ORDER O.P. Jain, J.
1. The above two writ petitions are inter-connected and, therefore, they are being disposed of together.
2. The petitioners have been summoned under Sections 420 and 120B, I. P. C. vide order dated 25th September, 1996 passed by Chief Judicial Magistrate, Ghaziabad. The petitioners filed an application for recall of the order on the ground that the court has no territorial jurisdiction to try the case and on the ground that the case is of a civil nature and no criminal offence is made out. The application for recall of order has been rejected by ixth A. C. J. M., Ghaziabad, vide order dated 17th May, 1997, a copy of which is Annex-ure-7 to the petition. Being aggrieved against the rejection of recall application, the petitioners filed a revision before the Court of Session which has been dismissed by Xth Addl. Sessions Judge, Ghaziabad on 10th July, 1998, vide Annexure-8 to the petition. Under these circumstances the present writ petitions have been filed.
3. I have heard Sri G. C. Saxena, learned counsel for the petitioners, Sri N. K. Chaturvedi, learned counsel for respondent No. 2 and the A. G. A. for the State.
4. So far as territorial jurisdiction of the Court is concerned, the objection raised on behalf of the petitioners has no force. It is alleged in paragraph 5 of the complainant (Annexure-4) that accused No. 1 came to Ghaziabad on 6/7th December, 1989 and a sum of Rs. 2400/- was paid to the accused at Ghaziabad. Again it is alleged in paragraph 7 of the complaint that the accused approached the complainant on 25th February, 1990 at Ghaziabad and persuaded the complainant to purchase some more Units. In paragraph 8 of the complaint it is alleged that the complainant gave a draft for Rs. 35,000/- to the accused and the draft was issued by New Bank of India, Ghaziabad Branch. In paragraph 9 of the complaint a sum of Rs. 20,000/- is said to have been paid to accused No. 1 at Ghaziabad on or about 15th March, 1990.
5. It is sell settled that at the stage of summoning of the accused, the allegations made in the complaint have to be presumed to be correct, it is clearly alleged in paragraphs 5,7, 8 and 9 of the complaint that at least a part of the cause of action arose within the jurisdiction of courts located at Ghaziabad. Therefore, the objection regarding territorial jurisdiction raised by the petitioners was rightly repelled by the Courts below.
6. As regards the second objection, a gist of the complaint (Annexure-4) will have to be given. The complainant says that he is a retired member of U. P. Higher Judicial Service. He alleges that the accused entered into a conspiracy and formed a company in the year 1988 under the name and style of Gwalior Food and Farm Ltd. (GFFL). Accused No. 2 became Chairman of the Company and accused No. 1 became whole time Director and the other accused became Directors. It is further alleged that to defraud the public, the Company launched a Scheme known as Green Field Scheme and members of the public were invited to invest on the terms and conditions mentioned in agreement dated 19th March, 1990.
7. The complainant came into contact with the accused through complainant's cousin Kailash Agarwal and the accused gave an exaggerated account of the Scheme. The complainant was taken to Shivpuri (Madhya Pradesh) and was shown the farm with a view to allure and induce the complainant. As a result, the complainant agreed to purchase six Units and paid Rupees 42,000/- by Bank Draft drawn in favour of GFFL. The accused took a further sum of Rs. 24,000/-ia cash at Ghaziabad. It is alleged by the complainant in Annexure-4 that the accused did execute a sale-deed of six acres of land in his favour, but that land was in a remote corner of the farm and no trees were planted on the land transferred to the complainant. The accused further represented to the complainant that a five feet high and four to five kilometres long boundary wall is to be constructed around the farm and, therefore, some more money is required. On this representation, the complainant purchased some more Units and paid a sum of Rs. 35,000/- and another sum of Rs. 4,000/- and again a sum of Rs. 20,000/-. It is further alleged that the accused persons neither paid the price of the trees standing on the land nor the sale-deed of the land was executed in favour of the complainant. The complainant offered to accept Rs. 10,000/- per acre as costs of the trees instead of Rs. 42,000/- per acre which was promised by the accused. But ultimately the accused refused to pay anything.
8. These are the allegations made in the complaint and the question is whether an offence under Section 420, I.P.C. is made out. It is well settled that a mere breach of promise is not sufficient to constitute the offence. Learned counsel for the petitioners has cited Ratanlal Sharma v. Mangeram Ghanshyamdas 1977 Cri LJ (NOC) 19 (Mad), in which it has been held that the evidence must establish the existence of the fraudulent or dishonest intention at the time of the commission of the act in respect of which the cheating is alleged. Therefore, the question whether there was intention to deceive must be answered at the date when the contract was made. A mere breach of contract cannot give rise to a criminal prosecution. If an accused had, at the time when he induced the complainant to part with the goods, the intention to fulfil the promise, then the fact that he did not pay would not by itself convert the transaction into one of cheating. The complainant must establish that the accused had no intention whatsoever to keep the promise and merely said that he would do so in order to induce the complainant to part with the goods.
9. Another authority cited on behalf of the petitioners is Narayan Chandra Bhunia v. The State 1989 Cri LJ 1807 (Cal), in which it has been observed that where the complainant paid the money to the accused of his own accord and for his own purpose, the accused cannot be held guilty under Section 420, I.P.C. merely, because the accused ultimately denied having received money from the complainant.
10. This Court has held in the case of R. Wheeler v. State of U.P. and 1992 ACC 324 that the complainant must prove that the offender had the intention to defraud. In the absence of such evidence the charge under Section 420, I.P.C. is not made out. In Hari Prasad Chamaria v. Bishun Kumar Surekha 1974 Cri LJ 352 : AIR 1974 SC 301 it was held that where the complainant gave a large amount to the accused for the purpose of starting a business and the accused started the business in their own name and refused to render accounts or return the money, the offence was not made out. The mere fact that the accused did not abide by their commitment as to starting of the business in complainant's name as agreed to, would not fasten the accused with criminal liability.
11. Keeping the above principles in view, the facts of the present case should be appreciated. Though it is alleged in paragraph 3 of the complaint that the Company was floated for a fraudulent purpose, it is also mentioned in paragraph 2 of the complaint that accused No. 1 Kamal Krishna Chopra and his brothers are own of 250-300 acres of barren land in a village situated in Tehsil Shivpuri, Madhya Pradesh. It cannot, therefore, be said that the Company has no assets and it was only on paper. It is further admitted by the complainant in paragraph 6 of the complaint that a sale-deed of six acres of land was executed in his favour though he says that it was in a remote corner. The contents of paragraph 13 of the complaint (Annexure-4) are fatal for the prosecution. It is stated in paragraph 13 that Eucalyptus trees are fully grown up after 5 or 6 years and the accused started cutting and selling Eucalyptus trees from year 1994. In paragraph 13 it is also mentioned that the number of Eucalyptus trees was more than one lac and the accused misappropriated the sale proceeds of the Eucalyptus trees and only a small portion was shown in the Account Books of the Company.
12. It is, therefore, crystal clear from the alligations made in the complaint itself that GFFL was not a Company on paper. The Company had substantial assets in the form of 250-300 acres of land and it had in fact planted more than one lac Eucalyptus trees on the said land. Therefore, the mere fact that later on the accused turned dishonest and misappropriated the whole amount will not lead to an inference that their intention from the very beginning was fraudulent. Therefore, the contention on behalf of the petitioners is correct that the liability of the accused, if any, is of a civil nature and it is a case of breach of contract.
13. In Radha Ballav Pal v. Emperor AIR 1939 Cal 327 it was found that a prospectus put forward a highly speculative and palpably unworkable scheme, but made no false statements and concealed nothing and merely appealed to the gambling instinct, and the members of the public who contributed to the scheme were either too obtuse to realise its weakness which was patent or actuated by a vague hope that their money would somehow be repaid before the crash came, it was held that no conviction for the offence of cheating could be founded on the issue of such a prospectus alone. In the State of Madhya Pradesh v. Mir Basit Ali Khan 1971 SC 1620, the accused, who were promoters of a financial snowball scheme, which could run only so long as there would be a continuous, uninterrupted and enormously progressive increase in subscribers, but which could not go on indefinitely, were found not guilty of cheating, in the absence of false representations and dishonest concealment of facts.
14. In view of the above discussion, this Court comes to the conclusion that the transaction between the parties was of a civil nature and it is a case of mere breach of agreement for which the remedy was to file a civil suit. No criminal offence is made out from the allegations made in the complaint. The complaint is a retired Judicial Officer and, therefore, he has used legal terms like fraud, conspiracy, inducement, allurement etc., but a mere use of the above expressions is not sufficient to constitute an offence. The particulars of fraud have not been given. There does1 not appear to be any conspiracy in floating the Company. Necessary facts to establish 'inducement' or 'allurement' are wanting in the complaint. It is not the accused who approached the complainant. It is stated in paragraph 4 of the complaint that the complainant came into contact with the accused through his cousin at Bombay. Merely giving an exaggerated account of the scheme cannot be said to be cheating. It has already been seen above that the Company is not a paper-Company. It has substantial assets in the shape of 250-300 acres of land. The Company had actually planted more than one Lac Eucalyptus trees. The mere fact that the accused retained the sale proceeds of trees will not render their action as of criminal nature.
15. In view of the above discussion, Writ Petition No. 2461 of 1998 and Writ Petition No. 4594 of 1998 are allowed and a writ of certiorari is issued and judgment (Annexure-8) dated 10th July, 1998 passed by Xth Addl. Sessions Judge, Ghaziabad, judgment (Annexure-7) dated 17th May, 1997 passed by ixth A. C. I, M., Ghaziabad and criminal complaint dated 10th September, 1996 (Annexure-4) are quashed.