Proceedings For 'Refund Of Advance' Civil In Nature, 'Dishonest Intention' Must Exist From Inception Of Transaction To Attract 420 IPC: Telangana HC

The Telangana High Court recently reiterated that the dispute regarding non-refund of money is of civil nature. For criminal prosecution under the offence of cheating or criminal breach of trust, it has to be proved that the accused persons had an intention to cheat/deceive the victim from the inception and accused dishonestly misappropriated the property entrusted to them. Brief Facts of the case The case of the petitioner in brief was that he filed a private complaint against the respondents for the offences under Indian Penal Code viz. Section 120B (Punishment for Criminal Conspiracy), Section 406 (Punishment for Criminal Breach of Trust) and Section 420 (Cheating and dishonestly inducing delivery of property). The complaint was dismissed by the Metropolitan Sessions Judge in a revision petition. The Petitioner filed a criminal petition under Section 482 of Criminal Procedure Code to quash the order passed by the Judge since it was opined that the case was purely of civil nature. The petitioner submitted that he entered into an agreement of sale with Respondents for purchase of Acs. 23 of land for a total sale consideration of Rs. 1,52,26,000/-. Out of this, the Petitioner paid Rs. 30,40,000/- to the Respondents. But the Respondents did not comply with the agreement of sale and the complainant moved the civil court for recovery of money with interest. While the civil matter was pending, the Respondents sold out the property to third parties. The Petitioner contended that the Respondent-accused were neither returning the amount they had secured as advance nor inclined to transfer the land against the balance sale consideration by executing registered sale deed in favour of the complainant. The mere fact that civil liability would arise out of the dispute and party had taken recourse to the civil remedy would not be a ground to refuse criminal prosecution and prayed to allow the petition. Court's Ruling The crux of the offence under Section 420 is that the accused persons had an intention to cheat the victim from the inception, the Court said at the outset.It observed that the petitioner failed to pay the balance sale amount and requested the Respondents to extend the time for payment and as a consequence failed to fulfill the terms of the agreement. The respondents did not return the money taken as advance and sold the property to third parties, purportedly to meet their personal financial commitments.But, the Court observed that the said fact would not disclose that Respondents had intention to cheat the victim at the time of entering into the agreement of sale itself, which was necessary to constitute the offence under Section 420 IPC. In the same way, Section 405 IPC is also not attracted as the complainant ought to prove that the accused persons dishonestly misappropriated or converted to their own use the property entrusted to them. Since the essential ingredients for the offences under Sections 420 and 406 IPC were not attracted, the Court held that the Petitioner-complainant had rightly pursued the civil remedy. Therefore, the Court dismissed the criminal petition. Cause Title: B.VIJAY KUMAR REDDY, HYD., v. STATE OF TELANGANA, REP PP 4 OTRS., Citation: 2022 LiveLaw (Tel) 15 Click Here To Read/Download Order

Proceedings For 'Refund Of Advance' Civil In Nature, 'Dishonest Intention' Must Exist From Inception Of Transaction To Attract 420 IPC: Telangana HC

Jagriti Sanghi

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