Holding

The complaint does not disclose the requisite fraudulent intention, so the criminal proceedings are quashed under Section 482 of the CrPC.

Summary

The appellants, a partner and an employee of a manufacturing firm, were charged under Sections 417 and 420 IPC for allegedly cheating a client who had paid an advance for a custom‑made machine that allegedly did not meet specifications. The client filed a criminal complaint, and the trial court took cognizance. The appellants sought quashing of the proceedings under Section 482 of the CrPC, arguing that the complaint did not disclose the essential ingredients of cheating, particularly a fraudulent intention at the time of the contract. The Gujarat High Court rejected the application. On appeal, the Supreme Court held that the complaint failed to allege any dishonest or fraudulent intention and merely reflected a civil breach of contract, which does not constitute an offence under Section 420. Consequently, the Court exercised its inherent power under Section 482 to quash the criminal proceedings.

Issues considered

The complaint under Section 420 IPC discloses the essential ingredients of the offence of cheating.
Whether a mere breach of contract can amount to cheating under Section 420 IPC.
Whether the High Court should have exercised its inherent power under Section 482 CrPC to quash the proceedings.

Legislation cited

Code of Criminal Procedure, 1973s. 155(2), s. 482, s. 483
Indian Penal Code, 1860s. 114, s. 415, s. 417, s. 420

Subjects

cheatingbreach of contractSection 420 IPCSection 482 CrPCquashing of criminal proceedingsfraudulent intentioninherent jurisdictioncivil vs criminal

Judgment

[2008] 17 S.C.R. 588
e
>
A V.Y. JOSE & ANR. 0--

\I.
STATE OF GUJARAT & ANR.
r-
(Criminal Appeal No. 2048 of 2008)
DECEMBER 16, 2008
B
[S.B. SINHA AND CYRIAC JOSEPH, JJ.]

Code of Criminal Procedure, 1973:
s.482 - Scope of - Complaint under s.420 !PC -
c Quashing of - Held: Absence of averments in complaint
petition wherefrom ingredients of offence of cheating could be
~
made - Hence, case not made out for criminal trial - High ;
Court erred in not quashing the complaint/proceedings -
Penal Code, 1860 - s.420.
D Penal Code, 1860:
s.420 - Cheating - Essential ingredients of.
s.420 - Offence of cheating vis-a-vis breach of contract-
Distinction between.
Criminal Law:
E
Criminal proceedings - If barred only on the ground that
civil law could be taken recourse to.
Respondent no.2-complainant firm placed an order n- ~.'
to manufacture a machine on the firm in which appellant
F 1 was the partner and appellant 2 was the employee. .Jim
Complainant firm paid advance of Rs.3 lacs. A partner of j
complainant-firm found that the machine manufactured
did not conform to the specifications in the order placed
and refused to take delivery thereof. The complainant
called upon the Firm to pay the advance amount along
G
with interest. In reply, the complainant firm was asked to
take delivery of the machine. Thereafter complaint was
filed. The CMM took cognizance of the offences against f ...
the appellants under ss.417, 420 r.w. s.114 IPC. Appellants
588
H'
V.Y. JOSE & ANR. v. STATE OF GUJARAT & ANR. · 589

filed application before High Court for quashing of A
proceedings which was dismissed.
In appeal to this Court, the appellants contended that
the allegations made in the complaint petition even if
given face value and taken to be correct in its entirety did
not disclose an offence under s.420 IPC; a breach of B
contract simpliciter did not constitute an offence under
s.420 IPC; and that there was no averment in the
complaint petition to the effect that the appellant had an
intention to cheat at the time of entering into the contract.
Allowing the appeal, the Court C
HELD: 1. For the purpose of constituting an offence
of cheating, the complainant is required to show that the
accused had fraudulent or dishonest intention at the time
of making promise or representation. Even in a case
where allegations are made in regard to failure on the part o
of the accused to keep his promise, in absence of a
culpable intention at the time of making i'nitial promise
being absent, no offence under s.420 IPC can be said to
have been made out. The facts disclosing the ingredients
of the offence must be averred in the complaint petition.
E
There cannot, furthermore, be any doubt that only
because civil law can be taken recourse to would not
necessarily mean that criminal,,proceedings should be
oarred. [Paras 12 and 13] [596-8-C, D-E]
Pratibha Rani v. Suraj Kumar & Anr. (1985) 2 SCC 370;
F
Rajesh Bajaj v. State NC'! of Delhi & Ors. (1999) 3 SCC 259;
Trisuns Chemical Industry v. Rajesh Agarwal & Ors. (1999) 8
SCC 686 and State ofHaryana & Ors. v. Bhajan Lal & Ors.
(1992) Supp.1 sec 335, relied on.
2. There exists a distinction between pure
contractual dispute of civil nature and an offence of G
cheating. Although breach of contract per se would not
come in the way of initiation of a criminal proceeding,
there cannot be any doubt whatsoever that in absence
of the averments made in the complaint petition
H
590 SUPREME COURT REPORTS [2008) 17 S.C.R.

A wherefrom the ingredients of an offence can be found
out, the court should not hesitate to exercise its
jurisdiction under s.482, Cr.P.C. One of the ingredients of
cheating as defined in s.415 IPC is existence of an
intention of making initial promise or existence thereof
8 from the very beginning of formation of contract. S.482
Cr.P.C. saves the inherent power of the court. It serves a
salutary purpose viz. a person should not undergo
harassment of litigation for a number of years although
no case has been made out against him. It is one thing
to say that a case has been made out for trial and as such
C the criminal proceedings should not be quashed but it is
another thing ·to say that a person should undergo a
criminal trial despite the fact that no case has been made
out at all. [Para 15] [600-A-E]
Hira Lal Hari Lal Bhagwati v. CBI (2003) 5 SCC 257;
D Indian Oil Corporation v. NEPC India Ltd. & Ors. (2006) 6
SCC 736; Vir Prakash Sharma v. Anil Kumar Agarwal (2007)
7 SCC 373 and All Caroga Movers (/) Pvt. Ltd. v. -Dhanesh J.
Badarmal Jain & Anr. (2007) 12 SCALE 39, relied on.
3. A matter which essentially involves dispute of a
.E
civil nature should not be allowed to be the subject
matter of a criminal offence, the latter being not a shortcut
of executing a decree which is non-existent. The Superior
Courts, with a view to maintain purity in the
administration of justice, should not allow abuse of the
F process of court. It has a duty in terms of s.483 Cr.P .C. to
supervise the functionings of the trial courts. An offence
of cheating may consist of two classes of cases : (1)
where the complainant has been induced frau~ulently or
dishonestly. Such is not the case here; (2) When by
G reason of such deception, the complainant has not done
or omitted to do anything which he would not do or omit
to do if he was not deceived or induced by the accused.
It is in that sense, a distinction between a mere breach
of contract and the offence of cheating should be borne
in mind. Having regard to the facts and circumstances of
H
V.Y. JOSE & ANR. v. STATE OF GUJARAT & ANR. 591

~-
the case, no case has been made out against the A·
appellant so as to hold that he should face the criminal
trial. [Paras 18 and 20] [603-E-H; 604-A-B]
State of Madhya Pradesh v. Awadh Kishore Gupta (2004)
1 sec 691, relied on.
Case Law Reference: B
· (1985) 2 SCC 370 relied on Para 13
(1999) 3 SCC 259 relied on Para 13
(1999) 8 SCC 686 relied on Para 13
(1992) Supp.1 SCC 335 relied on Para 14
(2003) 5 SCC 257 · relied on Para 16
c
- (2006) 6 SCC 736 relied on Para 16
(2007) 7 sec 373 relied on Para 17
(2007)12 SCALE 39 relied on Para 17
(2004) 1 SCC 691 relied on Para 21 D
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
No. 2048 of 2008. ..
From the final Judgment and Order dated 14.2.2006 of the
High Court of Gujarat at Ahmedabad in Criminal Misc.
Application No. 659 of 2003. E
Dayan Krishnan, Gautam Narayan, T.V.S. Raghavendra
... Sreyas and Nikhil Nayyar for the Appellants .
Sushil Kumar Jain, Puneet Jain, Ashwin V. Kothamath,
Pratibha Jain and Hemantika Wahi for the Respondents.
F
The Judgment of the Court was delivered by
S.B. SINHA, J. 1. Leave granted.
2. This appeal is directed against a judgment and order
dated 4.12.2006 passed by the High Court of Gujarat at
Ahmadabad dismissing an application filed by the appellants G
herein under Section 482 of the Code of Criminal Procedure.
3. Appellant No.1 is a partner of a partnership firm known
as M/s. Premionics (hereinafter referred to as 'the firm' for the
sake of brevity). Appellant No.2 is an employee of the said firm.
Respondent No.2, the complainant is also a partnership H
592 SUPREME COURT REPORTS [2008) 17 S.C.R.

A firm. On or about 18.10.1997, it placed an order on the firm to
manufacture and install a machine to· purify and desalt the dyes
of a particular quality and quantity with the firm. The total ' .
manufacturing cost of the said machine worked out to be at
Rs.17,96,488/- including excise duty and other incidental
8 charges. Second respondent paid a sum of Rs.3,00,000/- to
the firm as advance and part payment of the said consideration.
There has been a change in the specifications of the said
machine purported to be on the request of the second
respondent in terms whereof two extra modules thereto were
provided. A revised offer was made. The said machine,
C although was to be manufactured and supplied within a period
of three months, the same was not complied with.
4·. A partner of the second respondent along with its
technical engineer visited the site of the firm. Allegedly, it was L
found that the said machine did not conform to the
D specifications contained in the order placed with the firm. It
refused to take the delivery thereof. To the said effect, the
second respondent, by a letter dated 7.4.1998 called upon the
firm to return the amount of advance, stating :
"Please take a trial your Laboralory as discussed and
E concentrate between 25 to 30% & collect it in a new
plastic drum after good cleaning. I am quite sure that this
dye has got a molecular wt. around 400 and p/h in between
4.5 to and I am hopeful that your RO. Machine should work
for this dye only and you have manufactured for another.
F This is not fair and if you cannot manufacture accordingly,
please return our money.
As per specific order an advance 3 lacs of Rupees
in October 1997, please send stamped receipt which we
have not received so far."
G 5.Second respondent by another letter dated 9.7.1999
called upon the firm to refund the said amount together with
interest thereon, stating : • •
"Please send demand draft payable at Nadiad of

H
V.Y. JOSE & ANR. v. STATE OF GUJARAT & ANR. 593
[S.B. SINHA, J.]

Rs.3,97,674/- as per accounts below: A
Rs.3,00,000
Rs. 22,500 Interest of 5 months.
Rs.3,22,500
Rs. 58,050 Interest of 1998-99 B
Rs.3,80,550
Rs. 17,124 Interest of 1999-200
(April, May & June)
Rs.3,97,674 c
We hope you will do the needful immediately."
The firm, by its letter dated 14.7.1999, responded to the
said letter of the Second respondent as under :
"We are in receipt of your letter No.KPH/31/99-2000 dated
9. 7.1999 and are surprised to note your content therein. D
As per your order we have manufactured the system and
you had inspected the system also. We have been
reminding you to take delivery of the system but no action
had been taken from your end so far. We have blocked
material worth more than fourteen lakhs for the last so many E
months."
6. Thereafter, a criminal complaint was filed.
The learned Chief Ju_dicial Magistrate took cognizance of
the offences against the appellants under Section 417, 420
read with Section 114 of the Indian Penal Code. Summons F
were issued.
Appellants filed an application for quashing of the said
proceedings before the Gujarat High Court which by reason of
the impugned judgment has been dismissed.
G
7. Mr. Dayan Krishnan, learned counsel appearing on
behalf of the appellant, would submit :
1. The allegations made in the complaint petition even
if given face value and taken to be correct in its
entirety do not disclose an offence under Section H
594 SUPREME COURT REPORTS [2008] 17 S.C.R.
e
A 420 of the Indian Penal Code.
2. A breach of contract simpliciter does not constitute "'
an offence under Section 420 of the Indian Penal
Code.
3. There is no averment in the complaint petition to the
B effect that the appellant has an intention to cheat at
the time of entering into the contract.
8. Mr. Sushil Kumar Jain, learned counsel appearing on ~
behalf of the respondent No.2, on the other hand, would urge :
(1) The firm manufactured a machine different from the
c one for which order was placed which was found
out on inspection of the site of the firm.
(2) Although a sum of Rs.3,00,000/- was paid by way
of advance, the said amount has not been returned
which manifests dishonest intention on the part of
D
the firm.
(3) In any event, the High Court has rightly refused to ;,
exercise its jurisdi.ction under Section 482 of the
Code of Criminal Procedure which can be resorted
to only in rarest of rare cases.
E
9. We have been taken through the complaint petition in
its entirety. Indisputably, the parties entered into a contract in
terms whereof the firm was to manufacture a machine to purify
and desalt the dyes of a particular quality and quantity. The
specifications for the machine were changed. First appellant
F
issued a letter dated 20.2.1998 to the complainant, stating: >
"Further to our letter No.P:G:971 :97 dated 2.2.98 and
subsequent visit of our Mr. Sunil Rao. Please find enclosed
herewith our revised offer for your reference. You may note
that we are giving two module extra free of charge in the
G system so that the total number of modules becomes 105
no's instead of the committed 103 no's. We are also
enclosing herewith the detailed assembly drawing for your •
reference. Since the system is totally skid mounted the
system can be installed on a leveled platform.
H
V.Y. JOSE & ANR. v. STATE OF GUJARAT & ANR. 595
[S.B. SINHA, J.]

I am sure this will fulfill your pre-dispatch requirement. In A
:. ~
case you need any additional details kindly let us know so
that we can provide the same."
10. Inspection of the machine was admittedly made on
6.4.1998. During the period 18.10.1997 (when the order was
placed) and 6.4.1998, no allegation was made in regard to any B
false design or bad intention on the part of the appellants.
The complainant-respondent No.2 in letters dated 7.4.1998
~
and 9.7.1999 did not also make any allegation in regard to
existence of a dishonest intention on the part of the appellants
herein when the contract was entered into. c
- Ordinarily, we would not have referred to the
correspondences passed between the parties but, indisputably,
the said correspondences have been referred to in the
complaint petition itself. Even before us, a contention had been
raised by Mr. Jain that the appellants' letter dated 7.4.1998 was D
not replied to.
+ 11. Section 415 of the Indian Penal Code defines cheating
as under:
"Section 415. -Cheating-Whoever, by deceiving any
person, fraudulently or dishonestly induces the person so E
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 F
-A. likely to cause damage or harm to that person in body,
mind, reputation or property, is said to 'cheat'."
An offence of cheating cannot be said to have been made
out unless the following ingredients are satisfied :
"(i) deception of a person either by making a false or G
misleading representation or by other action or
. i omission;
(ii) fraudulently or dishonestly inducing any person to
~ deliver any property; or
H
'
,.._
596 SUPREME COURT REPORTS [2008] 17 S.C.R.
e
A (iii) To consent that any person shall retain any property
and finally intentionally inducing that person to do ~ ~
or omit to do anything which he would not do or
omit."
12. For the purpose of constituting an offence of cheating,
B the complainant is required to show that the accused had
fraudulent or dishonest intention at the time of making promise
or representation. Even in a case where allegations are made
in regard to failure on the part of the accused to keep his
promise, in absence of a culpable intention at the time of
C making initial promise being absent, no offence under Section
420 of the Indian Penal Code can be said to have been made
out.
13. No exception can be taken to the submission of Mr.
Jain that it is not necessary to reproduce the wordings of a
penal provision in the complaint petition, but, there cannot be
0
any doubt whatsoever that the facts disclosing the ingredients
of the offence must be averred.
There cannot, furthermore, be any doubt that only because
. civil law can be taken recourse to would not necessarily mean
E that criminal proceedings should be barred as has been opined
by this Court in Pratibha Rani v. Suraj Kumar & Anr. [(1985)
2 sec 370].
We are, however, not concerned in a case of this nature
where the allegations were clear, specific and unambiguous
F and, therefore, the complainant should have been given a
chance to prove her case as has been noticed by the High
Court in the said judgment. This Court therein also, while laying
down the law that the High Court would have no jurisdiction to
examine the correctness of the allegations, opined :
"In case no offence is committed on the allegation and the
G
ingredients of Section 405 and 406, IPC are not made out,
the High Court would be justified in quashing the
proceedings."
Reliance has also been placed by Mr. Jain on Rajesh
H Bajaj v. State NCT of Delhi & Ors. [(1999) 3 SCC 259],
--
--
__.
~
V.Y. JOSE & ANR. v. STATE OF GUJARAT & ANR.
[S.B. SINHA, J.]

wherein Thomas, J. opined:
"10. It may be that the facts narrated in the present
597

A

complaint would as well reveal a commercial transaction
or money transaction. But that is hardly a reason for holding
that the offence of cheating would elude from such a
transaction. In fact, many a cheatings were committed in B
the course of commercial and also money transactions.
One of the illustrations set out under Section 415 of the
A Indian Penal Code (Illustration f) is worthy of notice now :
'(f) A intentionally deceives Z into a belief that A means
to repay any money that Z may lend to him and c
thereby dishonestly induces Z to lend him money,
I/Ill
A not intending to repay it. A cheats'."
Similar observations have also been made by the same
learned Judge in Trisuns Chemical Industry v. Rajesh Agarwal
& Ors. [(1999) 8 SCC 686] in the following terms: D
"9. We are unable to appreciate the reasoning that the
.;.. provision incorporated in the agreement for referring the
disputes to arbitration is an effective substitute for a
criminal prosecution when the disputed act is an offence.
Arbitration is a remedy for affording reliefs to the party E
affected by breach of the agreement but the arbitrator
cannot conduct a trial of any act which amounted to an
offence albeit the same act may be connected with the
discharge of any function under the agreement. Hence,
those are not good reasons for the High Court to axe down
F
the complaint at the threshold itself. The investigating
agency should have had the freedom to go into the whole
gamut of the allegations and to reach a conclusion of its
own. Pre-emption of such investigation would be justified
only in very extreme cases as indicated in State of
Haryana v. Bhajan Lal." G
14. we· may hereat refer to the decision of this Court in
• State of Haryana & Ors. v. Bhajan Lal & Ors. [(1992) Supp.(1)
..- ;

SCC 335), whereupon reliance has been placed by this Court.
II("
In the aforementioned decision relied upon by Mr. Jain, it was
H

-r
598 SUPREME COURT REPORTS [2008] 17 S.C.R.
e
.,,
......
-

A stated:
"102. In the backdrop of the interpretation of the various ~ 4
relevant provisions of the Code under Chapter XIV and of
the principles of law enunciated by this Court in a series
of decisions relating to the exercise of the extraordinary
B power under Article 226 or the inherent powers under
Section 482 of the Code which we have extracted and
reproduced above, we give the following categories of
cases by way of illustration wherein such power could be
exercised either to prevent abuse of the process of any
court or otherwise to secure the ends of justice, though it
c may not be possible to lay down any precise, clearly
defined and sufficiently channelised and inflexible
guidelines or rigid formulae and to give an exhaustive list
of myriad kinds of cases wherein such power should be
exercised.
-D
(1) Where the allegations made in the first information
report or 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 a
case against the accused.
E
(2) Where the allegations in the first information report
and other materials, if any, accompanying the FIR
do not disclose a cognizable offence, justifying an
investigation by police officers under Section 1?6(1)
of the Code except under an order of a Magistrate
F within the purview of Section 155(2) of the Code.
(3) Where the uncontroverted allegations made in the
FIR or complaint and the evidence collected in
support of the same do not disclose the
commission of any offence and make out a case
G against the accused.

--
(4) Where, the allegations in the FIR do not constitute
a cognizable offence but constitute only a non- t

H
cognizable offence, no investigation is permitted by
a police officer without an order of a Magistrate as -
-;.....
V.Y. JOSE & ANR. v. STATE OF GUJARAT & ANR. 599
[S.S. SINHA, J.]
1"'
contemplated under Section 155(2) of the Code. A
. (5) Where the allegations made in the Fl R or complaint
~ ~
are so absurd and inherently improbable on the
basis of which no prudent person can ever reach a
just conclusion that there is sufficient ground for
proceeding against the accused. 8
(6) Where there is an express legal bar engrafted in
any of the provisions of the Code or the concerned
Act (under which a criminal proceeding is instituted)
to the institution and continuance of the
proceedings and/or where there is a specific c
provision in the Code or the concerned Act,
providing efficacious redress for the grievance of
the aggrieved party.
(7) Where a criminal proceeding is manifestly attended
with ma/a fide and/or where the proceeding is D
maliciously instituted with an ulterior motive for
wreaking vengeance on the accused and with a
... view to spite him due to private and personal
grudge.
103. We also give a note of caution to the effect that the E
power of quashing a criminal proceeding should be
exercised very sparingly and with circumspection and that
too in the rarest of rare cases; that the court will not be
justified in embarking upon an enquiry as to the reliability
or genuineness or otherwise of the allegations made in the
F
FIR or the complaint and that the extraordinary or inherent
:i. powers do not confer an arbitrary jurisdiction on the court
to act according to its whim or caprice."
The High Court, although noticed some of the principles
laid down in Bhajan Lal (supra), failed to assign any reason
G
as to why in a case of this nature the provisions of Section 482
of the Code of Criminal Procedure should not be applied and
,.
how the allegations made in the complaint petition, even if given
- 1 face value and taken to be correct in its entirety, make out an
offence.
H
A
600

-
SUPREME COURT REPORTS [2008] 17 S.C.R.

15. There exists a distinction between pure contractual
dispute of civil nature and an offence of cheating. Although
- ...
\
\
'•

breach of contract per se would not come in the way of initiation
of a criminal proceeding, there cannot be any doubt whatsoever
• "
that in absence of the averments made in the complaint petition
B wherefrom the ingredients of an offence can be found out, the
court should not hesitate to exercise its jurisdiction under
Section 482 of the Code of Criminal Procedure.
We may reiterate that one of the ingredients of cheating
as defined in Section 415 of the Indian Penal Code is existence
c of an intention of making initial promise or existence thereof
from the very beginning of formation of contract.
Section 482 of the Code of Criminal Procedure, saves the <....I
inherent power of the court. It serves a salutary purpose viz. a
person should not undergo harassment of litigation for a number
of years although no case has been made out against him.
D
It is one thing to say that a case has been made out for
trial and as such the criminal proceedings should not be
quashed but it is another thing to say that a person should
undergo a criminal trial despite the fact that no case has been
made out at all.
E
16. In Hira Lal Hari Lal Bhagwati v. CBI [(2003) 5 SCC
257), this Court held :
"40. It is settled law, by a catena of decisions, that for
establishing the offence of cheating, the complainant is
F required to show that the accused had fraudulent or
dishonest intention at the time of making promise or
representation. From his making failure to keep promise
subsequently, such a culpable intention right at the
beginning that is at the time when the promise was made
cannot be presumed. It is seen from the records that the
G
exemption certificate contained necessary conditions
which were required to be complied with after importation
of the machine. Since the GCS could not comply with it, ....

therefore, it rightly paid the necessary duties without taking ~
advantage of the exemption certificate. The conduct of the c:_
H

-
V.Y. JOSE & ANR. v. STATE OF GUJARAT & ANR. 601
[S.S. SINHA, J.]

GCS clearly indicates that there was no fraudulent or A
dishonest intention of either the GCS or the appellants in
their capacities as office-bearers right at the time of
making application for exemption. As there was absence
of dishonest and fraudulent intention, the question of
committing offence under Section 420 of the Indian Penal s
Code does not arise. We have read the charge-sheet as
a whole. There is no allegation in the first information report
or the charge-sheet indicating expressly or impliedly any
intentional deception or fraudulent/dishonest intention on
the part of the appellants right from the time of making the C
promise or misrepresentation. Nothing has been said on
what those misrepresentations were and how the Ministry
of Health was duped and what were the roles played by
the appellants in the alleged offence. The appellants, in our
view, could not be attributed any mens rea of evasion of
customs duty or cheating the Government of India as the ·D
Cancer Society is a non-profit organisation and, therefore,
the allegations against the appellants levelled by the
prosecution are unsustainable. The Kar Vivad Samadhan
Scheme certificate along with Duncan and Sushi/a Rani
judgments clearly absolve the appellants herein from all E
charges and allegations under any other law once the duty
so demanded has beer\ paid and the alleged offence has
been compounded. It is also settled law that once a civil '
case has been compromised and the alleged offence has
been compounded, to continue the,criminal proceedings F
thereafter would be an abuse of the judicial process.
[See also Indian Oil Corporation v. NEPC Ind/a Ltd. &
Ors. [(2006) 6 sec 736]
17." Recently, in Vir Prakash Sharma v. Anil Kumar
Agarwal [(2007) 7 SCC 373], noticing, inter alia, the G
aforementioned decisions, this Court held:
"13. The ingredients of Section 420 of the Penal Code are
\ 1 as follows:
(i} Deception of any persons;
H
~

602 SUPREME COURT REPORTS [2008] 17 S.C.R. e ~

A (ii) Fraudulently or dishonestly inducing any person to
deliver any property; or
~·
(iii) To consent that any person shall retain any property '.

and finally intentionally inducing that person to do
or omit to do anything which he would not do or
B omit.
No act of inducement on the part of the appellant has been
alleged by the respondent. No alleg·ation has been made
that he had an intention to cheat the respondent from the
very inception.
c 14. What has been alleged in the complaint petition as
also the statement of the complainant and his witnesses
relate to his subsequent conduct. The date when such
statements were allegedly made by the appellant had not
been disclosed by the witnesses of the complainant. It is
D really absurd to opine that any such statement would be
made by the appellant before all of them at the same time
and that too in his own district. They, thus, appear to be
wholly unnatural.
15. In law, only because he had issued cheques which
E were dishonoured, the same by itself would not mean that
he had cheated the complaina~t. Assuming that such a
statement had been made, the same, in our opinion, does
not exhibit that there had been any intention on the part of
the appellant herein to commit an offence under Section
F 417 of the Penal Code.
16. Furthermore, admittedly, their residences are in
differeot districts. Whereas the appellant is a resident of
the district of Ajamgarh, the respondent is a resident of the
district of Rampur. Cheques were admittedly issued by the
appellant at his place. There is nothing_on record to show
G
that any part of the cause of action arose within the
jurisdiction of the court concerned. Even if such statements
had been made, the same admittedly have been made only "
at the place where the appellant resides. The learned t
Magistrate, therefore, had no jurisdiction to issue the
H
V.Y. JOSE & ANR. v. STATE OF GUJARAT & ANR. 603
[S.S. SINHA, J.)

summons. (See Mosaraf Hossain Khan v. Bhagheeratha A
Engg. Ltd.)"
The said principle has been reiterated in A// Caroga
Movers (/) Pvt. Ltd. v. Dhanesh Badarmal Jain & Anr. [2007
(12) SCALE 391], stating :
"For the said purpose, allegations in the complaint petition B
must disclose the necessary ingredients therefor. Where
a civil suit is pending and the complaint petition has been
filed one year after filing of the civil suit, we may for the
purpose of finding out as to whether the said allegations
are prima facie cannot notice the correspondences c
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 the inherent jurisdiction of
this Court, it is impermissible also to look to the admitted
D
documents. Criminal proceedings should not be
encouraged, when it is found to be ma/a fide or otherwise
an abuse of the process of the Court. Superior Courts while
exercising this power should also strive to serve the ends
of justice."
E
. 18. A matter which essentially involves dispute of a civil
nature should not be allowed to be the subject matter of a
criminal offence, the latter being not a shortcut of executing a
decree which is non-existent. The Superior Courts, with a view
to maintain purity in the administration of justice, should not
allow abuse of the process of court. It has a duty in terms of F
Section 483 of the Code of Criminal Procedure to supervise
the functionings of the trial courts.
19. An offence of cheating may consist of two classes of
cases:
G
(1) where the complainant has been induced fraudulently
or dishonestly. Such is not the case here;
~ (2) When by reason of such deception, the complainant has
not done or omitted to do anything which he would not do
or omit to do if he was not deceived or induced by the
H
604 SUPREME COURT REPORTS [2008} 17 S.C.R.

A accused.
20. It is in that sense, a distinction between a mere breach
of contract and the offence of cheating should be borne in mind.
We, having regard to the facts and circumstances of the case,
are of the opinion that no case has been made out and against
B the appellant so as to hold that he should face the criminal trial.
21. Before parting, however, we may notice a decision of
this Court in from State of Madhya Pradesh v. Awadh Kishore
Gupta [(2004) 1 SCC 691] whereupon strong reliance has been
placed by Mr. Jain. This Court, therein upon referring to Bhajan
c Lal (supra) opined as under :
"11. As noted above, the powers possessed by the High
Court under Section 482 of the Code are very wide and
the very plenitude of the power requires great caution in
its exercise. Court must be careful to see that its decision
D in exercise of this power is based on sound principles. The
inherent power should not be exercised to stifle a legitimate
prosecution. The High Court being the highest court of a
State should normally refrain from giving a prima facie
decision in a case where the entire facts are incomplete
and hazy, more so, when the evidence has not been
E
collected and produced before the Court and the issues
involved, whether factual or legal, are of magnitude and
cannot be seen in their true perspective without sufficient
material. Of course, no hard-and-fast rule can be laid down
in regard to cases in which the High Court will exercise
F its extraordinary jurisdiction of quashing the proceedings
at any stage. (See Janata Dal v. H.S. Chowdhary and
Raghubir Saran (Dr) v. State of Bihaf) It would not be
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 ~ustainable 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 cannot be proceeded with. In proceedings
instituted on complaint, exercise of the inherent powers to
H
----,/
--4 V.Y. JOSE & ANR. v. STATE OF GUJARAT & ANR. 605
[S.B. SINHA, J.]
"'
quash the proceedings is called for only in a case where A
~
the complaint does not disclose any offence or is frivolous,
vexatious or oppressive. If the allegations set out in the.
complaint do not constitute the offence of which
cognizance has been taken by the Magistrate, it is open
to the High Court to quash the same in exercise of the B
inherent powers under Section 482 of the Code. It is not,
however, necessary that there should be meticulous
analysis of the case before the trial to find out whether
the ca$e would end in conviction or acquittal. The
complaint has to be read as a whole. If it appears that
on consideration of the allegations in the light of the c
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
fide, frivolous or vexatious, in that event there would be
no justification for interference by th·e High Court. When D
an information is lodged at the police station and an
offence is registered, then the ma/a tides of the informant
would be of secondary importance. It is the material
collected during the investigation and evidence led in the
court which decide the fate of the accused person. The ,E
allegations of ma/a tides against the informant are of no
consequence and cannot by itself be the basis for
quashing the proceedings."
(Emphasis supplied)
22. No exception can be taken to the aforementioned F
principles of law, as therein also it has categorically been held
that exercise of inherent power under Section 482 is
permissible where allegations set out in the complaint do not
constitute the offence for which cognizance has been taken by
the Magistrate. It is evidently a case of that nature. G
23. For the reasons aforementioned, the judgment of the
High Court cannot be sustained. It is set aside accordingly.
" r Criminal proceedings against the appellants are quashed. The
appeal is allowed.
D.G. Appeal allowed. H