The Jharkhand High Court recently quashed a criminal case of cheating against film producer and director Prakash Jha, observing that the case was civil in nature since it pertained to breach of agreement [Prakash Jha v. The State of Jharkhand].Justice Sanjay Kumar Dwivedi also quashed the order taking cognizance in connection with the complaint pending before the Chief Judicial Magistrate at Ranchi.“It is well settled that a breach of contract does give rise to criminal prosecution for cheating unless the fraudulent and dishonest intention is there in the beginning of the transaction. Merely on the allegation of failure to keep premises will not be enough to initiate criminal proceeding,” said the Court.The Court also observed that criminal courts are not meant to be used for settling the scores or pressurising the parties to settle the dispute. The complaint case dating back to 2011 alleged that Jha had intended to establish a multiplex in Jamshedpur and had promised to give a super built up area to the complainant company, Classic Multiplex Private Limited.The Chairman-cum-Managing Director of the company had also handed over three bank drafts of ₹20 lakh to Jha but later came to know there was no booking in his name, as per the complaint.The Court was told that the complaint was initially sent by a magistrate to police under Section 156(3) Code of Criminal Procedure (CrPC) for registration of First Information Report (FIR).The Police in turn had submitted a final report stating that the matter was civil in nature but on the complainant's protest application, the trial court had taken cognizance under Section 418 (cheating with knowledge that wrongful loss may ensue to person whose interest offender is bound to protect) in 2018.Challenging the order taking cognizance, it was submitted before the Court that the amount of those drafts were not encashed.The Court was also told that the complainant had already instituted a civil suit with regard to the dispute.After examining the records, the Court said the complaint petition itself stated that Jha was required to refund ₹10 crore because of breach of agreementThis clearly suggested that if any case was made out, it was civil in nature though a criminal colour was given to it, the Court stated.The Court also took note that since no encashment has taken place, Section 25 of the Indian Contract Act is attracted.“In the light of Section 25 of the Contract Act in absence of any consideration the contract deemed to be void contract,” the Court explained.It also said that Section 415 of IPC defines cheating and as per the provision, to hold a person guilty of cheating, it is necessary to show that he had fraudulent and dishonest intention at the time of making the promise. However, the Court opined that not encashing the drafts suggested that intention from the very beginning “was not there which is paramount consideration in a case arising out under section 415 I.P.C. and other sections with regard to the cheating.”The Court further took into account the fact that the civil suit filed by the complainant company was still pending. In this backdrop, the Court opined that the Police had rightly concluded that the case was civil in nature.“In view of above facts, reasons and analysis the Court comes to the conclusion that if criminal proceeding is allowed to be continue against the petitioners before the learned court will amount the abuse of process of law,” the Court said as it quashed the proceedings.However, it also clarified that it has not commented on the merits of the pending civil suit and the same will be decided in accordance with law.Senior Advocate Umesh Prasad Singh and advocates Jitendra S Singh and Surbhi represented the petitioners.
TAGS: Jharkhand High Court Prakash Jha criminal case cheating breach of contract civil nature quashing petition fraudulent intention Indian Contract Act Section 415 IPC
