Lalchand & Ors vs State & Anr on 7 September, 2017

HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR

S.B. Criminal Misc(Pet.) No. 1802 / 2016

1. Lalchand s/o Natthu Ram, b/c Jat, r/o Village Jeevandesar,
Tehsil Sardar Shahar, District Churu (Raj.).

2. Azmat s/o Rahamatulle Khan, Kayamkhani, Muslim, r/o Ward
No.22, Sardar Shahar, District Churu (Raj.).

3. Javed s/o Ramzan Khan, Kayamkhani Muslim, r/o Ward No.25,
Sardar Shahar, District Churu (Raj.).

—-Petitioner
Versus

1. State of Rajasthan through P.P.

2. Ram Kishan s/o Mana Ram, b/c Jat, r/o Ward No.19, Bukalsar
Was, Sardar Shahar, District Churu (Raj.).

—-Respondent

Connected With

S.B. Criminal Misc(Pet.) No. 1528 / 2013

Asif s/o Shri Ismail Khan, aged about 32 years, b/c Musalman, r/o
Vill. Pohidhora, Sujangarh, District Churu (Rajasthan).

—-Petitioner
Versus

1. The State of Rajasthan.

2. Ram Kishan s/o Shri Mana Ram, b/c Jat, r/o Vill. Gujrinda, P.S.
Sardar Shahar, Dist. Churu.

—-Respondent

S.B. Criminal Misc(Pet.) No. 303 / 2014

Ali Mohammed s/o Mukarab Khan, aged about 26 years, b/c
Muslim, r/o Sardar Shahar, Churu (Raj.).

—-Petitioner
Versus

1. The State of Rajasthan.

2. Ram Kishan s/o Shri Mana Ram, b/c Jat, r/o Village Gujrinda,
P.S. Sardar Shahar, District Churu.

—-Respondent

__
For Petitioner(s) : Mr.Farzand Ali with Mr.Naman Mohnot.

Mr.Harish Purohit.

For Respondent(s) : Mr.V.S.Rajpurohit PP for the State.

Mr.K.S.Lodha for Mr.Vineet Jain
Mr.K.R.Saharan
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HON’BLE DR. JUSTICE PUSHPENDRA SINGH BHATI
Order
Reserved on 04/09/2017

Pronounced on 07/09/2017

1. These criminal misc. petitions under Section 482 Cr.P.C.

have been preferred for quashing FIR No.254/2013 dated

22.06.2013 registered at Police Station, Sardar Shahar, District

Churu for the offences under Sections 420 and 406 IPC and the

entire proceedings pursuant thereto.

2. A complaint was filed by the private respondent in

respect of cheating and criminal breach of trust against the

present petitioners. The investigation was conducted and it was

concluded by the concerned investigating officer that prima facie,

the offence has been made out. At one stage, the investigation

has been conducted by the Deputy Superintendent of Police, Leave

Reserve Range, Bikaner, who found that no criminal offence was

made out, as the dispute was of civil nature.

3. Learned counsel for the petitioners have argued that on

a bare reading of the FIR, it is revealed that the complainant has

not been able to show commission of any offence, as the

petitioners never cheated or committed any breach of trust, and

therefore, on the face of it, the FIR does not constitute any

offence under Sections 420 and 406 IPC.

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4. Learned counsel for the petitioners have also stated

that the transaction of money was apparently there, and

therefore, at the inception, there was no offence, which has been

made out, and merely because the petitioners have not been able

to repay the amount, the present FIR has been lodged.

5. Learned counsel for the petitioners have relied upon

the precedent law laid down by the Hon’ble Apex Court in Binod

Kumar Vs. State of Bihar, reported in (2014) 10 SCC 663,

relevant paras 9 to 18 of which read as under:-

“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 Code
of Criminal Procedure should be sparingly invoked with
circumspection, it 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 v. 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:

(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
ingredients of an offence which is alleged against
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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 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 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 authority and
the 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 proceedings.

10. In Indian Oil Corporation v. NEPC India Ltd. and
Ors. : (2006) 6 SCC 736, this Court has summarized
the principles relating to exercise of jurisdiction Under
Section 482 Code of Criminal Procedure to quash
complaints and criminal proceedings as 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
and reiterated by 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 194, Central Bureau of Investigation v. Duncans
Agro Industries Ltd. : (1996) 5 SCC 591; State of Bihar
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v. Rajendra Agrawalla : (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) 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 Zandu Pharmaceutical
Works Ltd. v. Mohd. Sharaful Haque : (2005) 1 SCC

122. The principles, relevant to our purpose are:

(i) A complaint can be quashed where the 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.

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 examining prayer for
quashing of a complaint.

(ii) 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 initiated with mala
fides/malice for wreaking vengeance or to cause harm,
or where the allegations are absurd and inherently
improbable.

(iii) The power to quash shall not, however, be used 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 alleged. If the
necessary factual foundation is laid in the complaint,
merely on the ground that a few ingredients have not
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been stated in detail, the proceedings should not be
quashed. Quashing of the complaint is warranted only
where the 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
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 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 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 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 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 breakdown of
marriages/families. There is also an impression that
if a person could somehow be entangled in a
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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
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
offence. Criminal proceedings are not a short cut of
other remedies available in law. Before issuing
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. 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 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
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 Code of
Criminal Procedure more frequently, where they
discern malice or frivolousness or ulterior motives on
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the 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 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 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 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 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. 69,010/-
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 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.

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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. The Appellants have stated that they had no
intention to cheat or dishonestly misappropriate the
amount of Rs. 34,505/-. The Appellants 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 direction and approval of the
Vice-Chancellor, contract 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 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 account of the university and only
on instruction from the Vice-Chancellor, the amount
was not paid to the second Respondent and no
dishonest intention could be attributed to the
Appellants.

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 examine whether the
allegations made in the complaint when taken on their
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face value, are true and constitute the offence as
defined Under Section 406.

15. Section 405 Indian Penal Code deals with criminal
breach of trust. A careful reading of the Section 405
Indian Penal Code shows that a criminal 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
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
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 trust.

16. Section 406 Indian Penal Code prescribes
punishment for criminal breach of trust as defined in
Section 405 Indian Penal Code. For the offence
punishable Under Section 406 Indian Penal Code,
prosecution must prove:

(i) that the accused was entrusted with property or with
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.

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
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over which dominion or control is acquired. The second
part deals with misappropriation which should be
contrary to the terms of the obligation which is created.

17. Section 420 Indian Penal Code deals with cheating.
Essential ingredients of Section 420 Indian Penal Code
are: (i) cheating; (ii) dishonest inducement to deliver
property or to make, alter or destroy any 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 complaint on the face of it, we find no allegations
are made attracting the ingredients of Section 405
Indian Penal Code. 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.
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 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.”

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6. Learned counsel for the petitioners have also placed

reliance on the precedent law laid down by the Hon’ble Apex Court

in Hridaya Ranjan Pd. Verma Ors. Vs. State of Bihar

Anr., reported in (2000) 4 SCC 168.

7. Learned counsel for the petitioners also argued on the

definition of Sections 405 and 415 IPC that on a bare reading of

the said provisions of IPC, no offence is made out.

8. For ready reference, Sections 405 and 415 IPC read as

under:-

“405. Criminal breach of trust.–Whoever, being in
any manner entrusted with property, or with any
dominion over property, dishonestly misappropriates
or converts to his own use that property, or
dishonestly uses or disposes of that property in
violation of any direction of law prescribing the mode
in which such trust is to be discharged, or of any legal
contract, express or implied, which he has made
touching the discharge of such trust, or wilfully suffers
any other person so to do, commits “criminal breach
of trust”.

Explanation [1].–A person, being an employer 3[of an
establishment whether exempted under section 17 of
the Employees’ Provident Funds and Miscellaneous
Provisions Act, 1952 (19 of 1952), or not who deducts
the employee’s contribution from the wages payable to
the employee for credit to a Provident Fund or Family
Pension Fund established by any law for the time
being in force, shall be deemed to have been
entrusted with the amount of the contribution so
deducted by him and if he makes default in the
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payment of such contribution to the said Fund in
violation of the said law, shall be deemed to have
dishonestly used the amount of the said contribution
in violation of a direction of law as aforesaid.

[Explanation 2.–A person, being an employer, who
deducts the employees’ contribution from the wages
payable to the employee for credit to the Employees’
State Insurance Fund held and administered by the
Employees’ State Insurance Corporation established
under the Employees’ State Insurance Act, 1948 (34
of 1948), shall be deemed to have been entrusted
with the amount of the contribution so deducted by
him and if he makes default in the payment of such
contribution to the said Fund in violation of the said
Act, shall be deemed to have dishonestly used the
amount of the said contribution in violation of a
direction of law as aforesaid.

415. Cheating.–Whoever, by deceiving any person,
fraudulently or dishonestly induces the person so
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 likely to cause damage or harm to that
person in body, mind, reputation or property, is said
to “cheat”.

Explanation.–A dishonest concealment of facts is a
deception within the meaning of this section.”

9. Learned counsel for the petitioners have further argued

that the basic ingredient of Section 405 IPC is that there should be

entrustment of the property and a consequent dishonest
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misappropriation or conversion of the property in violation of the

law, in which trust was to be discharged.

10. Learned counsel for the petitioners have also argued

that the respondents have miserably failed to show that there was

an entrustment of the property, and if at all such entrustment was

there, then there was misappropriation or conversion or disposal

of the same.

11. Regarding Section 420 IPC also, learned counsel for the

petitioners argued that the dishonest inducement to deliver the

property, to alter, to destroy the valuable security and the mens

rea were not present in the present set of facts and

circumstances.

12. Learned Public Prosecutor has furnished the status

report of the case, in which the investigation is reflected to be

completed and filing of the charge-sheet was awaited, but the

same was not filed due to an interim order passed by this Court,

on an earlier occasion. The investigation reflects that the money

taken by the accused persons was not repaid by them, and though

there were repeated transactions and the accused persons induced

the complainant to give money, but they failed to repay the same,

and therefore, the offences are made out.

13. The inducement to pay more interest on the amount

was reflected in the FIR and the intention to cheat at the inception

was made out, as per the learned Public Prosecutor.

14. After hearing the learned counsel for the parties as well

as perusing the record of the case, alongwith the precedent law
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cited at the Bar, this Court is of the opinion that the complainant

stated in his FIR that he had a medical store situated near

Roadways Bus Stand, Sardar Shahar, and on 27.02.2013, his

neighbour Ali Mohammad came to him and sought a loan of

Rs.3,00,000/-. The complainant was shown a cheque by accused-

Ali Mohammad and was told that the concerned police officer of

Sardar Shahar Police Station was his relative and they are dealing

in certain land. The complainant further alleged that he refused to

pay the amount of Rs.8,00,000/-, but the accused managed to

induce him to enter into the transaction by saying that instead of

these Rs.8,00,000/-, the accused will repay the amount of

Rs.9,50,000/- on the next day. Thereafter, the complainant

arranged for the said sum of Rs.8,00,000/- and on the next day,

the accused paid Rs.9,50,000/-, which at the inception itself

reflects the fraudulent inducement to pay. The complainant again

paid Rs.3,50,000/- to the accused and two days thereafter, Ali

repaid an amount of Rs.4,00,000/-.

15. Thereafter, Ali, Asif and other persons asked for more

money and claimed to be partners in the Girdhar Market with one

Lal Chand having a stake of Rs.2 crores and 46 lacs. The accusd

persons also stated that they were purchasing certain land at

Dehradun. Ali and Asif sought Rs.11,00,000/- for being paid as an

advance money, which was refused by the complainant, but they

insisted that the complainant may get Rs.12,00,000/- in lieu of

Rs.11,00,000/-, and after two days the amount of Rs.12,00,000/-

was paid. The complainant claimed that blank cheques were given
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by Ali and Asif and were to be returned, and thereafter, accused

persons again sought Rs.5,00,000/- and promised to pay

Rs.6,00,000/- on the next date. Another person, namely, Pawan

was also alleged to be involved in the same kind of inducement.

The complainant gave Rs.5,00,000/- to Pawan, and thereafter, Ali

again came and sought Rs.11,00,000/-, and Asif also called the

complainant from his mobile No.9799377039 and 9983886786,

and tried to induce him to make the payment. The complainant

again paid Rs.9,90,000/- in front of Chunnilal. But Asif sought

Rs.5,00,000/- by inducing the complainant that they all were well

placed and shall repay the amount. Two blank cheques were

further given. The accused persons further induced the

complainant to pay Rs.1,20,000/- and similarly, the money was

paid to the accused persons.

16. Thus, the FIR is reflecting a standard modus operandi

and thus, the arguments of learned counsel for the petitioners

cannot be accepted by this Court. The FIR itself, on the face of it,

reflects that the transactions were not merely financial

transactions involving giving and taking of money, but at the

inception itself, on the first count, the accused persons have

induced the complainant to pay the amount of Rs.8,00,000/- and

on the next day, Rs.9,50,000/- in lieu of the said amount of

Rs.8,00,000/- was paid. Thus, it was a case where no reasonable

person can believe that within one day, the amount of

Rs.8,00,000/- can be repaid by a reasonable person, in the form

of unusual amount to the tune of Rs.9,50,000/-, in lieu of
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Rs.8,00,000/-. Similarly, the FIR, on the face of it, reflects that

the transactions were not usual transactions of taking some

money and then repaying the same with some reasonable

interest, but were illegal transactions, where such a heavy amount

was being returned, and that too, within one day, which amounted

to fraudulent inducement.

17. There is no doubt that the money, which was the

property of the complainant was entrusted to the accused

persons, who dishonestly misappropriated the same and also they

laid a trap upon the complainant to make him believe that unusual

amount shall be repaid, which itself, on the face of it, is contrary

to law. The entrustment, misappropriation and conversion of the

amount with an ingredient of intention to cheat at the very

inception itself, is thus prima facie made out, and on a perusal of

the case diary also, the offence is made out against the present

petitioners. Had it been a regular financial transaction gone bad

and a simple case of non-payment of certain due amount, then of

course the precedent law cited by learned counsel for the

petitioners would have come to the rescue of the present

petitioners. But once the allegations, on the face of it, show that

the money was returned twice within one day by converting

Rs.8,00,000/- into Rs.9,50,000/- and then Rs.3,50,000/- into

Rs.4,00,000/-, which was nothing, but a clear inducement made

by the present accused persons. On a careful perusal of the

precedent law cited by learned counsel for the petitioners, the

same are not applicable in the present factual matrix.

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18. On a bare perusal of the case diary, this Court is

satisfied with the strength of the investigation conducted against

all the present accused persons, who have come to this Court by

preferring the present misc. petitions, and when the investigation

has been concluded and prima facie, the offence has been found

to be made out, then no case for interference is made out.

19. In light of the aforesaid discussion, the present misc.

petitions are dismissed. The stay applications also stand disposed

of.

(DR. PUSHPENDRA SINGH BHATI)J.

Skant/-

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