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TMI Blog2024 (3) TMI 442X X X X Extracts X X X X X X X X Extracts X X X X ..... they take all necessary decisions on behalf of the petitioner no. 1/company. 4. The petitioners state that the petitioner no. 1/company deals with the business of export & import and the petitioners are doing such business for a considerable period of time with great reputation. 5. For the purpose of smooth running of the aforesaid business the petitioners used to obtain financial assistance from various banks and other financial institutions. The petitioners further state that in the year 2016, the petitioners being aware of the name of opposite party no. 2 being a company, who used to provide financial assistance to individuals and companies, approached the opposite party no. 2 for a loan and/or financial accommodation to the tune of Rs. 50 Lakhs. 6. After proper verification and inspection, the opposite party no. 2 agreed to provide and/or disburse a loan to the tune of Rs. 50 Lakhs and accordingly on 21.03.2016 the said amount was transferred through RTGS/NEFT in favour of the petitioner no. 1. It was further agreed that the entire money will be repaid within March 2017, if not extended further. 7. After such disbursement and/or entrustment of the money the petitioners star ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he false statements made by the abovenamed petitioners in the first revisional application, on oath, with a view to interfere with and obstruct the administration of justice. It is further stated that the abovenamed persons have deliberately resorted to using false evidence and making false statements before this Hon'ble Court in the instant proceedings whereby they also seek to invoke the plenary and inherent powers of this Hon'ble Court under Section 482 of Cr.P.C. which is meant for doing equitable justice. 13. It is further stated that it is required to compare the statements/averments made under oath by the abovenamed petitioners under the said first revisional application to the statements/averments, made under oath, in a subsequent application moved under Section 482 of the Cr.P.C. being CRR No. 1450 of 2022 (hereinafter referred to as the 'said second revisional application'). The said second revisional application has been preferred by the petitioners no. 2 and 4 herein, being petitioner no. 1 and 2 therein respectively, inter alia, praying for quashing of the proceeding in C.S. No. 53426 of 2019 initiated by the opposite party no. 2 herein against the petitioners therein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Supplementary Affidavit has been filed by the petitioner, stating that after filing of the revisional application being CRR No. 3637 of 2019, on October 23, 2019, the opposite party no. 2 had filed a petition of complaint before the Court of the Learned Chief Metropolitan Magistrate at Calcutta under Sections 138/141 of the Negotiable Instruments Act, 1881 (hereinafter referred to as "NI Act") on the allegations to the effect that after receiving the Summons in the present case on August 28, 2019, the petitioner no. 3 approached the opposite party no. 2 in the court premises and entered into a settlement and that pursuant to such settlement a cheque bearing Cheque No. 510577 dated August 01, 2019 for Rs. 50,00,000/- drawn on Kotak Mahindra Bank, Brabourne Road, Kolkata, duly signed by the petitioner no. 3 was issued by the petitioner no. 1. It was further alleged that the said cheque on being presented to its banker was returned unpaid with the remark "alteration in date". 18. It is submitted that on April 19, 2022 on the date of examination-in-chief of the PW1, the opposite party no. 2 herein filed its affidavit-in-chief along with the documents including the copy of the cheq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said payment in cash, which has been explained as follows:- Accordingly, a Post-dated Cheque bearing No. 510577 date August 01, 2017 (said PDC) was issued by M/s Gurudayal Gangabux in favour of the opposite party no. 2. Subsequently, on the request of the opposite party no. 2, the residue amount was paid in cash with the understanding by and between the parties that the said PDC would not be used. On account of mutual relationship between the parties, the said PDC which had been given by M/s Grurdayal Gangabux to the opposite party no. 2 was also not recalled by M/s Gurudayal Gangabux. 26. The petitioners by way of filing their written argument and a rejoinder have submitted that the dispute if any is civil in nature. 27. It is submitted that from the allegations leveled in the impugned complaint, it would be evident that the case of the opposite party no. 2 was a case of money lent and advanced. In the impugned complaint, the opposite party no. 2 had not only suppressed the factum of repayment of loan and/or issuance of the said PDC but also the fact of due repayment of loan by M/s Gurudayal Gangabux by paying in installments as would be evident from the Ledger the revi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... April 21, 2017 and receipt thereof by the opposite party no. 2; c. repayment of the loan in cash with the understanding of not to use the said PDC; d. letter dated October 01, 2019 issued by the petitioners in response to the purported Notice under Section 138(b) of the NI Act. 33. It is finally submitted that a proceeding which is an outcome of suppression of material facts swims into nullity. The Hon'ble Supreme Court of India and this Hon'ble Court time and again had frowned on such practice of suppression of material fact and therefore quashed the proceedings which were with the aid of suppression. 34. The opposite party no. 2 has also filed written notes and further notes an Argument relying upon following judgments:- i. Sanapareddy Maheedhar and Anr. vs State of Andhra Pradesh and Anr., (2007) 13 (Add) S.C.R. ii. Neeharika Infrastructure Pvt. Ltd. vs State of Maharashtra and Anr., (2021) SCC online SC 315. iii. Vijayander Kumar and Ors. vs State of Rajasthan and Anr., (2014) 3 SCC 389. iv. Lalmuni Devi (Smt) vs State of Bihar and Ors., 9 (2001) 2 SCC 17 SC Online 1795. v. Murray & Co. vs Ashoke Kr. Newatia and Anr., (2000) 2 SCC 367. vi. Mehtab Son of Shri M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h, CBI, Criminal Appeal No. 5 of 2010, on 13.12.2021, held:- "41. Section 409 IPC pertains to criminal breach of trust by a public servant or a banker, in respect of the property entrusted to him. The onus is on the prosecution to prove that the accused, a public servant or a banker was entrusted with the property which he is duly bound to account for and that he has committed criminal breach of trust. (See: Sadupati Nageswara Rao v. State of Andhra Pradesh, (2012) 8 SCC 547). 42. The entrustment of public property and dishonest misappropriation or use thereof in the manner illustrated under Section 405 are a sine qua non for making an offence punishable under Section 409 IPC. The expression 'criminal breach of trust' is defined under Section 405 IPC which provides, inter alia, that whoever being in any manner entrusted with property or with any dominion over a property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property contrary to law, or in violation of any law prescribing the mode in which such trust is to be discharged, or contravenes any legal contract, express or implied, etc. shall be held to have commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a legally and contractually acceptable manner." 38. In Deepak Gaba & Ors. vs State of Uttar Pradesh & Anr., in Criminal Appeal No. 2328 of 2022, on 2 January, 2023, the Supreme Court held:- "13. Section 406 of the IPC prescribes punishment for breach of trust which may extend to three years or with fine or with both, when ingredients of Section 405 of the IPC are satisfied. For Section 406 of the IPC to get attracted, there must be criminal breach of trust in terms of Section 405 of the IPC. For Section 405 of the IPC to be attracted, the following have to be established: (a) the accused was entrusted with property, or entrusted with dominion over property; 406. Punishment for criminal breach of trust.-Whoever commits criminal breach of trust shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both. 405. Criminal breach of trust.-Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t (no materials on record). 41. In the present case, the dispute relates to a loan and its repayment. There is absolutely no material on record to prima facie show that the accused has dishonestly mis-appropriated or converted the property for his own use. There is a strong case of repayment in this case. 42. It is also submitted that the continuance of both the proceedings under Sections 406/409/420/120B of the Indian Penal Code (CRR 3637 of 2019) as also under Section 138 of the Negotiable Instruments Act (CRR 1450 of 2022) is not maintainable in the eye of law as both cases relate to repayment of the same loan amount. 43. The Supreme Court in Sangeetaben Mahendrabhai Patel vs State of Gujarat & Anr., in Criminal Appeal No. 645 of 2012, on 23 April, 2012, considering all previous judgments of the Court held:- "24. In view of the above, the law is well settled that in order to attract the provisions of Article 20(2) of the Constitution i.e. doctrine of autrefois acquit or Section 300 Cr.P.C. or Section 71 IPC or Section 26 of General Clauses Act, ingredients of the offences in the earlier case as well as in the latter case must be the same and not different. The test to ascer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 138 N.I. Act and the case is sub judice before the High Court. In the instant case, he is involved under Sections 406/420 read with Section 114 IPC. In the prosecution under Section 138 N.I. Act, the mens rea i.e. fraudulent or dishonest intention at the time of issuance of cheque is not required to be proved. However, in the case under IPC involved herein, the issue of mens rea may be relevant. The offence punishable under Section 420 IPC is a serious one as the sentence of 7 years can be imposed. In the case under N.I. Act, there is a legal presumption that the cheque had been issued for discharging the antecedent liability and that presumption can be rebutted only by the person who draws the cheque. Such a requirement is not there in the offences under IPC. In the case under N.I. Act, if a fine is imposed, it is to be adjusted to meet the legally enforceable liability. There cannot be such a requirement in the offences under IPC. The case under N.I. Act can only be initiated by filing a complaint. However, in a case under the IPC such a condition is not necessary. 28. There may be some overlapping of facts in both the cases but ingredients of offences are entirely diffe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce value and accepted in their entirety, do not prima facie constitute any offence or make out the case alleged against the accused. For this purpose, the complaint has to be examined as a whole, but without examining the merits of the allegations. Neither a detailed inquiry nor a meticulous analysis of the material nor an assessment of the reliability or genuineness of the allegations in the complaint, is warranted while examining prayer for quashing of a complaint. (ii) A complaint may also be quashed where it is a clear abuse of the process of the court, as when the criminal proceeding is found to have been initiated with malafides/malice for wreaking vengeance or to cause harm, or where the allegations are absurd and inherently improbable. (iii) The power to quash shall not, however, be used to stifle or scuttle a legitimate prosecution. The power should be used sparingly and with abundant caution. (iv) The complaint is not required to verbatim reproduce the legal ingredients of the offence alleged. If the necessary factual foundation is laid in the complaint, merely on the ground that a few ingredients have not been stated in detail, the proceedings should not be quash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble in criminal law, a complainant who initiates or persists with a prosecution, being fully aware that the criminal proceedings are unwarranted and his remedy lies only in civil law, should himself be made accountable, at the end of such misconceived criminal proceedings, in accordance with law. One positive step that can be taken by the courts, to curb unnecessary prosecutions and harassment of innocent parties, is to exercise their power under section 250 Cr.P.C. more frequently, where they discern malice or frivolousness or ulterior motives on the part of the complainant. Be that as it may." 46. Now in the lines of the judgment under reference let us see if the allegations in the complaint in the present case, if accepted on face value, prima facie constitute any offence under Section 420 of the Indian Penal Code, as alleged against the petitioners. 47. Section 420 of the Indian Penal Code, defines:- "420. Cheating and dishonestly inducing delivery of property.-Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or seal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Court also relies upon the following judgments of the Supreme Court:- a) Sushil Sethi and Anr. vs The State of Arunachal Pradesh and Ors., AIR 2020 SC 765, Criminal Appeal No. 125 of 2020 (arising out of SLP (Crl.) No. 590 of 2019), on 31 January, 2020, the Supreme Court held:- "7.2 In the case of Vesa Holdings Private Limited (supra), it is observed and held by this Court that every breach of contract would not give rise to an offence of cheating and only in those cases breach of contract would amount to cheating where there was any deception played at the very inception. It is further observed and held that for the purpose of constituting an offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. It is further observed and held that even in a case where allegations are made in regard to failure on the part of the accused to keep his promise, in the absence of a culpable intention at the time of making initial promise being absent, no offence under Section 420 IPC can be said to have been made out. It is further observed and held that the real test is whether the allegat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttled law that once a civil case has been compromised and the alleged offence has been compounded, to continue the criminal proceedings thereafter would be an abuse of the judicial process." It is further observed and held by this Court in the aforesaid decision that to bring home the charge of conspiracy within the ambit of Section 120B of the IPC, it is necessary to establish that there was an agreement between the parties for doing an unlawful act. It is further observed and held that it is difficult to establish conspiracy by direct evidence. 7.4 In the case of V.Y Jose (supra), it is observed and held by this Court that one of the ingredients of cheating is the existence of fraudulent or dishonest intention of making initial promise or existence thereof, from the very beginning of formation of contract. It is further observed and held that it is one thing to say that a case has been made out for trial and as such criminal proceedings should not be quashed, but it is another thing to say that a person should undergo a criminal trial despite the fact that no case has been made out at all. 7.5 In the case of Sharad Kumar Sanghi (supra), this Court had an occasion to consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with a legitimate cause or grievance should be prevented from seeking remedies available in criminal law, a complainant who initiates or persists with a prosecution, being fully aware that the criminal proceedings are unwarranted and his remedy lies only in civil law, should himself be made accountable, at the end of such misconceived criminal proceedings, in accordance with law. One positive step that can be taken by the courts, to curb unnecessary prosecutions and harassment of innocent parties, is to exercise their power under Section 250 CrPC more frequently, where they discern malice or frivolousness or ulterior motives on the part of the complainant. Be that as it may." c) In Jay Shri & Anr. vs State of Rajasthan, Criminal Appeal No. ........ of 2024 (arising out of SLP (Crl.) No. 14423 of 2023), vide an order dated January 19, 2024, the Supreme Court held:- "Prima facie, in our opinion, mere breach of contract does not amount to an offence under Section 420 or Section 406 of the Indian Penal Code, 1860, unless fraudulent or dishonest intention is shown right at the beginning of the transaction. This Court has time and again cautioned about converting purely civil dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess against the accused can be quashed or set aside: (1) where the allegations made in the complaint or the statements of the witnesses recorded in support of the same taken at their face value make out absolutely no case against the accused or the complaint does not disclose the essential ingredients of an offence which is alleged against the accused; (2) where the allegations made in the complaint are patently absurd and inherently improbable so that no prudent person can ever reach a conclusion that there is sufficient ground for proceeding against the accused; (3) where the discretion exercised by the Magistrate in issuing process is capricious and arbitrary having been based either on no evidence or on materials which are wholly irrelevant or inadmissible; and (4) where the complaint suffers from fundamental legal defects, such as, want of sanction, or absence of a complaint by legally competent authority and the like. The cases mentioned by us are purely illustrative and provide sufficient guidelines to indicate contingencies where the High Court can quash proceedings." 84. In State of Haryana and Others v. Bhajan Lal and Others 1992 Supp (1) SCC 335, the Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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