CHUNDURU SIVA RAM KRISHNA AND ANR.versusPEDDI RAVINDRA BABU AND ANR.

                               [2009] 4 S.C.R. 1129


                  CHUNDURU SIVA RAM KRISHNA AND ANR.                    A
·•                                      v
                      PEDDI RAVINDRA BABU AND ANR.
                      Criminal Appeal No. 549 of 2009 Etc.

                                MARCH 25, 2009
                                                                        B
            [S.B. SINHA AND DR. MUKUNDAKAM SHARMA, JJ.]

                  Code of Criminal Procedure, 1973 - s. 482 - Scope of -
     .,    Criminal proceeding u/ss. 406, 420 and 424 rlw s. 34 /PC -
           Against nine accused - Some of the accused (family
           members/relatives of prime accused) filing petition for
                                                                        c
           quashing of proceedings - Rejected by High ,Court - On
           appeal, held: When prosecution is sought to be quashed at
           initial stage, test to be applied is whether the uncontroverted
           a/legations in the complaint prima facie establish the offence
     '(
           - On facts, no prima facie case made out against petitioners D
           as no specific role ascribed to them - Proceedings against
           them quashed - Penal Code, 1860 - ss. 406, 420, 424 rlw s.
           34.
                 Accused No. 1 was the sole proprietor of a rice mill.
                                                                        E
           As his business declined,· he owed debts to Banks,
           financial institutions and to public. He filed an insolvency
           petition. Several representations were made, making
           allegations against accused No. 1 and his family members.
           The representations were endorsed to police for
                                                                        F
           investigation. Respondents-paddy suppliers also lodged
           report against accused No. 1 and his family members and
           relatives (including appellants-accused Nos. 2-3 and 6-8)
           for offences punishable u/ss. 406 and 420 r/w s. 34 IPC.
           Police filed charge-sheet u/ss. 406, 420 and 424 r/w s. 34
     ...   IPC. Appellants-accused filed petition u/s. 482 Cr.P'.c., G
           seeking quashing of criminal complaint and charge-sheet.
           The petition was dismissed by High Co.urt. Hence the
           present appeals.

                                      1129                              H
    1130      SUPREME COURT REPORTS              [2009] 4 S.C.R.


A          Allowing the appeals, the Court
        HELD: 1. When at an initial stage a prosecution is
  sought to be quashed, the test to be applied by the court
  is as to whether the uncontroverted allegations as made
  in the complaint filed, prima facie establish the offence. It
8 is also for the court to take into consideration any special
  feature that may appear in a particular case while
  considering whether it is expedient and in the interest of
  justice to permit the prosecution to continue. This is so
  on the basis that the court cannot be utilised for any
C oblique purpose. The tests that are laid down in the case
  of Bhajan Lal are required to be applied very carefully and
  minutely when a prayer for quashing is laid before the
  court. [Para 17) [1142-F-H; 1143-A]
       Drugs Inspector v. Dr. B.K. Krishna 1981 (2) SCC 454;
D Municipal Corporation of Delhi v. Ram Kishan Rohtagi 1983
  (1) SCC 1; State of Haryana and Ors. v. Bhajan Lal 1992 Suppl.
  (1) SCC 335; Pepsi Foods Ltd. v. Special Judicial Magistrate
  1998 (5) SCC 749; S. W Palanikar v. State of Bihar 2002 (1)
    sec 241 - relied on.
E
       2.1 In the instant case, no useful purpose would be
  served by allowing the prosecution against the appellants
  most of the allegations in the charge sheet are mainly
  directed against accused No. 1. There is no concrete and
  direct allegation against all these persons ascribing any
F definite role to each one of them in the offence alleged.
  The statements shown as allegations amounting to prima
  facie evidence against them, are very bald and vague
  statements on the basis of which no case could be made
  out. Such allegations do not make out a case of prima facie
G evidence. Therefore, the proceedings as against the ap-
  pellants i.e. accused Nos. 2and 3 and accused Nos. 6 to 8
  are quashed. [Paras 20, 21 and 22] [1143-F-G; 1144-B-D]
                        Case Law Reference
H          19a1 (2) sec 454       Relied on.       Para 12
                 CHUNDURU SIVA RAM KRISHNA AND ANR V. PEDDI 1131
                          RAVINDRA BABU AND ANR.
~
                  1983 (1) sec 1           Relied on.         Para 12       A

                  1992 Suppl.
                  (1)SCC 335               Relied on.         Para 14 -
                  1998 (5) sec 749         Relied on.         Para 15
                                                                            B
                  2002 (1) sec 241         Relied on.         Para 16

    ..   -
                  CRIMINAL APPELLATE JURISDICTION: Criminal Appeal
             No. 549 of 2009

                  From the Judgement and Order dated 01.03.2007 of the
             Hon'ble High Court of Andhra Pradesh in Criminal Petition No. C
             5618 of 2006.

                                         WITH

    "             Criminal Appeal No. 550 of 2009
                                                                            D
                . G. Ramakrishna Prasad, C.K. Sucharita, for the
             Appellants.
                  Altaf Fatima, D. Bharathi Reddy, for the Respondents.
                  The Judgement of the Court was delivered by
                                                                            E
                  DR. MUKUNDAKAM SHARMA, J.
                  1. Leave granted.

                   2. Both these appeals are being taken up together and
             are being disposed of by this common judgment and order as F
             these appeals have been preferred against the common
             judgment and order dated 01.03.2007 passed by the Andhra
             Pradesh High Court at Hyderabad. By the aforesaid common
             judgment and order the learned Single Judge of the High Court
             dismissed the petition filed by Accused Nos. 1 to 9 praying for G
             quashing of the complaint filed against them by holding that the
             allegations made in the said complaint do not make out a case
             for quashing of the complaint.
                  3. In order to appreciate the contentions raised before us
             by the counsel appearing for the parties it would be necessary H
    1132     SUPREME COURT REPORTS                   (2009] 4 S.C.R


A   to set out the brief facts leading to filing of the aforesaid
    complaint dated 02.07 2005.
           One Chunduru Subba Rao, Accused No. 1 was having a
    rice mill at Village Lakshmipuram in District Guntur, Andhra
    Pradesh under the name and style of "C.S.R. Rice Mills". He
B
    was the sole proprietor of the said rice mill. Accused Nos. 2 to
    Accused No. 5 are the family members of Accused No. 1
    whereas Accused Nos. 6 to Accused No. 8 are son-in-law, the
    daughter of Accused No. 1 and the brother of the son-in-law of
    Accused No.1 respectively. Accused No. 9 has also been
c   arrayed as one of the accused in the complaint filed and he is
    the younger brother-in-law of Accused No. 1. Accused No. 2
    and Accused No. 3 are the two sons of Accused No. 1 who are
    aged about 28 and 25 years respectively. Accused No. 2 is
    stated to be doing his job after completing his graduation from
D   Nagarjuna University, Guntur, Andhra Pradesh and his post
                                                                         •
    graduation in Master of Computer Applications under University
    of Madras. On the other hand, Accused No. 3 is stated to be
    studying Engineering course in Bapatla, Guntur, Andhra
    Pradesh. It is, therefore, disclosed from the aforesaid facts that
E   all the family members of Accused No. 1 have been arrayed as
    accused persons in the complaint filed.

          4. It is disclosed from the records that Accused No. 1 had     •
    been into rice mill business for about 20 years and had been
    purchasing paddy from the local paddy growers in the village
F   and that he issued vouchers to some of them while to others
    promissory notes ranging from Rs. 30,000/- to Rs. 3 lakh were
    executed as security towards the purchase of paddy. He had
    also obtained Rs. 30 lakhs as loan from State Bank of India,
    Ponnur and remodeled the rice mill and fortified his goodwill.
G   However, his business has declined and consequently he owed
    debts to the banks, several financial institutions and to public
    and that his liabilities aggregated to Rs. 89,51,600/-. Therefore,
    on 24.06.2005, he filed an insolvency petition bearing J.P. No.
    11 of 2005 in the Court of Senior Civil Judge, Baptala, Guntur
H   District, Andhra Pradesh in which he stated that he was
            CHUNDURU SIVA RAM KRISHNA AND ANR. V PEDDI 1133
         RAVINDRA BABU AND ANR. [DR. MUKUNDAKAM SHARMA, J]
    -.   sustaining loss for 5-6 years and his aggregated liabilities was A
         approximately Rs. 89,51,600/. He also got published in the
         newspaper regarding the factum of filing of the said insolvency
         petition.
                5. Consequent upon filing of the aforesaid insolvency
                                                                             B
         petition several representations were made to the District
         Collector by the villagers making allegations against Accused
         No. 1 and his family members. The said representations were
         endorsed by the District Collector to the police for investigation.
         The paddy suppliers, who are respondents herein, also lodged
         a report dated 2.7.2005 against Accused No. 1 and his family       c
         members with the Station House Officer, Kakumanu Police
•        Station in Kakumanu Mandal, District Guntur for offences
         punishable under Sections 406 and 420 read with Section 34
         of the Indian Penal Code.
                                                                             D
                6. On 18.9.2006, the Station House Officer, Kakumanu filed
         a charge sheet bearing C.C. No. 110 of 2006 in the court of the
         learned Judicial Magistrate First Class, Ponnur under Sections
         406, 420 and 424 read with Section 37 IPC against Accused
         No. 1 to Accused No. 9 which included both the appellants
                                                                             E
         herein. In the said charge sheet the police stated that Accused
         No. 1 to Accused No. 9, who are inter related, developed an
         evil idea by colluding themselves and fraudulently directed the
         loans and gold secretly in benami names in order to defraud
         the persons who supplied paddy to them. It was further stated in
                                                                             F
         the charge sheet that during the year 2005 Accused No. 1
         purchased paddy crop from several farmers saying that he would
         pay the cost of paddy as per the existing market value. They
         blindly believed Accused No. 1 and unloaded huge quantities
         of paddy produced by them and entrusted the same with
         Accused No. 1. But Accused No. 1 diverted part of the paddy to G
         Accused No. 5 who was running rice mill under the name and
         style of 'C.S.R. Industries' opposite to Sivalayam, Old Ponnur,
         on the ground of inadequate power supply and secretly sold it
         for his own use. It has been further stated that 10 days before
         that he had also diverted huge quantities to 'NRI Industries', H
    1134      SUPREME COURT REPORTS                   [2009] 4 S.C.R.


A   Ponnur. Eventually, Accused No. 1 gained unlawfully to the tune      ~
    of Rs. 1,20,00,000/- by cheating the abovementioned paddy
    suppliers. He surrendered before the learned Judicial Magistrate
    First Class, Ponnur on 19.7.2005. Vide order dated 19.7.2005
    in the petition for grant of anticipatory bail, the Hon'ble High
B   Court of Andhra Pradesh directed release of A-6 to A-8 and A2
    to A-4 including the appellants herein.

         7. On 25.11.2006 all the accused i.e. Accused Nos. 1 to
  Accused No. 9 including the appellants herein (Accused No. 2
  and Accused No. 3) jointly filed a Criminal Petition No. 5618 of
C 2006 under Section 482 of the Criminal Procedure Code (for
  short 'CrPC') before the High Court of Judicature, Andhra
  Pradesh at Hyderabad seeking quashing of the Criminal
  Complaint No. 110/2006 and the charge sheet which were
  pending in the Court of learned Judicial Magistrate First Class,
D Ponnur on the ground that it was only a civil liability arising out
  of breach of contract by Accused No. 1 in payment of price of
  paddy and, therefore, it was improper on the part of the police
  to come to their aid to recover the money under a transaction
  by filing criminal cases and that the said criminal complaint itself
E was a counter blast to the insolvency petition filed by Accused
  No. 1. However, the learned Single Judge of the High Court
  vide impugned order dated 01.03.2007 observed that they
  collected paddy from various agriculturists worth Rs.
  1,20,00,000/- by making them to believe that the cost of paddy
F would be paid immediately but after having collected the paddy,
  they failed to pay the amount to the agriculturists and thereby
  they cheated those persons. So, it was held that there was prim a
  facie material against all the accused i.e. Accused Nos. 1 to
  Accused No. 9. Accordingly, the High Court dismissed the
G criminal petition.
         8. Being aggrieved by the aforesaid order passed by the
    High Court two special leave petitions were filed in this Court
    which are registered as SLP (C) No. 2991 of 2007 and SLP
    (C) No. 5072 of 2007.
H
        CHUNDURU SIVA RAM KRISHNA AND ANR. V. PEDDI 1135
     RAVINDRA BABU AND ANR. [DR. MUKUNDAKAM SHARMA, J.]

          SLP (C) No. 2991 of 2007 was filed by Accused Nos. 2 A
    and 3 who are sons Of Accused No. 1 and they are aged about
    28 years and 25 years respectively. In this special leave petition
    notice was issued by this Court vide order dated 18.05.2007
    and while doing so interim stay of the further proceedings in
    C.C. No. 110 of 2006 was also passed so far as appellants B
    herein are concerned. Similarly, SLP (C) No. 5072 of 2007 was
    preferred by Accused Nos. 6 to Accused No. 8 who are son-in-
    law, the daughter of Accused No. 1 (a housewife) and the brother
    of the son-in-law of Accused No. 1. Similar orders were passed
    in their special leave petition also. Both the aforesaid petitions        c
    were listed before us for hearing when we heard the learned
    counsel appearing for the parties.

           9. Mr. G. Ramakrishna Prasad, learned counsel for the
    appellants submitted that when a sole proprietary firm had
¥   allegedly cheated some suppliers, the members of the family of            D
    such sole proprietor cannot be roped into a criminal prosecution
    especially in the light of the facts that the criminal complaint itself
    has been lodged as a counter blast to the insolvency petition
    filed by the owner of the sole proprietary mill and the Investigation
    Officers were not justified in roping-in the innocent appellants          E
    herein despite the fact that there was no substantive allegation
~   made against them. It was further submitted that the matter is
    essentially having a civil profile and merely because many people
    have lodged criminal complaints, criminal prosecution was
    launched againstAccused No. 2 and Accused No. 3 (appellants               F
    herein) without any basis or an iota of evidence which has gone
    to the extent of spoiling the bright career and future of Accused
    No. 2 and Accused No. 3. ·He also submitted that the appellants
    herein have nothing to do with the daily conduct of the business,
~   income derived therefrom or with regard to alleged selling of             G
    paddy stock and in view of this the High Court ought to have
    taken into account the hardship and damage of future/career of
    the appellants herein.
         10. Learned counsel for the appellant submitted that the
    High Court had dismissed the petition of the appellant herein             H
    1136      SUPREME COURT REPORTS                  [2009] 4 S.C.R.


A   due to total non-application of mind as it failed to see that the
    rice mill was being run by Accused No. 1 as sole proprietary
    concern and Accused No. 2 and Accused No. 3 had nothing to
    do with the said sole proprietary concern and therefore the
    offences against Accused No. 2 and Accused No. 3 had not at
B   all sustainable. He further submitted that due to illegal actions
    of the investigating officers and being hand in glove with the
    farmers the police made Accused No. 3 to lose one precious
    academic year as he could not attend the classes and thereby
    rendered himself liable to be disqualified for appearing in the
c   examination due to shortage of attendance. According to him,
    although these facts were brought to the notice of the learned
    Advocate who appeared in the matter in High Court, unfortunately
    the same were not placed on record.

        11. Mr. C.K. Sucharita, learned counsel for the appellants
D submitted that the essential ingredients of offence under Section
  406 IPC is entrustment of the property and essential ingredient
  of offence under Section 420 IPC is that it must be proved that
  the complainant had parted with his property acting on a
  representation which is false to the knowledge of the accused
E and that the accused had dishonest intention from the onset
  are not satisfied even as per the allegations made in the
  complaint. He further submitted that the High Court erred in not
  invoking its inherent power under Section 482 CrPC to quash
  the criminal complaint against the appellants herein as the
F complaint does not even vaguely suggest that the appellants
  herein, who belong to a distinct family, were concerned in any
  manner with the business run by Accused No. 1 or with the
  collection of paddy. In support of such contentions the learned
  counsel has relied on various judgments pronounced by this
G Court.
         12. In the light of the aforesaid submissions we may now
    proceed to appreciate and analyse the contentions raised
    before us.
           The scope and ambit of Section 482 of the Code of
H
         CHUNDURU SIVA RAM KRISHNA AND ANR. V PEDDI 1137
      RAVINDRA BABU AND ANR. [DR. MUKUNDAKAM SHARMA, J.]

      Criminal Procedure have been the subject matter of A
      consideration by the courts in India. A number of decisions have
      been rendered by this Court on the aforesaid issue wherein the
      law relating to quashing of a complaint has been succinctly laid
      down. In the case of Drugs fnspectorv. Dr. B.K. Krishna [1981
      (2) SCC 454] it was held by this Court that in a quashing B
      proceeding, the High Court has to see whether the allegations
      made in the complaint petition, if proved, make out a prima facie
      offence and that the accused has prima facie committed the
.'1
      nffence. In the said decision this Court refused quashing of the
      -:;omplaint on the ground that there were enough allegations in
                                                                         c
      the complaint and that the accused persons were responsible
      for the management and conduct of the firm and, therefore, the
      extent of their liability could be and would be established during
      trial. In Municipal Corporation of Delhi v. Ram Kishan Rohtagi
 y
      [1983 (1) sec 1] it was held that when on the allegation made
      in the complaint, a clear case was made out against all the D
      respondents (accused persons), the High Court ought not to
      have quashed the proceedings on the ground that the complaint
      did not disclose any offence.
           13. In Municipal Corporation of Delhi (supra), this Court
                                                                        E
      observed as follows in para 8:
           "8. Another important consideration which is to be kept in
           mind is as to when the High Court acting under the
           prc.;sions of Section 482 should exercise the inherent
           power insofar as quashing of criminal proceedings are F
           concerned. This matter was gone into in greater detail in
           Smt Nagawwa v. Veeranna Shivalingappa Konjalgi,
           (1976) 3 sec 736 where the scope of Sections 202 and
           204 of the present Code was considered and while laying
           down the guidelines and the grounds on which proceedings
-1                                                                    G
           could be quashed this Court observed as follows: [SCC
           para 5, p. 741 : SCC (Cri) pp. 511-12]
           Thus it may be safely held that in the following cases an
           order of the Magistrate issuing process against the
           accused can be quashed or set aside:                      H
    1138       SUPREME COURT REPORTS                   [2009] 4 S.C.R.


A          (1) where the allegations made in the complaint or the
           statements of the witnesses recorded in support of the
           same taken at their face value make out absolutely no
           case against the accused or the complaint does not
           disclose the essential ingredients of an offence which is
B          alleged against the accused;

           (2) where the allegations made in the complaint are patently
           absurd and inherently improbable so that no prudent
           person can ever reach a conclusion that there is sufficient
           ground for proceeding against the accused;
c
           (3) where the discretion exercised by the Magistrate in
           issuing process is capricious and arbitrary having been
           based either on no evidence or on materials which are
           wholly irrelevant or inadmissible; and
D          (4) where the complaint suffers from fundamental legal
           defects, such as, want of sanction, or absence of a
           complaint by legally competent authority and the like.

           The cases mentioned by us are purely illustrative and
           provide sufficient guidelines to indicate contingencies
E
           where the High Court can quash proceedings."

          14. However, the most famous case on the subject,
    decided by this Court, was the case of State of Haryana & Ors.
    v. Bhajan Lal, [1992 Suppl. (1) SCC 335] wherein this Court
F   laid down the law as to when the High Court acting under the
    provisions of Section 482 CrPC should and would exercise the
    inherent power in so far as quashing of criminal proceedings
    are concerned. In the said decision this Court categorized the
    cases by way of illustration wherein such power should be
G   exercised either to prevent the abuse of the process of any court
    or otherwise to secure the ends of justice. It observed in para
    102 as follows:-

           "102. In the backdrop of the interpretation of the various
           relevant provisions of the Code under Chapter XIV and of
H          the principles of law enunciated by this Court in a series
       CHUNDURU SIVA RAM KRISHNA AND ANR. V. PEDDI 1139
    RAVINDRA BABU AND ANR. [DR. MUKUNDAKAM SHARMA, J.]

         of decisions relating to the exercise of the extraordinary A
•        power under Article 226 or the inherent powers under
         Section 482 of the Code which we have extracted and
         reproduced above, we give the following categories of
         cases by way of illustration wherein such power could be
       · exercised either to prevent abuse of the process of any B
         court or otherwise to secure the ends of justice, though it
         may not be possible to lay down any precise, clearly
         defined and sufficiently channelised and inflexible
         guidelines or rigid formulae and to give an exhaustive list
         of myriad kinds of cases wherein such power should be         c
         exercised.
        (1) Where the allegations made in the first information
        report or the complaint, even if they are taken at their face
        value and accepted in their entirety do not prima facie
        constitute any offence or make out a case against the D
        accused.
        (2) Where the allegations in the first information report
        and other materials, if any, accompanying the FIR do not
        disclose a cognizable offence, justifying an investigation     E
        by police officers under Section 156(1) of the Code except
        under an order of a Magistrate within the purview of Section
        155(2) of the Code.
        (3) Where the uncontroverted allegations made in the FIR
        or complaint and the evidence collected in support of the      F
        same do not disclose the commission of any offence and
        make out a case against the accused .
                              ..
        (4) Where, the allegations in the FIR do not constitute a
        cognizable offence but constitute only a non-cognizable
        offence, no investigation is permitted by a police officer G
        without an order of a Magistrate as contemplated under
        Section 155(2) of the Code.
         (5) Where the allegations made in the FIR or complaint
        are so absurd and inherently improbable on the basis of H
    1140       SUPREME COURT REPORTS                    [2009) 4 S.C.R.


A          which no prudent person can ever reach a just conclusion
           that there is sufficient ground for proceeding against the
           accused.

           (6) Where there is an express legal bar engrafted in any
           of the provisions of the Code or the concerned Act (under
B
           which a criminal proceeding is instituted) to the institution
           and continuance of the proceedings and/or where there is
           a specific provision in the Code or the concerned Act,
           providing efficacious redress for the grievance of the
           aggrieved party.
c
           (7) Where a criminal proceeding is manifestly attended
           with mala fide and/or where the proceeding is maliciously
           instituted with an ulterior motive for wreaking vengeance
           on the accused and with a view to spite him due to private
D          and personal grudge."

          15. The above decision was followed by this Court in Pepsi
    Foods Ltd. v. Special Judicial Magistrate [1998 (5) SCC 749].
    In paragraph 28 of the said judgment this Court held thus:

           "28. Summoning of an accused in a criminal case is a
E
           serious matter. Criminal law cannot be set into motion as
           a matter of course. It is not that the complainant has to
           bring only two witnesses to support his allegations in the
           complaint to have the criminal law set into motion. The
           order of the Magistrate summoning the accused must
F
           reflect that he has applied his mind to the facts of the case
           and the law applicable thereto. He has to examine the
           nature of allegations made in the complaint and the
           evidence both oral and documentary in support thereof
           and would that be sufficient for the complainant to succeed
G          in bringing charge home to the accused. It is not that the
           Magistrate is a silent spectator at the time of recording of
           preliminary evidence before summoning of the accused.
           The Magistrate has to carefully scrutinise the evidence
           brought on record and may even himself put questions to
H          the complainant and his witnesses to elicit answers to find
             CHUNDURU SIVA RAM KRISHNA AND ANR. V. PEDDI 1141
          RAVINDRA BABU AND ANR. [DR MUKUNDAKAM SHARMA, J.]

               out the truthfulness of the allegations or otherwise and A
\.
               then examine if any offence is prima facie committed by
               all or any of the accused."
                16. Further, this Court observed in S. W Palanikarv. State
          of Bihar [2002 (1) sec 241] that every breach of trust may not
                                                                             B
          result in a penal offence of criminal breach of trust unless there
          is evidence of a mental act of fraudulent misappropriation. It
          observed as follows:
     J.
               "8. Before examining respective contentions on their
               relative merits, we think it is appropriate to notice the c
               legal position. Every breach of trust may not result in a
               penal offence of criminal breach of trust unless there is
               evidence of a mental act of fraudulent misappropriation.
               An act of breach of trust involves a civil wrong in respect
               of which the person wronged may seek his redress for D
     "         damages in a civil court but a breach of trust with mens
               rea gives rise to a criminal prosecution as well.
               9. The ingredients in order to constitute a criminal breach
               of trust are: (1) entrusting a person with property or with
               any dominion over property, (i1) that person entrusted (a) E
               dishonestly misappropriating or converting that property
               to his own use; or (b) dishonestly using or disposing of
               that property or wilfully suffering any other person so to do
               in violation (1) of any direction of law prescribing the mode
               in which such trust is to be discharged, (i1) of any legal F
               contract made, touching the discharge of such trust.
               10. The ingredients of an offence of cheating are: (1) there
               should be fraudulent or dishonest inducement of a person
               by deceiving him, (il)(a) the person so deceived should
               be induced to deliver any property to any person, or to G
               consent that any person shall retain any property; or (b)
               the person so deceived should be intentionally induced to
               do or omit to do anything which he would not do or omit
               if he were not so deceived; and (iii) in cases covered by
               (i1)(b), the act of omission should be one which causes or H
    1142       SUPREME COURT REPORTS                     [2009] 4 S.C.R.


A          is likely to cause damage or harm to the person induced
           in body, mind, reputation or property.

           11. One of us (D.P. Mahapatra, J.), speaking for the Bench,
           in Hridaya Ranjan Prasad Verma v. State of Bihar, (2000)
B
           4 sec   168 on facts of that case, has expressed thus:
           (SCC p. 177, para 15)
           15. In determining the question it has to be kept in mind
           that the distinction between mere breach of contract and
           the offence of cheating is a fine one. It depends upon the
c          intention of the accused at the time of inducement which
           may be judged by his subsequent conduct but for this
           subsequent conduct is not the sole test. Mere breach of
           contract cannot give rise to criminal prosecution for
           cheating unless fraudulent or dishonest intention is shown
D          right at the beginning of the transaction, that is the time
           when the offence is said to have been committed.
           Therefore it is the intention which is the gist of the offence.
           To hold a person guilty of cheating it is necessary to show
           that he had fraudulent or dishonest intention at the time of
           making the promise. From his mere failure to keep up
E
           promise subsequently such a culpable intention right at
           the beginning, that is, when he made the promise cannot
           be presumed."

                                                   (emphasis supplied)
F
           17. The aforesaid discussion clearly pin-point the legal
    position on the subject which is by now well settled. The principle
    that could be culled out is that when at an initial stage a
    prosecution is asked to be quashed, the test to be applied by
    the court is as to whether the uncontroverted allegations as made
G   in the complaint filed prima facie establish the offence. It is also
    for the court to take into consideration any special feature that
    may appear in a particular case while considering whether it is
    expedient and in the interest of justice to permit a prosecution
    to continue. This is so on the basis that the court cannot be
H   utilised for any oblique purpose. The tests that are laid down in
   C.HUNDURU SIVA RAM KRISHNA AND ANR. V PEDDI 1143
RAVINDRA BABU AND ANR. [DR. MUKUNDAKAM SHARMA, J.]

the case of Bhajan Lal (supra) are required to be applied very A
carefully and niinutely when a prayer for quashing is laid before
the court.
      18. When the facts of the present case are tested in the
backdrop of the aforesaid legal position, the position that
                                                                  8
emerge is as to whether or nof in the report submitted with the
Station House Officer, Kakumanu Police Station in Kakumanu
Manda!, District Guntur on 02.07.2005 and the charge sheet
which was filed by the Station House Officer, whether there is
any substantial allegation against the appellants which would
prima facie establish the offence alleged against the appellants. C
While examining the said aspect this Court is required to keep
in mind the allegations made in the aforesaid report and in the
charge sheet which must be considered uncontroverted.

      19. We have carefully examined the charge sheet which is 0
a part of the record and which was prepared on the basis of the
aforesaid report dated 02 .07 .2005 and also on the basis of the
investigation carried out by the police thereafter in which they
had gathered certain information. We have read those
allegations made in the charge sheet against all the appellants
                                                                 E
herein. Most of the allegations in the aforesaid ,charge sheet
are mainly directed against Accused No. 1.                   ·-

     20. The allegations made against other accused are that
Accused No. 1 diverted huge quantities oL paddy to NRI
industries, Ponnur and made it disappear with the active F
assistance of Accused Nos. 2 to Accused No. 9 and that Accused
No. 1 purchased lands at Nethaji Nagar, Nidubrolu in the name
of benamies with the assistance of Accused No. 6 and that
Accused No. 1 also purchased valuable properties at Bangalore
with the help of Accused No. 2. These are the only allegations G
made against the role of the present appellants namely Accused
Nos. 2 and 3 and Accused Nos. 6, 7 and 8. No specific role is
ascribed to any of the aforesaid persons except for stating that
the huge quantities of paddy was diverted by Accused No. 1
and made to disappear with the active assistance of Accused H
    1144     SUPREME COURT REPORTS                   [2009] 4 S.C.R.


A   No. 2 to Accused No. 9. Without ascribing any specific role to
    any one of them the aforesaid allegation appear to us to be
    very bald and vague. Similarly the allegations made against
    Accused No. 2 and Accused No. 3 that they had helped their
    father in purchasing some property is also very vague as no
B   specific role is ascribed to them.

         21. In our considered opinion, no useful purpose would be
    served by allowing the prosecution against aforesaid accused
    persons (the appellants herein). There is no concrete and direct    "
    allegation against all these persons ascribing any definite role
C   to each one of them in the offence alleged. The statements
    shown to us as allegations amounting to prima facie evidence
    against them, according to us, are very bald and vague
    statements on the basis of which no case could be made out.

o         22. We are of the opinion that such allegations do not make
    out a case of prima facie evidence. Consequently, we have no
    other option but to quash the proceedings as against the
    appellants herein i.e. Accused Nos. 2 and 3 and Accused Nos.
    6 to 8. While doing so, however, we make it clear that we express
E   no opinion so far as the allegations made in the said charge
    sheet against Accused No. 1 and other accused persons are
    concerned. We also make it clear that the observations made
    herein by us are only with respect to the criminal proceedings
    and none of these observations shalll be construed as an opinion
F   of ours so far civil liability, if any, is concerned.
         23. Both the appeals are allowed to the aforesaid extent.
    There shall be no order as to costs.

    K.K.T.                                          Appeal allowed.