Allegations of criminal breach of trust and cheating must demonstrate clear intent and relevant legal basis; mere contractual disputes and settled civil claims do not support prosecution under criminal law.

1. The appeals are directed against a common Judgment dated December 23, 1992 passed by the Calcutta High Court in Crl. R. No. 859 of 1991 and Crl. R. No. 1203 of 1991. By the impugned Judgment, the High Court allowed the said criminal revision and quashed the impugned FIR Nos. RC - 4/87 - SIU (X) dated August 14, 1987 and RC - I(S) / 89 - SIU(X) dated June 12, 1989. The respondent, Duncans Agro Industries Ltd., moved the Calcutta High Court for quashing the said FIRs lodged by the Central Bureau of Investigation.

2. It was inter alia alleged in the FIR dated August 14, 1987 that reliable information was received by the complainant, the Superintendent of Police, CBI, SIU (X), New Delhi, that M/s. National Tobacco Company which was a division of M/s. Duncans Agro Industries Ltd. had cash credit facilities on hypothecation of stocks etc. with United Bank of India, Royal Exchange Branch, Calcutta. The ultimate credit facilities limit sanctioned to M/s. Duncans Agro Industries Ltd. in the account of M/s. National Tobacco Company as on January 12, 1984 was to the tune of Rs.17.50 crores subject to the drawing power according to hypothecation of raw material / stocks etc. M/s. Duncans Agro Industries Ltd. was submitting the monthly statements of raw materials held by its division. M/s. National Tobacco Company and such hypothecated raw materials were liable to physical inspection and verification by Bank authorities. In 1984, M/s. Duncans Agro Industries Ltd. made an application before the Calcutta High Court and contained an order from the High Court on August 10, 1984 that National Tobacco Company, a Tobacco Division of Duncans Agro Industries Ltd. would, henceforth function under the name and style of New Tobacco Company Limited which would be a fully owned subsidiary of M/s. Duncans Agro Industries Ltd. and the management of the said newly constituted company would be carried as per the Scheme of Arrangement approved by the High Court. It was further alleged in the said FIR that after the approval of the aforesaid Scheme of Arrangement, M/s. Duncans Agro Industries Limited approached the United Bank on December 3, 1984, to transfer the credit limits standing in their name to M/s. New Tobacco Company Limited and Shri S.K. Ghosh, Chief Officer (Legal) of the United Bank of India gave opinion on January 22, 1985 that the order of the Calcutta High Court was binding on the Bank and consequently the Bank would either continue the advances with transferee Company or to sue transferee Company i.e. M/s. New Tobacco Company Limited, for recovery of its dues. The said Chief Officer of the Bank advised the Bank that the Bank would not be in a position to enforce its right in respect of debts and immovable assets of the transferor company. The Board of Director of United Bank of India resolved that the credit limits of the Bank in respect of National Tobacco Company would be allowed to be transferred in the new account of New Tobacco Company Limited with retrospective effect from April 1, 1984 subject to the condition that the company would furnish an undertaking to create mortgage on all their assets and properties in favour of the Bank and without written consent of the Bank, holding level of percentage share of M/s. Duncans Agro Industries Limited in the National Tobacco Company would not undergo any change. Such resolution was drafted in the meeting of the Board of Directors held on May 30, 1985. The note of Shri B. K. Gosh, Chief Officer (Legal) along with a Board Note dated May 30, 1985 prepared by Shri S.N. Ghoshal, General Manager of the Bank were placed before the Board of Directors. While recommending transfer limits in favour of New Tobacco Company, the Bank officials did not specify whether stocks had been inspected and how the Bank would remain a secured creditor of M/s. Duncans Agro Industries Limited for National Tobacco Company. It was also not mentioned by the officials of the Bank as to whether stocks had been inspected and