In a significant ruling, the Supreme Court of India has allowed an appeal challenging the order of the High Court of Jharkhand at Ranchi, which had quashed the FIR and subsequent proceedings in a criminal case related to alleged criminal breach of trust and cheating. The Court directed the High Court to reconsider the petition for quashing the FIR, considering the materials gathered during the investigation.
Factual Background:
The case revolves around a dispute between the appellant, the original complainant, and the second and third respondents, the accused, regarding an alleged breach of a rental agreement. The appellant, a truck owner, had rented out his vehicle (Trailer No. NL 01K 1250) to the respondents under a contractual agreement for transportation between Tata Steel Jamshedpur and Kalinganagar. According to the complainant, the agreement was for a period starting in July 2014 and ending in March 2016, with a monthly rent of ?33,000. After an initial payment for the first month, the respondents allegedly failed to pay any further rent, accumulating arrears amounting to ?12,49,780.
Despite repeated assurances from the accused, the rent was never paid. Consequently, the appellant filed an application under Section 156(3) of the Criminal Procedure Code (CrPC), requesting the police to register an FIR. On the order of the Chief Judicial Magistrate (CJM) dated November 12, 2016, a case was registered, and police began their investigation.
However, the investigation was delayed when the accused failed to comply with notices under Section 41A CrPC, leading to the CJM issuing a Non-Bailable Warrant (NBW) against them in June 2017. The accused challenged the NBW order and the proceedings in the High Court, arguing that no criminal offence had been committed and that the dispute was purely civil in nature.
In February 2020, the CJM took cognizance of the case and issued process under Section 204 CrPC. Subsequently, the accused amended their application before the High Court to include a challenge against this cognizance order. The High Court, in its ruling dated February 1, 2024, quashed the cognizance order and all further proceedings, asserting that the FIR did not disclose any criminal offence under Sections 406 (criminal breach of trust) and 420 (cheating) of the Indian Penal Code (IPC). The High Court held that the dispute amounted to a civil matter concerning the recovery of rent and could be pursued through civil remedies.
The Supreme Court's Analysis:
The appellant, aggrieved by the High Court's decision, approached the Supreme Court. The primary issue before the Court was whether the High Court was justified in quashing the FIR and proceedings at the threshold without considering the materials collected during the police investigation.
The Supreme Court reiterated that when determining whether an FIR should be quashed, the Court must assess the allegations at face value and determine whether a prima facie case for investigation exists. At this stage, the Court is not expected to examine the truth of the allegations but only to assess whether they disclose the commission of a cognizable offence.
The Court observed that the FIR alleged that the accused had taken the truck on hire but failed to pay the rent, despite repeated assurances. The retention of possession of the truck without paying rent could suggest dishonest intention, which, if supported by investigation, could lead to a charge of criminal breach of trust. The Court noted that the mere failure to pay rent was indicative of the possibility of a criminal act, such as misappropriation or illegal disposal of the vehicle.
The Supreme Court held that the High Court erred in quashing the FIR without considering the materials collected during the investigation. It emphasized that the investigation needed to proceed to determine whether the accused had indeed misappropriated or disposed of the truck, which could constitute criminal breach of trust or cheating.
Remitting the Case for Reconsideration:
The Supreme Court allowed the appeal, setting aside the High Court's order and directing the High Court to reconsider the petition for quashing the FIR in light of the materials gathered during the investigation. The Court also noted that while the police report had been filed, the charge sheet had not been produced in court, and the whereabouts of the truck remained unknown. The matter was thus remitted to the High Court for a fresh decision, with all contentions open for the parties to raise.
Conclusion:
This ruling underscores the importance of allowing criminal investigations to proceed when allegations of dishonest conduct are made, particularly when the facts suggest the possibility of criminal offences such as cheating or criminal breach of trust. It also reinforces the principle that the correctness of the allegations should not be tested at the stage of quashing an FIR; rather, it is the duty of the investigating authorities to determine whether sufficient evidence exists to charge the accused.
The case has now been remitted to the High Court, where it will be reconsidered, taking into account the evidence collected during the investigation.
