Arshad Neyaz Khan vs The State Of Jharkhand

2025 INSC 1151 NON-REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. OF 2025 (Arising out of Special Leave Petition (Criminal) No.3606 of 2024)

ARSHAD NEYAZ KHAN …APPELLANT

VERSUS

STATE OF JHARKHAND & ANOTHER …RESPONDENTS

JUDGMENT

NAGARATHNA, J.

Leave granted.

2. This appeal arises out of the order dated 19.01.2023 passed

by the High Court of Jharkhand at Ranchi in Cr.M.P. No.2384 of

2022 dismissing the application filed under Section 482 of the

Code of Criminal Procedure (hereinafter ‘CrPC’ for short) preferred

by the accused-appellant and thereby refusing to quash the Signature Not Verified

proceedings arising out of the Complaint Case No.619 of 2021 and Digitally signed by BORRA LM VALLI Date: 2025.09.24 19:10:51 IST Reason: Page 1 of 17 FIR No.18 of 2021 dated 08.02.2021 registered at PS Hindpiri that

was filed by Md. Mustafa, the complainant/respondent No.2.

3. Briefly stated, the facts of the case are that the appellant is

the owner of the property situated at Khata No.186, MS Plot

No.1322, Sub Plot No.1322/38-A and that he is also the power of

attorney holder for the property adjacent to the above-mentioned

plot situated at Sub-Plot No.1322/39-A-1.

4. On 16.02.2013, the appellant entered into an agreement for

sale of the aforesaid properties with the complainant/respondent

No.2 for a total consideration of Rs.43,00,000/-. Out of the said

consideration, the petitioner received an advance payment of

Rs.20,00,000/- on the date of agreement for sale.

5. Thereafter, on 29.01.2021, after nearly eight years from the

date of the agreement for sale, aggrieved by the non-transfer of the

said properties, a complaint was filed being Complaint Case No.619

of 2021 by the complainant/respondent No.2 against the appellant

alleging offences under Sections 406, 420, and 120B of the Indian

Penal Code, 1860 (hereinafter, “IPC” for short.). The said complaint

culminated into registration of the FIR No.18 of 2021 dated

Page 2 of 17 08.02.2021 at Police Station Hindpiri against the appellant. The

allegations contained in the said complaint and F.I.R. can be

crystallized as hereunder:

i. In January 2013, one Atik Alam assured the

complainant/respondent No.2 that the property owned by the

appellant situated at Khata No.186, MS Plot No.1322, Sub Plot

No.1322/38-A was available for sale. Thereafter, upon meeting

the appellant, the complainant/respondent No.2 was assured

that all the documents and titles to the said property were in

order and correct.

ii. The complainant/respondent No.2 was also informed that the

land adjacent to the property owned by the appellant, situated

at M.S. Plot No.1322, Sub Plot No.1322/39-A-1, was owned by

six different individuals, all of whom had created a power of

attorney in favour of the appellant and therefore authorized

him to sell the said adjacent land as well.

iii. Pursuant to the said representations, the complainant/

respondent No.2 agreed to buy the said properties for a

consideration of Rs.43,00,000/- vide agreement for sale dated

Page 3 of 17 16.02.2013. In furtherance to the said agreement, a total sum

of Rs.20,00,000/- was given to the appellant and it was agreed

between the parties that the balance amount shall be paid by

the complainant/respondent No.2 to the appellant at the time

of the registration of the said document.

iv. After the execution of the said agreement for sale, the appellant

failed to convey title of the said lands to the complainant/

respondent No.2 nor did he return the money deposited with

him by the complainant/respondent No.2.

6. Apprehending arrest on the aforesaid complaint and F.I.R.,

the appellant herein preferred Anticipatory Bail Petition No.681 of

2021 before the Judicial Commissioner, Ranchi, Jharkhand on

22.03.2021.

7. Meanwhile, the parties were referred to the Mediation Centre,

Ranchi wherein they arrived at a mutually satisfactory disposition

according to which the appellant agreed to return a sum of

Rs.24,00,000/- to the complainant/respondent No.2 in five

instalments as a full and final settlement of all the claims between

the parties.

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8. The Court of Judicial Commissioner, Ranchi, vide order dated

23.12.2021, allowed the Anticipatory Bail Application No.681 of

2021.

9. In pursuance to the aforesaid order of the Judicial

Commissioner, Ranchi, the appellant appeared before the said

Court on 19.01.2022 to surrender and sought permission to

furnish bail bond. The appellant, in compliance with the

anticipatory bail conditions imposed by the Judicial

Commissioner, Ranchi, also furnished a demand draft bearing no.

115484 dated 13.01.2022 of Rs.5,00,000/- in favour of the

complainant/respondent No.2 as a payment of the first instalment.

10. Subsequently, on the failure of the appellant to abide by the

condition of timely payment of instalments fixed by the Judicial

Commissioner vide its order dated 23.12.2021 while granting

anticipatory bail, the complainant/respondent No.2 preferred

Criminal Miscellaneous Case No.39 of 2022 in Anticipatory Bail

Application No.681 of 2021 seeking cancellation of the bail granted

to the appellant. The said application was allowed and

Page 5 of 17 consequently vide order dated 15.06.2022, the anticipatory bail

granted to the appellant was cancelled.

11. Aggrieved by the order dated 15.06.2022 of the Court

cancelling the Anticipatory Bail, the appellant preferred Criminal

Miscellaneous Petition No.2384 of 2022 under Section 482 CrPC

before the Jharkhand High Court at Ranchi praying for the relief of

quashing of F.I.R. No.18 of 2021; Criminal Complaint Case No.619

of 2021; and order dated 15.06.2022 vide which the anticipatory

bail of the appellant was cancelled.

12. The Criminal Miscellaneous Petition No. 2384 of 2022

preferred by the appellant was partly allowed by the Jharkhand

High Court vide impugned order dated 19.01.2023 whereby the

High Court although refused to quash the criminal proceedings

against the appellant but nevertheless allowed him the liberty to

approach the High Court to prefer a fresh anticipatory bail

application.

13. Aggrieved by the impugned order dated 19.01.2023 passed by

the High Court of Jharkhand, the appellant has preferred the

present appeal.

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14. We have heard learned counsel for the appellant and learned

counsel for the respondent-State as well as respondent-

complainant. We have perused the material on record.

15. We have given our thorough consideration to the arguments

advanced at the bar and the material on record.

16. The contents of the complaint as well as the FIR would have

to be read in light of the ingredients of Sections 406 and 420 IPC

and the law settled by this Court through various judicial dicta. On

perusal of the complaint dated 29.01.2021, it is noted that the

complainant/respondent No.2 has filed the said complaint

invoking Sections 406, 420 and 120B IPC. For ease of reference,

the aforesaid Sections are extracted as under:

“406. Punishment for criminal breach of trust.— Whoever commits criminal breach of trust shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both.

xxx

420. Cheating and dishonestly inducing delivery of property.- Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of

Page 7 of 17 either description for a term which may extend to seven years, and shall also be liable to fine.

xxx 120B. Punishment of criminal conspiracy.-(1) Whoever is a party to a criminal conspiracy to commit an offence punishable with death, imprisonment for life or rigorous imprisonment for a term of two years or upwards, shall, where no express provision is made in this Code for the punishment of such a conspiracy, be punished in the same manner as if he had abetted such offence.

(2) Whoever is a party to a criminal conspiracy other than a criminal conspiracy to commit an offence punishable as aforesaid shall be punished with imprisonment of either description for a term not exceeding six months, or with fine or with both.”

17. In Inder Mohan Goswami vs. State of Uttaranchal, (2007)

12 SCC 1 (“Inder Mohan Goswami”), while dealing with Section

420 IPC, this Court observed thus:

“42. On a reading of the aforesaid section, it is manifest that in the definition there are two separate classes of acts which the person deceived may be induced to do. In the first class of acts he may be induced fraudulently or dishonestly to deliver property to any person. The second class of acts is the doing or omitting to do anything which the person deceived would not do or omit to do if he were not so deceived. In the first class of cases, the inducement must be fraudulent or dishonest. In the second class of acts, the inducing must be intentional but need not be fraudulent or dishonest. 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 a fraudulent or dishonest intention at the time of making the promise. From his mere failure to subsequently keep a promise, one

Page 8 of 17 cannot presume that he all along had a culpable intention to break the promise from the beginning.”

18. In light of the facts and circumstances of the present case, we

find that the complainant/respondent No.2 has failed to make out

a case that satisfies the basic ingredients of the offence under

Section 420 IPC. We fail to understand as to how the allegations

against the appellant herein could be brought within the scope and

ambit of the aforesaid section. On a bare perusal of the FIR as well

as the complaint, we do not find that the offence of cheating as

defined under Section 420 IPC is made out and we do not find that

there is any cheating and dishonest inducement to deliver any

property or a valuable security involved in the instant case.

19. It is settled law that for establishing the offence of cheating,

the complainant/respondent No.2 was required to show that the

appellant had a fraudulent or dishonest intention at the time of

making a promise or representation of not fulfilling the agreement

for sale of the said property. Such a culpable intention right at the

beginning when the promise was made cannot be presumed but

has to be made out with cogent facts. In the facts of the present

case, there is a clear absence of dishonest and fraudulent intention

Page 9 of 17 on the part of the appellant during the agreement for sale. We must

hasten to add that there is no allegation in the FIR or the complaint

indicating either expressly or impliedly any intentional deception

or fraudulent/dishonest intention on the part of the appellant right

from the time of making the promise or misrepresentation. Nothing

has been said on what the misrepresentations were and how the

appellant intentionally deceived the complainant/respondent No.2.

Mere allegations by the complainant/respondent No.2 that the

appellant failed to execute the agreement for sale and failed to

refund the money paid by the complainant/respondent No.2 does

not satisfy the test of dishonest inducement to deliver a property

or part with a valuable security as enshrined under Section 420

IPC.

20. On perusal of the allegations contained in the complaint, in

light of the ingredients of Section 406 IPC, read in the context of

Section 405 IPC, do not find that any offence of criminal breach of

trust has been made out. It is trite law that every act of breach of

trust may not result in a penal offence unless there is evidence of

a manipulating act of fraudulent misappropriation of property

entrusted to him. In the case of criminal breach of trust, if a person

Page 10 of 17 comes into possession of the property and receives it legally, but

illegally retains it or converts it to its own use against the terms of

contract, then the question whether such retention is with

dishonest intention or not and whether such retention involves

criminal breach of trust or only a civil liability would depend upon

the facts and circumstances of the case. In the present case, the

complainant/respondent No.2 has failed to establish the

ingredients essential to constitute an offence under Section 406

IPC. The complainant/respondent No.2 has failed to place any

material on record to show us as to how he had entrusted property

to the appellant. Furthermore, the complaint also omits to aver as

to how the property, so entrusted to the appellant, was dishonestly

misappropriated or converted for his own use, thereby committing

a breach of trust.

21. Furthermore, it is pertinent to mention that if it is the case of

the complainant/respondent No.2 that the offence of criminal

breach of trust as defined under Section 405 IPC, punishable

under Section 406 IPC, is committed by the accused, then in the

same breath it cannot be said that the accused has also committed

the offence of cheating as defined in Section 415, punishable under

Page 11 of 17 Section 420 IPC. This Court in Delhi Race Club (1940) Limited

vs. State of Uttar Pradesh, (2024) 10 SCC 690 observed that

there is a distinction between criminal breach of trust and

cheating. For cheating, criminal intention is necessary at the time

of making false or misleading representation i.e. since inception. In

criminal breach of trust, mere proof of entrustment is sufficient.

Thus, in case of criminal breach of trust, the offender is lawfully

entrusted with the property, and he dishonestly misappropriates

the same. Whereas, in case of cheating, the offender fraudulently

or dishonestly induces a person by deceiving him to deliver a

property. In such a situation, both offences cannot co-exist

simultaneously. Consequently, the complaint cannot contain both

the offences that are independent and distinct. The said offences

cannot co-exist simultaneously in the same set of facts as they are

antithetical to each other.

22. At this point, we must hasten to add that the complaint was

filed after a delay of nearly eight years. Learned counsel for the

complainant/respondent No.2 has failed to impress the Court

about the reason for the delay and hence this fact further raises a

suspicion about the bona fides of the complainant/respondent

Page 12 of 17 No.2. The delay in lodging of the complaint and FIR, coupled with

the vague allegations do not inspire any confidence in the Court to

allow the criminal proceedings to continue against the appellant.

Further, the complainant/respondent No.2 had an alternative

remedy of filing a civil suit claiming damages for the alleged

violation of his contractual rights which has not been availed but

a route through criminal proceedings, when no ingredient of

offence is made out, cannot be permitted. Criminal law ought not

to become a platform for initiation of vindictive proceedings to settle

personal scores and vendettas. The appellant therefore, in our

view, could not be attributed any mens rea and therefore, the

allegations levelled by the prosecution against the appellant are

unsustainable.

23. Furthermore, in Inder Mohan Goswami, it was held by this

Court that the Court must ensure that criminal prosecution is not

used as an instrument of harassment or for seeking private

vendetta or with an ulterior motive to pressurise the accused. It

was further held by this Court that it is neither possible nor

desirable to lay down any inflexible rule that would govern the

exercise of inherent jurisdiction. In view of the above and for the

Page 13 of 17 reasons stated above, we are of the firm opinion that to continue

the criminal proceedings against the appellant herein would cause

undue harassment to him because as observed hereinabove, no

prima facie case for the offence under Sections 406 or 420 IPC is

made out.

24. In this regard, it would be apposite to rely on the judgment in

the case of State of Haryana vs. Bhajan Lal, 1992 Suppl. (1)

SCC 335 (“Bhajan Lal”) with particular reference to paragraph

102 therein, where this Court observed:

“102. In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extraordinary 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 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 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 Accused.

Page 14 of 17 (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 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 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 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 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 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.

(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 and personal grudge.”

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25. On a careful consideration of the aforementioned judgment in

the light of the facts of this case, we find that none of the offences

alleged against the appellant herein is made out. In fact, we find

that the allegations of criminal intent and other allegations against

the appellant herein have been made with a mala fide intent and

therefore, the judgment of this Court in the case of Bhajan Lal and

particularly sub-paragraphs 1, 3, 5 and 7 of paragraph 102,

extracted above, squarely apply to the facts of this case. In our

view, it is neither expedient nor in the interest of justice to permit

the present prosecution to continue.

26. At this juncture, we find it apposite to mention the

observations of this Court in Vishal Noble Singh vs. State of

Uttar Pradesh, 2024 SCC OnLine SC 1680 wherein it was

observed that in recent years the machinery of criminal justice is

being misused by certain persons for their vested interests and for

achieving their oblique motives and agenda. Courts have therefore

to be vigilant against such tendencies and ensure that acts of

omission and commission having an adverse impact on the fabric

of our society must be nipped in the bud. We say so for the reason

that while the complainant/respondent No.2 has made grave

Page 16 of 17 allegations against the appellant herein, he has failed to justify the

same before this Court. Such actions would create significant

divisions and distrust among people, while also placing an

unnecessary strain on the judicial system, particularly criminal

courts.

27. In the aforementioned circumstances, the impugned order of

the High Court is set aside and consequently, the Complaint Case

No.619/2021 and FIR No.18 of 2021 dated 08.02.2021 lodged with

Police Station Hindpiri and all consequent proceedings initiated

pursuant thereto stand quashed.

The appeal is allowed in the aforesaid terms.

…………………………………..J. (B.V. NAGARATHNA)

…………………………………..J. (R. MAHADEVAN) NEW DELHI;

SEPTEMBER 24, 2025.

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