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Smt. Beena Khandelwal And Anr. vs State Of U.P. And Anr. on 13 October, 2017



Reserved on 20.09.2017

Delivered on 13.10.2017

Court No.13

Case :- CRIMINAL REVISION No. – 2469 of 2012

Revisionist :- Smt. Beena Khandelwal And Anr.

Opposite Party :- State Of U.P. And Anr.

Counsel for Revisionist :- Gaurav Kakkar

Counsel for Opposite Party :- Govt. Advocate,Abhitab Kumar Tiwari

Hon’ble Dinesh Kumar Singh-I,J.

This Criminal Revision has been preferred against order dated 21/07/2012, passed by the Judicial Magistrate, Hapur, in Complaint Case No. 538 of 2012, by means of which the learned Magistrate has summoned the revisionists under Section 420 IPC to face trial.

The facts giving rise to the present revision are as follows:

The opposite party no. 2 filed a complaint stating that he is owner of the complainant company which is being run by the name M/s. Prem Trading Company, which deals in production of bags of cloth. The accused-revisionists Smt. Bina Khandelwal and Pradeep Khandelwal, both husband and wife are owners and Managers of the Firm by the name Khandelwal Firm which deals in the business of cotton bags. They approached the complainant Firm (O.P. No. 2) for purchase of cloth on assurance that they would make the payment within one month from the date of purchase and would continue to make purchases in future as well. Believing the accused revisionists, the complainant started supplying materials for the first time on 4 September 2002 which continued up to 31 March 2003, during which period material worth Rs. 24,33,737 had been supplied to the accused, out of which the accused made payment of just Rs.18,19, 815/- in cash and through cheque. By 1 April 2003 an amount of Rs.6,13,922/- had become due, which was demanded by the complainant but only assurance was received that the same would be paid but it was not actually paid. But still believing the assurance, the complainant Firm further supplied some material worth Rs.1,75,648/ out of which only Rs.70,000/- was paid, while Rs.1,05,648/- remained due. By 1 April 2004 a total amount of Rs.7,19,570/- became due towards accused, hence the complainant stopped supplying the material. Thereafter again the accused approached the complainant Firm explaining that their business had flopped, and proposed that if the complainant starts supplying goods again, they would make the payment of the current items as well as that of the earlier dues in piecemeal and simultaneously also paid Rs. 10,000/- to the complainant on 28 January 2006 and Rs.10,000/- again on 6 February 2006 through two different cheques, nos. being 278568 and 278566. Being beguiled by this good intention shown by the accused, the complainant again supplied cotton cloth worth Rs.4,03,249/- on credit basis on various dates between 18 May 2006 and 22 September 2006. Out of this amount the accused paid only Rs.2,48,648/- (Rs.2,28, 648/- by way of cheque and Rs.20,000/- in cash) while the remaining amount of Rs.1,54, 602/- which pertained to new bills of the dates between 18 May 2006 to 29 September 2006, was not made. Thus total sum of Rs.8,54,192/- was was not paid, whereon an interest of Rs.3,68,680/- had also accrued, making the total amount due to be Rs.12,22,872. For the payment of this amount, the complainant got a notice issued to the accused on 30 August 2010, which was replied by accused on 13 September 2010 mentioning wrong facts. Feeling stunned by the reply sent, the complainant realised about bad intention of the accused to cheat. The accused also sent a counter notice to the complainant complaining therein about the material supplied being not up-to the mark, resulting in loss to him of Rs.1,50,000/- which they claimed to be paid by the complainant. It is further stated that the intention to cheat the complainant became clear from the fact that as soon as the complainant served notice upon the accused, they sent counter notice to the company about the poor quality while before that they had never complained about the same nor had they brought a claim on any forum. Thus the accused obtained cotton cloth from the complainant worth Rs.8,54,192/- and gobbled up the same with a malafide intention to cause harm to the complainant under a well thought out conspiracy.

Upon receipt of this complaint, the learned Magistrate recorded the statement of the complainant, Deepak Raj Kansal under section 200 Criminal Procedure Code and of Gaurav Kumar under section 202 Criminal Procedure Code. Upon consideration of the material available on record Court summoned the revisionists/accused on 21/07/2012 to face trial briefly recording that the accused used to purchase material from the complainant since 2002 and used to make payments. Subsequently the accused stopped making payment, which resulted in Rs. 8.50 lakhs becoming due by the year 2006. Only once an amount of Rs.20,000 was paid through counsel by the accused. Thereafter a notice was got sent to the accused asking for payment to be made. PW 1, Gaura Kumar also supported the statement of the complainant and based on these statements and the documentary evidence tendered in support of the complainant’s case, the primafacie case was found made out against both the accused under section 420 IPC and accordingly they were summoned under the said section to face trial. It is this order which has been assailed in the present revision.

Learned counsel for the revisionist Shri Gaurav Kakkar contended that even if the whole averments made in the complaint be taken to be true, no primafacie case is made out under section 420 IPC, because the necessary ingredients which are required to be fulfilled for constituting an offence under the aforesaid section, are not proved. The transaction is primarily contractual one and it does not involve any application of deceit on the part of the accused. It is unbelievable that the complainant would again supply material to the accused despite a huge amount of Rs.6,13,922/- being due. Further it is said that the amount being shown as due on the basis of entries in ledge could not be taken to be credible because of it being a document of the complainant which could be easily manipulated. It is further contended that when the notice dated 30 August 2010 was issued to the accused requiring them to make the payment of outstanding amount, the same was malafidely replied by the accused on 13 September 2010 alleging that the material supplied by the complainant was not up to the mark, which had resulted in causing huge loss to the accused worth Rs.1,50,000/- which needed to be compensated.

The learned counsel for the revisionists has relied upon V Y Jose vs State of U.P., (2009) 3) SCC 78; Harpreet Singh Ahluwalia and others vs State of Punjab and others, (2009) 7 SCC 712; and VP Srivastava vs Indian explosives Ltd and others, 2010 (10) SCC 361.

From the side of learned counsel for the Opposite Party No. 2 (complainant), it has been contended that the ingredients of cheating are fully made out. There was no payment made by the accused persons after the year 2006. Thereafter by paying some amount through few cheques, the complainant was induced to believe that the accused would make full payment for the supplies made which led him to resume supply but no payment was made. It resulted in the outstanding amount swelling to Rs.8.00 lacs. Further it is contended that nowhere in the notice served upon the accused has it been mentioned that the material supplied by the complainant was sub-standard hence the same needed to be returned.

Lastly it was argued that the case of the complainant was covered under the illustration given in sub-clause (f) and (h) of section 415 of IPC.

The record reveals that the record of the learned lower Court has not been summoned and when it was pointed out, the learned counsel of both the parties gave consent that the revision be disposed of on merit without summoning the lower Court record. Accordingly the matter has been heard for final disposal.

The learned counsel for the revisionists has relied upon VP Srivastava (Supra), in which facts were that the appellants were two senior employees of the Fertiliser Corporation of India Ltd. (in short “FCIL), against whom the complainant, Indian Explosives Ltd. (in short “IEL”) lodged a criminal complaint under sections 406, 420 and 120-B IPC read with sections 540 and 542 of the Companies Act, 1956. Upon consideration the Metropolitan Magistrate, Kolkata summoned them to face trial under aforesaid sections because the FCIL had to stop supplies of ammonium nitrate to IEL due to the breakdown of a synchronised gas compressor, which resulted in breach of a tripartite agreement among FCIL, M/s. Bharat Coking Coal Ltd (in short “BCCL”) and IEL. As per the agreement FCIL was to supply ammonium nitrate to IEL and against the supply, IEL was to supply explosives of an equivalent value to BCCL, which in turn would supply coal of equivalent value to FCIL. The Supreme Court citing various rulings on the subject, had expressed the view that mere mention of words “defraud” and “cheat” in the complaint would not suffice to infer that the appellants had dishonest intention right at the beginning when, after due deliberations a tripartite agreement was signed, which, under the given circumstances at that juncture, was considered to be in the interest of all the three parties to the agreement. The following was held:

“30. In our opinion, in the present case, at best, it was a case of breach of contract on the part of FCIL, for which the said company is already defending a Civil suit filed by IEL. In this behalf, it is also pertinent to note that in paragraph 5 of the plaint filed by IEL it is averred that:

”while the aforesaid arrangement was continuing and defendant 1 supplied various quantities of ammonium nitrate malt to the plaintiff in the years 2000 – 2001, defendant 1 ran into serious difficulties in continuing its production due to break down of synchronised gas compressor and the other financial problems…’

31. In our view, the averment strikes at the root of the allegation that at the time of entering into the agreement sometime in the year 2001, the appellants had fraudulent intention to somehow induce IEL to enter into the said agreement and part with a huge sum of money. It bears repetition that on their own showing IEL was fully aware of the financial health of FCIL at the time the said contract was entered into, as also the reason why FCIL was unable to continue the production of ammonium nitrate. It needs little emphasis that in order to constitute an offence of “cheating”, the intention to deceive should be in existence at the time when the alleged inducement was made. In the instant case, such an intention cannot be inferred from the aforesaid allegations in the complaint and averments in the plaint.

32. In our opinion, therefore, even if the allegations made in the complaint are taken to be correct on their face value, may amount to breach of terms of contract by FCIL but do not constitute an offence of “cheating”, punishable under section 420 IPC.”

The other case which has been relied upon by the learned counsel for the revisionist is V Y Jose and Another vs State of Gujarat and Another. The facts of the case are that there was a dispute between the appellant and respondent 2 regarding supply of the machine which would serve a specific purpose of purifying and desaulting the dyes to a particular level as indicated by respondent 2. Price of the machine was settled at Rs.17.00 lakhs plus, out of which advance payment of Rs.3.00 lakhs was also made. The machine, when ready was inspected by respondent 2 but it was found that it did not achieve the specified level of purifying and desaulting the dyes. Respondent 2 filed a criminal complaint against the appellants. The Criminal Court took cognizance of offences under sections 417, 420 read with section 114 of IPC, 1860. The appellants on the other hand alleged that respondent 2 were not taking delivery of machine and the appellants had blocked material worth Rs.14.00 lakhs on account of contract entered into with respondent 2. The appellants therefore moved the High Court under section 482 Cr. P. C. on the ground that no case for criminal offence was made out. Allowing the appeal the Apex Court held as below:

“16. 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 barred as has been opined by this Court in Pratibha Rani vs Suresh Kumar, (1985) 2 SCC 370.


21. 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 the absence of the averments made in the complaint petition 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.


23. Section 482 of the Code of Criminal Procedure 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.


28. A matter which essentially involves dispute of 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 section 483 of the Court of Criminal Procedure to supervise the functionings of the trial Court.

Further in this ruling the following is also held:

“14. 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 misleading representation or by other action or omission;

(ii) Fraudulently dishonestly inducing any person to deliver any property; or 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.

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 of the accused to keep his promise, in the absence of a culpable intention at the time of making initial promise being absent, no offence under section 420 of the Indian Penal Code can be said to have been made out.


22. We may reiterate that one of the ingredients of cheating as defined in section 415 of the Penal Code is existence of an (sic fraudulent or dishonest) intention of making initial promise or existence thereof from the very beginning of formation of contract.


24. 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.


29. An offence of cheating may consist of two classes of cases:

(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 accused.”

Another ruling relied upon by the learned counsel for the revisionist is Harman Preet Singh Ahluwalia and others vs. State of Punjab and others, (2009) 7 Supreme Court Cases 712. The facts of the case are that the appellant no. 1 (husband) and respondent no. 3 (wife) were married in India but settled in Canada. Sometime in early 2006, matrimonial differences arose between appellant no. 1 and respondent no. 3 and the parties started living separately. Appellant no. 1 moved a divorce petition against respondent no. 3 sometime around 1. 5 .2006. Before that, respondent no. 3’s father came to India and lodged complaint against appellants sometime around 21-4-2006 under section 406 (criminal breach of trust) and 420 (cheating and dishonestly inducing delivery of property) IPC, interalia alleging that appellant no. 1 married respondent no. 3 solely for the purpose of getting entry into Canada and settling there, and that appellants had taken away dowry articles belonging to respondent no. 3. The Superintendent of police, after investigation, concluded that no allegations were proved against appellants and therefore the case should be closed, yet the charge sheet was filed against appellants. The appellants moved High Court under section 482 Cr P C quashing criminal proceedings but High Court refused to do so. The issue involved was whether any offence was primafacie found out against appellants, or the High Court ought to have exercised its discretion under section 482 in favour of the appellants. Allowing the appeal the following was held :

“21. The facts pleaded in the application for quashing of F.I.R. before the High Court are not denied or disputed. In fact, most of the documents relied on by the appellant are annexed to the counter affidavit filed on behalf of respondent 3 herself. We, therefore, do not have to consider any document which the appellant intends to place before us by way of defence. It is also not a case where this Court has to undertake a difficult task of appreciating the evidence brought on record by the parties.

22. Mr. Dhanda’s submission that the marriage between appellant 1 and respondent 3 was solemnised only for the purpose of getting the family settled at Canada is far-fetched. For the purpose of constituting an offence for criminal breach of trust and/or cheating, the ingredients thereof as contained in sections 405 and 415 respectively must be borne out from the records.”

It may be observed that the facts of the above-mentioned cases are entirely different from the facts of the present case and in that view of the matter a close analysis of the facts in present case leads the Court to believe that no help may be extended to the revisionists on the basis of the aforesaid rulings. The reasoning for the same would follow.

First of all, the most important argument raised by the learned counsel for the revisionist is being taken up which is that important ingredients of cheating are not met from the averments made in the complaint. For this it would be pertinent to reproduce the provision of Section 415 IPC which is as follows:

“Section 415. 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”.


(f) A intentionally deceives Z into a belief that A means to repay any money that Z may lend him and thereby dishonestly induces Z to lend him money, A not intending to repay it. A cheats.

(h) A intentionally deceives Z into a belief that A has performed A’s part of contract made with Z, which he has not performed, and thereby dishonestly induces Z to pay money. A cheats.

It is clear from the above definition that following are the ingredients of section 415 IPC: –

1 – deception of any person.

2 – (a) Fraudulently dishonestly inducing the person

(i) to deliver any property to any person; or

(ii) consent that any person shall retain any property or

(b) intentionally inducing that person 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.

Now on the basis of above definition/ingredients, it has to be judged in the present case as to whether the learned Court below has rightly concluded from the evidence on record to find a prima-facie case under section 415 IPC made out which is punishable under section 420 IPC.

As per the version given in the complaint, the accused approached the complainant requesting him to supply cloth for the bags in consideration for the money to be paid by accused. On assurance of the accused that whatever material would be supplied to the accused, the payment would be made thereof, the complainant started supplying material to the accused, of which only part payment has been made while a huge amount of Rs.6,13,922/ became due. When the said amount was not paid, the supply of material was stopped by the complainant. But again in the year 2006 the complainant was approached by the accused with the request that, in case they decide to supply the material again, they would not only make the payment of current supply, rather they would also make the payment of earlier supplied material. According to the complainant, believing this assurance, the complainant further resumed supply only to be betrayed by the accused because they again made a part payment while a big amount was left unpaid. It may be mentioned here that there was no written agreement between them stipulating the conditions for supply of goods and its payment schedule. Here, it may be interfered that but for the assurance from the side of the accused to the complainant that if the further supply of cloth was made, though the same was stopped earlier due to earlier non-payment of a big amount, the accused would make the payment to the complaint not only of the current supply but also of earlier dues, the complainant would not have supplied the material. While making this promise the accused had also given 2 cheques of Rs.10,000 each to show their bonafide which would amount to inducing the complainant to supply goods to the accused, although there might have been no intention to make full payment of the same on the part of the accused. It may be also mentioned here that the stage at which the present case is, that is of summoning the accused, only a prima-facie case is to be seen to be made out. The whole proceedings are yet to follow during trial which shall provide enough opportunity to the accused to cross-examine the witnesses of the complainant to dispel the doubt whether there was any intention to cheat or not, on the part of the accused, while making such promise to the complainant that in case the supply of the goods is continued, the payment of the same would be made. The accused may avail the remedy of getting themselves discharged also under section 245 of the Criminal Procedure Code if sufficient evidence is not found. At the preliminary stage when the complainant has adduced only minimum evidence to prove a prima-facie case against the accused, it would not be advisable to scuttle the trial, on the presumption that this would result in undue harassment of innocent persons. It can also be mentioned here that the intention to not make full payment of the remaining amount must have been there on the part of the revisionists otherwise they would not have sent a counter notice to the opposite party n0. 2 indicating therein that their material was substandard. This is more important to note that if the supplied material was not up to the standard, why the revisionist had not launched appropriate proceedings against the opposite party no. 2 at proper forum.

The three citations which have been referred from the side of the appellants in support of their case do not come to their aid because in Y V Jose’s case (supra) there was a contract entered into between the complainant and the accused for supplying of a machine of a specific purpose, hence it was held that the matter was more of a Civil nature and no criminal intent was found to qualify the case to fall in the category of cheating. Similarly in V P Srivastava’s case (supra), there was a tripartite agreement which got breached due to certain factors and in this case also it was found that the matter was of Civil nature, there being no criminal intent to deceive the complainant by the accused nor such averments were made in the complaint properly. In both these cases matter pertained to breach of contract, hence were treated to be of civil nature but in the case at hand there is no such written contract between the parties. Similarly the third citation also has different facts. It is a simple case of putting a proposal by the accused to the complainant of supplying goods in consideration of payment to be made by the accused, which was made only partly, leaving out a big chunk of money due to be paid in the first phase and thereafter despite huge outstanding amount remaining to be paid, the accused again approached the complainant to resume supply and promised that in case supply was given, he would make the payment not only of the current bills but also of the outstanding bills as well, and it is on this promise that the complainant appears to have supplied the goods, which would amount to inducing the complainant to deliver goods to the accused which the accused had no intention to make full payment for. The learned counsel for the revisionists’ argued that, it would not be believable that despite there being huge outstanding dues, the complainant would again supply goods to the accused merely on his assurance that he would clear earlier payments along with the current bills. The intention of the accused from the very beginning was not to make full payment which may be gathered also from the fact that when a notice was issued by the complainant to the accused regarding outstanding amount, he sent its reply denying the amount reported due and made counterclaim of Rs.1,50,000/-( Rupees one lakh fifty thousand) alleging that the goods supplied were of substandard quality, which appears to the Court to be counterblast from the side of the accused, as is rightly argued by the learned counsel for the accused. It also may be pointed out here that instead of clearing payment of the outstanding dues, making a counter demand of money from the complainant shows that there was intention to cheat the complainant, more so because if there was loss caused to the accused by sub-standard supply of material worth Rs.1,50,000/- (Rupees One lakh fifty thousand), why no proceedings were launched for its realisation by the accused at appropriate forum. Not doing so would also lead to the inference that the said allegation was a counterblast to avoid making payment of outstanding amount.

Another argument which is made by the learned counsel for the revisionist is that whatever amount is being shown outstanding on the basis of entries in the ledger may not be believed because the said document is a private document belonging to the complainant which could easily be manipulated by them to serve their interest. This argument also does not appeal because its genesis lies in conjecture.

If the facts in this case be closely scrutinised, it would reveal that right from the beginning there was no intention to make full payment to the opposite party no. 2 by the revisionists for the material which was required to be supplied to the revisionists by the opposite party no. 2, because they allowed a huge amount to become due, which led to the opposite party no. 2 stopping supply of material. But again with deceitful intention the opposite party no. 2 was approached by the revisionists coaxing them to resume supply under promise that in future they would make full payment of the price of the delivered material regularly and would also clear the earlier dues and to show the bonafide they had also made payment through few cheques, but again defaulted in making the payment. It clearly indicates that the revisionists had induced the opposite party no. 2 fraudulently to deliver the material for manufacturing the bags of cloth, regarding payment of which they had pre-decided not to make full payment and cheat him. Hence Thanks prima-facie case under section 420 IPC is appropriately found to have been made out by the Court below. It may also be mentioned that the illustrations as provided in the section itself, which have been reproduced above, also indicate that the present case may be treated as covered under them.

The revision deserves to be dismissed and it is, accordingly, dismissed. Cost easy.

Order Date :- 13.10.2017




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