The main legal point established in the judgment is that the failure to pay a debt arising from a business transaction does not automatically constitute criminal breach of trust. The judgment emphasizes the requirement of entrustment and dishonest misappropriation for constituting the offence under Section 406 IPC.

1. This criminal petition under Section 482 Cr.P.C. has been filed praying for quashing the proceeding in C.R. Case No.337/2014 under Section 406 IPC read with Section 34 IPC, pending in the Court of the learned Judicial Magistrate First Class, Kamrup (M), Guwahati.

2. The present petitioners are the owners and Directors of the Company, namely, M/s Coronet Labs Pvt. Ltd. The respondent No.2 entered into an agreement with the Company M/s Coronet Labs Pvt. Ltd for carrying on business as consignment agent of M/s Coronet Labs Pvt. Ltd for the States of Assam, Arunachal Pradesh, Manipur, Mizoram, Meghalaya, Nagaland, Tripura and Sikkim and the agreement was made on 29.05.2010. As per the agreement, the respondent paid Rs.5,00,000/- as security money. It was agreed that on termination of agreement, the complainant shall return the stock of goods in its possession and the accused shall refund the security deposit along with the accrued interest after adjusting the arrear, if any, towards sales of goods. Pursuant to the said agreement, the respondent No.2 paid Rs.5,00,000/- as security money. As per the agreement, the respondent No.2 was required to provide storage facilities/godown for distribution of products. The required rent, electricity charge, cost of loading and unloading etc; were to be borne by the respondent No.2. Under the terms of agreement, the responsibility to sale the products was on the accused No.1, M/s Coronet Labs Pvt. Ltd. Pursuant to such agreement, the complainant/respondent No.2 duly discharged its responsibility and the first consignment was received on 30.08.2010. The business between the petitioner and the respondent No.2 continued smoothly for some time. However, during continuance of the business, the shares of M/s Coronet Labs Pvt. Ltd. was purchased by another company, namely, Arvind Remedies Ltd. A memorandum of understanding and share purchase agreement was executed between them and accordingly said Arvind Remedies Ltd became the full owner of the company under the name and style of M/s Coronet Labs Pvt. Ltd. After continuance of the business for some time, the sales of articles dwindled and consequently delivery of the goods ceased. Some of the goods for which payment was made by the respondent No.2 was lying with the respondent No.2. The petitioners asked the respondent No.2 to return those goods to their agent at Patna on the condition, that the cost thereof shall be remitted to the complaint/respondent No.2 as per the provisions of clause-31 of the contract. The complaint/respondent No.2 returned such goods, but no payment was received from the petitioners. It was alleged in the complaint that by not making payment the petitioners have misappropriated the goods returned by the respondent No.2 which costs Rs.3,23,200/-. Thereafter, a meeting was held on 01.11.2012 for settlement of the dispute and in the said meeting, the dispute was ultimately settled and petitioners undertook to pay Rs.28,00,000/- to the respondent No.2, out of which Rs.5,00,000/- was paid by the petitioner No.1 and it was agreed that the balance amount would be paid before 31.12.2012. As the payment was not made as per the settlement, the second respondent lodged a complaint against the petitioners and three others under Section 406 IPC and the learned trial Court took cognizance under Section 406/34 IPC against the petitioners on the basis of the said complaint and issued process.

3. Challenging the order of the learned trial Court taking cognizance, the petitioners have filed the instant petition under Section 482 Cr.P.C. praying for quashing the complaint and the proceeding in CR Case No.337/2014.

4. Mr. SK Goswami, learned counsel for the petitioner basically urged two points i.e., dispute between the parties is purely civil arising out of business transaction for which the remedy is available in the Civil Court and no criminal offence under Section 406 IPC has been made out. Mr. Goswami further contended tha