Bombay HC quashes FIR against steel trader, says ‘there was no intent to cheat initially’

Quashing a first information report (FIR) against steel trader Pankaj Mehadia and two others, the Nagpur bench of the Bombay High Court has ruled that there has to be an “intention of deceit at the very inception to constitute an offence”.

The FIR was registered on November 2, 2021, under sections 420, 406, 409, and 120-B of the Indian Penal Code (IPC) and Section 3 of the Maharashtra Protection of Interest of Depositors Act (MPIDA).

According to the bench, to constitute an offence of cheating and breach of trust, there is a requirement of dishonest intention.

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Citing the Supreme Court ruling in the Vijay Kumar Ghai vs State of West Bengal case, the Nagpur bench of the Bombay HC said that “even if the intention to deceive develops later, it does not amount to an offence under the Act.”

“The heart of the penal provisions above is dishonest intention since inception which is materially lacking in the case,” the Bench said.

The high court also observed that criminal prosecution must not be used as a means of seeking personal vendetta.

It was informed by the counsel for the applicants that the transactions between the applicant and the complainant were of civil nature.

From 2004 till 2017, the applicants have made assured payments and there is no dispute and every failure to oblige the promise does not attract criminal prosecution as the intention was not to deceit since inception.

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Furthermore, both parties had also entered into a deed of settlement and the applicants, to show their bonafide, had issued a demand draft total amounting to Rs 50 lakh and post-dated cheques.

The court in the above scenario observed that, “In case at hand, applicants took a step forward by entering into a Deed of Settlement. By no stretch of imagination it can be said that since inception i.e. from the year 2004, applicants had dishonest intention behind the entire transaction. The factum of paying assured interest for 12 years indicates applicants urge to fulfil the promise. The said very fact demonstrates that there was no fraudulent or dishonest intention on the part of applicants”.

In addition to this, the HC pointed out that the prosecution has failed to make out a prima facie case to proceed. In view of this, the HC has allowed and disposed of this criminal application.

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Advocate Shashank Manohar with advocates Rommill Ajit Jain and Anand Daga appeared for the applicants. APP VA Thakare represented the State and the Economic Offences Wing (EOW) of the Nagpur Police.