Investigation 'Swayed' By Farmers Plight, Not Evidence: MP High Court Quashes FIR Against Traders For Alleged Failure To Pay Farmers

The Madhya Pradesh High Court quashed an FIR against two traders accused of cheating farmers in Rajgarh District, observing that the investigative agency was apparently swayed by the plight of the farmers rather than proving a prima facie case for the offences alleged. 

Justice Sanjeev S Kalgaonkar observed:

"Apparently, both the parties consensually agreed for the sale and purchase of crops on credit. They continued in transaction. The subsequent failure of petitioners / accused to pay the amount towards purchase of crops cannot lead to inference that they had fraudulent or dishonest intention at the beginning of the transaction. Therefore, in view of aforestated dictum of law the offence punishable u/S 420 and 406 of IPC is prima-facie not made out against the petitioner from the contents of impugned FIR and the material on record...The investigation agency was apparently swayed by the magnitude of the outstanding amount and the plight of farmers but the prosecution has to show prima facie existence of the necessary ingredients constituting the alleged offence". 

The court said that the FIR, based on written complaint, is an attempt to "clock the civil dispute" of specific performance of contract and recovery of money for sale of goods with criminal prosecution for cheating, criminal breach of trust and forgery.

"Hence, the exercise of inherent jurisdiction u/Sec. 528 of the BNSS, 2023 is needed to prevent abuse of the process of Court," the court said. 

The farmers had submitted a written complaint to the SHO of District Rajgarh alleging fraud and cheating (Section 420 of IPC) against Raju and Ravi Soni. Per the complaint, in 2023, Raju and Ravi (traders)purchased crops of wheat, Soyabeen, Mustard, Lentil (masoor) and Corn (makka) on credit and promised to pay the amount within a month.

The traders paid the said amount, thereby establishing trust with the farmers. Thereafter, the two traders purchased the crops between October 2023 to February 2024, but rather than paying the amount, they had allegedly absconded. 

The counsel for the petitioners submitted that the dispute was predominantly civil in nature, which was given the colour of criminal prosecution to pressure the traders. 

The state, however, contended that the traders had forged the purchase slips showing the purchase of crops from 161 farmers and fled away with INR 2.32 Crores.  

The court noted that the traders' failure to pay the farmers the outstanding amount led to charges of cheating. It further observed that mere non-payment or underpayment of the price of goods itself does not amount to commission of an offence of cheating or criminal breach of trust. 

"Mere non-performance of the contract or inaction or deferment in payment in compliance with the promise may provide cause of action for specific performance of the contract or recovery of money but dishonest intention to cheat or fraudulent intention to misappropriate from inception cannot be inferred from these actions in case of continuing transaction", the court emphasized. 

The bench noted that the disputed purchase receipts, even if assumed to have been made dishonestly, were not made with the intention of causing it to be believed that they were made by or under the authority of someone else. 

Therefore, the bench allowed the petition, quashed the FIR and discharged the petitioners. 

Case Title: Raju v State [Misc Criminal Case No. 49157 of 2024]

For Petitioners: Advocate Zenith Chhablani

For State: Government Advocate Apoorv Joshi

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