Inder Chand Bagri vs Jagadish Prasad Bagri

2025 INSC 1350 NON-REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO.5000 OF 2025 (Arising out of Special Leave Petition (Crl.) No.4939 of 2018)

INDER CHAND BAGRI …APPELLANT

VERSUS

JAGADISH PRASAD BAGRI & ANOTHER …RESPONDENTS

JUDGMENT

NAGARATHNA, J.

Leave granted.

2. This appeal arises out of the order dated 13.02.2018 passed

by the High Court of Gauhati in Criminal Petition No.190 of 2015

dismissing the application filed under Section 482 of the Code of

Criminal Procedure (hereinafter “CrPC” for short) preferred by the

appellant-accused, Inder Chand Bagri and thereby refusing to Signature Not Verified Digitally signed by NEETU SACHDEVA Date: 2025.11.24 16:44:58 IST Reason:

quash the proceedings instituted under Sections 406/420/120B of

1 the Indian Penal Code, 1860 (for short, “IPC”) arising out of the

Complaint Case C.R.No.3230c of 2013 dated 19.09.2013 before the

Court of Chief Judicial Magistrate, Kamrup, Gauhati that was filed

by Jagadish Prasad Bagri, the complainant/respondent No.1.

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

accused along with four other individuals namely Bhagwandas

Bagri, Ramkishan Bagri, Shyamsundar Bagri and Jagdish Prasad

Bagri (complaint/respondent No.1) resolved to constitute a

partnership firm vide partnership deed dated 01.10.1976 in the

name and style of ‘INDRACHAND BAGRI AND BROTHERS’

(hereinafter referred to as “firm”). The aim of said partnership firm

was to carry on business of construction of warehouses and

godowns and subsequently letting them out to third parties. As per

the terms of the said partnership deed, the appellant-accused

agreed to bring into the partnership, for the purpose of business,

the land owned by him situated at New Dag No.2760 of New Patta

No. 455, Village Maidamgaon, Mouza Beltola, District: Kamrup,

Assam (hereinafter referred to as “disputed property”).

Subsequently, two godowns were constructed on the said disputed

property and leased out to Food Corporation of India on

2 01.04.1978 and 01.06.1978 for a period of fifteen years i.e. till

01.06.1993.

4. Thereafter, the partners of the said firm decided to enter into

a supplementary agreement on 03.04.1981 that was an addendum

to the original partnership deed dated 01.10.1976. In the said

supplementary agreement, it was decided conjointly by all the

partners that the appellant-accused shall be permitted to utilise

the disputed property for his individual interest. It was also

mutually decided that in the event of vacancy of the godowns by

the Food Corporation of India after the determination of lease deed

on 01.06.1993, the said disputed property shall revert back to the

appellant-accused along with all the rights, title and interest to the

said property.

5. The said godowns were vacated by 1995 thereafter the

partners of the said firm decided to dissolve the said partnership

firm vide the dissolution deed dated 03.04.1997 w.e.f. 01.04.1997.

Further it was mutually agreed upon that all the assets and

liabilities of the said firm would stand transferred to the appellant-

accused and the said firm would be his sole proprietary concern.

3

6. The complainant/respondent No.1 filed a Title Suit No.144 of

1998 for dissolution of the firm and rendition of partnership

accounts before Civil Judge (Senior Division) No.1, Gauhati

wherein the Court, vide order dated 08.09.2020, passed an ex-

parte preliminary decree declaring that the said partnership firm is

dissolved with effect from 08.09.2000 and the same shall be

advertised as such in the Gazette.

7. Thereafter, on 20.06.2011, the appellant-accused executed a

sale deed No.5359 of 2011 in favour of his nephew, one Ajit Kumar

Bagri for the consideration of Rs.94.60 lakh and thereby

transferred the said disputed property situated at New Dag

No.2760 of New Patta No.455, Village Maidamgaon, Beltola,

District Kamrup, Assam to him.

8. Aggrieved by the execution of the said sale deed, the

complainant/respondent No.1 filed a Title Suit No.160 of 2012

before Court of Civil Judge No.1, Kamrup at Gauhati against the

appellant-accused and the rest of the partners of the said firm

seeking relief of setting aside of the sale deed No.5359 of 2011

dated 20.06.2011 and declaration that the said disputed property

4 belongs to the firm and thereby permanently restraining the

appellant-accused from alienating the said disputed property.

9. Furthermore, the complainant/respondent No.1 filed a

complaint case being CR Case No.3230c of 2013 on 19.09.2013

against the appellant-accused and Ajit Kumar Bagri, who was

arraigned as accused No.2, under Section 406, 420 and 120B of

the IPC. The allegations made out in the said complaint can be

summarised as follows:

i. That the appellant-accused was entrusted by the

complainant/respondent No.1 and other partners with the

firm’s properties i.e. the disputed property allotted in favour of

the firm, the warehouses and godowns.

ii. The appellant-accused dishonestly misappropriated the said

disputed property belonging to the firm for his own and sold it

to accused No.2 and therefore the appellant-accused has

committed an offence of Criminal Breach of Trust. It is further

alleged that the appellant-accused failed to account for profits

and losses accruing to the firm post-March 1993.

5 iii. It is further alleged that the appellant-accused induced the

complainant/respondent No.1 into entering in the partnership

deed and thereafter connived with accused No.2 to

intentionally cheat and deceive the complainant/respondent

No.1 by selling the disputed property belonging to the firm and

thereby committed the offence of cheating.

iv. Lastly, it is alleged by the complainant/respondent No.1 that

appellant-accused and accused No.2 together hatched a

conspiracy to misappropriate the property of the firm and

connived and cheated the complainant/respondent No.1 by

dishonestly inducing him to invest capital in the partnership

firm and thereafter selling the disputed property of the firm to

accused No.2.

10. Vide order dated 25.02.2014, the Sub-Divisional Judicial

Magistrate(I) Kamrup, Gauhati took cognizance of the complaint

against the appellant-accused in CR Case No.3230c of 2013 under

Section 406, 420 and 34 of the IPC and thereafter issued summon

to the appellant-accused to appear before the Court.

6

11. Aggrieved by the order dated 25.02.2014 of the Sub-

Divisional Judicial Magistrate (I) Kamrup, the appellant-accused

preferred Criminal Petition No.190 of 2015 under Section 482 CrPC

before the Gauhati High Court praying for the relief of quashing of

the cognizance order dated 25.02.2014 as well as the Complaint

Case being CR Case No.3230c of 2013.

12. The Criminal Petition No.190 of 2015 preferred by the

appellant-accused was clubbed together with Criminal Petition

No.620 of 2014 preferred by accused No.2 and was disposed of vide

common impugned order dated 13.02.2018 of the Gauhati High

Court. The High Court deemed it fit to quash the criminal

proceedings arising out of CR Case No.3230c of 2013 against

accused No.2. However, the High Court refused to quash the said

criminal proceedings against the appellant-accused wherein it was

observed that the complainant/respondent No.1 has been

successful in making out a prima facie case against the appellant-

accused. It was also observed that the material relied upon by the

appellant-accused is not of a quality so as to merit quashing of the

charges against him. It was further held that the points raised by

the appellant-accused deserve scrutiny which can only be done by

7 the Trial Court and not by the High Court while exercising its

inherent jurisdiction under Section 482 CrPC. Therefore, the High

Court directed the Trial Court to proceed with the criminal

proceedings against the appellant-accused.

13. Aggrieved by the impugned order dated 13.02.2018 passed by

the High Court of Gauhati, the appellant-accused has preferred the

present appeal.

14. The learned counsel for the appellant-accused contends that

the complaint filed by the complainant/respondent No.1 on

19.09.2013 is time-barred as the same was instituted 16 years

after the alleged acts of criminal breach of trust, without any

application for condonation of delay under Section 473 CrPC, and

is thus barred by three-year limitation period under Section

468(2)(c) CrPC. It is further argued that the complainant/

respondent No.1 suppressed the supplementary deed dated

03.04.1981 and the deed of dissolution dated 03.04.1997, based

on which an ex-parte decree had already been passed in the Title

suit No.144 of 1998 for the dissolution of partnership and rendition

of accounts in a suit preferred by the complainant/ respondent

No.1 himself and hence they cannot dispute the factum of

8 dissolution. It is also contended that since the Civil Suit No.160 of

2012 for setting aside the sale deed dated 20.06.2011 was filed by

the complainant/respondent No.1, prior to the criminal complaint,

the initiation of the latter amounts to an abuse of process of law,

especially when no other partners raised any objections or

complaints regarding the sale of the property. Finally, it is

submitted that the appellant-accused resided in Bangalore and did

not manage the partnership accounts, as the duty of maintaining

accounts and distributing profits was entrusted to one

Bhagwandas Bagri as per the partnership deed dated 01.10.1976.

15. On the contrary, the Learned Counsel for the complainant/

respondent No.1 submits that the appellant-accused was expressly

entrusted with the firm’s properties, including the land allotted to

the firm, thereby fulfilling the ingredients of offences under

Sections 405 and 406 of the IPC. It is argued that any property

brought in by a partner becomes the property of the firm, and upon

dissolution, a partner is entitled only to a share in the value of the

firm’s assets after liabilities are settled, as reflected in Clause 4 of

the partnership deed dated 01.10.1976. The complainant/

respondent No.1 contends that the appellant-accused did not

9 disclose or rely upon the supplementary and dissolution deeds

during the trial, rendering their authenticity doubtful. Lastly it is

asserted that there is no legal bar on pursuing civil and criminal

proceedings simultaneously, and despite the civil nature of the

dispute, the existence of clear criminal elements justifies

continuation of the criminal proceedings.

16. Heard the learned counsel for the appellant and learned

counsel for the respondent-State as well as complainant/

respondent No.1. We have perused the material on record and we

have given our thorough consideration to the arguments advanced

at the bar and the material on record.

17. The contents of the complaint would have to be read in light

of the ingredients of Sections 406 and 420 of the IPC and the law

settled by this Court through various judicial dicta. On perusal of

the complaint dated 19.09.2013, it is noted that the complainant/

respondent No.1 has filed the said complaint invoking Sections

406/420 of the 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

10 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 either description for a term which may extend to seven years, and shall also be liable to fine.”

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

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

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

11

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

find that the complainant/respondent No.1 has failed to make out

a case that satisfies the basic ingredients of the offence under

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

allegations against the appellant-accused herein could be brought

within the scope and ambit of the aforesaid section. On a bare

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

as defined under Section 420 of the IPC is made out at all and we

do not find that there is any cheating and dishonest inducement to

deliver any property of a valuable security involved in the instant

case.

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

the complainant/respondent No.1 was required to show that the

appellant-accused had a fraudulent or dishonest intention at the

time of making a promise or representation of not fulfilling the

partnership agreement. Such a culpable intention right at the

beginning 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

material on record to attribute any dishonest and fraudulent

intention to the appellant-accused at the time of creation of

12 partnership agreement. We must hasten to add that there is no

allegation in the complaint indicating either expressly or impliedly

any intentional deception or fraudulent/dishonest intention on the

part of the appellant-accused right from the time of formation of

the partnership deed. Nothing has been said on what the

misrepresentations were and how the appellant-accused

intentionally deceived the complainant/respondent No.1. Mere

allegations that the appellant-accused dishonestly induced the

complainant/respondent No.1 to part with the property of the

partnership firm and subsequently sold the property to a third

party does not satisfy the test of dishonest inducement to deliver a

property or part with a valuable security as enshrined under

Section 420 of the IPC.

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

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

context of Section 405 of the IPC, we again fail to see how an offence

of criminal breach of trust can be made out. It is a 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 a property entrusted to him. In the case of

13 criminal breach of trust, if a person 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

civil liability would depend upon the facts and circumstances of the

case.

22. In the present case, the complainant/respondent No.1 has

failed to establish ingredients essential to constitute an offence

under Section 406 of the IPC. The complainant/respondent No.1

has failed to place any material on record to show us as to how he

had entrusted the subject property to the appellant-accused.

Furthermore, the complaint/respondent No.1 also omits to aver as

to how the property, so entrusted to the appellant-accused, was

dishonestly misappropriated or converted for his own use, thereby

committing a breach of trust. On the contrary, the bare perusal of

the partnership deed dated 01.10.1976 shows that the disputed

property was solely owned and enjoyed by the appellant-accused

wherein as per Clause 4 of the said agreement he agreed to bring

into the partnership the said disputed property. We must hasten

14 to mention herein that upon reading of the supplementary

agreement dated 03.04.1981, it becomes amply clear that all the

partners including the complainant/respondent No.1 had agreed

that upon expiry of the lease period of 15 years with the Food

Corporation of India i.e. 01.06.1993, the said land would revert

back to the appellant-accused along with all the constructions

erected upon it. In the facts of the present case, the

complainant/respondent No.1 cannot be allowed to blow hot and

cold at the same time wherein on one hand, through the

supplementary deed, he has agreed upon the reversion of the said

disputed property back to the original owner i.e. appellant-accused

and yet on the other hand has proceeded to file a complaint alleging

cheating and misappropriation of said disputed property against

appellant-accused.

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

the complainant/respondent No.1 that the offence of criminal

breach of trust as defined under Section 405 of the IPC, punishable

under Section 406 of the 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,

15 punishable under Section 420 of the 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

misappropriated 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 coexist simultaneously in the same set of facts

as they are antithetical to each other.

24. The complainant/respondent No.1 has an alternative remedy

of filing a civil suit to set aside the sale deed dated 20.06.2011 and

claim damages for the alleged violation of his contractual rights

which he is already pursuing vide Title Suit No.160 of 2012 against

the appellant-accused which is currently pending adjudication and

16 hence the 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-accused

therefore, in our view, could not be attributed any mens rea and

therefore, the allegations levelled by the prosecution against the

appellant-accused are unsustainable.

25. 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 an inflexible rule that would govern the

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

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

the criminal proceedings against the appellant-accused herein

would cause undue harassment to him because as observed

hereinabove, no prima facie case for the offence under Sections 406

or 420 of the IPC is made out.

17

26. 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 have given 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.

(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.

18 (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.”

27. On a careful consideration of the aforementioned judicial

dicta, we find that none of the offences alleged against the

appellant-accused herein is made out. In fact, we find that the

allegations of criminal intent and other allegations against the

appellant-accused herein have been made with a mala-fide intent

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

Lal extracted above, squarely applies to the facts of these cases. It

19 is neither expedient nor in the interest of justice to permit the

present prosecution to continue.

28. 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.1 has made grave

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.

29. In the aforementioned circumstances, the impugned order of

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

No.3230c of 2013 dated 19.09.2013 pending before Sub-Divisional

20 Judicial Magistrate (I) Kamrup, Gauhati, Assam and all

consequent proceedings initiated pursuant thereto stand quashed.

30. The appeal is allowed in the aforesaid terms.

…………………………………..J. (B.V. NAGARATHNA)

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

NOVEMBER 24, 2025.

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