S. Shamsul Hasan, J.@mdashThis application seeks the quashing of the entire prosecution, including the order dated 14-1-1980 passed by the Chief Judicial Magistrate Motihari, in G. R. Case No. 701/76, by which cognizance of an offence under Sections 420, 409, 406 of the Indian Penal Code, as against the petitioner, has been taken and another accused Tara Kant Mishra has been discharged. It is this Tara Kant Mishra who is the first informant.
2. Admittedly, this petitioner was appointed an agent by the District Lottery Officer, Motihari, to sell Bihar State lottery tickets on the basis of commission and was allotted Code No. E 510.
3. A written report was lodged by Tara Kant Mishra, who was the District Lottery Officer, East Champaran, Motihari, on 21.5.1976. In order to appreciate the points raised by learned Counsel for the petitioner it is essential to set out the entire report, which is as follows:
From;
Sri T. K. Mishra,
District Lottery Officer,
East Champaran, Motihari.
To
The Officer-Incharge,
Town Police Station, Motihari.
Dated, Motihari, May 21, 1976.
Sir,
Shri Hari Krishna kay son of Shree Krishna Sahay of Champaran (P. O. P.) District Hazanbagh, at present Hirapur, Dhanbad, was appointed as a Lottery agent by the District Lottery Officer, Motihari, to sell the Bihar State Lottery tickets by an agreement and was allotted a Code No E-510 Bihar State Lottery ticket worth Rs. 2,97,160/- (Rupees two lacs ninety seven thousand one hundred and sixty) only have been sold to him and he issued cheques against the price of Bihar State Lottery tickets details of which are given below:
Cheques No. BD/14 661128 dated 29.9.1975 for Rs. 30,400/- (Rupees thirty thousand four hundred) only has been dishonoured on the ground that the accused has no money in the Bank against which the said cheque could be encashed.
Cheque No BD/24 255621 dated 9.12.1975 for Rs. 1,52,000/- (Rupees one lac and fifty two thousand) only.
Cheque No. BD/15 780450 dated 11.7.1975 for Rs. 76,000/- (Rupees Seventy six thousand) only.
Cheque No. BD/24 2555605 dated 8.11. 1 975 for Rs. 38,750/- (Rupees thirty eight thousand seven hundred and fifty) only have been dishonoured on the ground that the firm''s rubber stamp was not given by the drawer but I apprehend that the accused had no money in the Bank concerned against which the above said cheques were issued by him. The accused has intentionally not affixed the rubber stamps on the cheques to conceal his mala fide motive. He had issued the cheques dishonestly knowing full well that the cheque would be dishonoured as he had no balance against which the cheques were issued.
After great persuation, he had deposited Rs. 500/- (Rupees five hundred) in cash and prize winning tickets of Rs. 5000/- (Rupees five thousand) only. An amount of Rs. 2,91,660/-, (Rupees two lacs ninety one thousand six hundred and sixty) only is still outstanding against the accused.
The Bihar State Lottery tickets were given to the accused in good faith and presuming that he had sufficient money in the Bank against which the cheques were issued by him.
Under the circumstances, stated above, the accused has cheated and committed criminal breach of trust against the State of Bihar. As it involves heavy amount you are requested to institute and investigate a case under proper sections of I. P. C. under Sections 406, 420, Indian Penal Code, and any other sections as deemed fit and proper.
Details of the Cheques and accounts
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Cheque No. Date Amount Name of Bank
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BD/15 780450 11.7.1975 76000 State Bank of India,
BD/14 651125 29.9.1975 30400 Petarbar.
BD/24 2555605 9.11.1975 38769 State Bank of India,
BD/24 155721 9.12.1975 152000 Do. Kadamkuan.
Realised. 5500 Do. Petarbar.
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2,91,660/-
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(Rupees two lacs ninety one thousand six hundred and sixty only).
4. It may be stated here that sale of tickets and appiontment of agents etc. are governed by Government Circulars which were placed before me during the hearing of this case. Government had authorised acceptance of payment by cheque from an agent, on being satisfied that the financial condition of the person paying by cheque is sound.
5. It may also be stated at the outset that the learned Counsel for the State conceded that no case is made out under Sections 406 or 409 of the Indian Penal Code against the Petitioner. Since it is not disputed that the ownership in the property on the payment by cheque had passed to the petitioner, learned Counsel for the State rightly did not endeavour to show that there was any breach of trust or misappropriation involved. The Supreme Court bad observed in this connection in
The expression ''entrustment'' carries with it the implication that the person handing over any property or on whose behalf that property is handed over to another, continues to be its owner. Further, the person handing over the property must have confidence in the person taking the property so as to create a fiduciary relationship between them. A mere transaction of sale cannot amount to an entrustment....
6. The only aspect, therefore, that is required to be considered for the purpose of this application is whether a ease u/s 420 has been made out or not. Two decisions of the Supreme Court have been relied upon by both sides while rep resenting their various interpretaions with regard to the scope of this application. One is in
...Thus it may be safely held that in the following cases an order of the Magistrate issuing process against the accused can be quashed or set aside:
(1) Where the allegations made in the complaint or the statement of the witnesses recorded in support of the same taken at their face value make out absolutely no case against the accused or the complaint does not disclose the essential ingredients of an offence which is alleged against the accused;
(2) where the allegations made in the complaint are potently absurd and inherently improbable so that no prudent person can ever reach a conclusion that there is 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 cases mentioned by us are purely illustrative and provide sufficient guidelines to indicate contingencies where the High Court can quash proceedings.
The other decision is
Before dealing with the merits of the appeal it is necessary to consider the nature and scope of the inherent power of the High Court u/s 561-A of the Code. The said section saves the inherent power of the High Court to make such orders as may be necessary to give effect to any order under this Code or to prevent abuse of the process of any Court or otherwise to secure the ends of justice. There is no doubt that this inherent power cannot be exercised in regard to matters specifically covered by the other provisions of the Code. In the present case the Magistrate before whom the police report has been filed u/s 173 of the Code has yet not applied his mind to the merits of the said report and it may be assumed in favour of the appellant that his report for the quashing of the proceedings is not at the present stage covered by any specific provision of the Code. It is well established that the inherent jurisdiction of the High Court can be exercised to quash proceedings in a proper case either to prevent the abuse of the process of any Court or otherwise to secure the ends of justice. Ordinarily, criminal proceedings instituted against an accused person must be tried under the provisions of the Code, and the High Court would be reluctant to interfere with the said proceedings at an interlocutory stage. It is not possible, desirable or expedient to lay down any inflexible rule which would govern the exercise of this inherent jurisdiction , However, we may indicate some categories of cases where the inherent jurisdiction can and should be exercised for quashing the proceedings. There may be cases where it may be possible for the High Court to take the view that the institution or continuance of Criminal proceedings against an accused person may amount to the abuse of the process of the Court or that the quashing of the impugned proceeding would secure the end of justice. If the criminal proceeding in question is in respect of an offence alleged to have been committed by an accused person and it manifestly appears that there is a legal bar against the institution" or continuance of the said proceeding the High Court would be justified in quashing the proceeding on that ground. Absence of the requisite sanction may, for instance, furnish cases under this category. Cases may also arise where the allegations in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety; do not constitute the offence alleged; in such cases no question of appreciating evidence arises; it is a matter merely of looking at the complaint or the First Information Report to decide whether the offence alleged is disclosed or not. In such cases it would legitimate for the High Court to hold that it would be manifestly-unjust to allow the process of the criminal Court to be issued against the accused, person. A third category of cases in which the inherent jurisdiction of the High Court can be successfully invoked may also arise. In cases falling under this category the allegations made against the accused person do constitute an offence alleged but there is either no legal evidence adduced in support of the case or evidence adduced clearly or manifestly fails to prove the charge. In dealing with this class of cases it is important to bear in mind the distinction between a case where there is no legal evidence or where there is evidence which is manifestly and clearly inconsistent with the accusation made and cases where there is legal evidence which on its appreciation may or may not support the accusation in question. In using its jurisdiction u/s 561-A the Court embark upon an enquiry as to whether the evidence In question is reliable or not. That is the function of the trial Magistrate, and ordinarily it would not be open to any party to invoke the High Court''s inherent jurisdiction and contend that or a reasonable appreciation of the evidence the accusation made against the accused would not be sustained. Broadly stated that is the nature and scope of the inherent jurisdiction of the High Court u/s 561-A in the matter of quashing criminal proceedings, and that is the effect of judicial decisions on the point.
7. For those, who desire to abort a prosecution at its very inception, the aforesaid two decisions of the Supreme Court have been widely used. Since booth parties, as I have stated, are relying on these decisions, I would first like to discuss their cumulative effect. Kapar''s case discusses the scope of the inherent power of a High Court in relation to quashing of a proceeding. This decision arose out of a police case and before going into the merits of the matter the Supreme Court discussed the scope and nature of inherent power of the High Court u/s 561-A 6f the Code of Criminal Procedure, 1898, (hereinafter referred to as ''the old Code''). After an elaborate discussion the Court was pleased to lay down broadly three categories of instances in which the High Court can quosh a criminal proceeding. Paragraph 6 of this decision has already been Cited above. As far as the present application is concerned, the relevant portion applicable is the second instance, which says that (sic) in the F.I.R. or the complaint, (sic) face value and accepted in their entirety, do not constitute the offence, in such a case no question of appreciating evidence arises. It is a matter merely of looking at the complaint or the F. I. R. to decide whether the offence alleged is disclosed or not.
8. From the above proposition it is manifest that the discretion to quash a proceeding has to be exercised merely by examining the F. I, R. or the complaint, there being no necessity thereafter to examine any other material whatsoever. The law is clear that the police can investigate only such cases in which cognizable offence has been alleged or is made out in the F. I. R. If no cognizable offence is alleged or made out the question of investigating the matter does not arise, except under certain conditions, not relevant here, and collection of material on the basis of such a F. I. R. or complaint will not be necessary.
9. The decision in Smt. Nagawwa''s case has also set out four instances in which process against the accused can be quashed or set aside. Relevant passages thereof have already been set out above. It is manifest from reading to those paragraphs that the observations of the Supreme Court relate only to a case instituted on a complaint and the statements of witnesses that arc required to be considered while dealing with an application for quashing a proceeding arising out of the complaint are those that are recorded in support of the complaint which means the evidence recorded by the Magistrate taking cognizance along with the complainant''s examination on solemn affirmation or those examined in an enquiry or investigation u/s 202 of the Code of Criminal Procedure. This decision (Smt. Nagawwa''s case), though does not relate to a case instituted on a police report, its principles are widely used for quashing prosecution initiated on police report also. The distinction, however, between the two cases has to be maintained to the extent of the material, which can be examined by a Court in dealing with an application for quashing of a case instituted on a police report or a complaint. For quashing of a case that arises out of a complaint one has to take into consideration both the decisions mentioned above, particularly the decision in Smt. Nagawwas case (supra) for the purpose of ascertaining what ''material the Court can examine apart from the complaint. In regard to the quashing of a case arising out of a police report, the former decision will have to be relied upon to ascertain as to what material the Court can examine for the purpose of quashing such a proceeding. This is precisely so because in the instances cited relate only to complaints and it does not speak specifically about police report cases, unlike the former case, Kapur''s case which deals with the cases instituted on police report also. In my view, therefore, the total effect of the Supreme Court decisions cited above is that in a case initiated on the basis of a F. I. R. it is only the F, I. R. and no other material which need be looked into for the purpose of examining if the prosecution is fit to be quashed or not.
10. Both the parties have relied in their own way on these decisions and other decisions, to be dealt with later, mainly on the question as to what material could be examined by a Court while dealing with an application, for quashing a prosecution also for the sufficiency of the grounds justifying the quashing of the prosecution.
11. Learned Counsel for the petitioner has submitted that since the F.I.R. does not contain the facts that make out an offence nor does it state any of the essential ingredients of the offence, no other material can and should be looked into, while learned Counsel for the State has submitted that a part from the F. I. R. the materials in the case diary can also be looked into, in order to ascertain if a case is made out against the accused. It has, therefore, to be tested as to which of the two submissions is of intrinsic merit and worth of acceptance, in the light of the various decisions cited at the bar.
12. Elaborating the submissions that I have set out above, learned Counsel for the petitioner submitted that on mere reading of the F. I. R, even if it is taken at its face value and accepted in its entirety, no offence is made out at all and at the highest the transaction between the parties was civil in nature, money due, if any, being recoverable by an appropriate proceeding in the Civil Courts. According to him, the essential ingredients of Section 420 have not been even stated in the F.I.R. It has not been shown that any fraudulent or dishonest deception was played upon the informant by the petitioner in order to induce him to part with the tickets on receipt of cheques that were dishonoured, and if these ingredients are not in the F.I. R. than there is no question of going into any other material to hunt for these ingredients. Learned Counsel has submitted that the only evidence against the petitioner is that of the informant, there being no other witness in the whole of the case diary in support of the prosecution case stated by the informant. It may be stated that the learned Counsel for the State has conceded that there is no other evidence whatsoever, apart from that of the informant, in regard to the essential ingredients of Section 420 of the Penal Code and he has based his submissions only on the facts stated in the F. I. R. and the statement of the first informant before the investigating officer as well as the conduct of the petitioner himself, which according to him, would show that for all intents and purposes the petitioner''s intention from the very inception of this transaction was dishonest and fraudulent and he never intended the cheques to be encashed. According to him the Court would be fully justified in taking accumulative effect of the F. I. R. and the statement in the diary to decide whether a case is made out against the petitioner or not.
13. I now proceed to consider the case of the parties on the basis of my interpretation of the two decisions mentioned above. The F.I R. has already been set out above. From that F.I.R. it is clear that none of the ingredients of Section 420 of the Indian Penal Code has been satisfied. There is not an iota of material to indicate that the accused by dishonest and fraudulent deception induced the District Lottery Officer to accept his cheques. It is stated in the complaint that the Bihar State Lottery tickets were given to the accused in good faith and presuming that he had sufficient money in the bank against which cheques were issued by him. This may be state of mind of the District Lottery Officer but it cannot be inferred that this state of mind was the result of any fraudulent or dishonest deception by the petitioner, In fact, it was the duty of the informant, as laid down in the Government notification, to satisfy himself as to the financial soundness etc. of the party purchasing ticket by making payments by cheque. Precautionary steps were not taken even then. If the informant had arrived at such a decision on his own. it cannot be said that the petitioner intended to cheat the party from whom he obtained tickets on the basis of by cheques that were subsequently dishonoured. Mere issue of cheque which is ultimately dishonoured, does not mean that at the time of giving the cheque the party doing so conveyed to the party receiving the cheque that he had enough money in the bank to cover the amount. In this connection a passage from the decision of Bindeshwari Singh v. Sheobachan Singh AIR 1954 Pat 77 which is relevant for the present purpose, quoted below:
A cheque is nothing but a ''document which on the face of it is only a command of a future act'' and implies at least four statements;
(i) that the drawer has an account with the bank, (ii) that he has authority to draw on it for that amount, (iii) that the cheque, drawn, is a valid order for the payment of that amount (i.e. that the present state of affairs is such that, in the ordinary course of events the cheque will on its future presentment be duly honoured); and (iv) that it does not imply any representations that the drawer now has money in the bank to the amount drawn for, inasmuch as he may well have authority to over draw or may intend to pay in (before the cheque can be presented) sufficient money to meet it. This doctrine applies even to post-dated cheques.
14. Learned Counsel for the State enumerated several circumstances to indicate that the intention of the petitioner was dishonest and fraudulent from the very inception. He stated that when the cheques were dishonoured on 23.2,76 and 8.3.76 several letters were sent by the officers concerned: to which no reply was sent by the petitioner. Further cheques were issued for large amounts though, the balance in the banks were not sufficient to meet those cheques. In fact, in one instance, alter issuing a cheque of Rs. 30,400/- for an account, that contained Rs. 20,000/- the petitioner withdrew Rs. 18,000/- on that next day of issuing that cheque. Large amount of money over 13 lacs of rupees was paid to the petitioner by the Directorate towards publicity, bonus and highest selling award, yet the petitioner did not repay some of the cheques. These facts, according to learned Counsel for the petitioner, have been collected during investigation. I have already held that no other material, even if it is in the diary, can be considered; if no offence is made out in the F.I.R. itself even if taken as a whole and accepted in its entirety, but, since learned Counsel for the State, placed relevant passages from the diary in order to show the aforesaid facts, I feel that they deserve some comment. In my view, these, facts by themselves do not in any way show that the intention of the petitioner was dishonest from the very inception. Non-reply of letters and inadequate balance by itself does not create any inference of criminality.
15. Learned Counsel for the State also relied on the statement of the informant in paragraph 156 at pages 212, 221 and 223 of the diary. The cumulative effect of these statements is that the petitioner represented to T. K. Mishra that he was in possession of substantial means and property and there would be no difficulty in encashing cheques paid by him for the purchase of tickets, It was on the basis of this fraudulent and dishonest representation that the Lottery Officer was induced to part with the tickets and accepted the cheques, There are other statements in the diary which show that the petitioner had been issuing such cheques for various other transactions relating to lottery tickets also. The effect of this statement, in my view, does not enure to the benefit off the prosecution for two reasons, firstly, T. K. Mishra himself was an accused, in this case, who had been discharged, and secondly, the statement of T.K. Mishra was recorded on 5-7-78, that is beyond two years, after loding of the F.I.R. which was lodged on 21.5.78 and it is at that stage when the ingredients of an offence u/s 420 of the Indian Penal Code has been introduced-through the mouth of the informant for the first time in the diary. Thirdly, the statement of the informant made at the earliest point of time and recorded at page 25 of the diary, which makes interesting reading, completely nullifies, the effect of the later statement at pages 212, 203, 221 and 223. It was stated by the informant on 27.7.76 that Sahay was introduced to the District Lottery. Officer by one Mr. Shukla, who was the Director of the State Lottery and the said Mr. Shukla asked the District Lottery Officer to accept the cheques given by the petitioner which need not be cashed and it should be kept as security for payments that will be made after the sale of tickets. Even at that stage no inducement of any kind and no representation of any nature were made by the petitioner. It is surprising that the prosecution has ignored this earliest statement of the informant and after two years has brought on record the missing ingredients of a prosecution u/s 420 of the Indian Penal Code.
16. Government instructions were clear that if cheques are not collected within a month, then certain precautionary measures have to be taken. These measures were completely disregarded, It is surprising that even during the period when cheques were issued and subsequently dishonoured, a huge sum of about 9 lacs of rupees was paid to the petitioner by the Director. It need not dilate more on the contents of the diary to which 1 have referred only because the State submitted that in order to find out whether any case is made out against the petitioner or not, the diary should be looked into, though I am satisfied that it is not the situation in law as I have stated above.
17. I have also no hesitation in holding on a consideration of the materials in the diary that I have set out above that even if the diary is taken into account no acceptable case is made out against the petitioner for the prosecution u/s 420 of the Indian Penal Code.
18. I may reiterate that I was not required to look into the case diary at all, but did so at the instance of the learned Counsel for the State.
19. Several decisions have been cited by both sides to support their respective contentions with regard to the applicability of Section 420, particularly in regard to what amounts to initial deception. Learned Counsel for the State has submitted that there is some difference in regard to an under (sic) of initial deception if a post-dated cheque is given and a current cheque in payment of the price of goods delivered is passed. According to him, in the event of a current cheque if it is dishonoured, from that circumstance it can be inferred that he must have been aware when the cheque was given that it would be dishonoured so that failure to make payment is not accidental and it amounts to a false representation within the definition of Section 410 of the Penal Code. He has also submitted that the prosecution has to establish that failure to meet the cheque was not accidental but was a consequence expected and intended by the accused and it will be for the accused to establish any fact that may be in his favour which is specially in his knowledge about which the prosecution could not be expected to have any information. He has relied on Rajeshwar Prasad Sukla v, The State 1957 (2) Cal. 444 . Keshavji Madhavji v. Emperor AIR 1930 Bom. 179 and
20. In my view, on the facts of this case none of these decisions is of any benefit to the State In view of the statement of the informant at page 25 of the diary, about which I have stated above, there could be no justifiable, inference that the petitioner intended the cheque to be dishonoured. In fact, according to that statement, the cheque was never intended to be presented and that too, at the instance of the petitioner,
21. Apart from that, the Bombay decision aforesaid has held that giving of a cheque on a bank as payment for goods, or for payment of a debt does not amount to a representation that the person giving the cheque has money to cover the amount in the bank at that time, but amounts only to a representation that he has authority to draw on the bank for that amount; that the cheque is a good and valid order for the payment of its amount and that the cheque will be paid, i.e., that the existing state of facts is such that in the ordinary course the cheque will be met. Allahabad decision also reiterates this position. The decision in Bindeshwari Singh v, Sheobachan Singh 1954 B.L.J.R. 77 is also to the same effect but it makes no distinction between a post dated and current payment. In regard to Calcutta decision that there is some distinction between a post-dated cheque and current cheque in regard to the inference of initial deception, in my view, has no relevance, as far as this case is concerned, in view of the circumstances that I have stated above. It may also be appropriate to note that the F.I.R. does not contain the dates on which the cheques were actually paid and the lottery tickets were delivered to the petitioner. In absence of these facts no advantage can be taken by the State on the basis of this decision. The main thing is the intention of the drawer when he induces a person to act on his fraudulent and dishonest representation. In this case from the F.I.R. there was no allegation of such any representation by which fraudulent and dishonest deception was created.
22. Learned Counsel for the petitioner has relied on Sheosaggr Pandey v. The King Emperor 1935 16 P.L.T. 553. It has been held therein that where there is no clear and conclusive evidence of the criminal intention of the accused at the time the offence is said to have been committed and where the party stated to be aggrieved has an alternative remedy in the civil Court, the mater should not be allowed to be fought in the Criminal Courts. Mere breach of a contract can not give rise to a criminal prosecution. The distinction between a case of mere breach of contract and one of cheating depends upon the intention of the accused at the time of the alleged inducement which may be judged by his subsequent act but of which the subsequent act is not the sole criterion. This case applies directly to the facts of the present case because of the total absence of any allegation with regard to the initial inducement and the statement of the informant in the diary at page 25. The case of
We have heard Mr. Maheshwari on behalf of the appellant and are of the opinion that no case has been made out against the respondents u/s 420 Indian Penal Code. For the purpose of the present appeal, we would assume that the various allegations of fact which have been made in the complaint by the appellant are correct. Even after making that allowance, we find that the complaint does not disclose the commission of any offence on the part of the respondents u/s 420 Indian Penal Code. There is nothing in the complaint to show that the respondents had dishonest or fraudulent intention at the time of appellant parted with Rs. 35,000/-. There is also nothing to indicate that the respondents induced the appellant to pay them Rs. 35,000 by deceiving him. It is further not the case of the appellant that a representation was made by the respondents to him at or before the time he paid the money to them and that at the time the representation was made, the respondents knew the same to be false. The fact that the respondents subsequently did not abide by their commitment that they would show the appellant to be the proprietor of Drang Transport Corporation and would also render accounts to him in the month of December might create civil liability for them, but this fact would not be sufficient to fasten criminal liability on the respondents for the offence of cheating.
23. In the ultimate analysis we find that the allegation of there being any fraudulent or dishonest deception by the petitioner is totally absent from the F.I.R. Such element has been introduced in the diary for the first time after two years, the earliest statement at page 25 of the diary by the informant being completely destructive of the statement relied upon by the prosecution in regard to initial deception, which, as I have said, was recorded after two years. In this circumstance the diary does not improve the situation for the prosecution in any way. It was also stated at the bar that civil suit has been filed against the petitioner for the recovery of the amount due.
24. I may also mention that the informant was an accused in this case and he was discharged by the Magistrate taking cognizance by the impugned order dated 14.1.80. The incriminating; statement made by him in the diary was recorded on 5.7.78 when he appears to be an accused. In the final form (charge sheet) he is shown as an informant, a witness and not as a sent up accused. It was submitted by the learned Counsel for the State that T. K. Mishra was in fact never arraigned as an accused and the entry in the final form is an error fit to be ignored. I do not propose to deal with this fact any further as it is not necessary in this application.
25. In the result, the application is allowed and the impugned order dated 14.1.80 and the consequential prosecution of the petitioner are quashed.
