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2007 Supreme(Cal) 753
CALCUTTA HIGH COURT
PARTHA SAKHA DATTA, J.
Mrs. Arti Bhandari
Versus
State of W.B. and Anr.
C. R. R. No. 293 of 2007
Decided on : 26 -9 -2007
Ranadev Roy Chowdhury, for Petitioner; Debojyoti Deb (for No. 2), S. S. Roy, for the State.
A partner cannot be charged under Section 406, IPC (criminal breach of trust) or Section 420, IPC (cheating) in respect of the partnership jointly belonging to him and the complainant partner, unless there is a special agreement casting fiduciary obligations on the partner.
Headnote:
CHEATING - Partnership - Criminal Breach of Trust - Partnership Goods - Fiduciary Obligation - Section 406, IPC - Section 420, IPC - Partnership Act, 1932 - Petitioner inducted as a partner in a firm called "NELUFER'S COLLECTIONS" - Alleged non-payment of dues by the petitioner for goods exported to her by the complainant, another partner in the firm - Petitioner filed a civil suit for winding up of the partnership firm and for direction upon the complainant and another partner to pay the petitioner her share of profits - Complainant filed a petition before the learned CJM, Alipore, South 24 Pgs, against the petitioner alleging cheating and criminal breach of trust - Petitioner filed a revisional application for quashing of the criminal proceeding - Court held that the petitioner did not have a dishonest intention to cheat the complainant at the inception of the transaction - Partnership agreement relied on by both parties - Court held that a partner cannot be said to have committed criminal breach of trust or cheating in respect of the partnership business - Quashed the criminal proceeding.
Fact of the Case:
Petitioner, a non-resident Indian (NRI) running a business under the name and style of "Artee Collection Inc", was inducted as a partner in a firm called "NELUFER'S COLLECTIONS" on 14-2-2001. The complainant, the managing partner of the firm, filed a petition before the learned CJM, Alipore, South 24 Pgs, against the petitioner alleging cheating and criminal breach of trust. The complainant alleged that the petitioner, after gaining the complainant's confidence, started delaying payments for the goods exported to her by the complainant. The petitioner filed a revisional application for quashing of the criminal proceeding, contending that there was no dishonest intention to cheat the complainant and that the allegations in the petition of complaint were fabricated and mala fide.
Finding of the Court:
The Court held that the petitioner did not have a dishonest intention to cheat the complainant at the inception of the transaction. The Court also held that a partner cannot be said to have committed criminal breach of trust or cheating in respect of the partnership business. The Court relied on the partnership agreement relied on by both parties and the proposition of law laid down by the Full Bench of the Calcutta High Court in Bhuban Mohan Das v. Surendra Mohan Das (1951 (52) Cri LJ 723).
Issues: 1. Whether the petitioner had a dishonest intention to cheat the complainant at the inception of the transaction? 2. Whether a partner can be said to have committed criminal breach of trust or cheating in respect of the partnership business?
Ratio Decidendi: 1. The Court held that the petitioner did not have a dishonest intention to cheat the complainant at the inception of the transaction, as there was no averment of dishonest intention on the part of the petitioner at the inception of the partnership firm. The Court also noted that the petitioner had been making payments to the complainant for the goods exported to her until August 2004, which indicated that she did not have a dishonest intention to cheat the complainant from the beginning. 2. The Court held that a partner cannot be said to have committed criminal breach of trust or cheating in respect of the partnership business, as a partner holds the property belonging to the partnership as one of the partners entitled to hold it, and until dissolution of accounts, it cannot be said that he holds the property in a fiduciary capacity.
Final Decision: The Court quashed the criminal proceeding initiated against the petitioner.
2. The grounds of revision are that the allegations in the petition of complaint are absolutely concocted, fabricated and with mala fide intention of depriving the legitimate claim of the petitioner of the profits of the partnership firm, that the learned Judicial Magistrate without application of mind took cognizance of the offence upon receipt of the charge-sheet, that there is no iota of material in the petition of complaint against the petitioner that can constitute any cause of action or any cognizable offence, there was no question of false inducement by the petitioner with a motive of deceiving the OP No. 2, that the ingredients of the offence of Section 415 of IPC are basent in the petition of complaint because as a partner of the firm, the petitioner has invested huge amount of money in the partnership firm after being inducted as a partner of the complainant's partnership firm and thus the question of deceiving the complainant with a false statement could not arise, that alleged act of the petitioner may give rise to a civil dispute but the purported criminal proceeding initiated by the OP No. 2 with a mala fide intention is a sheer abuse of the process of the Court and accordingly the proceedings be quashed.
3. On 14-2-2001 a deed of agreement was entered into by the OP No. 2, th
