College fee payments do not constitute "entrustment" under IPC; absence of deception at inception of transaction rules out cheating charge; continuation of proceedings declared abuse of process
In a significant judgment, the Jharkhand High Court has quashed criminal proceedings against Pratap Narayan Singh (Chairman) and another (Secretary) of S.S.R. Medical College situated in Mauritius, holding that the allegations against them lack the essential ingredients required to constitute offences under Sections 406 (Criminal Breach of Trust), 420 (Cheating), and 120B (Criminal Conspiracy) of the Indian Penal Code.
Background of the Case
The First Information Report (FIR) was registered at Argora Police Station, Case No. 199 of 2024, following a complaint by the father of Kairav Kirtne, a student of the medical college. The informant alleged that the student was subjected to harassment and hooting in classrooms and examinations, barred from appearing in examinations despite paying examination fees of 3,000 US Dollars, and ultimately forced to leave the college after five years. The informant claimed that the petitioners engaged in a criminal conspiracy to cheat and exploit him financially, extracting approximately Rs. 49,63,141/- under false pretenses.
Court's Critical Analysis
Justice Anil Kumar Choudhary, while examining the allegations, applied the legal framework established by the Supreme Court of India and found the complaint lacking on multiple fronts.
On the Charge of Cheating (Section 420, IPC):
The Court noted that for cheating to constitute a criminal offence, two essential ingredients must be present: (1) deceit or dishonest/fraudulent misrepresentation, and (2) inducing the deceived person to part with property. Critically, the Court emphasized that the deception must occur at the very inception of the transaction between the parties.
The judgment observed that there was no allegation that the petitioners ever came into direct contact with the informant or his son, nor was there any allegation of deception played by the petitioners from the beginning of the transaction. The student had voluntarily pursued his studies for approximately 4.5 years at the college, which itself negated any claim of deception at the inception.
Relying on the Supreme Court judgment in Uma Shankar Gopalika v. State of Bihar (2005) 10 SCC 336, the Court reiterated the settled legal principle that "every breach of contract would not give rise to an offence of cheating, and only in those cases where breach of contract would amount to cheating is when there was deception played at the very inception. If the intention to cheat developed later on, it cannot amount to cheating."
The Court concluded that even if all allegations were assumed to be true, the essential ingredient of deception at the inception was wholly absent, thereby ruling out the charge of cheating.
On the Charge of Criminal Breach of Trust (Section 406, IPC):
For this offence, the Court identified two essential ingredients: (1) entrustment of property, and (2) misappropriation or conversion of the entrusted property to one's own use or in violation of legal direction or contract.
The Court carefully distinguished between mere payment of fees and "entrustment" as defined under the IPC. The judgment clarified that entrustment contemplates handing over property or money to someone as a trustee for a specific restricted purpose where ownership remains with the giver. Payment of college fees by a student or guardian constitutes a standard financial or contractual transaction and cannot be characterized as "entrustment" under Section 405 of the IPC.
The Court further noted that payments were made directly into the bank account of the trust running the medical college in Mauritius (IOMIT S.S.R. Medical College), not to the petitioners' personal accounts. This factual scenario further demonstrated the absence of any breach of fiduciary obligation.
Additionally, the Court observed that the petitioners had provided a comprehensive reply to the legal notice dated 21.06.2024 sent by the informant, which the informant had suppressed from the FIR.
On the Charge of Criminal Conspiracy (Section 120B, IPC):
The Court held that since neither Section 406 nor Section 420 offences were made out, the question of conspiracy could not arise independently. Section 120B requires a prior agreement or meeting of minds for committing an unlawful act. Without foundational offences, a conspiracy charge cannot stand alone.
Petitioner's Defense and Material Facts Omitted:
The Court found that the informant had deliberately suppressed several material facts:
- 1. The student had signed an undertaking agreeing that any disputes regarding admission would be subject to the jurisdiction of the Supreme Court of Mauritius
- 2. The student's attendance record was only 46% against the mandatory requirement of 80%
- 3. In internal assessments, the student scored merely 2 and 1 marks out of required 15 marks in subjects like Anatomy and Biochemistry
- 4. The student failed to appear in or complete university examinations conducted from June 2020 onwards
- 5. The student voluntarily discontinued the course after 4.5 years despite having two remaining opportunities to clear the university examination
- 6. The student was the only Indian student among 35 to fail in his batch
- 7. The FIR was filed primarily to evade payment of outstanding dues of 16,000 US Dollars demanded by the college through notice dated 08.07.2024
Comparative Legal Precedent:
The Court drew parallels with the Supreme Court judgment in Narayana Health v. State of West Bengal (2026 SCC Online SC 844), where similar charges of criminal breach of trust, cheating, and conspiracy were quashed against hospital authorities. In that case, the Supreme Court held that payment for hospital services does not constitute entrustment, and an erroneous billing charge that was promptly refunded could not form the basis of cheating charges.
Court's Conclusion:
Justice Choudhary observed that the continuation of criminal proceedings against the petitioners would constitute an abuse of the process of law when none of the alleged offences were legally made out, even accepting all allegations as true.
Final Order:
The Jharkhand High Court, exercising powers under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, quashed and set aside the entire criminal proceeding in respect of FIR Argora P.S. Case No. 199 of 2024 against the petitioners.
Bottom Line:
Quashing of FIR - Absence of essential ingredients for offences under Sections 406, 420, and 120B IPC - Payment of college fees not amounting to "entrustment" under Section 405 IPC - No allegation of deception or fraudulent intent at the inception of the transaction - Continuation of criminal proceedings against petitioners amounts to abuse of process of law.
Statutory Provisions
Section 406 IPC (Criminal Breach of Trust), Section 420 IPC (Cheating), Section 120B IPC (Punishment of Criminal Conspiracy), Section 405 IPC (Criminal Breach of Trust defined), Section 528 Bharatiya Nagarik Suraksha Sanhita, 2023 (Quashing of FIR)
