Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(Cal) 133

IN THE HIGH COURT AT CALCUTTA
Subhendu Samanta, J.
IN THE MATTER OF
M/s. Blue Star limited & Ors. – Petitioners
Versus
State of West Bengal & Ors. – Respondents
CRR 3944 of 2017 With IA No. CRAN 19 of 2022, CRAN 21 of 2022, CRAN 22 of 2023, CRAN 23 of 2023, CRAN 24 of 2023, CRAN 25 of 2023, CRAN 26 of 2023, CRAN 27 of 2023, CRAN 28 of 2023
Decided On : 27-01-2025

Advocates:
Advocate Appeared:
For the Petitioners: Mr. Krishnendu Bhattacharya, Adv., Mr. Avisekh Guha, Adv., Mr. Rounak Majumder, Adv., Ms. Enakshi Saha Adv.
For the OP :Mr. Chittaranjan Panda, Advocate., Mr. Manab Chakraborty Adv.

A mere breach of contract does not constitute criminal liability under IPC unless fraudulent intent is established at the time of inducement.

Headnote:(A) Code of Criminal Procedure, 1973 - Section 482 - Indian Penal Code, 1860 - Sections 415, 418, 420 - Quashing of complaint - The petitioners, a company and its directors, sought to quash a complaint alleging cheating and criminal breach of trust, claiming it was a counterblast to a pending complaint under Section 138 of the NI Act - The court found that the allegations did not disclose an offence under IPC, emphasizing that mere breach of contract does not constitute criminal liability - The complaint was quashed as an abuse of process of court. (Paras 1, 30, 32, 33)

(B) Criminal liability in commercial transactions - The court reiterated that a mere breach of contract does not amount to cheating unless fraudulent intention is established at the time of inducement - The distinction between civil and criminal liability must be maintained. (Paras 21, 22, 25)

Facts of the case:
The petitioners, a company and its directors, were accused of cheating by the complainant, who alleged non-payment for goods supplied. The petitioners contended that the complaint was filed to obstruct their own complaint under Section 138 of the NI Act.

Findings of Court:
The court found that the allegations did not establish any criminal offence and that the complaint was an abuse of process.

Issues: Whether the complaint constituted an offence under IPC and whether it was maintainable given the ongoing proceedings under the NI Act.

Ratio Decidendi: The court held that the allegations did not demonstrate any fraudulent intention necessary for establishing cheating and that the complaint was a misuse of legal process.

Result: The criminal proceedings were quashed.

JUDGMENT :

Subhendu Samanta, J.

1. This is an application u/s 482 of the Code of Criminal Procedure for quashing of a complaint case being CS No. 63855/2017 pending before the Learned 3rd Metropolitan Magistrate, Calcutta alleging offence u/s 415/418/420 IPC.

2. The brief fact of the matter is that the petitioner No. 1 is a Company and other petitioners are directors of petitioner No. 1. O.P. No. 2 is a proprietorship concerned who lodged the instant complaint before the Learned Metropolitan Magistrate.

3. The complaint contained that the OP No. 2 had a long business transaction with the petitioner No. 1 in respect of various contracts and projects since last 10 years and more. It is averted in the petition of complaint that time to time the complainant has been awarded with numerous contract for supply installation testing and commissioning for the petitioners.

4. It is further averted in the petition of complaint that all such contracts have been successfully performed by the complainant/ Opposite Party No. 2 and accordingly he raised his bills/invoices to the accused. It has also been averted in the petition of complaint that petitioners/accused persons for paid bills/ vouchers of the complainant. As per agreement of the terms. It is the case of the petitioner that since last few years the irregular in making timely payments to the complainants on various false pretext and for which the complainant suffers huge loss.

5. It is the case of the petitioner that as on 5th October 2017 a sum of Rs 30,47,471/-is due and payable from the accused. It is the case of the complainant that for the completion of an approach of some clients, the complaint was any requirement of three No. of air cool screw chillers and so long after for the same in the market. Accused No. 4 and 5 repaying accused No… petitioner No. 1 approached the complainants to purchase the same machine from the petitioner company. It is the further case of the petitioner that the accused persons/Opposite Parties assured the complainant of timely payments of his previous due, the accused also assured the complainant to avail to just the amount payable of purchased value to with the amount receivable. Believing upon the said assurances of the petitioner the complainant agreed and placed order for purchase of the said machines i.e. three nos. of Air Cool Screw Chillers from the accused persons vide purchase order dated 27th September, 2016. The value of the three machines was Rs. 35,40,000.78/- only. At the time of purchase of the aforesaid machines accused No. 4 and 5 induced the complainant to initially pay a sum of Rs. 7,08,000/- as advance against the same purchase order so that they can execute the order had one can with an assurance that entire payment would be adjusted later. On that the complainant paid the sum of Rs. 7,08,000/- to the accused persons. However, before delivery of the said item it has been demonstrated by the petitioner that they need the complainant to sign indemnity bond and they also requires three post dated blank cheques. The accused assured the complainant the cheque will not be presented to the bank and will be returned to the compliant after adjustment of the account. By doing so the accused induced the complainant to sign indemnity bond taken three post dated cheques. It is the further allegation of the complainant that despite repeated reminders, phone calls, meetings, representations regarding adjustment of account and for paying of balance money, the accused failed financial display and repay under aforesaid projects.

6. It is the case of the complainant that value of the three machines projects of the complainants from the accused as sum of Rs 35,40,000.78/- out which the petitioner/complainant paid Rs 12,40,001/-. Hence the balance payable for the cost of machines is Rs. 22,99,999.78/- according to the complaint the final amount would be Rs. 7,47,472.78/-(Rs. 30,47,471/- -- Rs. 22,99,999.78/-) receivable from the accused to the complainant.