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2013 Supreme(Cal) 735
IN THE HIGH COURT AT CALCUTTA
Joymalya Bagchi, J.
Keyur J. Shah
Vs.
State of West Bengal & Anr.
C.R.R. 982 of 2013
Decided On : 21.11.2013
Mr. Debasish Roy Mr. Niladri Sekhar Ghosh, Mr. Tirthankar Ghosh Mr. Koushik Kundu Mr. Ganesh Prasad Shaw, for the petitioner
Mr. Sanjoy Banerjee, for the State
Mere breach of contract or failure to fulfill a promise does not constitute cheating or criminal breach of trust in the absence of dishonest representation or misappropriation of entrusted property.
Headnote:
CHEATING - INGREDIENT - ESSENTIAL - DISHONEST REPRESENTATION - BREACH OF CONTRACT - DISTINCTION - CRIMINAL BREACH OF TRUST - MENS REA - REQUISITE - COUNTER CLAIM - RELEVANCE.
Fact of the Case:
Petitioner, the Managing Director of M/s. Marvel Gem & Jewellery Pvt. Ltd., was accused of cheating and criminal breach of trust by the opposite party, who claimed to be a minor working partner in the petitioner's business. The opposite party alleged that he invested Rs.5 lakhs as security deposit and was promised a share in the profits, but the petitioner failed to pay his dues and threatened to implicate him in false criminal cases.
Finding of the Court:
The court found that there was no dishonest representation made by the petitioner at the inception of the transaction and that the subsequent failure to fulfill a promise did not constitute cheating. It also found that the allegation of criminal breach of trust was not supported by documentary evidence and that the failure to refund the investment and other dues upon termination of the business relationship did not amount to misappropriation of entrusted property.
Issues: 1. Whether the allegations in the FIR disclosed the essential ingredients of cheating? 2. Whether the allegations in the FIR disclosed the essential ingredients of criminal breach of trust?
Ratio Decidendi: 1. The court held that a civil wrong arising out of a breach of agreement may also give rise to an offence of cheating when the facts disclose that a party to the agreement was induced to enter into the same and part with property on the basis of false and dishonest representation is knowingly held act to him at the inception of the transaction otherwise would not have done. However, mere failure to fulfill a promise does not constitute cheating although it may give rise to a loss and a claim for damages in Civil Law. 2. The court held that mere failure to refund the investment and other dues upon termination of the business relationship did not amount to misappropriation of entrusted property, especially in light of the counter claim by the petitioner that the opposite party had misappropriated raw gold entrusted to him.
Final Decision: The court allowed the application and quashed the impugned criminal proceeding against the petitioner.
Joymalya Bagchi, J.
Criminal proceeding being G.R. Case No.763 of 2010 pending before the learned Judicial Magistrate, 2nd court at Arambagh, Hooghly arising out of Khanakul Police Station Case No.217 of 2010 dated 13.09.2010 under sections 406/420/506 of the Indian Penal Code has been assailed.
2. The petitioner is the Managing Director of M/s. Marvel Gem & Jewellery Pvt. Ltd., having its office at 31, Oceanic Apartment, Dr. Tajaboli Road, Bhulabhai Desai Road, Mumbai – 400 026. The petitioner carries on business in dealing with gold jewellery throughout the country. It has been pleaded in the petition that the opposite party no.2 being the de facto complainant was an employee of the petitioner’s company since July 2009 and in usual course of business entrusted with raw gold for converting it to finished products/jewelleries at Mumbai and Kolkata and to sell them on behalf of the petitioner’s company in various places in India.
3. It is further claimed that on 21.06.2010, the petitioner called upon the opposite party no.2 at the residence of one Vijay Talwar, BB-53, Salt Lake, Sector-1, Kolkata – 64, but he failed to turn up, as a result a criminal case being Bidhannagar (North) Police Station Case No.124 of 2010 dated 07.07.2010 under sections 420/406/408 of the Indian Penal Code was registered for investigation.
4. It appears that in course of investigation, further statement was recorded on behalf of the petitioner stating that no entrustment of gold was, in fact, made at Kolkata. Such gold ornaments were entrusted at Mumbai and criminal cases have been registered at Mumbai too. On such premise, investigation of the aforesaid case was sought to be transferred to Mumbai. Such transfer was challenged by the opposite party no.2 in C.R.R.No.3339 of 2010. The said revisional application has been disposed of with direction upon Investigating Agency to conclude the investigation. The issue of jurisdiction has been kept open and may be raised by the parties, if so advised, before the trial court after filing of police report.
5. However, the contention of the petitioner in the instant revisional application is that to cover up his misdeeds, opposite party no.2 has falsely instituted the impugned criminal proceeding being Khanakul Police Station Case No.217 dated 13.09.2010 under sections 406/420/506 of the Indian Penal Code and the same is liable to be quashed.
6. Mr. Ghosh, learned counsel, on behalf of the petitioner has urged that the allegations in the FIR including the materials collected in course of investigation do not disclose the essential ingredients of the alleged offences. The impugned criminal proceeding has been maliciously instituted to wreak vengeance on the petitioner and is liable to be quashed being an abuse of process of court.
7. Mr. Roy, learned counsel for the opposite party no.2, submitted that the petitioner was sought to be inducted as a working partner in the petitioner’s business and a sum of Rs.5 lakhs was taken as security for such induction on at the promise that the said sum should be refunded upon termination. Neither the said sum, nor the dues arising from such relationship have been refunded. The allegations disclose the ingredients of the alleged offences and the instant case was lodged prior to the registration of FIR against the opposite party no.2. The learned lawyer for the State has produced the case diary.
8. In order to examine the rival submissions of the parties, one must analyze the uncontroverted allegations in the FIR, which form the substratum of the impugned criminal case.
9. In the FIR, the opposite party no.2 has, inter alia, alleged that the petitioner is the proprietor of M/s. Marvel Gem & Jewellery Pvt. Ltd. and that he carried on business in gold jewellery. It is further alleged that the opposite party no.2 carries on business in fabrication and manufacture of jewellery and, in view of his reputation, the petitioner gave a proposal to induct him as a minor working parent wit
