Allegations of financial misconduct must establish criminal intent; mere breach of contract does not constitute a criminal offence under IPC sections 406 and 420.

JUDGMENT :

SHAMPA DUTT (PAUL), J.

1. The present revisional application has been preferred against an order dated 08.02.2022 passed by the learned Metropolitan Magistrate, 10th Court, Calcutta in complaint case no. C/S-95394/2021 taking cognizance against the petitioners/accused persons under Sections 406/420/506 read with Section 120B of the Indian Penal Code, 1860 along with a prayer for quashing of the entire proceeding in respect of the petitioners herein.

2. Vide the order under revision the learned Magistrate examined the complainant and witnesses under Section 200 of the Code of Criminal Procedure and issued Process against the accused persons.

3. The case of the petitioners is as follows:-

“i. The opposite party no.1 carries on business of finance.

ii. There was an agreement between the petitioner no.1 and the opposite party no.1 dated 17.10.2016 in the form of a letter dated 17.10.2016 mentioning the details of amounts agreed to be lent by the opposite party no.1 to the petitioner no.1 with the details of the assets of the petitioner, interest rate and number of installments for a sum of Rs.1,14,00,000/-.

iii. Under the said agreement the petitioners agreed to repay the said loan by way of monthly installments as agreed between the parties as mentioned in the Schedule thereto.

iv. The petitioner no.1 has paid installments from time to time to the opposite party no.1 against the said loan which was accepted by the opposite party no.1 without any demur or reservation.

v. By the letter dated 5th July, 2017, the opposite party no.1 restructured the loan amount and the rate of interest to the tune of Rs.1,25,53,000/- and forwarded a revised Schedule of installments to the petitioner no.1 for payment.

vi. No amount was paid or lent or advanced by the opposite party to the petitioner in the month of June, 2017 as the same was merely a reschedulement of the existing loan transaction.

vii. The opposite party no.1 once again by its letter dated 30th March, 2019 revised the repayment Schedule.

viii. A plain reading of the agreement between the parties read with the revised Schedules makes it apparent that the transaction between the parties is a commercial transaction and the same is a concluded contract between the parties.”

4. The complainant’s case in the petition of complaint is that on the basis of an agreement the complainant-company provided financial assistance to the accused persons but installments were not diligently repaid and hence the present case.

5. A copy of the agreement filed shows that the agreement runs into more than 58 pages and Clause 9.11 reads as follows:-

“9.11 Dispute Resolution Arbitration

Any disputes and/or differences arising out of or in connection with the Agreement during its subsistence or thereafter between the parties including any disputes and differences relating to the interpretation of the agreement or any clause thereof shall be adjudicated by arbitration in accordance with the provisions of the Arbitration and Conciliation Act, 1996 and rules framed there under and any amendment, modification, statutory enactment thereto from time to time and shall be referred to the Arbitration of a sole Arbitrator appointed by the Company upon intimation to all parties to this Agreement. The proceedings shall be held at Kolkata. The cost of the proceedings shall be borne by the parties to this Agreement. The award of the arbitrator shall be final, conclusive and binding on all the parties.”

6. Learned senior counsel appearing for the petitioner has relied upon the judgment of this Court passed in the case of Debapratim Neogie vs. State of West Bengal & Anr. reported in 2024 SCC OnLine Cal 3158, where in the court held:-

“22. In the present case:—

a) The company has not been made an accused, though the agreement has been admittedly executed between the two companies.

b) The petitioner has been made the sole accused as a director of the company who was in-charge of its affairs.

23. The Supreme Court in Shiv Kumar Jatia v