LexDELHI RACE CLUB (1940) LTD. & ORS. versus STATE OF UTTAR PRADESH & ANR.
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[2024] 8 S.C.R. 670 : 2024 INSC 626 Delhi Race Club (1940) Ltd. & Ors. v. State of Uttar Pradesh & Anr. (Criminal Appeal No. 3114 of 2024) 23 August 2024 [J.B. Pardiwala* and Manoj Misra, JJ.] Issue for Consideration High Court, if justified in declining to quash and set aside the summoning order passed by the Magistrate, against the appellants- company and its office bearers, for offence punishable u/ss. 406 and 420 IPC. Headnotes† Penal Code, 1860 – ss.406, 420 and 120B – Criminal breach of trust and cheating – Private complaint filed by the respondent No. 2 in the court of Magistrate against the appellants for the offence punishable u/ss.406, 420 and 120B, alleging that certain amount was due and payable to him by the appellants towards the sale of horse grains and oats over a period of time – Trial court issued process for the offence punishable u/s.406 – Application u/s.482 CrPC by the appellants seeking quashing of the summoning order passed by the Additional Chief Judicial Magistrate – Rejected by the High Court – Correctness: Held: There was total non-application of mind by the High Court – Magistrate failed to pose unto himself the correct question as to whether the appellant Nos. 2 and 3-office bearers of the appellant No. 1 Company, were personally liable for any offence – Penal Code does not contain any provision for attaching vicarious liability on the part of the appellant Nos. 2 and 3 – Vicarious liability of the office bearers would arise provided any provision exists in that behalf in the statute – Furthermore, at the stage of pre-cognizance, the Magistrate is obliged to look into the complaint threadbare so as to reach to a prima facie conclusion whether the offence is disclosed or not, then he is expected to be more careful when he is actually taking cognizance upon a private complaint and ordering issue of process – High Court completely * Author [2024] 8 S.C.R. 671 Delhi Race Club (1940) Ltd. & Ors. v. State of Uttar Pradesh & Anr. lost sight of the said aspect while rejecting the application u/s.482 CrPC – Issuance of summons is a serious matter and, thus, should not be done mechanically and it should be done only upon satisfaction on the ground for proceeding further in the matter against a person concerned based on the materials collected during the inquiry – Plain reading of the complaint fails to spell out any of the ingredients of ss. 406 and 420 – At the most, the Magistrate could have issued process for the offence punishable u/s.420-cheating but in any circumstances no case of criminal breach of trust made out, because there was no entrustment of any property – Not even the case of the complainant that any property was lawfully entrusted to appellants and that the same has been dishonestly misappropriated – Case of the complainant is that the price of the goods sold by him has not been paid – Once there is a sale, s. 406 goes out of picture – Even if the Magistrate would have issued process for the offence punishable u/s.420-cheating the same would have been liable to be quashed and set aside, as none of the ingredients to constitute the offence of cheating disclosed from the materials on record – If it is the case of the complainant that a particular amount is due and payable to him then he should have filed a civil suit for recovery of the amount against the appellants – But he could not have gone to the court of the Judicial Magistrate by filing a complaint of cheating and criminal breach of trust – Till date, the complainant has not filed any recovery suit – Continuation of the criminal proceeding nothing but abuse of the process of law – Thus, the impugned order passed by the High Court as also the order passed by the Additional Chief Judicial Magistrate taking cognizance upon the complaint, set aside. [Paras 11, 12, 14, 18, 19, 21, 26, 27, 31, 32, 39, 40, 45] Penal Code, 1860 – u/ss.406, 420 – Criminal breach of trust and cheating – Specific ingredients – Difference between: Held: In both the sections, ss. 406 and 420, mens rea-intention to defraud or the dishonest intention must be present, and in the case of cheating it must be there from the very beginning or inception – Distinction between mere breach of contract and the offence of criminal breach of trust and cheating is a fine one – In case of cheating, the intention of the accused at the time of inducement should be looked into which may be judged by a subseq
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