Supreme Court of India
BINOD KUMAR & ORS.versusSTATE OF BIHAR & ANR.
- Citation
- 2014 INSC 754
- Decided
- 30 October 2014
- Disposal
- Appeal(s) allowed
- Bench
- T S THAKUR
Holding
The complaint fails to disclose the essential ingredients of criminal breach of trust or cheating, so the criminal proceedings under Sections 406/1208 IPC must be quashed under Section 482 CrPC.
Summary
The appellants, college officials, were charged under Sections 406 and 1208 IPC for criminal breach of trust after allegedly withholding a bill amount of Rs 34,505 owed to a contractor. The contractor had pursued civil remedies, but the second respondent filed a criminal complaint alleging misappropriation of the funds. The trial court ordered framing of charges, and the appellants sought discharge under Section 227 CrPC, which was denied; they then filed a petition under Section 482 CrPC to quash the proceedings, which the Patna High Court also dismissed. The Supreme Court examined whether the complaint disclosed the essential ingredients of criminal breach of trust or cheating, finding no allegation of dishonest intent and that the essential ingredients of Sections 405, 406 and 420 IPC were missing. Applying the principles governing the exercise of inherent powers under Section 482, the Court held that the criminal proceedings were an abuse of process and should be quashed. Consequently, the appeal was allowed and the High Court’s order set aside, leaving the parties to pursue their civil suits.
Issues considered
- Whether the criminal complaint under Sections 406/1208 IPC discloses a cognizable offence of criminal breach of trust.
- Whether the High Court was correct in refusing to quash the proceedings under Section 482 CrPC.
- Whether the essential ingredients of Sections 405 and 420 IPC are present in the complaint.
Legislation cited
- Code of Criminal Procedure, 1973s. 227, s. 250, s. 482
- Indian Penal Code, 1860s. 1208, s. 405, s. 406, s. 420
Subjects
criminal breach of trustSection 482 CrPCquashing of criminal proceedingsdishonest misappropriationcivil remedycriminal complaintIndian Penal CodeSection 406 IPC
Judgment
• [2014] 11 S.C.R. 85
BINOD KUMAR & ORS. A
v.
STATE OF BIHAR & ANR.
(Crir:ninal Appeal No. 2327 of 2014)
OCTOBER 30, 2014
B
[T.S. THAKUR AND R. BANUMATHI, JJ.]
Code of Criminal Procedure, 1973 - s. 482 - Criminal
proceedings u/s. 406 /PC - Quashing of - Denial by High
Court - Held: Exercise of inherent powers to quash the c
proceedings is called for, only where the complaint does not
disclose any offence or is frivolous - The complaint in the
present case does make out a case of dishonest
misappropriation or cheating - Proceedings liable to be
quashed. o
Allowing the appeal, the Court
HELD: 1. In proceedings instituted on criminal
complaint, exercise of the inherent powers to quash the
proceedings is called for only in case where the complaint E
does not disclose any offence or is frivolous. The power
u/s. 482 Cr.P.C. should be sparingly invoked with
circumspection, it should be exercised to see that th.e
process of law is not abused or misused. At the stage of
quashing the complaint/FIR, the High Court is not to F
embark upon an .. nquiry as to the probability, reliability
or the genuineness of the allegations made therein. [Para
9] [89-C-D]
Smt. Nagawwa vs. Veeranna Shivalingappa Konjalgi G
(1976) 3 SCC 736: 1976 Suppl. SCR 123; Indian Oil
Corporation vs. NEPC India Ltd. And Ors. (2006) 6 SCC 736:
2006 (3) Suppl. SCR 704 - relied on.
85 H
A
86 SUPREME COURT REPORTS [2014] 11 S.C.R.
2.1. In the present case, in the complaint, on the face
•
of it, no allegations are made attracting the ingredients
of s. 405 IPC. There is no iota of allegation as to the
dishonest intention in misappropriating the property. To
make out a case of criminal breach of trust, it is not
B sufficient to show that money has been retained. It must
also be shown that the appellants dishonestly disposed
of the same in some way or dishonestly retained the
same. The mere fact that the appellants did not pay the
money to the complainant does not amount to criminal
C breach of trust. [Para 18] [96-D-F]
2.2. Criminal proceedings are not a short cut for other
remedies. Since no case of criminal breach of trust or
dishonest intention of inducement is made out and the
essential ingredients of ss. 405/420 IPC are missing, the
D prosecution of the appellants u/ss. 406/1208 IPC, is liable
to be quashed. [Para 19] [96-H; 97-A]
Case Law Reference:
1976 (0) Suppl. SCR 123 Relied on Para 9
E
2006 (3) Suppl. SCR 704 Relied on Para 10
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal
No. 2327 of 2014.
F From the Judgment & Order date? 18.02.2011 of the High
Court of Patna In Crl. Misc. Application No. 10656/2003.
Dr. Manish Singhvi, Atul Jha, Sandeep Jha, Dharmendra
Kumar Sinha for the Appellants.
G Prerna Singh, Gopal Singh, Rajiv Kumar, Kusum
Chaudhary for the Respondents.
The Judgment of the Court was delivered by
R. BANUMATHI, J. 1. Leave granted.
H
• BINOD KUMAR v. STATE OF BIHAR
[R. BANUMATHI, J.]
2. Whether the charges under Section 406 IPC and the
87
A
criminal complaint for criminal breach of trust for allegedly
retaining the bill amount payable to respondent No.4 is liable
to be quashed is the point falling for consideration in this
appeal.
B
3. Payment of bill pertaining to the contract executed by
the second respondent in Tilka Manjhi Bhagalpur University had
a chequered history. Case of second respondent is that
contract was entered into between him and K.S.S. College on
4.9.1990 for the construction of building of K.S.S. College, C
Lakhisarai, a constituent unit of Tilka Manjhi Bhagalpur
University. According to second respondent, since money and
requisite materials were not given to him in time, the work was
not completed within stipulated period. The university vide letter
dated 9.5.1995, informed the respondent No.2 that his contract
is terminated and all his dues including final bill, earnest money D
and security deposit etc. will be released after consultation with
the College Development C9mmittee. The University Engineer
vide letter. dated 4.6.1996, addressed to the Principal of the
college, informed that a payment of Rs.48,505/- is payable to
the contractor; but the respondent No.2 was not paid the E
aforesaid bill amount. Finally, the respondent was paid
Rs.14,000/- vide cheque No. EMGCO-OP.Z No. 0127627, as
per the direction of the College Development Committee and
balance amount of Rs.34,505/- was not paid to him. Aggrieved
by the said non-payment of entire amount, respondent No.2 F
filed a criminal complaint case No.196-C/1997 in the Court of
Sub Divisional Judicial Magistrate, Lakhisarai for criminal
breach of trust, alleging that the amount of Rs.34,505/- was not
paid to him and that the amount was utilized by the appellants
in some other work. G
4. The appellants filed an application under Section 227
Cr.P.C. before the Court of Sub Divisional Judicial Magistrate,
Lakhisarai seeking their discharge from the criminal case. The
Court of Sub Divisional Judicial Magistrate, Lakhisarai vide its H
88 SUPREME COURT REPORTS [2014] 11 S.C.R. •
A order dated 2.12.2002 dismissed the said petition and directed
the appellants to remain present in the court on 8.1.2003 for
framing of charges under Section 406/1208 IPC. The
appellants filed petition under Section 482 Cr.P.C. before the
Patna High Court for quashing the said order and by the
B impugned order dated 18.2.2011, the High Court dismissed the
petition. Aggrieved by the same, the appellants are before us.
5. Dr. Manish Singhvi, learned counsel appearing for the
appellants, contended that the act of withholding of payment to
the second respondent was as per the direction issued by the
C Vice-Chancellor and no case is made out for misappropriation
of funds under Section 406 IPC. It was contended that the act
of the appellants was done in the discharge of their public
duties and there was no dishonest intention to misappropriate
the amount and the essential ingredients of criminal breach of
D trust are not made out and the High Court has not properly
appreciated the matter.
6. Mr. Gopal Singh, learned counsel for respondent No.1
- State of Bihar, submitted that the instant petition does not
E relate to any police case and the matter was never subjected
to police investigation. It was, however, submitted that on
examination of four witnesses, Magistrate found that a prima
facie case was made out against the appellants and therefore,
High Court rightly dismissed the petition filed under Section 482
F Cr.P.C.
7. Ms. Kusum Chaudhary, learned counsel appearing for
the second respondent contended that the application for
discharge was rightly rejected by the Magistrate as the case
filed by the secondfaspondent is a warrant case instituted other
G than on police report and since prima-facie case was made
out, the discharge application was rightly dismissed by the trial
court. It was also contended that as per the terms and conditions
of the contract, the second respondent had executed the work
and the same was also measured and verified by the University
·H Engineer and while so, the appellants with malafide intention
• BINOD KUMAR v. STATE OF BIHAR ·
[R. BANUMATHI, J.]
withheld the second respondent's dues and thus, committed
89
A
criminal breach of trust and the High Court rightly dismissed
the petition filed under Section 482 Cr.P.C.
8. We have carefully considered the rival contentions and
also perused the impugned order and the materials.on record. B
9. In proceedings instituted on criminal complaint, exercise
of the inherent powers to quash the proceedings is called for
only in case where the complaint does not disclose any offence
or is frivolous. It is well. settled that the power under Section 482
Cr.P.C. should be sparingly invoked with circumspection, it C
should be exercised to see that the process of law is not
abused or misused. The settled principle of law is that at the
stage of quashing the complaint/FIR, the High Court is not to
'embark upon an enquiry as to the probability, reliability or the
genuineness of the allegations made therein. In Smt. Nagawwa D
vs. Veeranna Shivalingappa Konjalgi, (1976) 3 SCC 736, this
Court enumerated the cases where an order of the Magistrate
issuing process against the accused can be quashed or set
aside as under:
E
"(1) where the allegations made in the complaint or the
statements of the witnesses recorded in support of
the same taken at their face value make out
absolutely no case against the accused or the
complainant does not disclose the essential
F
ingredients of an offence which is alleged against
the accused;
(2) where the allegations made in the complaint are
patently absurd and inherently improbable so that
no prudent person can ever reach a conclusion that G
there is a sufficient ground for proceeding against
the accused;
(3) where the discretion exercised by the Magistrate in
issuing process is capricious and arbitrary having
H
A
90 SUPREME COURT RE;PORTS [2014] 11 S.C.R.
been based either on no evidence or on materials
•
which are wholly, irrelevant or inadmissible; and
(4) where the complaint suffers from fundamental legal
defects such as, want of sanction, or absence of
a complaint by legally competent autbority and the
B like."
The Supreme Court pointed out that the cases mentioned are
purely illustrative and provide sufficient guidelines to indicate
contingencies where the High Court can quash the
C proceedings.
10. In Indian Oil Corporation vs. NEPC India Ltd. And
Ors., (2006) 6 SCC 736, this Court has summarized the
principles relating to exercise of jurisdiction under Section 482,,
Cr.P.C. to quash complaints and criminal proceedings as
0
under:-
"The principles relating to exercise of jurisdiction under
Section 482 of the Code of Criminal Procedure to quash
complaints and criminal proceedings have been stated
E and reiterated ~y this Court in several decisions. To
mention a few-Madhavrao Jiwajirao Scindia v.
Sambhajirao Chandrojirao Angre (1988) 1 SCC 692,
State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335;
Rupan Deol Bajaj v. Kanwar Pal Singh Gill (1995) 6 SCC
F 194, Central Bureau of Investigation v. Duncans Agro
Industries Ltd (1996) 5 SCC 591; State of Bihar v.
Rajendra Agrawal/a (1996) 8 SCC 164, Rajesh Bajaj v.
State NCT of Delhi, (1999) 3 SCC 259; Medchl
Chemicals & Pharma (P) Ltd. v. Biological E. Ltd(2000)
G 3 SCC 269 Hridaya Ranjan Prasad Verma v. State of
Bihar (2000) 4 SCC 168, M. Krishnan v. Vijay Singh
(2001) 8 SCC 645 and Zan du Pharmaceutical Works
Ltd. v. Mohd. Sharaful Haque( 2005) 1 SCC _122. The
principles, relevant to our purpose are:
H
• (1)
BINOD KUMAR v. STATE OF BIHAR
[R. BANUMATHI, J.]
A complaint can be quashed where the
91
A
allegations made in the complaint, even if they are
taken at their face value and accepted in their
entirety, do not prima facie constitute any offence
or make out the case alleged against the accused.
B
For this purpose, the complaint has to be examined
as a whole, but without examining the merits of the
allegations. Neither a detailed inquiry nor a
meticulous analysis of the material nor an
assessment of the reliability or genuineness of the
allegations in the complaint, is warranted while c
examining prayer for quashing of a complaint.
(it) A complaint may also be quashed where it is a
clear abuse of the process of the court, as when
the criminal proceeding is found to have been D
initiated with ma/a tides/malice for wreaking
vengeance or to cause harm, or where the
allegations are absurd and inherently improbable.
(iit) The power to quash shall not, however, be used
E
to stifle or scuttle a legitimate prosecution. The
power should be used sparingly and with abundant
caution.
(iv) The complaint is not required to verbatim
reproduce the legal ingredients of the offence F
alleged. If the necessary factual foundation is laid
in the complaint, merely on the ground that a few
ingredients have not been stated in detail, the
proceedings should not be quashed. Quashing of
the complaint is ·warranted only where the G.
complaint is so bereft of even the basic facts which
are absolutely necessary for making out the
offence.
(v) A given set of facts, may make out: (a) purely a civil
H
A
92 SUPREME COURT REPORTS [2014] 11 S.C.R.
wrong; or (b) purely a criminal offence; or (c) a civil
wrong as also a criminal offence. A commercial
•
transaction or a contractual dispute, apart from
furnishing a cause of action for seeking remedy in
civil law, may also involve a criminal offence. As the
8 nature and scope of a civil proceeding are different
from a criminal proceeding, the mere fact that the
complaint relates to a commercial transaction or
breach of contract, for which a civil remedy is
available or has been availed, is not by itself a
c ground to quash the criminal proceedings. The test
is whether the allegations in the complaint disclose
a criminal offence or not."
11. Referring to the growing tendency in business circles
to convert purely civil disputes into criminal cases, in
D paragraphs (13) and (14) of the Indian Oil Corporation's case
(supra), it was held as under:-
"13. While on this issue, it is necessary to take notice of a
growing tendency in business circles to convert purely civil
E disputes into criminal cases. This is obviously on account
of a prevalent impression that civil law remedies are time
consuming and do not adequately protect the interests of
lenders/creditors. Such a tendency is seen in several family
disputes also, leading to irretrievable breakdo~_n of
marriages/families. There is also an impression that if a
F
person could somehow be entangled in a criminal
prosecution, there is a likelihood of imminent settlement.
Any effort to settle civil disputes and claims, which do not
involve any criminal offence, by applying pressure through
criminal prosecution should be deprecated and
G
discouraged. In G. Sagar Suri v. State of U.P., (2000) 2
SCC 636 this Court observed: (SCC p. 643, para 8)
"It is to be seen if a matter, which is essentially of
a civil nature, has been given a cloak of criminal
H offence. Criminal proceedings are not a short cut
• BINOD KUMAR v. STATE OF BIHAR
[R. BANUMATHI, J.]
93
l:lf other remedies available in law. Before issuing A
process a criminal court has to exercise a great
deal of caution. For the accused it is a serious
matter. This Court has laid certain principles on the
basis of which the High Court is to exercise its
jurisdiction under Section 482 of the Code. B
Jurisdiction under this section has to be exercised
to prevent abuse of the process of any court or
otherwise to secure the ends of justice."
14. While no one with a legitimate cause or grievance C
should be prevented from seeking remedies available in
criminal law, a complainant who initiates or persists with
a prosecution, being fully aware that the criminal
proceedings are unwarranted and his remedy lies only in
civil law, should himself be made accountable, at the end
of such misconceived criminal proceedings, in D
accordance with law. One positive step that can be taken
by the courts, to curb unnecessary prosecutions and
harassment of innocent parties, is to exercise their power
under Section 250 CrPC more frequently, where they
discern malice or frivolousness or ulterior motives on the E
part of the complainant. Be that as it may."
12. Coming to the facts of this case, it is no doubt true that
the dispute relates to the non-payment of bill amount of
Rs.34,505/- pertaining to the contract executed by respondent F
No.2. It is also pertinent to note that respondent No.2 preferred
CWJC No.5803/1999 wherein an order dated 5.4.2000 was
passed by Patna High Court directing the Vice-Chancellor of
Bhagalpur University to release the balance amount of
Rs.34,505/- with interest at the rate of 18% w.e.f. 1.10.1994 till G
the date of payment and pay the interest at the rate of 11 % on
the sum of Rs.14,000/- from 1.10.1994 till 9.12.1996.
Aggrieved by the said order, Bhagalpur University preferred
LPA No.716/2000 wherein it was directed that since it was not
a statutory contract, no direction for payment of money could
H
A
94 SUPREME COURT REPORTS (2014] 11 S.C.R.
be issued and the respondent No.2 can pursue other remedies
•
available in law for the recovery of money. Aggrieved by the
said order, respondent No. 2 filed SLP(C) No. CC 4832/2001
which was dismissed as withdrawn by this Court by Order
dated 30.7.2001 granting him liberty to approach the
B appropriate forum. Respondent No:2 thereafter filed Money Suit
No. 2/2002 before the Court of Sub Judge 1st Court, Lakhisarai
on 20.4.2002 for recovery of Rs. 69,01 Of- i.e. double the
amount of Rs.34,505/- and the said suit is pending. Second ·
appellant representing the university had also filed Money Suit
c No.2/2006 before the same Court on 4.2.2006 claiming a sum
of Rs.1,44,437/- with interest against the second respondent-
contractor. These acts of the parties show that the parties have
already had recourse to the civil remedies that are available
to them in law.
D 13. Appellant Nos.1 and 2 were then employed as Principal
and Professor respectively in KSS College, Lakhisarai and
appellant No.3 as Bursar of the said college. Tt1e appellants
have stated that they had no intention to cheat or dishonestly
misappropriate the amount of Rs. 34,505/-. The appellants
E have stated that there were disputes regarding the quality of
work done and also non-return of some cement bags by the
second respondent. It is stated that in view of the dispute
between the university and 'the contractor and stoppage of
further construction by the second respondent and with the
F direction and approval of the Vice-Chancellor, c,ontract of the
appellant was terminated and his bill was placed before the
College Development Committee. In its meeting dated
8.12.1995, the Committee considered the claim of the second
respondent and rejected his certain claims and the same was
G informed to the Vice-Chancellor. The university vide letter No.
E/243 dated 25.3.1998 directed to stop final payment to the
second respondent and the university requested the Executive
Engineer for verification of quality of work done. Appellants have
stated that the amount of Rs. 34,505/- has been lying in the
H account of the university and only on instruction from the Vice-
• BINOD KUMAR v. STATE OF BIHAR
[R. BANUMATHI, J.]
Chancellor, the amount was not paid to the second respondent
and no dishonest intention could be attributed to the appellants.
95
A
14. At this stage, we are only concerned with the question
whether the averments in the complaint taken at their face value
make out the ingredients of criminal offence or not. Let us now
B
examine whether the allegations made in the complaint when
taken on their face value, are true and constitute the offence
as defined under Section 406.
15. Section 405 IPC deals with criminal breach of trust. A
careful reading of the Section 405 IPC shows that a criminal C
breach of trust involves the following ingredients:
(a) a person should have been entrusted with property,
or entrusted with dominion over property;
(b) that person should dishonestly misappropriate or D
convert to his own use that property, or dishonestly
use or dispose of that property or wilfully suffer any
other person to do so;
(c) that such misappropriation, conversion, use or E
disposal should be in violation of any direction of
law prescribing the mode in which such trust is to
be discharged, or of any legal contract which the
person has made, touching the discharge of such
~~ F
16. Section 406 IPC prescribes punishment for criminal
breach of trust as defined in Section 405 IPC. For the offence
punishable under Section 406 IPC, prosecution must prove:
(i) that the accused was entrusted with property or with G
dominion over it and
(ii) that he (a) misappropriated it, or (b) converted it to
his own use, or (c) used it, or (d) disposed of it.
H
A
96 SUPREME COURT REPORTS [2014) 11 S.C.R.
The gist of the offence is misappropriation done in a
•
dishonest manner. There are two distinct parts of the said
offence. The first involves the fact of entrustment, wherein an
obligation arises in relation to the property over which dominion
or control .is acquired. The second part deals with
B misappropriation which should be contrary to the terms of the
obligation which is created.
17. Section 420 IPC deals with cheating. Essential
ingredients of Section 420 IPC are:- (i) cheating; (ii) dishonest
inducement to deliver property or to make, alter or destroy any
C valuable security or anything which is sealed or signed or is
capable of being converted into a valuable security, and (iii)
mens rea of the accused at the time of making the inducement.
18. In the present case, looking at the allegations in the
D complaint on the face of it, we find no all~gations are made
attracting the ingredients of Section 405 IPC. Likewise, there
are no allegations as to cheating or the dishonest intention of
the appellants in retaining the money in order to have wrongful
gain to themselves or causing wrongful loss to the complainant.
E Excepting the bald allegations that the appellants did not make
payment to the second respondent and that the appellants
utilized the amounts either by themselves or for some other
work, there is no iota of allegation as to the dishonest intention
in misappropriating the property. To make out a case of criminal
F breach of trust, it is not sufficient to show that money has been
retained by the appellants. It must also be shown that the
appellants dishonestly disposed of the same in some way or
dishonestly retained the same. The mere fact that the appellants
did not pay the money to the complainant does not amount to
criminal breach of trust.
G
19. Even if all the allegations in the complaint taken at the
face value are true, in our view, the basic essential ingredients
of dishonest misappropriation and cheating are missing.
Criminal proceedings are not a short cut for other remedies.
H Since no case of criminal breach of trust or dishonest intention
• BINOD KUMAR v. STATE OF BIHAR
[R. BANUMATHI, J.]
of inducement is made out and the essential ingredients of
97
A
Sections 405/420 IPC are missing, the prosecution of the
appellants under Sections 406/1208 IPC, is liable to be
quashed.
20. The impugned order of the High Court is set aside and
8
this appeal is allowed. Parties are at liberty to work out their
remedy in the civil suits which they have already had recourse
to.
Kalpana K. Tripathy Appeal allowed.
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