V.P. SHRIVASTAVA versus INDIAN EXPLOSIVES LTD. & ORS.

Citation: [2010] 11 S.C.R. 788 · Decided: 24-09-2010 · Supreme Court of India · Bench: D.K. JAIN · Disposal: Appeal(s) allowed
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Judgment (excerpt)

A 
B 
[2010] 11 S.C.R. 788 
V.P. SHRIVASTAVA 
v. 
INDIAN EXPLOSIVES LTD. & ORS. 
(Criminal Appeal No. 1843 of 2010) 
SEPTEMBER 24, 2010 
[D.K. JAIN AND H.L. DATTU, JJ.] 
I 
Penal Code, 1860 - ss. 405, 415, 420, 406 and 120-8 -
Cheating and dishonestly inducing delivery of property, 
C criminal breach of trust and criminal conspiracy - Company 
in which appellants were senior functionaries entering into 
tripartite agreement with complainant company and another 
company "'- Complainant alleging suppression of the fact by 
appellants that the company was likely to be declared a sick 
o company - Criminal complaint u/ss. 420, 406 and 1208 /PC 
and ss. 540 and 542 of the Companies Act - Issuance of 
summons to appellants -
Petition uls. 482 Cr. P. C. -
Dismissed by High Court - On appeal, held: No prima facie 
case made out against appellants in respect of alleged 
E offences u/ss. 420, 406 and 1208 - High Court should have 
quashed the complaint exercising its jurisdiction u/s. 482 
Cr. P. C. - Thus, order of High Court set aside and order of 
magistrate taking cognizance in complaint case quashed -
Code of Criminal Procedure, 1973- s. 482 - Companies Act, 
F 
1956 - ss. 540 and 542. 
Respondent no. 1 Company (IEL) was engaged in 
the manufacture and sale of industrial explosives. They 
used to buy raw materials from 'FCIL'. 'FCIL' entered into 
a tripartite agreement with respondent no. 1 and 'BCCL'. 
G In terms of the agreement, 'FCIL' supplied raw materials 
to respondent no. 1. The same was stopped due to 
breakdown of gas compressor and financial difficulties. 
'FCIL' wa~ declared a sick company by the BIFR. 
H 
788 
V.P. SHRIVASTAVA v. INDIAN EXPLOSIVES LTD. & 789 
ORS. 
Thereafter, the BIFR directed winding up of 'FCIL'. 
A 
Respondent no. 1 filed a criminal complaint against the 
appellants and 'M'-senior functionaries of 'FCIL for 
offences punishable under Sections 420, 406 and 1208 
IPC. Respondent no. 1 also filed a suit for recovery of 
certain amount. The magistrate took cognizance of the 
B 
complaint and issued summons against the appellants 
and 'M'. Aggrieved, the appellants and 'M' filed petition 
under section 482 of the Code of Criminal Procedure, 
1973 for quashing the order of summoning them. The 
High Court dismissed the petition. Therefore, the c 
appellants filed the instant appeals. 
Allowing the appeals, the Court 
HELD: 1.1 It is plain from a bare reading of Section 
415 IPC that to hold a person guilty of cheating, as 
D 
defined in Section 415 IPC, it is necessary to show that 
at the time of making the promise he had a fraudulent or 
dishonest intention to retain the property or to induce the 
person so deceived to do something which he would not 
otherwise do. Such a culpable intention right at the time 
E 
of entering into an agreement cannot be presumed 
merely from his failure to keep the promise subsequently. 
[Paras 21 and 24] [801-C; 80' "E] 
F 
Ram Jas vs. State of UP (1970) 2 SCC 740; Hridaya 
Ranjan Prasad Verma and Ors. vs. State of Bihar and Anr. 
(2000) 4 SCC 168; S. W Palanitkar and Ors. vs. State ofBihar 
and Anr. (2002) 1 sec 241; Kuriachan Chacko and Ors. VS. 
State of Kera/a (2008) 8 SCC 708; Medical Chemicals and 
Pharma (P) Ltd. vs. Biological E. Ltd. and Ors. (2000) 3 SCC 
267; Hira Lal Hari Lal Bhagwati vs. CBI, New Delhi (2003) 5 
G 
sec 257, referred to. 
1.2. In the instant case, a bare reading of the 
complaint would show that there was not even a whisper 
H 
790 
SUPREME COURT REPORTS 
[2010] 11 S.C.R. 
A let alone a specific averment that the appellants had 
dishonestly 'induced' 'IEL' to enter into the said 
agreement/arrangement. On the contrary, the complaint 
clearly revealed that 'IEL' was fully conscious of·the 
precarious financial health of 'FCIL' at the time they had 
B decided to enter into contract with 'FCIL' and 'BCCL' to 
ensure a regular supply of their basic raw material from 
'FCIL' so that their production of explosives did not 
suffer. It is manifest from the complaint that the basis of 
the complaint was that by deliberately suppressing the 
c fact that 'FCIL' had already been referred to the BIFR after, 
the erosion of its net worth and was likely to be declared 
a 'sick company', the appellants induced 'IEL' to pay 
Rs.4,20,41,622/- to 'BCCL' and in return did not su.pply 
ammonium nitrate to them. A mere mention of the words 
0 
'defraud' and 'cheat' in the complaint, in the setting that 
these were used, is not sufficient to infer that t
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