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2019 (10) TMI 1559 - HC - Indian LawsCheating - breach of contract - IPO was not provided (as agreed upon) - fraudulent or dishonest intention at the time of making the representation, exists or not - HELD THAT - In the First Information Report, the complainant company described how the accused persons induced the complainant company to purchase shares in question for the purpose of investment and issued a letter dated 29.03.2008 stating falsely that the shares in questions were allotted to the complainant company. From the materials placed on record it appears that the petitioners falsely informed the complainant that the shares were allotted. Learned Counsel for the petitioners has argued that the transaction in question between the parties as revealed from the contents of the First Information Report was purely a sale transaction or commercial transaction and the question of cheating does not arise at all. At the time of perusal of the First Information Report, it appears that the petitioners induced the complainant company to purchase the shares in question by misrepresentations and false assurance. In view of the provision contained in Section 420 of the Indian Penal Code, the intention of the offender who induces the complainant is the decisive in discerning whether the offence of cheating was committed or not. In fact, it cannot be denied that many a cheatings are being committed in the course of commercial and also money transactions - In the present case, the allegation in the First Information Report disclosed the offences alleged. Moreover, the allegations made in the F.I.R. disclosed that the petitioners induced the complainant to purchase share or invest money by wilful misrepresentation. It is true that the complaint discloses that there was a commercial transaction between the parties but at the same time, it cannot be overlooked that the averments made in the complaint/F.I.R. prima facie reveal the commission of an cognizable offence. Allegation contained in the F.I.R. involve appreciation of evidence. Moreover, when complaint discloses that the commercial transaction between the parties involves criminal offences, then the question of quashing the complaint cannot be allowed - the continuance of criminal proceedings against the present petitioners/accused would not be an abuse of the process of the Court. Hence, the prayer for quashing of the proceedings and setting aside the impugned order are hereby dismissed.
Issues Involved:
1. Quashing of criminal proceedings in G.R. Case No. 1221 of 2013. 2. Validity of the order dated 14.02.2017 by the Chief Metropolitan Magistrate, Calcutta. 3. Allegations under Sections 420, 406, and 120B of the Indian Penal Code. 4. Jurisdictional and procedural propriety. 5. Distinction between civil and criminal liability in commercial transactions. Detailed Analysis: Quashing of Criminal Proceedings: The petitioners sought to quash the criminal proceedings in G.R. Case No. 1221 of 2013, arising from Bowbazar Police Station Case No. 168 dated 28.03.2013, under Sections 420, 406, and 120B of the Indian Penal Code. The court examined whether the allegations in the FIR disclosed a prima facie case of cheating and criminal breach of trust. The court noted that the petitioners induced the complainant to invest in their company by making false representations and assurances about the issuance of shares and the prospect of an IPO. Validity of the Order Dated 14.02.2017: The petitioners challenged the order dated 14.02.2017, where the Chief Metropolitan Magistrate, Calcutta, took cognizance of the offences. The court upheld the order, stating that the allegations in the FIR disclosed cognizable offences and warranted further investigation and trial. Allegations Under Sections 420, 406, and 120B IPC: The court referred to Sections 415 and 405 of the IPC, defining cheating and criminal breach of trust, respectively. It concluded that the petitioners' actions, as described in the FIR, constituted inducement through misrepresentation, thus fulfilling the criteria for cheating under Section 420 IPC. The court also found that the allegations of misappropriation and breach of trust under Section 406 IPC were substantiated by the complaint. Jurisdictional and Procedural Propriety: The petitioners argued that the FIR was lodged in Calcutta while a similar complaint was pending in Tis Hazari Court, New Delhi. The court dismissed this contention, noting that the complaint in Tis Hazari was dismissed and that the complainant was not barred from initiating fresh proceedings in Calcutta. The court emphasized that the FIR in Calcutta was not an abuse of the judicial process. Distinction Between Civil and Criminal Liability: The petitioners contended that the dispute was purely civil, arising from a commercial transaction, and did not amount to criminal offences. The court rejected this argument, stating that the FIR disclosed elements of criminality, including deceit and dishonest inducement, which went beyond a mere breach of contract. The court emphasized that the presence of a commercial transaction does not preclude the possibility of criminal liability if fraudulent intent and misrepresentation are involved. Conclusion: The court dismissed the petition for quashing the criminal proceedings, holding that the FIR disclosed a prima facie case of cheating and criminal breach of trust. The court also upheld the validity of the order dated 14.02.2017 by the Chief Metropolitan Magistrate, Calcutta, and clarified that the observations in the judgment should not influence the trial court's proceedings. The trial court was directed to proceed with the case in accordance with the law.
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