ALPIC FINANCE LTD. versus P. SADASIVAN AND ANR.

Citation: [2001] 1 S.C.R. 1059 · Decided: 16-02-2001 · Supreme Court of India · Bench: S. RAJENDRA BABU · Disposal: Dismissed

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Judgment (excerpt)

ALPICFINANCE LTD. 
A 
v. 
P. SADASIVAN AND ANR. 
FEBRUARY 16, 2001 
[S. RAJENDRA BABU AND K.G. BALAKRISHNAN, JJ.] 
B 
Penal Code, 1860/Criminal Procedure Code, 1973-Sections 420, 406, 
423, 42./ r/11• 120-BI 93. 482-Lease finance for purchase of dental chairs-
Default in payment of rental instalments by respondents to finance company-
Missing of certain chairs from the premises of respondents-Complaint for C 
criminal breach of trust and misappropriation-High Court quashing the 
criminal proceedings-Held, there was no wilful misrepresentation or 
fraudulent inducement by re;,pondents at the time of entering into lease 
agreement-Quashing of criminal proceedings justified. 
Appellant, a non-banking financial company, financed an amount of D 
Rs. 92,50,000 to respondents, who are trustees of a trust running a Dental 
College, for purchase of 100 hydraulically operated dental chairs through a 
lease agreement. The respondents were liable to pay rentals to the appellant 
quarterly, The respondents defaulted in the payment of rentals. The appellant, 
on physical ·verification, found certain chairs missing from the premises of E 
the respondent. The appellant made a complaint before Chief Metropolitan 
Magistrate for criminal breach of trust and misappropriation of property 
under Sections 420, 406, 423, 424 r/w 120-B l.P.C. The appellant also made 
an application under Section 93 Cr.P.C. for issue of warrant for search and 
seizure of the property from the premises of the respondent. The Magistrate 
issued summons to the respondents and issued a search warrant. The 
respondents challenged the proceedings before High Court under Section 
482 Cr.P.C. The High Court quashed thl' proceedings before the Magistrate 
and directed the appellant company to return all the properties seized by the 
Police pursuant to the issue of search warrant. 
In appeal to this Court, the appellant contended that the allegations in 
the complaint was clearly made out for criminal breach of trust or cheating 
and misappropriation of the property by the respondent under the provisions 
of the I.P.C. 
,-
F 
G 
The respondents contended that the complaint was filed before the 
1059 
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1060 
SUPREME COURT REPORTS 
[2001] I S.C.R. 
A Magistrate with a ma/a fide intention to harass the respondents; that the 
finance lease transaction between the parties was of civil nature; that a 
substantial amount has been repaid to the appellant as per the lease agreement; 
that the default in payment was not wilful; that there was no intention of 
misappropriation or cheating; and that there was no removal of disputed 
B property clandestinely to defeat the interest of the appellant 
Dismissing the appeal, the Court 
HELD : I.I. When somebody suffers injury to his person, property or 
reputation, he may have remedies both under civil and criminal law. The 
injury alleged may form the basis of civil claim and may also constitute the 
C ingredients of some crime punishable under criminal law. When there is 
dispute between the parties arising out of a transaction involving passing of 
valuable properties between them, the aggrieved person may have right to 
sue for damages or compensation and at the same time, law permits the 
victim to proceed against the wrongdoer for having committed an offence of 
D criminal breach of trust or cheating. To deceive is to induce a man to believe 
that a thing is true which is actually false and the person, who is deceiving 
knows or believes it to be false. It must also be shown that there existed a 
fraudulent and dishonest intention at the time of commission of the offence. 
There is no allegation that the respondents made any wilful misrepresentation. 
In the complaint, there is no allegation that there was fraud or dishonest 
E inducement on the part of the respondents and thereby the appellant parted 
with the property. It is trite law and common sense that an honest man entering 
into a contract is deemed to represent that he has the present intention of 
carrying it out but if he, having accepted the pecuniary advantage involved in 
the transaction, fails to pay his debt, he does not necessarily evade the debt by 
F deception. The appellant has no case that the respondents obtained the article 
by any fraudulent inducement or by wilful misrepresentation. The respondents, 
though defaulted some instalment, have paid substantial amount towards the 
consideration.11066-E-G; 1067-A-B-C] 
1.2. It is difficult to discern an e

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