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2018 (8) TMI 2067 - HC - Indian LawsDishonor of Cheque - framing of charges against the petitioners - criminal breach of trust - whether the allegations made in the FIR when taken on their face value would constitute the offences punishable under Sections 406 and 420 of the IPC? - HELD THAT:- In the opinion of this Court, simply because the company withheld payment either to the milk suppliers or it failed to make payment due to the milk van and salary to the informant, the same would not constitute an offence punishable under Section 406 of the IPC - In order to make out a case of criminal breach of trust, it is not sufficient to show that the money has been retained by the company but also that the company dishonestly disposed of the same or dishonestly retained the same. The mere fact that the accused persons did not pay the amount due would not amount to criminal breach of trust. It is well settled position in law that in order to attract the provisions of Section 420 IPC, the guilty intent at the time of making the promise is a prerequisite and an essential ingredient thereto, and subsequent failure to fulfil the promise by itself would not attract the provisions of Section 420 IPC - In Dalip Kaur & Ors. Vs. Jagnar Singh & Anr. [2009 (7) TMI 1365 - SUPREME COURT], the question for determination before the Supreme Court was whether breach of contract of an agreement for sale would constitute an offence under Section 406 or Section 420 of the IPC. After examining the fact of the case and relevant Sections of the IPC, the Supreme Court held that an offence of “cheating‟ would be constituted when the accused has fraudulent or dishonest intention at the time of making of promise or representation. A pure and simple breach of contract does not constitute the offence of “cheating‟. In the present case, what has been alleged by the informant in his written report is that the company did not make appropriate payment to the milk suppliers. It also failed to make payment due to the milk van and salary of the informant as also wages due to the labour of the milk van. Apart from the allegation of non-payment of dues to various persons, as discussed above, there is no iota of allegation they had dishonest intention in misappropriation of property. There is no allegation that the company or the petitioners made any willful misrepresentation. There is also no allegation that the petitioners induced the informant to believe anything to be true which was false and which the petitioners knew or believed to be false - in view of the allegation made by the informant, the agreement, if any, was between the milk suppliers and the company and the informant had got no concern with such agreement. In the event, the company failed to fulfill its liability under the agreement, the aggrieved persons would have been the milk suppliers. Apart from the fact that the allegations made in the FIR lacks necessary ingredients of sections 406 and 420 of the IPC, concept of vicarious liability is unknown to criminal law. The IPC does not provide for vicarious liability upon the directors of the comapny for any offences alleged to be committed by a company. From perusal of the cheques, it would be apparent that the alleged cheques were issued under the signature of petitioner no. 1 on behalf of Natural Dairy Pvt. Ltd. Thus, the liability to pay, if any, was of the company of which the petitioner no.1 was the authorized signatory - It is settled position in law that when a cheque, which is drawn by the company, is dishonoured, the company will have to be made a party to the proceedings under Section 138 of the NI Act and failure to do so will vitiate the prosecution. This Court is of the opinion that the criminal proceedings initiated against the petitioners in the present case, is an abuse of the process of law and, as such, the criminal proceedings as well as the impugned order cannot be sustained. The Court is also of the opinion that the learned Judicial Magistrate-1 st Class, Patna without appreciating the facts and considering the settled provisions of law rejected the application filed by the petitioners under Section 239 of the CrPC in the most mechanical manner. Application allowed.
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