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IN THE HIGH COURT AT CALCUTTA
Ajay Kumar Gupta, J.
M/s. Gannon Dunkerley & Company Limited & Others – Petitioners
Versus
Chhatishgarh Impex Private Limited - Opposite Parties
C.R.R. 49 of 2022
Decided On : 24-07-2024
Criminal - IPC Sections 406, 420, 120B - The court discussed the applicability of criminal provisions in commercial disputes, emphasizing the distinction between civil liabilities and criminal offenses, ultimately quashing the summons issued against the accused.
Fact of the Case:
The petitioners, accused in a commercial transaction, were summoned for alleged cheating and criminal breach of trust after failing to pay the full amount for goods received. They contended that the dispute was civil in nature and not criminal.
Finding of the Court:
The court found that the allegations did not establish a prima facie case of criminal intent or deception, indicating that the matter was a civil dispute over unpaid dues rather than a criminal offense.
Issues: Whether the issuance of summons against the petitioners for alleged offenses under IPC Sections 406, 420, and 120B was justified or constituted an abuse of process of law.
Ratio Decidendi: The court held that mere non-payment in a commercial transaction does not equate to criminal liability under the IPC, and that the allegations did not demonstrate the necessary intent for the offenses charged.
Result: The court quashed the summons and the proceedings against the petitioners.
JUDGMENT :
Ajay Kumar Gupta, J.
1. By filing this revisional application under Section 482 of the Code of Criminal Procedure, the petitioners being the accused persons have challenged the propriety, legality and correctness of the impugned Order dated 24th August, 2021 passed by the learned Metropolitan Magistrate, 19th Court at Calcutta in C.S. No. 4780 of 2021 under Sections 406/420/120B of the IPC (Chhatishgarh Impex Pvt. Ltd. Vs. M/s. Gannon Dunkerley & Co. Ltd. & Ors.) thereby the learned Court below issued summons against the accused persons and fixed a date on 01.10.2021 for service return.
2. The brief facts, leading to filing of this instant revisional application, are as under:
2a. Sometimes in the last week of October 2017, the petitioner/accused nos. 2, 3, 4, 5 and 6 herein went to the office of the opposite party/complainant at No. 10, Biplabi Rasbehary Basu Road, Police Station-Hare Street, Kolkata – 700 001, represented their company Gannon Dunkerley & Co. Ltd. (petitioner no. 1 herein) dealt in the retail business of MS Gates and required purchasing of the MS Gates from the Opposite Party/Complainant Company. They also represented that their company had a very good reputation and goodwill in the local markets of Mumbai and they would give good profit to the Opposite Party/Complainant Company if it started a dealership business with them. They also assured if the goods were sold to them, they would make payment as per the terms and conditions of the complainant company. Accordingly, they placed a purchased order dated 01.07.2017 for a total amount of Rs. 1,45,90,464/-. Accordingly, the complainant company sold and supplied various MS gates against proper bills/invoices.
2b. It is further alleged that the accused company allegedly received the goods worth Rs. 1,12,32,184/-but allegedly made part payment, leaving behind a balance due sum of Rs. 22,32,041/-only. The complainant company sent a demand notice dated 30.07.2021 but the accused persons allegedly made no payment and thus the accused persons had allegedly been liable to be prosecuted and punished under Sections 406/420/120B of the IPC.
2c. On the contrary, the accused persons denied the allegations made by the complainant company and further denied the petitioner company dealt in the retail business of MS Gates, having a very good reputation and goodwill in the local markets of Mumbai. Actually, the petitioner company was initially incorporated as a Private Ltd. Company in 1924 which was converted to Public Ltd. Company in 1948, after taking over by Indian Management, having Head Office located at Mumbai and also having several Zonal Head Quarter at different places including New Delhi and Kolkata. The petitioner company is fully engaged in construction both industrial and infrastructure having annual turnover is about Rs. 1700 Crore and its regular present staff strength is over 2700 technical and commercial personnel excluding labour and muster staff employed at different project sites.
2d. The petitioner company had placed a purchased order on 04.10.2017 and 01.11.2017 respectively from its head office at New Delhi for purchase of steel transformer gates, requiring them for execution of some construction jobs at their work sites at Jagdalpur, CG and according to the purchase order, they have supplied the goods. The transaction by and between the parties herein was a commercial transaction only. Any breach of terms and conditions would create civil liability. The relief available in a forum like MSME, NCLT, Commercial Courts etc. for specific performance along with the damages suffered due to alleged breach of contract. But despite of knowing the said facts, the opposite party, with ill motive, tried to convert civil disputes into criminal complaints though the present petitioners or their company is not at all involved in the alleged offence punishable under Sections 406/420/120B of the IPC.
2e. In spite of the aforesaid facts, the learned Metropolitan Magistra
The court established that criminal proceedings cannot be initiated for mere civil disputes, emphasizing the need for clear evidence of criminal intent.
Non-payment of dues does not constitute criminal cheating or breach of trust unless fraudulent intent is established from the inception of the transaction.
The judgment established the importance of specific allegations, fraudulent intention, and entrustment in cases related to cheating and commercial transactions, and emphasized the necessity of follow....
Mere non-payment for goods in a civil transaction cannot constitute cheating or criminal breach of trust under IPC; intent must be proven.
Allegations of fraud must demonstrate clear fraudulent intent at the time of the agreement, solely distinguishing civil disputes from criminal cases under IPC Sections 405 and 420.
A mere breach of contract does not amount to cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction.
The main legal point established in the judgment is that a civil dispute does not get converted into a criminal offence without satisfying the essential elements of the alleged provisions, and there ....
Criminal proceedings for cheating require clear evidence of fraudulent intent and misrepresentation; mere breach of contract does not suffice to constitute a criminal offense.
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