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IN THE HIGH COURT AT CALCUTTA
Shampa Dutt (Paul), J.
Sri Dinesh Jain @ Dinesh Kasturchand Jain – Petitioner
Versus
The State of West Bengal & Anr. – Respondents
CRR 648 of 2020
Decided On : 19-07-2023
CHEATING - DISHONEST INTENTION - ENTRUSTMENT - SECTION 405/406/420 IPC - Dishonor of Cheque - Criminal proceedings for cheating are not barred even if proceedings under Section 138 of the N.I. Act are pending as the ingredients of the offenses are entirely different.
Fact of the Case:
The petitioner, a company director, was accused of cheating and criminal breach of trust along with other directors for allegedly receiving gold and diamond jewelry from the complainant company on the promise of payment within 60 days but failing to make the payment despite presenting dishonored cheques. The petitioner claimed that the transaction was purely commercial and should be dealt with under Section 138 of the Negotiable Instruments Act, not criminally.
Finding of the Court:
The court held that the ingredients of the offenses under Sections 405/406/420 IPC were prima facie present in the case, as there was evidence of entrustment of the jewelry, dishonest intention at the time of the transaction and issuance of cheques, and wrongful loss to the complainant and wrongful gain to the accused persons.
Issues: 1. Whether the criminal proceedings for cheating are barred if proceedings under Section 138 of the N.I. Act are pending? 2. Whether the ingredients of the offenses under Sections 405/406/420 IPC were present in the case?
Ratio Decidendi: 1. The court held that the criminal proceedings for cheating are not barred even if proceedings under Section 138 of the N.I. Act are pending, as the ingredients of the offenses are entirely different. 2. The court found that there was prima facie evidence of entrustment of the jewelry, dishonest intention at the time of the transaction and issuance of cheques, and wrongful loss to the complainant and wrongful gain to the accused persons, which satisfied the ingredients of the offenses under Sections 405/406/420 IPC.
Final Decision: The court dismissed the revisional application filed by the petitioner, holding that there was no merit in the arguments raised and that the criminal proceedings against the petitioner should continue.
JUDGMENT :
Shampa Dutt (Paul), J.
1. The present revision has been preferred praying for quashing of the proceeding being Bhawanipore Police Station Case No.232 dated 03.06.2016 (C.G.R No.2974 of 2016) presently pending before the learned Chief Judicial Magistrate, South 24 Parganas at Alipore, alleging commission of offence punishable under Sections 406/420/120B of the Indian Penal Code.
2. The petitioner's case is that there was a commercial transaction between M/s. Diagold Jewels Pvt. Ltd., and M/s. Marvin Gems Pvt. Ltd. Both are registered under the Companies Act, 1956. M/s. Marvin Gems Pvt. Ltd. is controlled by Mr. Raj Kumar Sobhagmal Jain. The aforesaid commercial transaction was also executed by Mr. Raj Kumar Sobhagmal Jain.
3. That after execution of the aforesaid commercial transaction dispute cropped up with regard to quality of the product.
4. On behalf of M/s. Diagold Jewels Pvt. Ltd. an application under Section 156(3) of the Code of Criminal Procedure was filed before the learned Chief Judicial Magistrate, Alipore, South 24 Parganas.
5. On the basis of the said application under Section 156(3) of Cr.P.C., the learned Magistrate was pleased to direct the Officer-in-Charge, Bhawanipore and Bhawanipore Police Station case No.232 dated 03.06.2016 was initiated.
6. Bhawanipore Police Station case No.232 was registered against four persons including the present petitioner for alleged commission of offence punishable under Sections 420/406/120B of the Indian Penal Code.
7. The allegation made in the aforesaid complaint is inter alia, to the effect that on and about October 5, 2015, the persons named as accuseds in the complaint allegedly came at the office of the complainant showing interest for purchase of various types of gold and diamond jewellery. It is also alleged that the persons named as (the accuseds) in the complaint agreed to the price of gold and making charges. It was agreed that the charges would be paid within a period of 60 days from the date of delivery of the said gold and diamond jewellery. There was an agreement to give post dated cheques for the said balance amount to the complainant.
8. The post dated cheques were presented on 28th December, 2015 for encashment but the cheques were returned with an endorsement 'funds insufficient'. The opposite party no.2/complainant had already parted with the gold and diamond jewellery amounting to Rs.52,46,727/-.
9. The complainant/opposite party no. 2 company suffered financial loss due to the representation and assurance of the accused persons named in the complaint. The complainant lodged a written complaint on June 25, 2016 with Bhawanipore Police Station. However, no FIR was registered. Therefore an application was filed before the learned Magistrate.
10. In the complaint, the complainant annexed tax invoices in respect of the articles sold and duly received by Mr. Raj Kumar Sobhagmal Jain on behalf of M/s. Marvin Gems Pvt. Ltd the accused in the case.
11. After completion of investigation the investigating agency submitted charge sheet alleging commission of offence punishable under Sections 420/406/120B of the Indian Penal Code.
12. The petitioner states that the entire transaction was executed in between two companies M/s. Diagold Jewels Pvt. Ltd. and M/s. Marvin Gems Pvt. Ltd. The petitioner does not have any control over M/s. Marvin Gems Private Limited.
13. The entire articles was handed over to Mr. Raj Kumar Sobhagmal Jain. Therefore, “entrustment” over the property by the complainant company was upon Mr. Raj Kumar Sobhagmal Jain.
14. There was no role of the present petitioner in respect of the alleged transaction. Hence, offences alleged are not made out against the present petitioner.
15. That there was no “initial deception” at the time of execution of the contract or in the process of execution of the transaction. Unless there is any deception at the inception, no offence comes within the definition of 'Cheating' in terms of the Indian Penal Code.
16. Mr. Deb
The ingredients of the offenses under Sections 405/406/420 IPC are prima facie present in the case, as there was evidence of entrustment of the jewelry, dishonest intention at the time of the transac....
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....
Fraudulent intent at the inception of a transaction is essential to establish cheating; mere breach of contract does not constitute a criminal offence.
The court affirmed that criminal proceedings cannot be used as leverage in civil disputes, emphasizing the need for proof of dishonest intent and necessary ingredients for offences claimed. Lack of v....
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