Indian Oil Corporation v. NEPC India Ltd.

Criminal Appeal No. 834 of 2002, decided 20 July 2006

Court: Supreme Court of India (Criminal Appellate Jurisdiction)
Case: Criminal Appeal No. 834 of 2002 (with Criminal Appeal No. 833 of 2002)
Decided: 20 July 2006
Bench: H.K. Sema, R.V. Raveendran (judgment by R.V. Raveendran, J.)
Citation: Criminal Appeal No. 834 of 2002, decided 20 July 2006
Provisions: Indian Penal Code, 1860, s. 415 (cheating), s. 417 and s. 420 (cheating and dishonestly inducing delivery of property) (now Bharatiya Nyaya Sanhita, 2023, s. 318(1), s. 318(2) and s. 318(4))

Headnote

Cheating · IPC s. 415 (BNS s. 318(1)) · Civil remedy and criminal complaint · Quashing of complaint, CrPC s. 482 · Dishonest intention at the time of promise

The case, in the Court's words

Whether existence or availment of civil remedy in respect of disputes arising from breach of contract, bars remedy under criminal law? [para 8]

Held

A given set of facts may make out : (a) purely a civil wrong; or (b) purely a criminal offence; or (c) a civil wrong as also a criminal offence. A commercial transaction or a contractual dispute, apart from furnishing a cause of action for seeking remedy in civil law, may also involve a criminal offence. As the nature and scope of a civil proceedings are different from a criminal proceeding, the mere fact that the complaint relates to a commercial transaction or breach of contract, for which a civil remedy is available or has been availed, is not by itself a ground to quash the criminal proceedings. The test is whether the allegations in the complaint disclose a criminal offence or not. [para 9]
Any effort to settle civil disputes and claims, which do not involve any criminal offence, by applying pressure [...] criminal prosecution should be deprecated and discouraged. [para 10]
The essential ingredients of the offence of 'cheating' are : (i) deception of a person either by making a false or misleading representation or by other action or omission (ii) fraudulent or dishonest inducement of that person to either deliver any property or to consent to the retention thereof by any person or to intentionally induce that person to do or omit to do anything which he would not do or omit if he were not so deceived and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property. [para 25]
The High Court has relied on several decisions of this Court wherein this Court has held that dishonest intent at the time of making the promise/inducement is necessary, in addition to the subsequent failure to fulfil the promise. [para 26]
All that is to be seen is whether the necessary allegations exist in the complaint to bring the case within section 415. We are clearly of the view that the allegations in the complaint constitute such an offence. We are not concerned with the proof of such allegations or ultimate outcome of trial at this stage. [para 29]

Result

We accordingly allow these appeals in part and set aside the order of the High Court insofar it quashes the complaint under sections 415 and 425. [para 31]

Editorial note: subsequent treatment

The passage on civil remedy and criminal liability (para 9) was referred to in Priti Saraf v. State of NCT of Delhi (2021), Mitesh Kumar J. Sha v. State of Karnataka (2021) and Vijay Kumar Ghai v. State of West Bengal (2022). The appeals were allowed in part: the complaint was held to disclose cheating and mischief but not theft, dishonest misappropriation or criminal breach of trust.

The headnote consists of extracts from the Court's judgment, selected by The Daily Bench for convenience. The selection is not part of the judgment, is not a law report and should not be cited. It may contain errors; rely on the official judgment. Library reference TDB-LL BNS-318/02 is our own cataloguing label and is not a citation.