IMPORTANT POINT
Fraudulent intent at the inception of a transaction is essential to establish cheating; mere breach of contract does not constitute a criminal offence.

JUDGMENT :

Ananya Bandyopadhyay, J.

1. The instant revisional application has been filed by the petitioner praying for quashing of the proceedings of Case No. C-11974 of 2010 pending before the Court of the Learned 8th Metropolitan Magistrate, Kolkata under Sections 406/420/120B of the Indian Penal Code.

2. The petitioner was an ex-director of a company named and styled as M/s Zoom Ballav Steel Ltd. The petitioner was appointed as director in the said company in the year 2007 and subsequently tendered his resignation, with immediate effect, through a letter dated 17.01.2009 addressed to the Board of Directors of the said company. The said resignation of the petitioner as director from the said company was duly accepted by M/s Zoom Ballav Steel Ltd. and Form 32, as provided under the Companies Act, was filed by the said company with the Registrar of Companies, NCT of Delhi and Haryana on 20.1.2009 thereby informing the said authority about the resignation of the petitioner as Director of M/s Zoom Ballav Steel Ltd. with effect from 17.01.2009.

3. The opposite party no. 2 filed a petition of complaint before the Court of the Learned Chief Metropolitan Magistrate, Kolkata, inter alia alleging commission of offences by the petitioner and others punishable under Sections 406/420/120B of the Indian Penal Code. The said petition of complaint was registered as Case No. C-11974 of 2010.

4. The narrative of the complaint as aforesaid comprised as follows:-

a) One Param Saxena (accused no. 14) approached the complainant/opposite party no. 2 company for selling 600 Metric Tons of iron ore of Fe 61% grade at the rate of Rs.5,100/-per ton inclusive of VAT. Accepting such offer from the aforesaid accused person, the opposite party no.2 company placed a purchase order vide letter dated 18.12.2010 and made full payment of the total amount to the tune of Rs.25,50,000/-through its bank, namely Oriental Bank of Commerce, Overseas branch, 7/1, Lord Sinha Road, Kolkata 700 071, by way of RTGS via UTR No. ORBCH10352088883 into the account of the accused company maintained with Bank of India, Bistupur branch.

b) As the ordered materials were removed from the place of the accused no.1 company, the opposite party no.2 company detected that the accused no.1 company forwarded only 260.37 Metric Tons of the inferior quality of iron ore bearing Fe of 57.48%, value of which, according to the complainant/opposite party no.2, could not exceed Rs.3,500/-per ton.

c) The officials of the accused company agreed to refund the excess amount on the very next day of being notified.

d) However, the accused persons did not refund the excess amount to the complainant company inspite of repeated requests by the officials of the complainant/opposite party no.2 company over telephone and otherwise.

e) The intention to deceive the opposite party no.2 company was perceived as the accused no.14 in order to induce the opposite party no.2 company to pay the aforesaid sum of money had supplied a part of the ordered consignment of inferior quality on false representations.

f) The accused no.1 company, with mala fide intent and in order to cheat the opposite party no.2 company, willfully delayed to refund the excess money as paid to them and hence committed offences punishable under Sections 406/420 of the Indian Penal Code.

5. Considered the rival contentions of the Learned Advocate for the petitioner and the Learned Amicus Curiae representing the Opposite Party.

6. In Raju Krishna Shedbalkar v. State of Karnataka, 2024 SCC OnLine SC 200, the Hon’ble Supreme Court held the following:-

“9. Further, in the case of Indian Oil Corporation v. NEPC India Ltd. (2006) 6 SCC 736 this position was reiterated in the following manner:

33. The High Court has held that mere breach of contractual terms would not amount to cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction and in the absence of an allegation that the accused had a fraudulent or dishonest intent