Court’s Decision
The Patna High Court partly allowed a criminal revision petition, acquitting the petitioner of the charge under Section 420 of the Indian Penal Code (cheating), while affirming his conviction under Section 406 (criminal breach of trust). The Court found that although the petitioner was guilty of misappropriating entrusted fertilizer stock, no case of cheating was made out, as there was no evidence of fraudulent or dishonest inducement at the inception of the transaction.
Justice Bibek Chaudhuri observed:
“In the instant case, it is not alleged by the informant that the Warehousing Corporation was induced fraudulently or dishonestly by the petitioner to deliver 2160 bags of fertilizers… Therefore, this Court is of the view that both the Courts below committed illegality and impropriety in holding the petitioner guilty of offence under Section 420.”
The Court further noted that the petitioner had already served the sentence for the Section 406 conviction, and the remaining period, if any, stood set off against the time already undergone in custody.
Facts
The petitioner served as the In-Charge of several warehouses under the Bihar State Warehousing Corporation (BSWC), including one at Vyapar Mandal, Samastipur. He was transferred from this post on 31 July 2012 but failed to hand over the charge to his successor, Mukeshwar Sharma.
On the direction of the District Magistrate, a stock inventory was conducted on 9 December 2013, revealing a shortage of 2230 sacks of DAP fertilizer—amounting to approximately ₹44.29 lakhs. A criminal case was initiated against the petitioner, and following investigation, a charge sheet was filed under Sections 406 and 420 of IPC and Section 7 of the Essential Commodities Act.
The petitioner faced trial and was convicted by the Sub-Divisional Judicial Magistrate. The conviction and sentence were affirmed in appeal, with a modification that sentences under Sections 406 and 420 would run concurrently. The present revision challenged the legality and propriety of those orders.
Issues
- Whether the petitioner was rightly convicted under Section 420 (cheating) and Section 406 (criminal breach of trust) of the IPC.
- Whether the petitioner had already served the requisite period of sentence under the law.
Petitioner’s Arguments
The petitioner contended that both the trial court and appellate court erred in convicting him under Section 420 of the IPC, as no element of “cheating” was made out. He emphasized that the prosecution failed to establish any fraudulent or dishonest inducement at the inception of the transaction, which is a necessary precondition for a conviction under Section 420. The facts, even if taken at face value, revealed only an instance of breach of trust, not cheating.
The petitioner also relied on Supreme Court precedents to argue that one cannot be charged simultaneously for cheating and criminal breach of trust on the same facts, as they involve distinct legal ingredients. Furthermore, it was highlighted that the petitioner had already served close to the full sentence under Section 406 and any remaining period should be set off.
Respondent’s Arguments
The prosecution submitted that the petitioner was undeniably entrusted with 2160 bags of fertilizers, and he failed to deliver them or give a satisfactory explanation for their disappearance. He continued to retain control of the warehouse even after his transfer, and the inspection team found only 30 bags remaining. This, according to the State, established criminal breach of trust, justifying his conviction under Section 406.
As for Section 420, the State did not point to any direct evidence of fraudulent inducement but maintained that the petitioner’s overall conduct justified the dual charges.
Analysis of the Law
The Court elaborated on the distinction between cheating and criminal breach of trust. Relying on the Supreme Court decision in Deepak Gaba & Ors. v. State of U.P. [(2023) 3 SCC 423], it held that:
- For cheating under Section 420 read with Section 415 IPC, there must be “fraudulence, dishonesty, or intentional inducement” at the inception of the transaction.
- Conversely, criminal breach of trust under Section 406 arises when a person dishonestly misappropriates entrusted property, violating legal directions or contractual obligations.
In this case, although the misappropriation of entrusted fertilizer stock was proved, there was no evidence of dishonest inducement at the time of entrustment.
Precedent Analysis
- Hydru v. State of Kerala (2004) 13 SCC 374: Cited to emphasize the limited scope of revisional jurisdiction. Reappraisal of evidence is not permissible unless material evidence is overlooked.
- Deepak Gaba v. State of U.P. (2023) 3 SCC 423: Clarified the legal ingredients of Sections 406 and 420 IPC and held that misappropriation without initial fraudulent intent does not amount to cheating.
- Mohd. Ibrahim v. State of Bihar (2009) 8 SCC 751: Reinforced the requirement of dishonest inducement for the offence of cheating.
- Satishchandra Ratanlal Shah v. State of Gujarat (2019) 9 SCC 148: Stressed that breach of contract alone does not amount to cheating unless accompanied by fraudulent inducement at inception.
These judgments supported the Court’s reasoning that the conviction under Section 420 IPC was unsustainable in the absence of proof of fraudulent inducement.
Court’s Reasoning
The Court scrutinized the prosecution evidence, noting that the petitioner received the stock while in charge of the warehouse and retained possession despite his transfer. The stock was subsequently found missing during the official inventory. This clearly pointed to a case of criminal breach of trust under Section 406 IPC.
However, there was no evidence that the petitioner induced the BSWC to deliver the fertilizers through fraud or deceit. The entrustment was based on his official duties and not any misrepresentation. The informant did not allege any fraudulent inducement either. As such, the charge under Section 420 was not made out.
Conclusion
- The conviction under Section 420 IPC was set aside.
- The conviction under Section 406 IPC was upheld.
- Considering that the petitioner had already served nearly the full sentence of three years for the Section 406 conviction, the remaining period was directed to be set off.
The revision was accordingly disposed of.
Implications
This judgment reinforces the strict distinction between cheating and breach of trust under Indian penal law. Courts must scrutinize whether fraudulent inducement was present at the inception of the transaction before convicting a person under Section 420 IPC. It also clarifies the limited scope of revisional jurisdiction, particularly in cases involving concurrent findings by subordinate courts.
FAQs
1. What is the difference between cheating and criminal breach of trust?
Cheating under Section 420 requires dishonest or fraudulent inducement at the outset, whereas criminal breach of trust under Section 406 involves misappropriation of entrusted property, regardless of initial intent.
2. Can a person be convicted under both Sections 406 and 420 IPC for the same act?
Not unless both distinct legal ingredients are established. The presence of entrustment and subsequent misappropriation supports Section 406, while Section 420 requires dishonest inducement from the beginning.
3. What is the scope of the High Court’s revisional power?
A Revisional Court cannot reappraise evidence like an appellate court unless there is a glaring error or misreading of material evidence by lower courts.
