Legal Review and Analysis of Inder Chand Bagri vs Jagadish Prasad Bagri & Anr 2025 INSC 1350

In-Short

Case: Inder Chand Bagri vs Jagadish Prasad Bagri & Anr. (2025 INSC 1350)The Supreme Court quashed criminal proceedings for cheating and criminal breach of trust, ruling that a dispute arising from a partnership deed, governed by specific contractual terms agreed upon by all partners, is essentially civil in nature. Using criminal law to resolve such contractual disputes amounts to an abuse of the judicial process.

1. Heading of the Judgment

Case Title: Inder Chand Bagri vs Jagadish Prasad Bagri & Another
Citation: 2025 INSC 1350
Court: Supreme Court of India
Jurisdiction: Criminal Appellate Jurisdiction
Criminal Appeal No.: 5000 of 2025 (Arising out of SLP (Crl.) No. 4939 of 2018)
Judges: Justice B.V. Nagarathna and Justice R. Mahadevan
Date of Judgment: November 24, 2025

2. Related Laws and Sections

This judgment interprets and applies the following legal provisions:

• Indian Penal Code, 1860 (IPC):
  Section 405: Defines Criminal Breach of Trust.
  Section 406: Prescribes punishment for Criminal Breach of Trust.
  Section 415: Defines Cheating.
  Section 420: Prescribes punishment for Cheating and dishonestly inducing delivery of property.
  Section 120B: Defines Criminal Conspiracy.

• Code of Criminal Procedure, 1973 (CrPC):
  Section 468: Bars taking cognizance of an offence after the expiry of the period of limitation.
  Section 473: Empowers the court to extend the period of limitation in certain cases.
  Section 482: Preserves the inherent powers of the High Court to make such orders as may be necessary to prevent abuse of the process of any court or otherwise to secure the ends of justice.

3. Basic Judgment Details

• Appellant: Inder Chand Bagri (Accused in the original complaint)

• Respondents: Jagadish Prasad Bagri (Complainant) & The State

• Origin of the Case: The first respondent filed a criminal complaint under Sections 406/420/120B IPC, alleging that the appellant had cheated the partnership firm and committed criminal breach of trust by selling a property that was once a firm asset.

• Lower Court Proceedings:
  Trial Court: The Chief Judicial Magistrate, Kamrup, took cognizance of the offence.
  High Court: The Gauhati High Court, in a petition under Section 482 CrPC, quashed proceedings against Accused No. 2 but refused to quash them against the appellant.

• Path to Supreme Court: The appellant challenged the High Court's order before the Supreme Court.

4. Core Legal Principles and Judicial Analysis

The Central Issue

The core issue before the Supreme Court was whether the criminal complaint filed against the appellant disclosed the necessary ingredients to constitute the offences of cheating (Section 420 IPC) and criminal breach of trust (Section 406 IPC), or whether it was a purely civil dispute disguised as a criminal case, amounting to an abuse of the process of the court.

The Supreme Court's Analysis and Reasoning

The Court's analysis proceeded on a meticulous examination of the facts in light of the settled legal principles governing the offences alleged.

A. Absence of Ingredients for the Offence of Cheating (Section 420 IPC)

The Court, relying on its judgment in Inder Mohan Goswami vs. State of Uttaranchal, (2007) 12 SCC 1, emphasized that the gist of the offence of cheating is a fraudulent or dishonest intention at the time of making the promise or representation.

• Application to Facts: The Court found that the complaint was completely silent on any intentional deception or fraudulent intention on the part of the appellant at the time of the formation of the partnership in 1976. There were no specific allegations regarding what misrepresentations were made at the inception. The mere subsequent sale of the property, even if disputed, could not retrospectively impart a dishonest intention to the original agreement. The Court held that the essential element of "dishonest inducement" under Section 420 IPC was entirely missing.

B. Absence of Ingredients for the Offence of Criminal Breach of Trust (Section 406 IPC)

For criminal breach of trust, the complainant must prove (i) entrustment of property, and (ii) dishonest misappropriation or conversion of that property by the accused.

• Application to Facts: The Court scrutinized the partnership deed and a subsequent supplementary agreement dated 03.04.1981. It found that the disputed property was brought into the partnership by the appellant, and crucially, all partners, including the complainant, had agreed that after the lease with the Food Corporation of India ended, the property would revert to the appellant. The dissolution deed further solidified this position. Therefore, the appellant was acting on a right he legitimately possessed as per agreements signed by the complainant himself. The Court held that the complainant could not "blow hot and cold," agreeing to the reversion of the property in a deed and later alleging its misappropriation.

C. The Legal Inconsistency of Alleging Both Cheating and Criminal Breach of Trust

The Court made a significant legal observation by citing Delhi Race Club (1940) Limited vs. State of Uttar Pradesh, (2024) 10 SCC 690. It highlighted the fundamental distinction between the two offences:

• Cheating: Requires a fraudulent intention at the inception of the transaction.

• Criminal Breach of Trust: Presumes a lawful entrustment first, followed by a subsequent dishonest act.

The Court reasoned that these two offences are "antithetical to each other" and cannot logically coexist on the same set of facts. An act cannot be based on a fraudulent inducement from the start and a lawful entrustment simultaneously.

D. Characterization as an Abuse of Process

The Court concluded that the criminal complaint was a blatant attempt to use criminal law as a tool for pressurizing the appellant in a dispute that was essentially of a civil nature. The complainant had already filed a civil suit (Title Suit No. 160 of 2012) for the same subject matter. Relying on the categories outlined in State of Haryana vs. Bhajan Lal, 1992 Supp (1) SCC 335, particularly category (7) which deals with malicious and vexatious prosecutions, the Court held that continuing the criminal proceedings would be a gross abuse of the process of law and cause undue harassment to the appellant.

5. Final Outcome and Supreme Court's Directions

The Supreme Court allowed the appeal and set aside the impugned order of the Gauhati High Court. It issued the following final direction:

• The Complaint Case No. 3230c of 2013 dated 19.09.2013 pending before the Sub-Divisional Judicial Magistrate (I), Kamrup, Gauhati, and all consequent proceedings initiated pursuant thereto, were quashed.

6. (MCQs) Based on the Judgment

Question 1: In Inder Chand Bagri vs Jagadish Prasad Bagri, the Supreme Court held that the offences of cheating (S. 420 IPC) and criminal breach of trust (S. 406 IPC) cannot be alleged together in the same case because?
(a) The punishment for both offences is different.
(b) They are antithetical to each other, as one requires fraudulent intention at inception and the other presupposes lawful entrustment.
(c) A civil suit was already pending between the parties.
(d) The High Court had already quashed the proceedings for one of the offences.

Question 2: The Supreme Court quashed the criminal proceedings primarily on the ground that?
(a) The appellant was a senior citizen residing in Bangalore.
(b) The complaint was filed after a long delay.
(c) The facts disclosed a purely civil dispute and the criminal complaint was an abuse of the process of law.
(d) The partnership deed was not properly stamped.