J.]

  report before the court. The appellant coming to know about         A
  the same submitted an application before the concerned Area
  Officer. who, taking note of the same, handed over the
  investigation to another S.S.I. of Police on 24.11.2009. The said
  Investigating Officer recorded statements of the concerned Sub-
  Registrar. the Chief Executive Officer of Greater Noida             B
  Authority, from whose statements it was evident that the
  accused persons were never the owners of the property in
  question and the original allottee had not appeared in the
  Greater Noida Authority and not transferred any documents. He
  also recorded the statement of original allottee who had stated     c
  that the property was allotted in her name in 2005 and on a
  proposal being made by Raghuvinder Singh, a friend of her
  husband, to sell the property she executed an agreement to sell
  in his favour and a General Power of Attorney in the name of
  his wife, Savita Singh, at his instar:ice but possession was not    D
  handed over to them. He also examined one Sharad Kumar
  Sharma, who was a witness to the agreement to sell and the
  Power of Attorney executed by the original allottee, and said
  Sharma had stated that the General Power of Attorney was
  executed to implement the agreement to sell executed in favour
                                                                      E
  of Raghuvinder Singh. The Investigating Officer obtained an
  affidavit from the complainant which was kept in the case diary,
  and on 25.2.2010 it was recorded in the case diary that a
  criminal offence had been made out against the accused
  persons. The case diary also evinced that there was an effort
  for settlement between the informant and the accused persons        F
  and the accused persons were ready to return the amount of
  Rs.1,05,00,000/- to the appellant. On 10.3.2010, he made an
  entry to file the charge-sheet against the respondents under
  Sections 420, 406, 567, 468 and 479 of the IPC. At this stage,
  the accused persons again colluded with the previous                G
  Investigating Officer and the Station House Officer and got the
  investigation transferred to the 'previous Investigating Officer.
· Coming to know about the said development, the appellant
 ·submitted a petition before the Senior Superintendent of Police,
  Gautam Budh Nagar on 6.5.2010, but before any steps could           H
    970      SUPREME COURT REPORTS                 [2013] 3 S.C.R.


A   be taken by the higher authority, the said Investigating Officer
    submitted a final report stating that no offence under the IPC
    had been made out. In the protest petition it was urged that the
    whole case diary should be perused and appropriate orders
    may be passed.
B
       6. On the basis of the aforesaid protest petition the Chief
  Judicial Magistrate, on 5.6.2010, perused the final report
  submitted by the Investigating Officer, the entire case diary, the
  protest petition and the statements recorded under Section 161
  of the CrPC by the previous Investigating Officer and came to
C hold that even if a suit could be filed, the fact situation prima
  facie revealed criminal culpability and, accordingly, took
  cognizance under Sections 420 and 406 of the IPC against the
  respondents and issued summons requiring them to appear
  before the court on 9.7.2010.
D
        7. Being dissatisfied with the said order, the respondents
  preferred Criminal Revision No. 108 of 2010 before the learned
  Sessions Judge contending, inter alla, that the FIR had been
  lodged with an ulterior motive to pressurize the respondents to
E return the earnest money and the complainant had, in fact,
  committed breach of the terms of the agreement: that the
  allegations made in the FIR could only be ascertained on the
  basis of evidence and documents by a civil court of competent
  jurisdiction regard being had to the nature of the dispute; that
F the learned Magistrate had taken cognizance without any
  material in the case diary: and that the exercise of power under
  Section 190(1)(b) of the CrPC was totally unwarranted in the
  case at hand. The revisional court scanned the material brought
  on record, perused the case diary in entirety, took note of the
  conduct of the Investigating Officer who had submitted the final
G report stating that the allegations did not constitute any criminal
  offence despite the material brought on record during the
  course of investigation by the Investigating Officer, who was
  appointed at the instance of the Area Officer, scrutinized the
  substance of material collected to the effect that Raghuvinder
H
          ARUN BHANDARI v. STATE OF U.P.                          971
                 (DIPAK MISRA, J.]

Singh had no right, title and interest in the property and a              A
General Power of Attorney was executed in favour of his wife
to sell, transfer and convey all rights, title and interest in the plot
in question on behalf of the original allottee and that the
husband and wife had concealed the material factum of
execution of Power of Attorney from the complainant and                   B
opined that both the accused persons had fraudulent and
dishonest intention since the beginning of the negotiation with
the complainant and, therefore, the allegations prima facie
constituted a criminal offence and it could not be said that it
was a pure and simple dispute of civil nature. Being of this view         C
he gave the stamp of approval to the order passed by the
learned Magistrate.
     8. The unsuccess in revision compelled the respondents
to approach the High Court in a writ petition and the Writ Court
came to hold that on the basis of the allegations made in the             o
FIR and the evidence collected during investigation it could not
be said that the instant case is simpliciter a breach of contract
not attracting any criminal liability as far as the husband was
concerned and there was a prima facie case triable for offences
under Section 406 and 420 of the IPC. However, while dealing              E
with the allegations made against the wife, the High Court
observed that there being no entrustment of any property by the
complainant to her and further there being no privily of contract
between them, she was under no legal obligation to disclose
to the complainant that she held a registered Power of Attorney
                                                                          F
from the original allottee to sell and alienate the property in
question and such non-disclosure of facts could not be said to
have constituted offence either under Section 406 or Section
420 of the IPC. Being of this view the High Court partly allowed
the writ petition and quashed the order taking cognizance and             G
summoning of the wife, the respondent No. 2 herein.
     9. We have heard Mr. Amit Khemka, learned counsel for
the appellant, and Mr. Chelan Sharma, learned senior counsel
appearing for the respondent Nos. 2 and 3.
     10. It is submitted by Mr. Khemka learned counsel for the            H
     972        SUPREME COURT REPORTS               [2013] 3 S.C.R.


A appellant that the High Court could not have scrutinized the
  material brought on record as if it was sitting in appeal against
  the judgment of conviction and also committed error in ignoring
  certain material facts which make. the order sensitively
  susceptible. It is his further submission that the learned
  Sessions Judge had considered the entire gamut of facts and
8
  appositely opined that the order taking cognizance could not
  be flawed but the High Court by taking note of the fact that there
  was no privity of contract and the non-disclosure was not
  material has completely erred in its conclusion and, hence. the
C order deserves to be lancinated.
        11. Mr. Chetan Sharma, learned senior counsel, resisting
  the aforesaid contentions, canvassed that mere presence of the
  respondent No. 2 at the time of signing of the agreement to sell
  does not amount to an offence under Section 420 of the IPC
o as she did not sign the document nor did she endorse the
  same as a witness. It is urged by him that no criminal liability
  can be fastened on her, for the sine qua non for attracting
  criminality is to show dishonest intention right from the very
  inception which is non-existent in the case at hand. It is
E submitted by him that if the criminal action is allowed to continue
  against her that would put a premium on a commercial strategy
  adopted by the appellant in roping a lady only to have more
  bargaining power in the matter to arrive at a settlement despite
  the breach of contract by him. The learned senior counsel would
F further contend that the appellant has taken contradictory stands
  inasmuch as in one way he had demanded the forfeited amount
  and the other way lodged an FIR to set the criminal law in
  motion which is impermissible. To bolster the said contentions
  reliance has been placed on the judgments rendered in Hridya
  Rajan Pd. Verma & Others v. State of Bihar and Another1,
G Murari Lal Gupta v. Gopi Singh 2 and 8. Suresh Yadav v.
  Sharita Bee and Another3.
    1.   AIR 2000 SC 2341.
    2.   (2006) 12 sec (Cri) 430.
H 3.     (2001i 13 sec 107.
          ARUN BHANDARI v. STATE OF U.P.                      973
                 [DIPAK MISRA, J)

      12. At the very outset, it is necessary to state that on a      A
perusal of the FIR. the protest petition and the order passed
by the learned Magistrate. it is demonstrable that at various
stages of the investigation different views were expressed by
the Investigating Officers and the learned Magistrate has
scrutinized the same and taking note of the allegations had           B
exercised the power to reject the final report and take
cognizance. The court taking cognizance and the revisional
court have expressed the view that both the respondents had
nurtured dishonest intentions from the very beginning of making
the negotiation with the complainant and treated non-disclosure       c
of execution of Power of Attorney in favour of the respondent
No. 2 herein by the original owner as a material omission as a
consequence of wh.ich damage· had been caused to the
complainant. The learned counsel for the appellant would
submit that the High Court has misguided itself by observing
                                                                      D
that there was no entrustment of any property to the wife and
further there was no privily of contract and non-disclosure on
her part do not constitute an offence. The learned senior counsel
for the respondent has highlighted the factum of absence of
privily of contract. Regard being had to the allegations brought
                                                                      E
on record, the question that emerges for consideration is
whether the High Court is justified in exercising its extraordinary
jurisdiction to quash the order taking cognizance against the
respondent No. 2 herein ..

    13. At this juncture, we may note that Raghuvinder Singh,         F
respondent No. 3, had filed SLP (Crl) No. 3894 of 2011 which
has been dismissed on 13.5.2011.

     14. As advised at present we are inclined to discuss the
decisions which have been commended. to us by the learned             G
senior counsel for the respondent. In Hridya Rajan Pd. Verma
(supra) a complaint was filed that the accused persons therein
had deliberately and intentionally diverted and induced the
respondent society and the complainant by suppressing certain
facts and giving false and concocted information a.nd
                                                                      H
    974        SUPREME COURT REPORTS              [2013] 3 S.C.R.


A  assurances to the complainant so as to make him believe that
  the deal was a fair one and free from troubles. The further
  allegation was that the accusei:l person did so with the intention
  to acquire wrongful gain for themselves and to cause wrongful
   loss to the Society and the complainant and they had induced
s the complainant to enter into negotiation and get advance
  consideration money to them. The two-Judge Bench referred
  to the judgment in State of Haryana v. Bhajan La/4 wherein this
  Court has enumerated certain categories of cases by way of
  illustration wherein the extraordinary power under Article 226
c or the inherent powers under Section 482 of the CrPC could
  be exercised either to prevent abuse of the process of the court
  or otherwise to secure the ends of justice. The Bench also
  referred to the decisions in Rupen Deol Bajaj (Mrs.) v. Kanwar
  Pal Singh Gi/15, Rajesh Bajaj v. State NCT of Delhi6 and State
  of Kera/a v. 0. C. Kuttan 1 wherein the principle laid down in
0
  Bhajan Lal (supra) was reiterated. The Court posed the
  question whether the case of the appellants therein came under
  any of the categories enumerated in Bhajan Lal (supra) and
  whether the allegations made in the FIR or the complaint if
E accepted in entirety did make out a case against the accused-
  appellants therein. For the aforesaid purpose advertence was
  made to offences alleged against the appellants, the
  ingredients of the offences and the averments made in the
  complaint. The Court took the view that main offence alleged
  to have been committed by the appellants is cheating
F punishable under Section 420 of the IPC. Scanning the
  definition of 'cheating' the Court opined that there are two
  separate classes of acts which the persons deceived may be
  induced to do. In the first place he may be induced fraudulently
  or dishonestly to deliver any property to any person. The second
G class of acts set-forth in the section is the doing or omitting to

    4    1992 Supp (1) sec 335.
    5    AIR 1996 SC 309.
    6.   (1999) 3 sec 259.
H 7. AIR 1999 SC 1044.
         ARUN BHANDARI v. STATE OF U.P.                    975
                [DIPAK MISRA, J.]

do anything which the person deceived would not do or omit to     A
do if he were not so deceived. In the first class of cases the
inducing must be fraudulent or dishonest. In the second class
of acts, the inducing must be intentional but not fraudulent or
dishonest. Thereafter, the Bench proqeeded to state as
follows:-                                                         B

    "16. In determining the question it has to be kept in mind
    that the distinction between mere breach of contract and
    the offence of cheating is a fine one. It depends upon the
    intention of the accused at the time ()f inducement which C
    may be judged by his subsequent conduct but for this
    subsequent conduct is not the sole test. Mere breach of
    contract cannot give rise to criminal prosecution for
    cheating unless fraudulent or dishonest intention is shown
    right at the beginning of the transaction, that is the time
    when the offence is said to have been committed. D
    Therefore, it is the intention which is the gist of the offence.
    To hold a person guilty of cheating it is necessary to show
    that he had fraudulent or dishonest intention at the time of
    making the promise. From his mere failure to keep up
    promise subsequently such a culpable intention· right at the E
    beginning, that is, when he made the promise cannot be
    presumed."

     15. After laying down the principle the Bench referred to
the complaint and opined that reading the averments in the F
complaint in entirety and accepting the allegations to be true,
the ingredients of intentional deception on the part of the
accused right at the beginning of the negotiations for the
transaction had neither been expressly stated nor indirectly
suggested in the complaint. All that the respondent No. 2 had G
alleged against the appellants was that they did not disclose
to him that one of their brothers had filed a partition suit which
was pending. The requirement that the information was not
disclosed by the appellants intentionally in order to make the
respondent No. 2 part with property was not alleged expressly H
    976       SUPREME COURT REPORTS                 [2013] 3 S.C.R.


A   or even impliedly in the complaint. Therefore, the core postulate
    of dishonest intention in order to deceive the complainant-
    respondent No. 2 was not made out even accepting all the
    averments in the complaint on their face value and, accordingly,
    ruled that in such a situation continuing the criminal proceeding
B   against the accused would be an abuse of process of the Court.

          16. From the aforesaid decision it is quite clear that this
    Court recorded a finding that there was no averment in the
    r;omplaint that intention to deceive on the part of the accused
    was absent right from the beginning of the negotiation of the
C   transaction as the said allegation had neither been expressly
    made nor indirectly suggested in the complaint. This Court took
    note of the fact that only non-disclosure was that one of their
    brothers had filed a partition suit which was pending and the
    allegation that such a disclosure was not made intentionally to
D   deceive the complainant was absent. It is worthy to note that
    this Court referred to certain averments in the complaint petition
    and scrutinized the allegations and recorded the aforesaid
    finding. The present case, as we perceive, stands on a different
    factual ~atrix altogether. The learned Sessions Judge has
E   returned a finding that there was intention to deceive from the
    very beginning, namely, at the time of negotiation but the High
    Court has dislodged the same on the foundation that the
    respondcmt No. 2 was merely present and there was no privily
    of contract between the complainant and her. W,e will advert to
F   the said factual analysis at a later stage after discussing the
    other authorities which have been placed reliance upon by the
    learned senior counsel for the respondents.

        17. In Murari Lal Gupta {supra) a two-Judge Bench
G   quashed the criminal complaint instituted under Sections 406
    and 420 of the IPC on the following analysis: -

          "The complaint does not make any averment so as to infer
          any fraudulent or dishonest inducement having been made
          by the petitioner pursuant to which the respondent parted
H
             ARUN BHANDARI v. ,STATE OF U.P.                      977
                    [DIPAK MISRA, J.]

        with the money. It is not the case of the respondent that the A
        petitioner does not have the property or that the petitioner
        was not competent to enter into an agreement to sell or
        could not have transferred title in the property to the
        respondent. Merely because an agreement to sell was
        entered into which- agreement the petitioner failed to B
        honour, it cannot be said that the petitioner has cheated
•· .    the respondent. No case for prosecution under Section 420
        or Section 406 IPC is made out even prima facie. The
        complaint filed by the respondent and that too at
        Madhepura against the petitioner, who is a resident of c
        Delhi, seems to be an attempt to pressurize the petitioner
        for coming to terms with the respondent."

        In our considered opinion the factual position in the
   aforesaid case is demonstrably different and, hence, we have
   no hesitation in stating that the said decision is not applicable D
   to the case at hand.
          18. In 8. Suresh Yadav (supra) the complainant, who was
    defendant in the suit, had filed a written statement from which
    it was manifest that she at all material times was aware of the       E
    purported demolition of the rooms standing on the suit property.
    It was contended in the written statement that the suit properties
    were different from the subject-matter of the deed of sale. After
    filing the written statement the respondent had filed the
    complaint under Section 420 of the IPC. The Court took note           F
    of the fact that there existed a dispute as to whether the property
    whereupon the said two rooms were allegedly situated was the
    same property forming the subject-matter of the deed of sale
    or not and a civil suit had already been filed pertaining to the
   .said dispute. The Court also took note of the fact that at the time   G
    of execution of the sale deed the accused had not made any
    false or misleading representation and there was no omission
    on his part to do anything which he could have done. Under
    these circumstances, the Court opined that the dispute between
    the parties was basically a civil dispute. It is apt to note here     H
    978        SUPREME COURT REPORTS                 [2013] 3 S.C.R.


A that the Court also opined that when a stand had been taken
  in a complaint petition which is contrary to or inconsistent with
  the stand taken by him in a civil suit, the same assumes
  significance and had there been an allegation that the accused
  got the said two rooms demolished and concealed the said
B fact at the time of execution of the deed of sale, the matter
  would have been different. Being of this view, this Court
  quashed the criminal proceeding as that did amount to abuse
  of the process of the court. On an x-ray of the factual score, it
  can safely be stated that the said pronouncement renders no
c assistance to the lis in question.
       19. Before we proceed to scan and analyse the material
  brought on record in the case at hand, it is seemly to refer to
  certain authorities wherein the ingredients of cheating have
  been highlighted. In State of Kera/a v. A. Pareed Pillai and
D Anothe~. a two-Judge Bench ruled that to hold a person guilty
  of the offence of cheating, it has to be shown that his intention
  was dishonest at the time of making the promise and such a
  dishonest intention cannot be inferred from a mere fact that he
  could ne>t subsequently fulfil the promise.
E
        20. In G. V. Rao v. L.H. V. Prasad and Others9, this Court
    has held thus: -

          "7. As mentioned above, Section 415 has two parts. While
          in the first part, the person must "dishonestly" or
F         "fraudulently" induce the complainant to deliver any
          property; in the second part. the person should intentionally
          induce the complainant to do or omit to do a thing. That is
          to say, in the first part, inducement must be dishonest or
          fraudulent. In the second part, the inducement should be
G         intentional. As observed by this Court in Jaswantrai
          Manila/ Akhaney v. State of Bombay10 a guilty intention

    8.   AIR 1973 SC 326.
    9.   (2000) 3 sec 693.
H   10. c2000) 3 sec 693.
          ARUN BHANDARI v. STATE OF U.P.                      979
                [DIPAK MISRA, J.]

     is an essential ingredient of the offence of cheating. In        A
     order, therefore. to secure conviction of a person for the
     offence of cheating, "mens rea" on the par} of that person,
     must be established. It was also observed in Mahadeo
   · Prasad v. State of W B.,, that in order to constitute the
     offence of cheating, the intention to deceive should be in       B
     existence at the time when the inducement was offered."

     21. In S.N. Palanitkar and Others v. State of Bihar and.
Another12, it has been laid down that in order to constitute an .
offence of cheating, the intention to deceive should be in C
existence at the time when the inducement was made. It is
necessary to show that a person had fraudulent or dishonest
intention at the time of making the promise, to say that he
committed an act of cheating. A mere failure to keep up
promise subsequently cannot be presumed as an act leading
to cheating.                                                      D

     22. In the said case while dealing with the ingredients of
criminal breach of trust and cheating, the Bench observed thus:-

    "9. The ingredients in order to constitute a criminal breach      E
    of trust are: (1) entrusting a person with property or with any
    dominion over property (ii) that person entrusted (a)
    dishonestly misappropriating or converting that property to
    his own use; or (b) dishonestly using or disposing of that
    property or wilfully suffering any other person so to do in
                                                                      F
    violation (1) of any direction of law prescribing the mode
    in which such trust is to be discharged, (i1) of any legal
    contract made, touching the discharge of such. trust

    10. The ingredients of an offence of cheating are: (1) there
    should be fraudulent or dishonest inducement of a peison          G
    by deceiving him, (il)(a) the person so deceived should be
    induced to deliver any property to any person, or to consent

11. AIR 1956 SC 575.
12. AIR 2001 SC 2960.                                                 H
    980       SUPREME COURT REPORTS                 [2013] 3 S.C.R.


A         that any person shall retain any property; or (b) the person
          so deceived should be intentionally induced to do or omit
          to do anything which he would not do or omit if he were
          not so deceived; and (iii) in cases covered by (il)(b), the
          act of omission should be one which causes or is likely to
B         cause damage or harm to the person induced in body,
          mind, reputation or property."

         23. Coming to the facts of the present case, it is luminicent
    from the FIR that the allegations against the respondent No. 2
    do not only pertain to her presence but also about her total
C   silence and connivance with her husband and transfer of
    property using Power of Attorney in favour of Monika Goel. It
    is also graphically clear. that the complainant had made
    allegations that Raghuvinder Singh and his wife, Savita Singh,
    had met him at the site, showed the registered agreement and
D   the cash and cheque were given to them at that time. It is also
    mentioned in the FIR that on 28.7.2008, Savita Singh had
    received the possession of the said plot and on the same day
    it was transferred in the name of Mcmika Goel. It is also
    reflectible that on 28.2.2007, Raghuvinder Singh and Savita
E   Singh had got prepared and registered two documents in the
    office of the Sub-Registrar consisting one agreement to sell in
    favour of Raghuvinder Singh and another General Power of
    Attorney in favour of the wife. The allegation of collusion by the
    husband and wife has clearly been stated. During the
F   investigation, as has been stated earlier, many a fact emerged
    but the same were ignored and a final report was submitted.
    In the protest petition the complainant had asseverated
    everything iii detail about what emerged during the course of
    investigation. The learned Chief Judicial Magistrate after
G   perusal of the case diary and the PIR has expressed the view
    that a cas~ under Sections 406 and 420 of the IPC had been
    made out against both the accused persons. The learned
    Sessions Judge, after referring to the ingredients and the role
    ascribed, concurred with the same. The High Court declined
H   to accept the said analysis on the ground that it was mere
          ARUN BHANDARI v. STATE OF U.P.                       981
                 [DIPAK MISRA, J.]

presence and further there was no privity of contract between          A
the complainant and the respondent No. 2.

     24. At this stage, we may usefully note that some times a
case may apparently look to be of civil nature or may involve a
commercial transaction but such civil disputes or commercial
                                                                       8
disputes in certain circumstances may also contain ingredients
of criminal offences and such disputes have to be entertained
notwithstanding they are also civil disputes. In this context, we
may reproduce a passage from Mohammec;I Ibrahim and
Others v. State of Bihar and Another13: -
                                                                       c
     "8. This Court has time and again drawn attention to the
     growing tendency of the complainants attempting to give
     the cloak of a criminal offence to matters which are
     essentially and purely civil in nature,.obviously either to
     apply pressure on the accused, or out of enmity towards D             ·
     the accused, or to subject the accused to harassment.
     Criminal courts should ensure that proceedings before it
     are not used for settling scores or to pressurize parties to
     settle civil disputes. But at the same time, it should be
     noted that several disputes of a civil nature may also · E
     contain the ingredients of criminal offences and if so, will
     have to be tried as criminal offences, even if they also
     amount to civil disputes. (See G. Sagar Suri v. State of
     U.P. 14 and Indian Oil Corpn. v. NEPC India Ltd. 15)"
                                                                       F
      25. In this context we may usefully refer to a paragraph from
All Cargo Movers (/) Pvt. Ltd. V. Dhanesh Badannal Jain &
Anr. 16

     " .....Where a civil suit is pending and the complaint petition
     has been filed one year after filing of the civil suit, we may    G
     for the purpose of finding out as to whether the said
13. (2009) a sec 751.
14. c2000) 6 sec 636.
15. (2006) 6 sec 736.
16. AIR 2008 SC 274.                                                   H
    982       SUPREME COURT REPORTS                  [2013) 3 S.C.R.


A         allegations are prima facie cannot notice the
          correspondence exchanged by the parties and other
          admitted documents. It is one thing to say that the Court
          at this juncture would not consider the defence of the
          accused but it is another thing to say that for exercising
a         the inherent jurisdiction of this Court, it is impermissible ·
          also to look to the admitted documents. Criminal
          proceedings should not be encouraged, when it is found
          to be mala fide or otherwise an abuse of the process of
          the court. Superior Courts while exercising this power
c         should also strive to serve the ends of justice."

          26. In Rajesh Bajaj v. State NCT of Delhi and Others, 17
  while dealing with a case where the High Court had quashed
  an F.l.R., this Court opined that the facts narrated in the
  complaint petition may reveal a commercial transaction or a
D money transaction, but that is hardly a reason for holding that
  the offence of cheating would elude from such a transaction.
  Proceeding further, the Bench observed thus: -

          "11. The crux of the postulate is the intention of the person
E       who induces the victim of his representation and not the .
        nature of the transaction which would become decisive in
        discerning whether there was commission of offence or not.
        The complainant has stated in the body of the complaint
        that he was induced to believe that the respondent would
F       honour payment on receipt of invoices, and that the
        complainant realised later that the intentions of the
        respondent were not clear. He also mentioned that the
        respondent after receiving the goods had sold them to
        others and still he did not pay the money. Such averments
        would prima facie make out a case for investigation by the
G
        authorities."

         27. We have referred to the aforesaid decisions in the field
    to highlight about the role of the Court while dealing with such

H 17. AIR 1999 SC 1216.
          ARUN BHANDARI v. STATE OF U.P.                    983
                 [DIPAK MISRA, J.]

iS!;>_Ues. In our considered opinion the present case falls "in the A
category which cannot be stated at this stage to be purely civil
in nature on the basis of the admitted documents or the
allegations made in the FIR or what has come out in the
investigation or for that matter what has been stated in the
protest petition. We are disposed fo think that prima facie there B
is allegation that there was a guilty intention to induce the
complainant to part with money. We may hasten to clarify that
it is not a case where a promise initially made could not lived
up to subsequently. It is not a case where it could be said that
even if the allegations in entirety are accepted, no case is       c
made out. Needless to emphasise, the High ~ourt, while
exercising power under Article 226 of the Constitution or
Section 482 of the CrPC, has to adopt a very cautious
approach. lri Central Bureau of Investigation v. Ravi Shankar .
Srivastava, /AS and Another, 18 the Court, after referring to
                                                                    0
Janata Dal v. H.S. Chowdhary19 and Raghubir Saran (Dr.) v.
State of Bihar20 , has observed that the powers possessed by
the High Court under Sedion 482 of the IPC are very wide and
the very plentitude of the power requires great caution in its
exerc[se. The court must be careful to see th.at its decision in
                                                                    E
exercise of this power is based on sound principles and such
inherent powers should not be exercised to stifle a legitimate
prosecution. This Court has further stated that it is not proper
for the High Court to analyse the case of the complainant in the
light of all probabilities in order to determine whether a
conviction would be sustainable and on such premises arrive F
at a conclusion that the proceedings are to be quashed. It has
been further pronounced that it would be erroneous to assess
the material before it and conclude that the complaint could not
be proceeded with. The Bench has opined that the meticulous
analysis of the case is not necessary and the complaint has to G
be read as a whole and if it appears that on consideration of
the allegations in the light of the statement made on oath of the
18. (2006) 7 sec 188.
10. (1992) 4 sec 30s.
20. AIR 1964 SC 1.
                                                                   H
    984       SUPREME COURT REPORTS .. [2013] 3 S.C.R.


A   complainant that the ingredients of the offence or offences are
    disclosed and there is no material to show that the complaint
    is mala fide, frivolous or vexatious, in that event there would be
    no justification for interference by the High Court.

         28. In R. Ka/yani v. Janak C. Mehta and Others21 , after
8
    referring to the decisions in Hamida v. Rashid22 and State of
    Orissa v. Saroj Kumar Sahoo, 23· this Court eventually culled out
    the following propositions: -

         ."15. Propositions of law which emerge from the said
c         decisions are:

          a. The High Court ordinarily would not exercise its inherent
          jurisdiction to quash a criminal proceeding and, in
          particular, a first information report unless the allegations
D         contained therein, even if given face value and taken to be
          correct in their entirety, disclosed no cognizable offence.

          b. For the said purpose the Court, save and except in very
          exceptional circumstances, would not look to any document
          relied upon by the defence.
E
          c. Such a power should be exercised very sparingly. If the
          allegations made in the FIR disclose commission of 3J1
          offence, the Court shall not go beyond the same and pass
          an order in favour of the accused to hold absence of any
F         mens rea or actus reus.

          d. If the allegation discloses a civil dispute, the same by
          itself may not be a ground to hold that the criminal
          proceedings should not be allowed to continue."

G        29. It is worth noting that it was observed therein that one
    of the paramount duties of the superior court is to see that
    person who is absolutely innocent is not subjected to
    21. c2oos) 1 sec 516.
    22. c2oos) 1 sec 474.
H 23. c2005) 13 sec 540.
           ARUN BHANDARI v. STATE OF U.P.                      985
                  [DIPAK MISRA, J.]

 prosecution and humiliation on the basis of a false and wholly      A
.·untenable complaint.
     30. Recently in Gian Singh v. State of Punjab and
. Another4 a three-Judge Bench has observed that: -
      "55. In the very nature of its constitution, it is the judicial B
      obligation of the High Court to undo a wrong in course of
      administration of justice or to prevent continuation of
      unnecessary judicial process. This is founded on the legal
      maxim quando lex aliquid a/icui concedit, conceditur et
      id sine qua res ipsa esse non pof(]sf. The full import of
      which is whenever anything is authorised, and especially C
      if, as a matter of duty, required to be done by law, it is found
      impossible to do that thing unless something else not
      authorised in expr.ess terms be also done, may also be
      done, then that something else will be supplied by
      necessary fntendment. Ex debito justitiae is inbuilt in such D
      exercise; the whole idea is to d6 real, complete and
      substantialjustice for which it exists. The power possessed
      by the High Court under Section 482 of the Code is of wide·
      amplitude but requires exercise with great caution and
      circumspection."                                                 E
       31. Applying the aforesaid parameters we have no
 hesitation in coming to hold that neither the FIR nor the protest
 petition was mala fide, frivolous or vexatious. It is also not a
 case where there is no substance in the complaint. The manner
 in which the investigation was conducted by the officer who          F
 eventually filed the final report and the transfer of the
 investigation earlier to another officer who had almost
 completed the investigation and the entire case diary which has
 been adverted to in detail in the protest petition prima facie
 makes out a case against the husband and the wife regarding          G
·collusion and the intention to cheat from the very beginning,
 inducing him to hand over a huge sum of money to both of them.
 Their conduct of not stating so many aspects, namely, the Power
 of Attorney executed by the original owner, the will and also the
 24. c2012) 10 sec 303.                                               H
    986      SUPREME COURT REPORTS                [2013] 3 S.C.R.


A sale effected by the wife in the name of Monika Singh on
  28.7.2008 cannot be brushed aside at this stage. Therefore,
   we are disposed to think that the High Court, while exercising
  the extraordinary jurisdiction, had not proceeded on the sound
  principles of law for quashment of order taking cognizance. The
B High Court and has been guided by the non-existence of privity
  of contract and without appreciating the factual scenario has
  observed that the wife was merely present. Be it noted, if the
  wife had nothing to do with any of the transactions with the
  original owner and was not aware of the things, possibly the
c view of the High Court could have gained acceptation, but when
  the wife had the Power of Attorney in her favour and was aware
  of execution of the will, had accepted the money along with her
  husband from the complainant, it is extremely difficulty to say
  that an innocent person is dragged to face a vexatious litigation
  or humiliation. The entire conduct of the respondent Nos. 2 and
0
  3 would show that a prima facie case is made out and
  allegations are there on record in this regard that they had the
  intention to cheat from the stage of negotiation. That being the
  position, the decision in Hridya Rajan Pd. Verma & Others
  (supra) which is commended to us by Mr. Sharma, learned
E senior counsel, to which we have adverted to earlier, does not
  really assist the respondents and we say so after making the
  factual analysis in detail.
        32. In view of our aforesaid analysis we allow the appeal,
F set aside the order passed by the High Court and direct the
  Magistrate to proceed in accordance with law. However, we
  may clarify that we may not be understood to have expressed
  any opinion on the merits of the case one way or the other and
  our observations must be construed as limited to the order
  taking cognizance and nothing more than that. The learned
G Magistrate shall decide the case on its own merit without being
  influenced by any of our observations as the same have been
  made only for the purpose of holding that the order of
  cognizance is prima facie valid and did not warrant interference
  by the High Court.
H
  K.K.T.                                         Appeal allowed.