INTERNATIONAL ADVANCED RESEARCH CENTRE FOR POWDER METALLURGY AND NEW MATERIALS (ARCI) &ORS. versus NIMRA CERGLASS TECHNICS (P) LTD.&ANR.

Citation: [2015] 11 S.C.R. 299 · Decided: 22-09-2015 · Supreme Court of India · Bench: J.S. KHEHAR · Disposal: Appeal(s) allowed
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Judgment (excerpt)

(2015] 11S.C.R.299 
INTERNATIONALADVANCED RESEARCH CENTRE FOR 
A 
POWDER METALLURGY AND NEW MATERIALS (ARCI) 
&ORS. 
v. 
NIMRA CERGLASS TECHNICS (P) LTD.&ANR. 
(Criminal Appeal No.2128 of2011) 
SEPTEMBER 22, 2015 
[JAGDIS.H SINGH KHEHAR AND R. BANUMATHI, JJ.] 
B 
c 
Code of Criminal Procedure, 1973- s.482- Scope of-
Technology transfer agreement - Between a Government 
research institute and a private Company - The institute D 
failed to achieve targeted specifications - Complaint by the 
Company-Against the institute and its officials uls. 420 /PC 
- Magistrate took cognizance of the offence -Application ul 
s.482 for quashing the criminal proceedings, dismissed by 
High Court- On appeal, held: In order to bring out a case for E 
the offence of cheating, ·it is not merely sufficient to prove 
that a false representation had been made, but it should also 
be proved that the representation was made in order to 
decieve the complainant - In view of the facts of the case 
including the terms and conditions of the agreement, offence F 
of cheating has not been made out, but it is a case of breach 
of contract - Mere breach of contract cannot give rise to 
criminal prosecution for cheating unless fraudulent or 
dishonest intention is shown at the beginning of the 
transaction-The dispute between the parties is purely of civil G 
nature - Criminal liability cannot be imposed if/ disputes of 
civil nature - The inherent jurisdiction u/s. 482 should be 
exercised only in rare cases and in exercise of such 
jurisdiction the High Court should not appreciate the 
H 
299 
300 
SUPREME COURT REPORTS 
[2015] 11 S.C.R. 
A evidence and its truthfulness or sufficiency - However, the 
High Court's inherent powers, either in civil or in criminal 
matter, ought not be permitted to degenerate into weapon of 
harassment or persecution - If the averments in the 
complaint do not constitute an offence, the court would be 
B justified in quashing the proceedings in the interest of justice 
-
Therefore, the criminal proceedings are liable to be 
quashed in the present case- Penal Code, 1860- s.420 rlw 
s. 34 - Contract - Breach of contract - Distinction from 
offence of Cheating. 
c 
Allowing the .appeal, the Court 
HELD: 1. Though it is well-settled that while 
exercising inherent jurisdiction u/s. 482 Cr.P.C., it is not 
o for the High Court to appreciate the evidence and its 
truthfulness or sufficiency inasmuch as it is the function 
of the trial court and that the inherent jurisdiction of the 
High Court under Section 482 Cr.P.C. should not be 
exercised to stifle a legitimate prosecution. Power under 
E Section 482 Cr.P.C. is to be used sparingly only in rare 
. 
cases. However, the High Court's inherent powers, be 
it, civil or criminal matters, is designed to achieve a 
salutary public purpose and that a court proceeding 
ought not to be permitted to degenerate into a weapon 
F of harassment or persecution. If the averments in the 
complaint do not constitute an offence, the court would 
be justified in quashing the proceedings in the interest 
of justice. [Paras 23, 12] [311-G-H; 320-G-H; 321-A-BJ 
G 
State of Haryana & Ors. vs. Bhajan Lal & Ors. 1990 
(3) Suppl. SCR 259: 1992 Supp. (1) sec 335; 
State of T.N. vs. Thirukkural Perumal 1995 (1) 
SCR 712: (1995) 2 SCC 449; Central Bureau of 
Investigation vs. Ravi Shankar Srivastava, /AS & 
H 
INTERNATIONALADVANCED RESEARCH CENTRE FOR POWDER 
301 
METALLURGYv. NIMRACERGLASS 
Anr. 2006 (4) Suppl. SCR 450:. (2006) 7sec188 
A 
-relied on. 
Trisuns Chemical Industry vs. Rajesh Agarwal & 
ors. 1999 (2) Suppl. SCR 686: (1999) 8 sec 
686; Rajesh Bajaj vs. State NCT of Delhi and Ors. 
8 
1999 (1) scR 1012: (1999) 3 sec 259; P 
Swaroopa Rani vs. M.Hari Narayana Alias Hari 
Babu 2008 (3) SCR 900: (2008) 5 ~cc 765; 
Iridium India Telecom Ltd. vs. Motorola 
Incorporated & Ors. 2010 (14) SCR 591: (2011) 1 
C 
SCC 74; Fiona Shrikhande vs. State of 
Maharashtra & Anr. 2013 (9) SCR 240: (2013) 
14 SCC 44; Bhushan Kumar & Anr. vs. State 
(NCT) of Delhi & Anr. 2012 (2) SCR 696: (2012) 
5 SCC 424; Smt. Nagawwa vs. Veeranna 
D 
Shivalingappa Konjalgi & Ors.1976 (0) Suppl. 
SCR 123: (1976) 3 SCC 736- referred to. 
2.1 The essential ingredients to attract Section 420 
IPC are: (i) cheating; (ii) dishonest inducement to deliver E 
property or to make, alter or destroy any valuable 
security or anything which is sealed or signed or is 
capable of l:)eing converted into a valuable security and 
(iii) mens rea o
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