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REPORTABLE

IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 2327  OF 2014 (Arising out of SLP (Crl.) No. 9751/2011)

BINOD KUMAR & ORS.       .. Appellant

Versus

STATE OF BIHAR & ANR.   ..Respondents

J U D G M E N T

R. BANUMATHI, J.

Leave granted.

2. Whether the charges under Section 406 IPC and the  

criminal  complaint  for  criminal  breach of  trust for  allegedly  

retaining the bill amount payable to respondent No.2 is liable  

to  be  quashed is  the  point  falling  for  consideration in  this  

appeal.

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3. Payment of bill pertaining to the contract executed  

by  the  second  respondent  in  Tilka  Manjhi  Bhagalpur  

University  had  a  chequered  history.  Case  of  second  

respondent is that contract was entered into between him and  

K.S.S. College on 4.9.1990 for the construction of building of  

K.S.S. College, Lakhisarai, a constituent unit of Tilka Manjhi  

Bhagalpur University.  According to second respondent, since  

money and requisite materials were not given to him in time,  

the  work  was  not  completed  within  stipulated  period.   The  

university vide letter dated 9.5.1995,  informed the respondent  

No.2 that his contract is terminated and all his dues including  

final  bill,  earnest  money  and  security  deposit  etc.  will  be  

released  after  consultation  with  the  College  Development  

Committee.  The  University  Engineer  vide  letter  dated  

4.6.1996, addressed to the Principal of the college, informed  

that a payment of Rs.48,505/- is payable to the contractor;  

but  the  respondent  No.2  was  not  paid  the  aforesaid  bill  

amount.  Finally, the respondent was paid Rs.14,000/- vide  

cheque No. EMGCO-OP.Z No. 0127627, as per the direction of  

the College Development Committee and balance amount of  

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Rs.34,505/- was not paid to him.  Aggrieved by the said non-

payment of entire amount, respondent No.2 filed  a criminal  

complaint case No.196-C/1997 in the Court of  Sub Divisional  

Judicial  Magistrate,  Lakhisarai  for  criminal  breach of  trust,  

alleging that the amount of Rs.34,505/- was  not paid to  him  

and that  the amount was utilized by the appellants in some  

other work.

4. The  appellants  filed  an  application  under  

Section 227 Cr.P.C. before the Court of Sub Divisional Judicial  

Magistrate,  Lakhisarai  seeking  their  discharge  from  the  

criminal case. The Court of Sub Divisional Judicial Magistrate,  

Lakhisarai vide its order dated 2.12.2002 dismissed the said  

petition and directed the appellants to remain present in the  

court  on  8.1.2003  for  framing  of  charges  under  Section  

406/120B IPC.   The appellants  filed petition under  Section  

482 Cr.P.C. before the Patna High Court  for quashing the said  

order and by the impugned order dated 18.2.2011, the High  

Court  dismissed  the  petition.  Aggrieved  by  the  same,  the  

appellants are before us.          

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5. Dr. Manish Singhvi, learned counsel appearing for  

the  appellants,  contended  that  the  act  of  withholding  of  

payment to the second respondent was as per the direction  

issued by the Vice-Chancellor  and no case is  made out for  

misappropriation  of  funds  under  Section  406  IPC.  It  was  

contended  that  the  act  of  the  appellants  was  done  in  the  

discharge of their public duties and there was no dishonest  

intention  to  misappropriate  the  amount  and  the  essential  

ingredients of criminal breach of trust are not made out and  

the High Court has not properly appreciated the matter.

6. Ms. Prerna Singh,  learned counsel  for  respondent  

No.1 -  State of  Bihar,  submitted that   the instant petition  

does not relate to any police case and the matter was never  

subjected to police investigation.  It was, however, submitted  

that on examination of four witnesses, Magistrate found that  

a prima facie case was made out against the appellants and  

therefore, High Court rightly dismissed the petition filed under  

Section 482 Cr.P.C.

7. Mr. Rajiv Kumar, learned counsel appearing for the  

second  respondent  contended  that  the  application  for  

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discharge was rightly rejected by the Magistrate as the case  

filed by the second respondent is  a warrant case instituted  

other than  on police report and since  prima-facie  case  was  

made out, the discharge application was  rightly dismissed by  

the trial court.  It was also contended that as per the terms  

and  conditions  of  the  contract,  the  second  respondent  had  

executed  the  work  and  the  same  was  also  measured  and  

verified  by  the  University  Engineer  and  while  so,  the  

appellants  with  malafide  intention  withheld  the  second  

respondent’s  dues  and  thus,  committed  criminal  breach  of  

trust and the High Court rightly dismissed the petition filed  

under Section 482 Cr.P.C.  

8. We have carefully considered the rival contentions  

and also perused the impugned order and the materials on  

record.  

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 Cr.P.C. should be sparingly invoked with  

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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 vs.  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  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.”

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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 vs.  NEPC India Ltd.  And  

Ors.,  (2006)  6  SCC  736,  this  Court  has  summarized  the  

principles relating to exercise of jurisdiction under Section 482  

Cr.P.C.  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 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.

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   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 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.”

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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 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  

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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 CrPC more frequently,  where they discern malice or frivolousness or ulterior  motives on 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  

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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.  

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  

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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  

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or not.  Let us now examine whether the allegations made in  

the complaint when taken on their face value, are true and  

constitute the offence as defined under Section 406.  

15. Section 405 IPC deals with criminal breach of trust.  

A careful reading of the Section 405 IPC 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 IPC prescribes punishment for criminal  

breach of trust as defined in Section 405 IPC.  For the offence  

punishable under Section 406 IPC, 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.   

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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  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  IPC  deals  with  cheating.  Essential  

ingredients of Section 420 IPC 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 IPC. 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  

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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.  

19. Even if all the allegations in the complaint   taken at  

the  face  value  are  true,  in  our  view,  the  basic  essential  

ingredients  of  dishonest  misappropriation  and  cheating  are  

missing.  Criminal  proceedings are not a short  cut  for  other  

remedies.   Since  no  case  of  criminal  breach  of  trust  or  

dishonest  intention  of  inducement  is  made  out  and  the  

essential ingredients of Sections 405/420 IPC are missing, the  

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prosecution of the appellants under Sections 406/120B IPC, is  

liable to be quashed.    

20. The impugned order of the High Court is set aside  

and this appeal is allowed. Parties are at liberty to work out  

their remedy in the civil  suits which they have already had  

recourse to.   

……………………….J. (T.S. Thakur)

……………………….J. (R. Banumathi)  

New Delhi; October  30, 2014   

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