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TMI Blog2024 (3) TMI 442X X X X Extracts X X X X X X X X Extracts X X X X ..... either any deceit nor any inducement to deceive the complainant. The transaction was admittedly for the benefit of both the parties. The fact of wrongful loss of one resulting in wrongful gain of another is not present in this case as loan has been admitted and the dispute relates to its repayment. Thus the ingredients required to constitute the offence under Section 420 IPC are clearly absent in the present case. In the present case there is no materials to show that there was any existence of dishonest/fraudulent intention while making any initial promise that is from the beginning of formation of contract - The petitioners were repaying the loan as agreed, when they decided to the clear the dues prematurely. In the Present case, there is no substance in the allegations and no material exists to prima facie make out the complicity of the petitioner in a cognizable offence as alleged. As such the proceedings in this case should be quashed by exercising this courts inherent powers for ends of justice and to prevent the abuse of process of the court. Revision application allowed. - HON BLE JUSTICE SHAMPA DUTT (PAUL) For the Petitioners : Mr. Ayan Bhattacharya, Mr. Neelesh Choudhur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expressed the petitioners willingness to repay the residue amount. 8. The opposite party no. 2 agreed to the proposal made by the petitioners and accordingly received the residue amount in cash in the month of December 2016. The petitioners were further assured by the opposite party no. 2 that no further documentation was required to prove that the petitioners had discharged their liability to pay and that the aforesaid transaction had come to an end. Since then no further transaction and/or any loan accommodation was ever obtained from the opposite party no. 2. 9. It is stated that now a purported case has been initiated by the opposite party no. 2 under Sections 406/409/420/120B of the Indian Penal Code against the petitioners alleging that the petitioners have neglected to pay the loan amount since December 2016 and in spite of repeated reminders and/or demand made by the opposite party no. 2, the petitioners did not pay and further threatened the opposite party no. 2 with dire consequences. 10. On the basis of aforesaid allegation a complaint case was registered being complaint case no. 32544/2019 under Sections 406/409/420/120B of the Indian Penal Code against the petitioners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verment that the entire liability of Rs. 50,00,000/- has been discharged by either of the petitioners or the company. Even though the said second revisional application was filed more than two years after the said first revisional application, there is not an iota and/or hint under such second application that the petitioners have repaid Rs. 50,00,000/- to the opposite party no. 2 in cash. 15. The following averments from the said second revisional application as made by the petitioner has been stressed upon by the opposite party:- 10.4. After proper verification and inspection done by the opposite party no. 2 agreed to provide and/or disbursed a loan to the tune of Rs. 50 lakh and accordingly on March 21, 2016 the said amount was remitted through RTGS/NEFT in favour of M/s Gurudayal Gangabux. It was further greed that the entire money will be paid within March 2017, if not extended further. 10.5. But subsequently the petitioners decided to foreclose the loan, which was obtained from the opposite party no. 2 by paying the residue amount, which was supposed to be paid within March 2017 and to discharge the liability to pay, the petitioners called upon the opposite party no. 2 and ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itan Magistrate, 11th Court at Calcutta, the petitioners no. 2 and 4 herein filed a petition under Section 482 of the Cr.P.C. before this Hon ble Court which was registered as CRR No. 1450 of 2022, seeking stay of all further proceedings in CS No. 53426 of 2019 under Sections 138/141 of the NI Act pending before the Court of the Learned Metropolitan Magistrate, 11th Court at Calcutta including the Order dated September 19, 2022 passed in connection therewith. 20. The opposite party no. 2/complainant then filed an Affidavit in reply stating there in that they deny the statements made by the petitioners in their pleadings. 21. The proceedings before the trial Court being complaint case no. 32544 of 2019 is under Sections 406/409/420/120B of the Indian Penal Code. 22. In the petition of complaint it is thus stated that as the accused persons refused to make repayment, being merchants, committed cheating and criminal breach of trust punishable under Sections 406/409/420 read with 120B of the Indian Penal Code and are liable to be prosecuted accordingly. 23. That the representation and inducement made by the accused persons since very inception are of falsehood and all made only with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e party no. 2 had dressed up its claim as a criminal offence. It is trite law that mere non-payment and/or under payment is no offence under Section 420 of the IPC. In order to constitute an offence under Section 420 of the IPC, it is incumbent to have mens rea from the very inception. 30. It is therefore submitted that the word inducement is qualified by the term fraudulently of dishonestly . Mens rea from the inception is the crux of an offence under Section 420 of the IPC which differentiates it from a case of mere non-payment and/or under payment. Subsequent arising of mens rea is not a constituent factor of an offence under Section 420 of the IPC. 31. The following judgments have been relied upon by the petitioners:- 1. 2023 SCC OnLine Cal HTC India Pvt. Ltd. Ors. v. Link Telecom Pvt. Ltd. Entire 2. (2023) 3 SCC 423 Deepak Gaba Ors. V. State of Uttar Pradesh Anr. Para 18/19/20 3. (2019) 16 SCC 739 Prof. R.K. Vijayasarathy Anr. v. Sudha Seetharam Anr. Para 15/16/17/18/19/20/23/28 4. (2019) 9 SCC 148 Satishchandra Ratanlal Shah v. State of Gujarat Anr. Para 13/14 5. 2008) 1 C Cr LR (Cal) 789 Kingshuk Neogi v. The State of West Bengal Anr. Para 3/10/12/13 6. (2005) 10 SCC 261 Hot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escription for a term which may extend to three years, or with fine, or with both. Ingredients of offence. The essential ingredients of the offence under Sec. 406 are as follows:- (1) Mens rea is essential ingredient of offence. (2) There must be an entrustment, there must be misappropriation or conversion to one s own use, or use in violation of a legal direction or of any legal contract. (3) The accused was entrusted with the property or domain over it. (4) He dishonestly misappropriated or converted to his own use such property; (5) He dishonestly used or disposed of that property or willfully suffered any other person to do so in failure of- (a) Any direction of law prescribing the mode in which such trust is to be discharged, or (b) Any legal contract made touching upon the discharge of such trust. 36. Section 409 of I.P.C. lays down:- 409. Criminal breach of trust by public servant, or by banker, merchant or agent.- Whoever, being in any manner entrusted with property, or with any dominion over property in his capacity of a public servant or in the way of his business as a banker, merchant, factor, broker, attorney or agent, commits criminal breach of trust in respect of that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pre-supposes the existence of mens rea. In other words, mere retention of property entrusted to a person without any misappropriation cannot fall within the ambit of criminal breach of trust. Unless there is some actual use by the accused in violation of law or contract, coupled with dishonest intention, there is no criminal breach of trust. The second significant expression is mis-appropriates which means improperly setting apart for ones use and to the exclusion of the owner. 44. No sooner are the two fundamental ingredients of criminal breach of trust within the meaning of Section 405 IPC proved, and if such criminal breach is caused by a public servant or a banker, merchant or agent, the said offence of criminal breach of trust is punishable under Section 409 IPC, for which it is essential to prove that: (i) The accused must be a public servant or a banker, merchant or agent; (ii) He/She must have been entrusted, in such capacity, with property; and (iii) He/She must have committed breach of trust in respect of such property. 45. Accordingly, unless it is proved that the accused, a public servant or a banker etc. was entrusted with the property which he is duty bound to account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on has made, touching the discharge of such trust. 14. Thus, criminal breach of trust would, inter alia, mean using or disposing of the property by a person who is entrusted with or otherwise has dominion. Such an act must not only be done dishonestly, but also in violation of any direction of law or any contract express or implied relating to carrying out the trust. 39. The facts and circumstances in the present case show that:- (i) There is no material to prove dishonest intention and thus the existence of mens rea . (ii) There has been no mis appropriation of the property entrusted as, a post-dated cheque had been issued by the petitioner no. 1 in favour of the opposite party no. 2 in spite of their case being that payment in cash had already been made, which is the subject matter in CRR 1450 of 2022. (iii) There has been no mis appropriation of the property entrusted as repayment has been effected either in cash and/or by issuing a post dated cheque. (iv) There has been no use of the disputed property by the petitioner in violation of law or contract. Thus, no mis appropriation which means improperly setting apart for ones use and to the exclusion of the owner (opposite party), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecause adjudication under Section 51 stood finalised. The Court held : The ratio which can be culled out from these decisions can broadly be stated as follows: (i) Adjudication proceedings and criminal prosecution can be launched simultaneously; (ii) Decision in adjudication proceedings is not necessary before initiating criminal prosecution; (iii) Adjudication proceedings and criminal proceedings are independent in nature to each other; (iv) The finding against the person facing prosecution in the adjudication proceedings is not binding on the proceeding for criminal prosecution; (v) Adjudication proceedings by the Enforcement Directorate is not prosecution by a competent court of law to attract the provisions of Article 20(2) of the Constitution or Section 300 of the Code of Criminal Procedure; (vi) The finding in the adjudication proceedings in favour of the person facing trial for identical violation will depend upon the nature of finding. If the exoneration in adjudication proceedings is on technical ground and not on merit, prosecution may continue; and (vii) In case of exoneration, however, on merits where the allegation is found to be not sustainable at all and the person h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent dated 23.3.2001 allowed both the petitions and quashed the two complaints. It accepted the second ground urged by the Respondents herein, but rejected the first ground. The said order of the High Court is under challenge in these appeals. On the rival contentions urged, the following points arise for consideration : (i) Whether existence or availment of civil remedy in respect of disputes arising from breach of contract, bars remedy under criminal law? (ii) Whether the allegations in the complaint, if accepted on face value, constitute any offence under sections 378, 403, 405, 415 or 425 IPC ? Re : Point No. (i) : 9. The principles relating to exercise of jurisdiction under Section 482 of the Code of Criminal Procedure to quash complaints and criminal proceedings have been stated and reiterated by this Court in several decisions. To mention a few - Madhavrao Jiwaji Rao Scindia v. Sambhajirao Chandrojirao Angre [1988 (1) SCC 692], State of Haryana vs. Bhajanlal [1992 Supp (1) SCC 335], Rupan Deol Bajaj vs. Kanwar Pal Singh Gill [1995 (6) SCC 194], Central Bureau of Investigation v. Duncans Agro Industries Ltd., [1996 (5) SCC 591], State of Bihar vs. Rajendra Agrawalla [1996 (8) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by itself a ground to quash the criminal proceedings. The test is whether the allegations in the complaint disclose a criminal offence or not. 10. While on this issue, it is necessary to take notice of a growing tendency in business circles to convert purely civil disputes into criminal cases. This is obviously on account of a prevalent impression that civil law remedies are time consuming and do not adequately protect the interests of lenders/creditors. Such a tendency is seen in several family disputes also, leading to irretrievable break down of marriages/families. There is also an impression that if a person could somehow be entangled in a criminal prosecution, there is a likelihood of imminent settlement. Any effort to settle civil disputes and claims, which do not involve any criminal offence, by applying pressure though criminal prosecution should be deprecated and discouraged. In G. Sagar Suri vs. State of UP [2000 (2) SCC 636], this Court observed : It is to be seen if a matter, which is essentially of civil nature, has been given a cloak of criminal offence. Criminal proceedings are not a short cut of other remedies available in law. Before issuing process a criminal co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or was likely to cause damage or harm to the person induced in body, mind or property. The two essential ingredients of the offence under this section are (A) Deceit, that is to say dishonest or fraudulent misrepresentation, and (B) Inducing the person deceived to part with property. 48. In Vijay Kumar Ghai vs The State of West Bengal, Criminal Appeal No. 463 of 2022 (arising out of SLP (Crl.) No. 10951 of 2019), on 22 March, 2022, held:- 42. .. Furthermore it has to be prima facie established that due to such alleged act of cheating the complainant (Respondent No. 2 herein) had suffered a wrongful loss and the same had resulted in wrongful gain for the accused(appellant herein). In absence of these elements, no proceeding is permissible in the eyes of law with regard to the commission of the offence punishable u/s 420 IPC . 49. The amount due in the present case is also the subject matter in a separate proceedings under Section 138 of the N.I. Act (CRR 1450 of 2022). 50. In the present case, admittedly there was a business transaction between the parties but there is no case against the petitioners that he dishonestly induced the complainant. There was neither any deceit nor any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it rightly paid the necessary duties without taking advantage of the exemption certificate. The conduct of the GCS clearly indicates that there was no fraudulent or dishonest intention of either the GCS or the appellants in their capacities as office bearers right at the time of making application for exemption. As there was absence of dishonest and fraudulent intention, the question of committing offence under Section 420 of the Penal Code, 1860 does not arise. We have read the chargesheet as a whole. There is no allegation in the first information report or the chargesheet indicating expressly or impliedly any intentional deception or fraudulent/dishonest intention on the part of the appellants right from the time of making the promise or misrepresentation. Nothing has been said on what those misrepresentations were and how the Ministry of Health was duped and what were the roles played by the appellants in the alleged offence. The appellants, in our view, could not be attributed any mens rea of evasion of customs duty or cheating the Government of India as the Cancer Society is a nonprofit organisation and, therefore, the allegations against the appellants levelled by the pros ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he parties constitute only a civil wrong and not a criminal wrong, the courts would not permit a person to be harassed although no case for taking cognizance of the offence has been made out. 7.7 In the case of Inder Mohan Goswami v. State of Uttaranchal, (2007) 12 SCC 1 , it is observed and held by this Court that the Court must ensure that criminal prosecution is not used as an instrument of harassment or for seeking private vendetta or with an ulterior motive to pressurise the accused. It is further observed and held by this Court that it is neither possible nor desirable to law down an inflexible rule that would govern the exercise of inherent jurisdiction. It is further observed and held that inherent jurisdiction of the High Courts under Section 482 Cr.P.C. though wide has to be exercised sparingly, carefully and with caution and only when it is justified by the tests specifically laid down in the statute itself. 8. Applying the law laid down by this Court in the aforesaid decisions to the facts of the case on hand, we are of the opinion that this is a fit case to exercise powers under Section 482 Cr.P.C. and to quash the impugned criminal proceedings. b) Birla Corporation Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to prevent abuse of the process of court; and (iii) to otherwise secure the ends of justice. Inherent jurisdiction under Section 482 Cr.P.C. though wide has to be exercised sparingly, carefully and with caution. 83. It is well settled that the inherent jurisdiction under Section 482 Cr.P.C. is designed to achieve a salutary purpose and that the criminal proceedings ought not to be permitted to degenerate into a weapon of harassment. When the Court is satisfied that the criminal proceedings amount to an abuse of process of law or that it amounts to bringing pressure upon the accused, in exercise of the inherent powers, such proceedings can be quashed. In Smt. Nagawwa v. Veeranna Shivalingappa Konjalgi and Others (1976) 3 SCC 736, the Supreme Court reviewed the earlier decisions and summarised the principles as to when the issue of process can be quashed and held as under:- 5. .. Once the Magistrate has exercised his discretion it is not for the High Court, or even this Court, to substitute its own discretion for that of the Magistrate or to examine the case on merits with a view to find out whether or not the allegations in the complaint, if proved, would ultimately end in convictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the offence. It was further held that while considering the matter, the court is to take into consideration any special feature which appear in a particular case showing whether or not it is expedient in the interest of justice to permit a prosecution to continue. 88. The FIR or the criminal proceedings can be quashed if the allegations do not make out a prima-facie case or allegations are so improbable that no prudent person would ever reach a just conclusion that there are sufficient grounds for proceeding against the accused 55. In the Present case, there is no substance in the allegations and no material exists to prima facie make out the complicity of the petitioner in a cognizable offence as alleged. As such the proceedings in this case should be quashed by exercising this courts inherent powers for ends of justice and to prevent the abuse of process of the court. 56. The revisional application being CRR 3637 of 2019 is accordingly allowed. 57. The proceedings pending before the Learned Metropolitan Magistrate 9th Court, Kolkata, in connection with Complaint Case no. C.S. 32544 of 2019, under Sections 406/409/420/120B of the Indian Penal Code, 1860, is hereby quashed in res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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