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2019 Supreme(Cal) 784
IN THE HIGH COURT OF JUDICATURE AT CALCUTTA
MADHUMATI MITRA, J.
Priknit Retails Ltd. & Others - Appellants
Versus
The State of West Bengal & Another - Respondents
C.R.R. No. 731 of 2017
Decided On : 01-10-2019
Sandipan Ganguly, Sr. Advocate, Saryati Dutta, Shanshank Jaisuddhi, Preeti Chowdhury, Abhishek Sinha, Advocates
The court emphasized that the continuance of criminal proceedings would not be an abuse of the process of the Court, and the observations in the judgment should not be taken as an expression of any opinion regarding the merit of the criminal proceedings.
Headnote:
Section 482 - Quashing of Criminal Proceedings - Indian Penal Code - Sections 406/420/120B - Summary
Fact of the Case:
The petitioners, a company and its directors, were accused of inducing another company to invest in their business through misrepresentations and false assurances. The criminal proceedings were initiated under Sections 406/420/120B of the Indian Penal Code.
Finding of the Court:
The court found that the allegations in the First Information Report disclosed the commission of cognizable offences, and the continuance of criminal proceedings would not be an abuse of the process of the Court. The prayer for quashing of the proceedings was dismissed.
Issues: The issues involved included whether the transaction was purely a sale transaction or a commercial transaction, and whether the petitioners had fraudulent or dishonest intentions at the time of making the representations.
Ratio Decidendi: The court relied on the provisions of Section 415 (cheating) and Section 405 (criminal breach of trust) of the Indian Penal Code to determine the intention of the offenders and discern whether the offence of cheating was committed.
Final Decision: The prayer for quashing of the proceedings and setting aside the impugned order was dismissed, and the trial magistrate was directed to proceed with the complaint and dispose of the same in accordance with the law.
JUDGMENT :
1. This is an application under Section 482 read with Section 401 of the Code of Criminal Procedure filed by the petitioners praying for quashing of the proceedings being G.R.Case No.1221 of 2013 pending before the Court of the Learned Chief Metropolitan Magistrate, Kolkata. The criminal proceeding of G.R.Case No. 1221 of 2013 has arisen out of Bowbazar Police Station Case No. 168 dated 28.03.2013, under Sections 420/406/120B of the Indian Penal Code. The petitioners have also challenged the order dated 14.02.2017 passed by the Learned Chief Metropolitan Magistrate, Calcutta, regarding taking of cognizance of the aforesaid offences. Petitioner no.1 is a company registered under the Companies Act, 1956. The company is engaged in the manufacture and trade of apparels through chain of retail stores under the brand name and style of Priknit.
2. The petitioner no.2 is the Managing Director of the Company. Petitioner nos.3 and 4 are the Directors of petitioner no.1 company. Petitioner no.4 joined petitioner no.1 company on 30.11.2009.
3. Opposite party no.2 is a company registered under the provisions of the Companies Act and is member of the National Stock Exchange of India Ltd. and is also an Indian Financial Service provider.
4. On 28.03.2013, a person namely K.Adil, Authorised Signatory of SMC Global Securities Ltd. lodged a complaint under Sections 406/420/120B of the Indian Penal Code against the present petitioners. It has been alleged in the said complaint that the petitioner nos.2 and 3 approached opposite party no.2 and made an offer of good returns on investment in the petitioner no.1 company. Initially the opposite party no.2 did not show any interest. Petitioner nos.2 and 3 frequently visited the main office of the opposite party no.2 at Delhi and Regional Office at Calcutta to encourage the opposite party no.2 to invest in their company. They stated to the opposite party no.2 that the retail business of the apparel under the Prinkit brand through a network of exclusive band outlets was witnessing a high growth. The petitioners also stated that they would provide exist route through I.P.O.(Initial Public Offer)(an act of offering the stock of a company on a public stock exchange for the first time) to the opposite party no.2 for their safe investment within three years of their investment and if the I.P.O. does not come by that date then the petitioner company would pay the entire amount along with interest. On 25.03.2008, the opposite party no.2 filed share application form along with a cheque of Rs.2,50,00,000/- for the purchase of Rs.2,50,000/- equity share of the petitioner no.1 company. On 29.03.2008, petitioner no.1 through petitioner no.2 had issued an allotment letter to the opposite party no.2 wherein, confirming the allotment of Rs.2,50,000/- shares in the name of opposite party no.2 and had also undertaken to issue share certificate at the earliest. On 20.08.2009, the petitioner company allotted shares to the opposite party no.2 only after one year of making investment and thereafter re-confirmed the terms and conditions. The petitioners vide letter dated 20.08.2009, confirmed to bring an I.P.O. within three years from the date of investment on 25.03.2008 and if the petitioners failed to do so, they would be liable to pay interest @ 12% per annum with effect from 01.04.2009 and thereafter the opposite party no.2 shall be entitled to recover from the petitioners, the investment amount with interest @ 24% per annum for delayed period beyond the said period of three years. The petitioners failed to bring the I.P.O. on 06.12.2011 the opposite party no.2 issued a legal notice upon the petitioners. On 31.01.2012, the petitioners sent reply to that notice denying each and every allegation.
5. On the basis of the complaint lodged by opposite party no.2, Bowbazar Police Station Case No.168 dated 28.03.2013 under Sections 406/420/120B of the Indian Penal Code was started. Investigating agency filed final report v
