CRM-M/23415/2018 of MAHIP TREHAN AND ANR Vs STATE OF PUNJAB AND ANR. on 15 July 2026

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supply oil for their vehicles. Accordingly, he spoke to Mahip Trehan (Petitioner No.1) owner of the company and asked him to come to the pump to discuss the same. On 05.07.2015, Mahip Trehan went to B.K. Filling Station and asked the complainant to fill oil in their vehicles. He offered a cheque as security, assuring that if payment for the oil was not made, the complainant could deposit Cheque No. 002307 dated 05.07.2015 amounting to Rs. 6,26,520/- in Allahabad Bank, Jalandhar. Thereafter, Rajinder Trehan (Petitioner No. 2) also came to meet the complainant and told him that they also owned an Indian Oil Pump at Gurdaspur. They made him believe that they will keep on paying the money in time. For two months, Mahip Trehan did not make any payment for the oil. Later, an employee at their office told the complainant that Petitioner No. 1 had undergone a head operation and requested him not to deposit the cheque as its date had expired. He visited their office several times, but Mahip Trehan never met him. Complainant had filled their vehicles with oil worth Rs. 5,09,060/-. The total amount for the oil was Rs. 5,09,060/- and with interest, it came to Rs. 5,50,000/-. On 03.11.2015, he visited their office at Galib Kalan, where Petitioner No. 2 (Rajinder Trehan) met him. When asked to pay up, he had a telephonic conversation with his son petitioner No.1 Mahip Trehan, who refused to pay, abused him, threatened to kill him as well as the owner of the pump saying that he had political connections and none could harm him. After this telephonic conversation, Petitioner No. 2 also abused the complainant and threatened to kill him.

3. Learned counsel for the petitioners submits that the FIR revealed a pure and simple civil dispute over business transactions and REEMA SAINI

appropriate remedy with the complainant was to file a civil suit on the basis of bills which had already been instituted vide Annexure P-3. A civil dispute of payment, which had already been made in the form of cash, was given a criminal colour. There was no element of cheating or misappropriation involved on part of the petitioners. The FIR was a glaring example of misuse of criminal justice system and allegations therein, even if, accepted at face value, did not prima-facie constitute any offence. To support his arguments, learned counsel relied upon judgments rendered by Hon’ble Supreme Court in Lalit Chaturvedi and others vs. State of Uttar Pradesh and another, 2024(2) RCR (Crl.) 73; Veer Prakash Sharma vs. Anil Kumar Agarwal and another 2007(3) RCR (Crl.) 960; Hotline Teletubes and Components Ltd. & others vs. State of Bihar and another 2005(10) SCC 261 as well as of this Court in Ashok Kumar and others vs. State of Punjab and another, CRM-M No. 28446-2008, decided on 27.01.2010.

4. Learned State counsel, assisted by Ms. Navjot Kaur, learned counsel for respondent No.2 on the other hand submits that mere existence of civil remedy did not bar criminal proceedings. FIR was registered after thorough and proper investigation. There were allegations of criminal intimidation as well and the case was not liable to be quashed at the inception. All pleas raised by the petitioners ought to be raised before learned Magistrate.

5. In State of Haryana and Others Vs. Chaudhary Bhajan Lal and Others, 1992 AIR 604, after considering all the earlier precedents, Hon’ble Supreme Court laid down principles which the High Courts must consider while exercising jurisdiction under Section 482 Cr.P.C. for quashing the proceedings. It gave the following categories of cases by way of illustration wherein such power REEMA SAINI

could be exercised either to prevent abuse of the process of the Court or otherwise to secure the ends of justice: “(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 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.

(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."

6. Petitioners have been booked for the commission of offences punishable under Sections 406, 506, 120-B IPC. REEMA SAINI

7. In Delhi Race Club (1940)Ltd. & others vs. State of Uttar Pradesh and another, 2024(10) SCC 690, it was complainant's case that he used to regularly supply consignments of grain and oats meant for Delhi Race Club. Complainant raised invoices to the Club and Club used to pay the requisite amount. However, after 2017, the Club stopped making payment. Complainant claimed that amount of Rs.9,11,434/- was due and payable by the accused towards supply of consignment of goods. Hon’ble Supreme Court observed that even if entire case of the complainant was accepted as true, no offence worth the name was disclosed. The Apex Court further noticed the difference in the ingredients required for constituting offence of criminal breach of trust (406 IPC) viz-a-viz the offence of cheating (420 IPC). It was observed that offences of criminal breach of trust (406 IPC) and cheating (420 IPC) have the specific following ingredients: “25. What can be discerned from the above is that the offences of criminal breach of trust (Section 406 IPC) and cheating (Section 420 IPC) have specific ingredients. In order to constitute a criminal breach of trust (Section 406 IPC): -

1) There must be entrustment with person for property or dominion over the property, and

2) The person entrusted: -

a) dishonestly misappropriated or converted property to his own use, or

b) dishonestly used or disposed of the property or willfully suffers any other person so to do in violation of:

i. any direction of law prescribing the method in which the trust is discharged; or

ii. legal contract touching the discharge of trust (see: S.W.P. Palanitkar (supra). Similarly, in respect of an offence under Section 420 IPC, the essential ingredients are: - REEMA SAINI

1) deception of any person, either by making a false or misleading representation or by other action or by omission;

2) fraudulently or dishonestly inducing any person to deliver any property, or

3) the consent that any persons shall retain any property and finally intentionally inducing that person to do or omit to do anything which he would not do or omit (see:Harmanpreet Singh Ahluwalia v. State of Punjab, (2009) 7 SCC 712 : (2009) Cr.L.J. 3462 (SC))

26. Further, in both the aforesaid sections, mens rea i.e. intention to defraud or the dishonest intention must be present, and in the case of cheating it must be there from the very beginning or inception.”

8. The Court further observed as under: “30. The distinction between mere breach of contract and the offence of criminal breach of trust and cheating is a fine one. In case of cheating, the intention of the accused at the time of inducement should be looked into which may be judged by a subsequent conduct, but for this, the subsequent conduct is not the sole test. Mere breach of contract cannot give rise to a criminal prosecution for cheating unless fraudulent or dishonest intention is shown right from the beginning of the transaction i.e. the time when the offence is said to have been committed. Therefore, it is this intention, which is the gist of the offence. Whereas, for the criminal breach of trust, the property must have been entrusted to the accused or he must have dominion over it. The property in respect of which the offence of breach of trust has been committed must be either the property of some person other than the accused or the beneficial interest in or ownership’ of it must be of some other person. The accused must hold that property on trust of such other person. Although the offence, i.e. the offence of breach of trust and cheating involve dishonest intention, yet they are mutually exclusive and different in basic concept. There is a distinction between criminal breach of trust and cheating. For cheating, REEMA SAINI

criminal intention is necessary at the time of making a 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 any property. In such a situation, both the offences cannot co-exist simultaneously.”

9. Referring to the previous decisions in State of Gujarat v. Jaswant Lal Nathalal reported in (1968) 2 SCR 408, and Central Bureau of Investigation, SPE, SIU (X), New Delhi v. Duncans Agro Industries Ltd. Calcutta reported in (1996) 5 SCC 591, it was observed that there should be some entrustment of property to the accused wherein the ownership is not transferred to the accused. In case of sale of movable property, although the payment may be deferred, yet the property in the goods passes on delivery as per Sections 20 and 24 respectively of the Sale of Goods Act, 1930.The said provisions read:

20. Specific goods in a deliverable state.— Where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment of the price or the time of delivery of the goods, or both, is postponed. Xxxxxxxxxxxxxx

24. Goods sent on approval or “on sale or return”.—When goods are delivered to the buyer on approval or “on sale or return” or other similar terms, the property therein passes to the buyer—

(a) when he signifies his approval or acceptance to the seller or does any other act adopting the transaction; (b) if he does not signify his approval or acceptance to the seller but retains the goods without giving notice of rejection, then, if a time has been fixed for the return of the goods, on the expiration of REEMA SAINI

such time, and, if no time has been fixed, on the expiration of a reasonable time.’ The Court further observed: ‘36. From the aforesaid, there is no manner of any doubt whatsoever that in case of sale of goods, the property passes to the purchaser from the seller when the goods are delivered. Once the property in the goods passes to the purchaser, it cannot be said that the purchaser was entrusted with the property of the seller. Without entrustment of property, there cannot be any criminal breach of trust. Thus, prosecution of cases on charge of criminal breach of trust, for failure to pay the consideration amount in case of sale of goods is flawed to the core. There can be civil remedy for the non-payment of the consideration amount, but no criminal case will be maintainable for it.’ See :Lalit Chaturvedi and Others v. State of Uttar Pradesh and Another: 2024 SCC OnLine SC 171 & Mideast Integrated Steels Ltd. (MESCO Steel Ltd.) and Others v. State of Jharkhand and Another:

37. The case at hand falls in category No. 1 as laid in Smt. Nagawwa (supra) referred to in para 7 of this judgment.

38. If it is the case of the complainant that a particular amount is due and payable to him then he should have filed a civil suit for recovery of the amount against the appellants herein. But he could not have gone to the court of Additional Chief Judicial Magistrate by filing a complaint of cheating and criminal breach of trust.

10. In the case in hand as well, there is no attribution in the FIR that the petitioners had dishonest intention from the very inception, not to pay up the price of the oil. Allegations contained in the FIR, even if taken to be correct in their entirety, do not disclose any offence. The dispute between the parties is purely civil in nature, regarding which a civil suit Annexure P-3 REEMA SAINI

already stands filed. Non-payment of price of the oil, by itself, does not amount to commission of offence of cheating or criminal breach of trust. Though intention of the accused at the time of inducement is to be adjudged by subsequent conduct but subsequent conduct is not the sole test. Mere breach of contract to pay the price of the goods cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction. There is not even an averment in the FIR that the petitioner had fraudulent and dishonest intention at the time of entering into contract. From mere failure to keep up the promise and make payment of goods in future, culpable intention right at the beginning cannot be presumed. Even if it is accepted that the petitioners owe money to the complainant on account of having purchased oil, it would neither constitute the offence under Section 420 IPC nor under Section 406 IPC.

11. In Lalit Chaturvedi and others vs. State of Uttar Pradesh and another, 2024(2) RCR (Crl.) 73, the grievance of the complainant was regarding failure of the accused to pay the outstanding amount on account of the supply of goods made, despite repeated demands. The accused had made payment from time to time of Rs.3,76,40,553/- but there was balance of Rs.1,92,91,358/-. Hon’ble Supreme Court held in the facts and circumstances of case that initiation of criminal process for oblique purposes was bad in law and amounted to abuse of process of law. The FIR and all resultant proceedings and charge sheet were quashed.

12. In Veer Prakash Sharma vs. Anil Kumar Agarwal and another 2007(3) RCR (Crl.) 960), the parties entered into a contract for sale and purchase of Welding rods. Accused did not pay some amount due from REEMA SAINI

him towards supply of the articles and issued two cheques which were dishonoured. FIR was registered under Sections 406, 409, 402 and 417 IPC. The Apex Court held that the dispute was civil in nature and non-payment of goods did not amount to commission of offence of cheating or criminal breach of trust.

13. Similarly in Hotline Teletubes and Components Ltd. & others vs. State of Bihar and another 2005(10) SCC 261, the complainant supplied good to the accused, who failed to pay the price, therefore, there was no whisper in the complaint that at the very inception of the contract between the parties, there was any intention to cheat. The Court held that it was a case of pure civil liability and no criminal offence was disclosed much less offences either under Section 406 or 420 IPC.

14. In Ashok Kumar and others vs. State of Punjab and another, CRM-M No. 28446-2008, decided on 27.01.2010, as well, the accused purchased paddy from the complainant for Rs. 7.25 lacs. Only Rs.5.25 lacs was paid and Rs.2 lacs was outstanding. Written agreement was executed between the parties, agreeing to payments in instalments. Instalments having been not paid, the FIR was lodged. FIR was quashed on the ground that no offence under Section 420 IPC was made out.

15. Police has also invoked Section 506 IPC in the FIR.

Section 503 IPC defines criminal intimidation. The offence has the following essentials:

1) Threatening a person with any injury;

(i) to his person, reputation or property; or

(ii) to the person, or reputation of any one in whom that person is interested. REEMA SAINI

2) The threat must be with intent;

(i) to cause alarm to that person; or

(ii) to cause that person to do any act which he is not legally bound to do as the means of avoiding the execution of such threat; or

(iii) to cause that person to omit to do any act which that person is legally entitled to do as the means of avoiding the execution of such threat.

16. Before the offence of criminal intimidation is made out, it must be established that the accused had the intention to cause alarm to the complainant. Mere empty threats are not sufficient to constitute the offence under Section 506 IPC which is attracted only when the said threats cause alarm to the person. The FIR alleges that when the complainant asked petitioner No.2 to make payment, petitioner No.2 made telephonic call to his son-petitioner No.1 who refused to pay, abused and threatened to kill him and the owner of the pump. Offence under Section 506 IPC is also not made out.

17. Facts of the present case squarely fall within the parameters laid down in Bhajan Lal’s case (supra). Continuation of FIR will be abuse of process of law. Therefore, it is a fit case to invoke inherent powers under Section 482 Cr.P.C. to quash the FIR.

18. The petition is allowed. FIR No. 88 dated 18.06.2016, under Sections 406, 506, 120-B IPC, Police Station Sadar, Jagraon, District Ludhiana and all consequential proceedings arising out of the same are ordered to be quashed qua the petitioners. All the pending miscellaneous applications, if any, stand disposed of.

(SHALINI SINGH NAGPAL) 15.07.2026

JUDGE reema Whether speaking/reasoned : Yes Whether reportable : Yes/No REEMA SAINI