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IN THE HIGH COURT AT CALCUTTA
Shampa Dutt Paul, J.
Vivo Communication Device Pvt. Ltd. & Anr. - Appellants
Versus
State Of West Bengal & Anr. - Respondents
Criminal Revision No. 298 of 2019
Decided On : 06-01-2023
CRIMINAL REVISION - QUASHING OF PROCEEDINGS - COMPLAINT CASE - OFFENCES UNDER SECTIONS 405/406/420/425/34 OF INDIAN PENAL CODE, 1860 - INGREDIENTS OF OFFENCES - TRUST, DOMINION OVER PROPERTY, DISHONEST MISAPPROPRIATION, CRIMINAL BREACH OF TRUST, CHEATING, INDUCING DELIVERY OF PROPERTY, MISCHIEF - APPLICABILITY TO COMMERCIAL TRANSACTION OR CONTRACTUAL DISPUTE - SCOPE OF INHERENT JURISDICTION UNDER SECTION 482 OF CODE OF CRIMINAL PROCEDURE, 1973 - GUIDELINES FOR EXERCISE OF POWER - PRINCIPLES OF QUASHING CRIMINAL PROCEEDINGS - SUFFICIENCY OF MATERIAL TO CONSTITUTE OFFENCES - CIVIL DISPUTE IN THE GUISE OF CRIMINAL COMPLAINT - REVISION ALLOWED - PROCEEDINGS QUASHED.
Fact of the Case:
Petitioner preferred a revision for quashing of the proceedings in a complaint case for offences under Sections 405/406/420/425/34 of the Indian Penal Code, 1860, alleging that the dispute between the parties was purely civil in nature and that no criminal offence had been committed. The complainant, opposite party no. 2, had filed a complaint under Section 200 of the Code of Criminal Procedure stating that the opposite party no. 2 entered into an agreement with the petitioner no.1 company to promote retail excellence in the name and style of VIVO and sell their products at a shop in City Centre Mall, Matigara, District - Darjeeling since 2007. Subsequently, a dispute cropped up between them relating to rent, allegedly showing fabricated sale figures to convince the complainant to open the Brand Store, non-refund of security deposit, shortage of staff, sudden change of policy structure and target achievement plans, infiltration of stock, all leading to the business being stopped arbitrarily causing huge loss to the complainant by having to forgo legitimate dues. The complainant alleged that the petitioner has committed the offence of cheating and criminal breach of trust.
Finding of the Court:
The court held that the dispute between the parties was purely civil in nature and that no criminal offence had been committed. The court further held that the ingredients required to constitute the offences as alleged were not present in the materials on record and that the proceedings were liable to be quashed.
Issues: Whether the dispute between the parties was purely civil in nature and that no criminal offence had been committed. Whether the ingredients required to constitute the offences as alleged were present in the materials on record.
Ratio Decidendi: The court relied on the following principles in reaching its decision: * A commercial transaction or contractual dispute, apart from furnishing a cause of action for seeking remedy in civil law, may also involve a criminal offence. * The mere fact that the complaint relates to a commercial transaction or breach of contract, for which a civil remedy is available or has been availed, is not by itself a ground to quash the criminal proceedings. * The test is whether the allegations in the complaint disclose a criminal offence or not. * In order to constitute an offence of criminal breach of trust, it is essential that the prosecution must prove first of all that the accused was entrusted with some property or with any dominion or power over it. * It has to be established further that in respect of the property so entrusted, there was dishonest misappropriation or dishonest conversion or dishonest use or disposal in violation of a direction of law or legal contract, by the accused himself or by someone else which he willingly suffered to do. * The two essential ingredients of the offence of cheating are: * Fraudulent or dishonest inducement of a person by deceiving him; * The person so induced should be intentionally induced to deliver any property to any person or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security. * Mischief is committed when a person with intent to cause, or knowing that he is likely to cause, wrongful loss or damage to the public or to any person, causes the destruction of any property, or any such change in any property or in the situation thereof as destroys or diminishes its value or utility, or affects it injuriously.
Final Decision: The court allowed the revision and quashed the proceedings in the complaint case.
JUDGMENT
Shampa Dutt (Paul), J. - The revision has been preferred praying for quashing of the proceeding being Complaint Case No. C- 4119 of 2018, pending before the Learned Additional Chief Magistrate at Bidhannagar under Sections 405/406/420/425/34 of the Indian Penal Code, 1860.
2. The Complainant /Opposite Party No. 2 herein filed a complaint under Section 200 of the Code of Criminal Procedure stating there in that the opposite party no. 2 entered into agreement with the petitioner no.1 company, in order to promote the retail excellence in the name and style of VIVO and sell their products at shop No. CCSGA004, Ground Floor, City Centre Mall Matigara, District - Darjeeling since 2007. Subsequently dispute cropped up between them relating to rent, allegedly showing fabricated sale figure to convince the complainant to open the Brand Store, non refund of security deposit, shortage of staff, sudden charge of policy structure and target achievement plans, infiltration of stock, all leading to the business being stopped arbitrarily causing huge loss to the complainant by having to forgo legitimate dues. The complainant alleged that the petitioner has committed the offence of cheating and criminal breach of trust.
3. Mr. Mayukh Mukherjee, Learned Counsel for the petitioner has submitted that the petitioners have diligently responded to the notice served upon them by the complainant, proving their clear and honest intention.
4. It is further stated that Criminal liability cannot arise from a commercial transaction or obligation when the sum was not promised to be paid. Mens rea which is a condition precedent for criminal liability to arise, is completely missing. A commercial transaction or obligation cannot be given a criminal colour to suit the needs of the opposite party. That no unfair or deceptive means or data are provided to any of their business partner. The instant dispute is civil in nature but it has been given criminal colors only to malign the petitioners brand reputation. There is nothing on record to show or even prima facie suggest that the petitioners have committed such offences.
5. The terms and condition in the agreement were very clear and the petitioners all along have performed their part of the contract diligently. That the ingredient required to constitute the offences alleged are totally absent there being no evidence to prima facie make out a case of cognizable offence against the petitioners and as such the cognizance taken by the Learned Magistrate is bad in law and the proceedings are thus liable to be quashed.
6. Inspite of intimation being served, there is no representation on the part of the opposite party no. 2.
7. On hearing the counsel for the petitioners and/having considered the materials on record including the documents relied upon by the petitioner, it appears that a written agreement (on 2 1/2 pages) was entered into between the parties on 30.03.2017. The agreement did not contain any arbitration clause. The terms and condition were clearly mentioned therein. Vide an order dated 06.10.2018 the Learned Magistrate was pleased to issue summons upon the petitioner.
8. Hence the revision with a prayer for quashing of the said proceedings.
9. Considering the nature of dispute between the parties based on a distributor agreement, the following judgment of the Supreme Court is to be taken as a guidance and if applicable to the present case shall be applied to arrive at a just decision.
10. In M/s. Indian Oil Corporation vs. M/s Nepc India Ltd. & Ors., Appeal (crl.) 834 of 2002 decided on 20.07.2006, the court considered the following point among the two points decided.
8. The High Court by common judgment 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 c
The Court held that the essential ingredients of the offences alleged against the petitioners are not present. The Court also noted that the dispute between the parties is essentially civil in nature....
A breach of contract does not constitute cheating unless fraudulent intent is proven at the outset of the agreement, as established in relevant legal precedents.
A mere breach of a promise, agreement, or contract does not, ipso facto, constitute the offence of criminal breach of trust contained in Section 405 IPC without there being a clear case of entrustmen....
Main Legal Point
The ingredients required to constitute the offenses of criminal breach of trust and cheating were not prima facie present against the petitioners.
The court reiterated the principles for quashing criminal proceedings at the threshold, emphasizing the distinction between civil and criminal wrongs. It held that criminal proceedings should not be ....
The court reiterated that criminal proceedings should not be initiated when the allegations are purely civil in nature and there is no entrustment of property or dishonest intention on the part of th....
The court affirmed that a party only involved in a civil contract cannot face criminal liability unless it directly transacted or misappropriated funds, supporting the need for a clear distinction be....
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