Introduction 

• This is a landmark judgment relating to the practice of invoking criminal jurisdiction in cases that are essentially civil in nature.   
• This judgment was delivered by a 2-judge bench comprising of Justice Sanjiv Khanna and Justice JK Maheshwari.    

Facts

• JIPL, a multinational company dealing in paints and coatings, and Shubhankar P. Tomar (respondent no. 2), a dealer, had dealership agreements for the sale and purchase of paints. 
• JIPL filed two criminal complaints under Section 138 of the Negotiable Instruments Act, 1881, against Tomar for cheque dishonour due to insufficient funds. 
• Further, a private complaint was filed by the Respondent no 2 alleging discrepancies in dealership agreements and supply of goods. 
• JIPL also raised false bills and alleged offences under Section 405, Section 420, Section 471 and Section 120B of Indian Penal Code, 1860. 
• The summons were issued under: 
  • Section 406 (Criminal Breach of Trust) 
  • Section 420 (Cheating) 
  • Section 471 (Forgery) 
  • Section 120B (Criminal Conspiracy) 
• The High Court of Allahabad dismissed the petition under Section 482 of the Code of Criminal Procedure, 1973 (CrPC) challenging the summoning order passed by the Magistrate. 
• Thus, the matter was before the Supreme Court. 

Issue Involved

• Whether offences under Section 406, 420, 471 and 120B of IPC have been made out in the present facts? 

Observations

• The Court held that for the offence of criminal breach of trust to be made out the following ingredients must be made out: 
  • Criminal breach of trust would mean using or disposing of the property by a person who is entrusted with or otherwise has dominion over the property. 
  • Such act must not only be done dishonestly, but also in violation of any direction of law or any contract express or implied relating to carrying out the trust. 
• The Court held that in the present facts the material on record does not disclose the commission of offence under Section 405 of IPC and does not state in what manner the requirements are satisfied. 
• Further, the Court held to constitute an offence of cheating under Section 415 a person should be induced, either fraudulently or dishonestly, to deliver any property to any person, or consent that any person shall retain any property. 
• Thus, the sine qua non of Section 415 of IPC is “fraudulence”, “dishonestly” or “intentional inducement” and absence of these ingredients would debase the offence of cheating. 
• The Court held that the ingredients as elucidated above are not satisfied. 
• Further, the Court also observed that the essential ingredients required to establish an offence under Section 471 of IPC are also not satisfied in the present facts. 
• The Court additionally made an observation that attempts have been made by the parties in a number of cases to invoke the jurisdiction of criminal courts by filing criminal complaints by camouflaging allegations which were ex facie outrageous or pure civil claims. 
• The Court held that the High Court while dismissing the petition under Section 482 of CrPC failed to take note that the criminal proceedings should not be allowed to be initiated. 

Conclusion 

• This case lays down the important ingredients to be satisfied for invoking the offence of criminal breach of trust, cheating and forging. 
• The Court cautioned against the practice of filing criminal cases in those disputes that are purely civil in nature. 

[Original Judgment]