Complaint alleging breach of trust and cheating must convincingly prove entrustment and deception #indianlaws

To constitute an offence punishable under Section 406 IPC, the essential ingredient is the “entrustment” of the property.  It is only after entrustment is shown, it can be said that there was criminal breach of trust. To constitute an offence punishable under Section 409 IPC, apart from entrustment, it is an essential requirement that it should be shown that the accused has acted in the capacity of a public servant, banker, merchant, factor, broker, attorney or agent.

To constitute an offence punishable under Section 406 IPC, the essential ingredient is the “entrustment” of the property and for an under Section 409 IPC, apart from entrustment, it is an essential requirement that it should be shown that the accused has acted in the capacity of a public servant, banker, merchant, factor, broker, attorney or agent.

The Supreme Court in this case dealt with the issue in the backdrop of Section 482 of the Code of Criminal Procedure providing for exercise of inherent jurisdiction by the High Court in respect of quashing of proceedings before the trial court.

In the instant matter a society was constituted for rendering charitable work and social service duly registered under Karnataka Societies Registration Act, 1970. It purchased a piece of land vide registered sale deed’. A complaint was filed against the office bearers of the society alleging them of misusing the position in the above sale transaction in forming of causing favour to Directors of the society. Interestingly, the complainant was neither the part of transaction nor a member of the society or more rightly can be referred as stranger. The complaint was also filed after almost 14 years of the above sale transaction.

Trial Court after recording the statement of complainant issued summons to all the office bearers of the society including its directors in respect of offences punishable under Sections 406, 409, 420 read with Section 34 of Indian Penal Code (IPC). The Revision petition filed to challenge the order of summoning was dismissed by the Sessions court and thereafter the petition for quashing of proceedings was also dismissed by the High Court and that how the matter came up before the Supreme Court in form of appeal.

It was contended before the apex court that courts below erred in disallowing relief to appellants by ignoring to consider following relevant facts:

• Complainant was not a member of the Society. He was not in manner connected with the affairs of the Society and as such had no locus to file the criminal complaint.
• The complaint was filed after 14 years of the alleged sale transaction and complaint appeared to be filed more with malafide intentions and to settle personal vendetta against the Directors of the Society.
• No offences as alleged were made out and also that the sale transaction in question was not against any bye-law or clause of Memorandum of Association of the Society.

The orders passed by courts below were held to be incorrect and not sustainable for ignoring the above vital facts.

It was held that to constitute an offence punishable under Section 406 IPC, the essential ingredient is the “entrustment” of the property. The complaint filed by the complainant nowhere disclosed that the land in question was entrusted to the Society for the benefit of others. It is only after entrustment is shown, it can be said that there was criminal breach of trust. Further, even if the allegations made in the complaint were taken to be true, the ingredients of the offence punishable under Section 409 IPC for which office bearers were summoned were also not made out. To constitute an offence punishable under Section 409 IPC, apart from entrustment, it is an essential requirement that it should be shown that the accused has acted in the capacity of a public servant, banker, merchant, factor, broker, attorney or agent. It was nowhere shown in the complaint that the accused acted in any of the above capacities. Then in respect of the offence of cheating, one of the essential ingredients is deception, but in the present case, the contents of the complaint nowhere reflected that the complainant was deceived or he or anyone else was induced to deliver the property by deception. What was done was so reflected in the resolutions, and sale deeds.

The apex court affirmed the settled legal view with regard to court’s power in quashing of proceedings under Section 482 CrPC that, when a prosecution at the initial stage is asked to be quashed, the test to be applied by the court is as to whether the uncontroverted allegations as made prima facie establish the offence. Court should take into consideration any special features which appear in a particular case to consider whether it is expedient and in the interest of justice to permit a prosecution to continue. This is so on the basis that the court cannot be utilised for any oblique purpose and where in the opinion of the court chances of an ultimate conviction is bleak and, therefore, no useful purpose is likely to be served by allowing a criminal prosecution to continue, the court may while taking into consideration the special facts of a case also quash the proceeding even though it may be at a preliminary stage.

The complaint proceedings were accordingly held as abuse of process of law on the part implicating the society office bearers in criminal case that too after a period of more than twelve years of execution of registered sale deeds in question, more so when was neither party to the sale deeds nor a member of the Society.

Robert John D’Souza and Ors. vs. Stephen V. Gomes and Anr.

SC, 21.07.2015

Criminal Appeal No. 953 of 2015