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IN THE HIGH COURT AT CALCUTTA

CRIMINAL REVISIONAL JURISDICTION

APPELLATE SIDE

PRESENT:

THE HON’BLE DR. JUSTICE AJOY KUMAR MUKHERJEE

CRR 3931 of 2022

Rajendra Ramesh chandra Chaturvedi Nee Rajendra Chaturvedi & Anr.

Vs.

The State of West Bengal & Anr.

For the petitioners : Mr. Ayan Bhattacharya,Sr. Adv.

Mr. Neelesh Choudhury

Mr. Arpit Choudhury

Ms. Anuradha Poddar

For the Opposite Party No.2 : Mr. Sabyasachi Banerjee, Sr. Adv

Mr. Anand Keshri

Mr. Ayan Poddar

Ms. Syed Kishwar

Mr. Soumen Mohanty

Mr. Gourav Bose

Mr. Agnish Basu

For the State : Mr. Rudradipta Nandy, Ld. APP

Ms. Sonali Das

Heard on : 05.02.2026

Judgment on : 10.06.2026

Dr. Ajoy Kumar Mukherjee, J.

1. The instant application has been preferred seeking quashment of the

proceeding being CGR case no. 381 of 2020 arising out of Kalighat P.S. Case

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no. 19 of 2020 under section 406/418/420/467/468/471/120B of the IPC,

pending before learned Chief Judicial Magistrate Alipore.

2. The allegations levelled in the FIR interalia states as follows:-

In the year 2009 the defacto complainant company Mrs. Akriti

infrastructure PVT Ltd., being in search of suitable flat in Mumbai for

expansion of its business was approached by the petitioner no.1, who

introduced himself as the manging partner of M/s. Shreepati Investment, an

erstwhile partnership firm and represented that his firm was a renowned

real estate concern engaged in several large projects, including a mass

housing project styled ‘Shreepati Estate’ at greater Mumbai. The petitioners,

thorough false assurances of reputation, financial soundness and project

credential induced the complainant company to invest in two flats i.e. flat

no. 2001 admeasuring 4323.15 square feet and flat no. 2002 admeasuring

4694.38 square feet both on the 20

th Floor of the said project. The

petitioners promised timely completion, modern amenities and also assured

approvals from authorities. Believing such representations, the complainant

reposed faith and confidence in the petitioners herein. The Opposite party

(in short OP) no.2 was pressured into making advance payment even before

approvals, citing high demand in the market. Based on the representations

and assurances made by the petitioners herein, the OP no.2 was induced to

part away from their hard earned money aggregating to a sum of Rs. 3,

30,00,000/- between August, 2009 and February, 2010 by way of RTGS, as

an advance for the aforementioned flats. Subsequently an agreement for sale

was entered into with M/s. Shreepati Investment dated 15.03.2011 for

aforesaid two flats in the proposed building. The said payment was

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acknowledged in the said agreement dated 15.02.2011 and later dated

01.04.2012. Despite execution of the said agreement for sale and receipt of

advance given by the petitioner, they did not obtain the necessary sanction

and permission which were requisite for the commencement of the said

project. The representative for the OP No.2 continued to pursue the

petitioners for completion but they neither commenced nor completed

construction of the project. In 2013-2014, when questioned the petitioners

produced fabricated documents and forged municipal sanction plan to

mislead the opposite party no.2. Upon confrontation they admitted their

inability to obtain approval, thereby confirming their dishonest intention. In

order to avert legal consequences the petitioner requested that the advance

be treated as a loan. By letter dated 31.05.2015, they undertook for

repayment of the sum of Rs. 3,3,00,000/- with 12% cumulative interest per

annum. The said liability further re affirmed in letter dated 08.07.2016 and

again on 30.9.2017 on behalf of M/s. Shreepati Infra Investment Ltd.

undertaking to repay with 15% cumulative interest compounded quarterly.

Notwithstanding repeated written acknowledgements, the petitioner

defaulted on repayment and by 2019, they dishonestly denied the entire

transaction and evaded all responsibility and liability. Having left with no

other alternative, the representative of the OP No.2 lodged the complaint in

respect of which the abovementioned criminal proceeding has been initiated.

3. Being aggrieved by the said proceeding learned senior counsel for the

petitioner Mr. Ayan Bhattacharya argued that in the FIR the complainant

suppressed the NCLT proceedings. On March, 15, 2011 a similar agreement

was entered into by and between one Abhiyan Developers Pvt. Ltd., a sister

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concern of the FIR maker on one hand and Shreepati on the other.

Subsequently in 2018 two company petitions being CP (IB) /4148 of 2018

and CP (IB)/4149 of 2018 were filed by the complainant herein before the

National Company Law Tribunal, Mumbai Bench, under section 7 of the

Insolvency and Bankruptcy Code 2016 (in short IBC) for initiation of

Corporate Insolvency Resolution Process by the first informant and Abhiyan

respectively. On February 5, 2019 the first informant filed another affidavit

in connection with CP(IB)/4148 of 2018 wherein again there was no

allegation of forgery or production of fake document by Shreepati. On being

challenged by Shreepati the constitutional validity of the IBC, vide order

dated March 11, 2019 in WP No. 277 of 2019 and WP(civil) No. 281 of 2019,

the Supreme Court was pleased to stay all further proceedings pending

before NCLT. Thereafter by an order dated August, 9 2019 the Supreme

Court was pleased to dispose of the Writ Petition thereby upholding the

constitutional validity of the amendment of section 5 (8) of IBC. On October,

29, 2021 Shreepati went into CIRP in a proceeding initiated by Abhijan

being CP(IB) 4149 of 2018. The said proceeding was challenged before the

NCALT being Company Appeal no. (AT) (INC) 939 of 2021, when NCLAT was

pleased to set aside the order dated October 29, 2021 passed by Hon’ble

NCLT. Taking exception to an order dated March 7, 2021 passed by NCLAT,

Abhiyan filed a civil appeal being C.A. 3184 of 2022 before the Supreme

Court, where the court recoded that counsel for the respondent has made

available certain offers to the appellants to settle the dispute and it will be

open for the appellants to consider those options available to him and if it is

not acceptable the matter would be heard on merits. As Abhiyan declined to

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accept the offer made by Shreepati, the case was argued on merit when after

hearing, the Supreme Court was pleased to dismiss the same as withdrawn

4. Mr. Bhattacharya further argued that the first informant had

suppressed in the FIR the factum of initiation of NCLT proceeding and its

subsequent developments. The FIR was filed on 18

th January, 2020 i.e. just

after promulgation of the ordinance, dated December, 28, 2019 under

section 7 of the IBC by prescribing that a creditor in class can maintain a

petition under section 7 of IBC only if the petition is filed by 100 of such

creditors or 1/10

th of total number of such class.

5. Mr. Bhattacharya further argued that from the contour of the

allegation as made in the FIR it would be evident that the claim of the FIR

maker is essentially a civil one. It is evident that in 2009 a sum of Rs. 3.30

crore was paid to the Shreepati by the First informant for purchase of flats.

Subsequently on march 15, 2011, an agreement for sale was entered into.

The construction could not take place on account of objection from the jail

authorities. Due to such objection raised by jail authorities in 2014,

Shreepati filed a Writ Application under Article 226 of the Constitution of

India before the High Court of Judicature at Bombay, being Writ petition (L)

No. 6173 of 2014 when the court directed the State of Maharashtra to

consider and decide the representation of the petitioner dated May 22,2014

and further directed the Municipal Corporation to consider and decide the

representation of the petitioners for building permission after the State

Government decides the representation. Subsequently as per mutual

understanding on March 15, 2015, the said amount was converted into a

loan amount payable with 12% cumulative interest per annum. IBC

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proceedings were initiated in 2015. After failure in IBC proceeding in 2020

the present proceeding has been initiated as a substituted method of

recovery. Infact the FIR was invented in order to realise the loan amount.

6. Mr. Bhattacharya further argued that the first part of the FIR deals

with non-performance of contract by the petitioners thereby not handing

over possession of flat to the first informant. The second part of the

allegation made in the FIR revolves around conversion of the earnest money

into a loan transaction at the behest of the first informant because it is the

prosecution case that the earnest money was converted into a loan amount,

which was payable with 12% cumulative interest per month, and was

subsequently enhanced by 15%. Therefore, it is evident that on account of

such conversion of earnest money the transaction becomes a pure and

simple loan transaction.

7. He further argued that the fundamental objection of first informant

was that the special leave petition preferred by the petitioners herein has

foreclosed any further deliberation by the present petitioners. Such

argument of the OP no.2 is misplaced as rejection against an interim order

has no bearing at the final disposal stage. Furthermore the Supreme Court

while disposing the Special Leave Petition was pleased not to interfere at

that stage of the case only. Therefore the attempt of first informant to

extrapolate the order of the Supreme Court cannot be countenanced.

8. Mr. Bhattacharjee also argued that in the instant case the

complainant caused inordinate delay in lodging FIR. Therefore it is evidently

clear from the narration of the aforesaid facts and circumstances that while

the FIR maker had realized that he would be unsuccessful, before the NCLT

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to recover the amount, it has changed its stance and ignited criminal

machinery to recover its dues.

9. Therefore, a mere breach of agreement cannot constitute an offence of

cheating. Simply because a party to an agreement fails to perform its

promise, criminality cannot be attributed to it. Even if the mens rea

developed at a subsequent stage it cannot constitute the offence under

section 420 of the IPC. It is trite law that invitation to treat is no offence per

se as the same is not offer but mere invitation. The petitioners have already

deposited the said amount of 3.30 crores which is lying with the Registrar

General of the Hon’ble Court in terms of the interim order passed by this

Court.

10. The learned counsel for the petitioner further argued that the instant

criminal proceeding at the behest of the first informant is an attempt to

recover civil dues which became barred by the law of limitation. Though

there were two agreements by FIR maker and its sister concern Abhiyan

with Shreepati but only one criminal proceeding has been initiated as a test

case in order to recover the amount. The prevaricating stand taken in the

FIR and the NCLT proceeding are mutually destructive.

11. The petitioner also challenged the creation of jurisdiction. He argued

that the jurisdiction was created on the premises that in 2009 the registered

office of First informant was in Kolkata. But it cannot be lost sight of the

fact that NCLT proceeding was filed by the first informant at Mumbai and

not in Kolkata. No part of agreement was entered into in Kolkata. However

the present FIR has been filed at a particular police station of Kolkata,

which no way has territorial competence to investigate.

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12. Mr. Sabyasachi Banerjee learned senior counsel appearing on behalf

of the Op No.2 argued that the petitioner in their agreement dated

15.03.2011 had proposed to sell of flats in Shreepati Estate, wing A but in

the annexure 2 of the said agreement the petitioners had unilaterally

changed the description of the structure to Shreepati Jewels Diamond “D”

wing. From the supplementary affidavit filed by the petitioner, it is evident

that the petitioner had made a representation before the Hon’ble Home

Minister for obtaining sanction for construction of the flats in rehab wings.

Again the petitioner moved before Bombay High Court who directed the

State Authorities to consider the representations of the petitioner without

going into the merits of the case. Therefore, the petitioner, were very much

aware about the fact that they did not have the necessary sanction to

construct the flat and yet the accused/petitioner retained the advance

amount paid to them by the defacto complaint. Furthermore the petitioners

unilaterally transferred the said advance to unsecured loan amount, which

clearly demonstrates the intention to defraud the defacto complainant. The

conduct of the petitioner, both preceding and subsequent to the transaction

in question clearly reveals a pattern of deliberate mis-representation and

concealment, indicative of a malafide intent to deceive from the very

inception. The petitioners actions were neither inadvertence nor the product

of any bonafide mis understanding but rather formed part of a calculated

design to induce reliance through false assurance and thereafter make the

defacto complainant deliver a substantial sum of money as advanced for the

said properties. The sequence of events if viewed in their entirety

unmistakably establishes that the petitioner had no genuine intention to act

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in good faith and that deceit was embedded at the core of the transaction

itself.

13. The contention of the petitioner that the dispute is purely civil in

nature is wholly untenable. The FIR in the present matter, if taken at face

value discloses allegations constituting cognizable offence which necessarily

warrant investigation. The veracity of such allegation cannot be adjudicated

at this stage. Mr. Banerjee further argued that the existence of a particular

office where the cause of action is said to have accrued is a pure question of

fact and anything which is a question of fact necessarily falls within the

domain of investigation so long as the complaint discloses a prima facie

cognizable offence. At the interim stage when a challenge was raised as to

whether the FIR disclosed a prima facie case fit for investigation, this

Hon’ble Court answered in the affirmative thereby indicating that the FIR is

liable to be investigated. The jurisdiction of Kalighat police station was duly

attracted as the OP No.2 maintained corporate office at the address specified

in the complaint. The OP no.2 operated from two offices and was within its

right to lodge the complaint from either location. In such circumstances, the

question of jurisdiction becomes inconsequential particularly where the

complaint discloses a cognizable offence warranting investigation.

14. He further argued that the conduct of the petitioner in taking

contradictory stand before the Hon’ble High Court and the Hon’ble Supreme

Court demonstrates an attempt to mislead the judicial system. This is

because the petitioner contended before High Court that the contract stood

novated as the advance paid was treated as a loan at the instance of the OP

no.2, whereas in the Special Leave Petition before the Supreme Court, the

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petitioner pleaded that it was a unilateral decision on their part to convert

the advance towards flats into a loan in their books of account. Such

contradictory pleadings were not disclosed before this High court which

clearly reflects a malafide intention.

15. It is admitted position that the construction over the property remains

incomplete till date and the petitioner has not acted in bonafide manner

despite having no sanction from the competent authorities. Petitioner

accepted money from the complainant which itself speaks to their dishonest

conduct. The accused persons were fully conscious of the fact that the

necessary sanctions might not be forthcoming, yet they deliberately induced

the defacto complainant to part with a substantial sum of money towards

consideration for two flats. Furthermore to assure them of the viability of the

petitioner’s project they furnished forged and fabricated documents,

including the approved sanction plan and others, showcasing that the

necessary permission had been obtained. Such conduct amounts to

deliberate misrepresentation and dishonest inducement and forms the very

subject matter of investigation.

16. He further argued that a bare perusal of letter of complaint it clearly

indicates that the said amount of money was collected by inducing the

representatives of the complainants through false representation and

assurance to the effect that flats were selling like hot cake and that

approvals and sanctions would follow, thereby persuading them to part with

the funds without awaiting such approvals. The act of collecting crores of

rupees without possessing the requisite rights or permissions to undertake

construction, clearly demonstrate malafide intent and a calculated design to

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defraud and cheat the OP no.2 herein. The deception was not confined to

the initial inducement but also it was perpetuated when the petitioners was

sought to convert the earnest money into a loan, enticing the OP 2 with the

promise of interest accrual and portraying it as a financially advantageous

arrangement. Such actions reveal a continuous course of dishonest conduct

aimed at lawful gain at the cost and peril of the OP no.2

17. He further argued that the law is well settled that an FIR need not be

an encyclopaedia which would contain details of all the factual information

relating to the case. Therefore, the factum of NCLT proceeding has got no

bearing in deciding the present quashing application as jurisdiction of this

court is confined to examining as to whether allegations levelled in the

complaint at its face value discloses the commission of cognizable offences

or not. He further argued that the mere availability of a civil remedy cannot

by itself be a ground to quash criminal proceeding, where the allegations

disclose commission of a cognizable offence. Civil and Criminal proceedings

may validly arise from the same cause of action. The Apex Court in a catena

of judgments has consistently held and reiterated that the jurisdiction of

criminal court is not ousted merely because the same set of facts may give

rise to civil liability. What is material is whether the allegation as levelled in

the FIR, if taken at its face value satisfy the ingredients of a criminal offence.

If they do, the pendency of the civil proceeding is no bar to the continuance

of criminal proceeding. Therefore he prayed for dismissal of the instant

Revisional Application.

18. Mr. Nandi appearing on behalf of the state adopted the argument

made on behalf of OP no. 2.

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Decision

19. In the instant case the petitioners are booked under section

406/418/420/467/468/471 read with 120B of the Indian Penal Code. It is

not in dispute in the present case that over the self same issue one NCLT

proceeding was initiated. However, said NCLT proceedings and its

subsequent developments have got no reflection in the FIR. From the gist of

allegations as made in the FIR, it is clear that initially FIR makers inquired

whether M/s Shreepati Investment/accused had obtained necessary

approval and sanctions from appropriate authorities to commence the

proposed project, though it is also there case that the accused persons

assured them that they were in process of obtaining such approval. In the

FIR the complainant also alleged that even after knowing that they do not

have necessary approval and sanctions, being induced by the petitioners

flowery representation they made advance payment of Rs. 3, 30,00,000/-. It

is also admitted positon that thereafter the parties entered into an

agreement for sale on March, 15, 2011. The petitioners defence is that the

construction could not take place on account of objection from the jail

authorities as would be evident from the correspondences relied on in the

FIR. It is not in dispute that on account of such objection raised by the jail

authorities in 2014, Shreepati filed a Writ Application under Article 226 of

the Constitution of India before the High Court of Judicature at Bombay

being writ petition (L) no. 6173 of 2014. Said Writ Court by an order dated

July 24, 2014 directed the State of Maharashtra to consider and decide the

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representation of petitioner dated May, 2022, 2014 and further directed the

Municipal Commissioner to consider the petitioner’s application for building

permission, after the State Government decides the representation. Such

facts needs no corroboration and is based on unimpeachable documents.

20. In the middle portion of lengthy FIR complainant made following

averments.

“When we threatened the accused persons with criminal action for forging

documents and cheating us the accused persons got nervous and tried their

best to pacify us and thereby requested us to convert the said money lying

entrusted with them into loan on account of their financial crunch. In doing

so, M/s Shreepati build infra investments Ltd through its chairman cum

managing Director, being the said Rajendra Rameshchandra Chaturvedi,

vide letter dated 31 March, 2015, assured us that the entire amount of RS.

3,30,00,000/- would be paid along with 12% cumulative interest per annum

if they were unable to obtain requisite permission from the appropriate

authorities to commence construction, and that the same would be

converted to a loan account. However, thereafter there was no response from

their end.

Upon numerous request, reminders and follow-ups by our representative,

Rajendra Rameshchandra Chaturvedi and other directors of M/S Shreepati

Build infra investments ltd vide letter dated 8

th

july 2016, while confirming

such conversation into a loan account, categorically undertook to repay the

entire amount with a mutually agreed interest/compensation before 30

August 2016. However, despite such assurances, they did not make any

payment to our company and bargained time from us on various false pleas

and fake assurances.”

21. It is further averred in the FIR that the said accused persons did not

make any payment and once again confirmed that the sum of Rs.

3,30,00,000/- received by them during the period 2009-2010 would be

repaid to the complainant along with 15% cumulative interest compounded

quarterly, which the complainant reasonably believed that the accused

persons would make the entire payment along with 15% cumulative interest

compounded quarterly as per their confirmation of accounts.

22. In the above backdrop let me consider the applicability of sections 406

/418/420 IPC in the facts and circumstances of the present case. It is

needless to say that each of the said offences have specific ingredients.

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23. In order to constitute a criminal breach of trust (Section 406 IPC)

(1) There must be entrustment with persons for property or dominion over

the property, and

(2) The person entrusted:

(a) Dishonestly misappropriated or converted property to his own use, or

(b) Dishonestly used or disposes of the property or wilfully suffers any other

persons so to do in violation of:

(i) Any direction of law prescribing the method in which the trust is

discharge; or

(ii) Legal contract touching the discharge of trust (see; S.W. Palanitkar).

Similarly, in respect of an offence under section 420 IPC, the essential

ingredients are:

(1) Deception of any person, either by making a false or misleading

representation or by other action or by omission;

(2) Fraudulently or dishonestly inducing any persons to deliver any

property, or

(3) The consent that any persons shall retain any property and finally

intentionally inducing that person to do or omit to do anything which he would

not do or omit.

In order to constitute offence of cheating with knowledge that wrongful loss

may ensue to person whose interest offender is bound to protect, following

essential ingredients must present under section 418 IPC

(i) the accused cheated a person

(ii) at the time of offence, accused was bound by law or legal contract to

protect the interests of the person whom he cheated the obligation related to the

transaction involving the cheating and

(iii) accused had the knowledge that the act was likely to cause wrongful

loss to the person cheated and whose interest he was bound to protect.

24. In all the three aforesaid sections, mens rea i.e. intention to defraud or

the dishonest intention must be present and in the case of cheating, it must

be there from the very beginning or inception.

25. So far as allegation of criminal breach of trust is concerned

prosecution in order to succeed must show at least prima facie that there

was an entrustment, that there must be misappropriation or conversion to

one’s own use or use in violation of a legal direction or of any legal contract

and the misappropriation or conversion or disposal must be with a

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dishonest intention. In the instant case FIR itself makes it clear that the

accused firm had undertaken housing project and they assured the

complainant that the flats would be constructed by them and their said

project would have all facilities and amenities of modern life and the entire

project would be completed in a time bound fashion and they also

represented that the real estate market was on a rise and that such

investment would yield substantial returns to the company. In the FIR it has

also been made clear that when the complainant inquired whether M/S

Shreepati investment had obtained necessary approval and sanctions from

appropriate authorities to commence the proposed project, the accused

persons assured them that they were in the process of obtaining such

approval. It is also alleged in the FIR that the accused persons wrongfully

represented that due to a boom in the real estate market the flats were

selling like hot cakes and the complainant should not wait for sanctions and

approvals to be granted and should make advance payment so as to ensure

that accused reserve their rights over the intended properties and to enter

into a proper agreement later so that they will hold on to the flats from being

sold off to any other intending buyer.

26. From the materials available so far and the unimpeachable

documents relied by the petitioner there is nothing to say that aforesaid

representations were found to be false at the material time. Regarding the

promotion of the project by painting a rosy picture that the property is being

sold like a hot cake is not an inducement but can be taken as ‘invitation to

treat’. Infact the delay in constructing the project was apparently beyond the

control of the petitioners. The complainant had also earlier invoked civil

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remedy. This court while granted interim stay directed the petitioner to

deposit a sum of Rs. 3.30 crores to the Registrar General of this High Court

and the petitioners in compliance of the said order have already deposited

the same amount which is lying with this High Court. Therefore, neither

money was misappropriated nor the petitioners have avoided to deposit the

said amount before the court. The opposite party/complainant in their FIR

has prayed for recovery of money which they have paid to the accused

persons by way of advance. Infact the purpose for which the amount was

paid by first informant i.e. for allotment of flat in the housing project is still

subsisting. The deposit of such amount pursuant to the direction of this

court bears the testimony of such fact and therefore, the allegation of

criminal breach of trust hardly attracts.

27. So far as the allegations of cheating with knowledge that wrong full

loss may ensue to person under section 418, it is required to be shown that

accused must have the knowledge that his act would likely to cause

wrongful loss to the person cheated whose interest he is going to protect.

Similarly, in case of cheating and dishonestly inducing delivery of property

under section 420 there must be false representation and dishonest

intention and it must be from the beginning. In Md. Ibrahim Vs. State of

Bihar reported in (2009) 8 SCC 751 the Apex Court had laid down that the

following ingredients of offence of cheating are essential.

(i) deception of a person either by making a false or misleading

representation or by dishonest concealment or by any other act or omission

(ii) fraudulent or dishonest inducement of that person to either deliver

any property or to consent to the retention thereof by any person or to

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intentionally induce that person so deceived to do or omit to do anything

which he would not do or omit if he were not so deceived.

(iii) such act or omission causing or is likely to cause damage or harm

to that person in body, mind, reputation or property.

In other words offence of cheating consist of two classes of cases:-

(i) where the complainant has been induced fraudulently or

dishonestly.

(ii) When by reasons of such deception, the complainant has not done

or omitted to do anything which he would not do, or omit to do if

he was not so deceived or induced by the accused.

The facts and circumstance of the case it as stated above do not indicate

that any of the essential ingredients to constitute offence under section 418

or 420 of IPC is present.

28. In Delhi Race Club, 1940 Ltd. Vs. State of UP , reported in (2024)

10 SCC 690 Supreme Court observed that the distinction between mere

breach of contract and the offence of criminal breach of trust and offence of

cheating is a fine one and in case of cheating the intention of the accused at

the time of inducement should be looked into, which may be judged by a

subsequent conduct though for this subsequent conduct it is not the sole

test. However, mere breach of contract cannot give rise to a criminal

prosecution for cheating unless fraudulent or dishonest intention is shown

right from the beginning of the transaction i.e. the time when the offence is

said to have been committed. Therefore, simply because a party to an

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agreement fails to perform its promise does not attract criminality. It is also

well settled that even if guilty mind develop at a subsequent stage, it does

not constitute an offence punishable under section 420 of the IPC.

29. In the instant case it is evident from the FIR that in 2009 a sum of

Rs. 3.30 crores was paid to Shreepati by the first informant for purchase of

flats. Subsequently on March, 2011 an agreement for sale was entered into.

As the possession was not delivered to the first informant, on a mutual

understanding dated March 15, 2015 the said amount, was converted into a

loan amount payable with 12% cumulative interest per annum. Such

interest component was subsequently enhanced to 15%. It is also evident

that the construction could not take place on account of objection raised by

jail authorities as appearing from the correspondences exchanged and relied

in the FIR and for which upon mutual understanding on March 15, 2015,

the said amount was converted into a loan amount.

30. It is also not in dispute that IBC proceeding were initiated, in 2018

which did not succeed and thereafter the present criminal proceeding has

been initiated where in the FIR the complainant has claimed that Shreepati

had caused wrongful gain to itself and wrongful loss to the first informant to

the tune of Rs. 14,66,08,563/- as on 30

th January, 2020, whose interest the

said accused persons are liable to protect under the said transaction.

Furthermore at the end of the FIR the complainant clearly urges for recovery

of the amount. Therefore, from the aforesaid conspectus it is evident that

the grievance of the first informant is about the alleged wrong retention of

money so paid in 2009 and which was converted into a loan transaction in

2015. Needless to say that neither wrongful retention of earnest money nor

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non-payment of loan amount can give rise to a criminal prosecution since

criminal prosecution, cannot be construed to be a recovery proceeding.

31. It is not the case of the prosecution that Shreepati was not a

developer. It is also not the case of the prosecution that the land was not in

existence. Rather the writ petition filed before the Hon’ble High Court at

Bombay demonstrate the stage wise progress regarding the construction

work. It is also nobody’s case that the flat was constructed but the

possession was not handed over to the first informant. There is no dispute

that the petitioner/real estate company had taken earnest money from the

intending purchasers and it is apparent that no other customer has filed

any criminal prosecution against them. The proceeding initiated by the first

informant under section 7 of the IBC failed as the threshold of 10% home

buyers was not achieved by the first informant. It is also required to be

mentioned in this context that in the pleading filed in connection with NCLT

proceedings, neither the first informant nor its sister concern has ever

alleged the case of cheating or criminal breach of trust, forgery etc. Mr.

Bhattacharya on behalf of the petitioner argued that till date the agreement

dated 15

th March, 2011 against which Rs. 3.30 crore had been paid by the

first informant to Shreepati has not been cancelled. Therefore, in true sense

no money could be said to be due from the petitioners. Therefore, the

complainant though executed agreement for purchase and paid advance

consideration price in 2010 and though they had converted the same into a

loan agreement in the year 2015 but at the same time they have also

retained their allotment of the said flats in the project simultaneously.

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32. It is also well settled in view of judgment passed in Delhi Race Club

1940 Ltd. (Supra), that if it is a case of the complainant that offence of

criminal breach of trust as defined under section 405 IPC, punishable under

section 406 IPC is committed by the accused, then in the same breath it

cannot be said that the accused has also committed the offence of cheating

as defined and explained in section 415 IPC punishable under section 420

IPC. From the assertion made in the FIR, it is quite clear that the

complainant’s grievance is regarding failure of the appellants to pay the

outstanding amount inspite of complainants repeated demands. Therefore

essentially the present dispute between he parties at best relates to a breach

of contract. A mere breach of contract by one of the parties would not attract

prosecution for criminal offence in every case, unless it is shown that the

accused had fraudulent or dishonest intention at the time of making of

promise, which is conspicuously absent in the present case. In fact the

novation of contract on mutual understanding i.e. substituted agreement

gave a new cause of action.

33. Section 62 of the contract Act states if the parties to a contract agree

to substitute a new contract for it, or to rescind or alter it, the original

contract need not be performed. In this context reliance can be placed upon

observation made by Apex court in para 6 of the judgment passed in the

Union of India Vs. Subba Rao reported in AIR 1959 SC 1362 where it was

held that the substituted agreement gave a new cause of action and

obliterated the earlier one and if there was a valid defence for the

enforcement of the new contract in whole or in part, the party affected must

take the consequences. Therefore on account of such conversion of earnest

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money, the transaction became a pure and simple loan transaction in terms

of the provision under section 62 of the Indian Contract Act which deals

with novation of contract. As a result when the present case has been

novated in terms of section 62 of the Contract Act, all allegations prior to

loan transaction may not stand as the doctrine of novation erases the prior

transaction by an between the parties.

34. The petitioners are also booked under section 467/468/471 of IPC. It

is alleged that till 2013 Shreepati went on giving false assurance to the first

informant and in 2013 when the first informant approached Shreepati, they

showed certain documents claiming to be grant of permission from the

Municipal Authorities. However, such documents were not handed over to

the first informant. It is further alleged that in 2014, on enquiry the first

informant came to learn that those documents were not original.

Subsequently after confronting with Shreepati they accepted that they had

not received final and necessary permission and that they had shown forged

and fabricated document to the first informant.

35. However the facts remains that though the alleged forged/false

document were allegedly produced by the petitioners to the complainant

much prior to filing of the NCLT proceedings, yet in the said proceedings

there was no whisper by the first informant regarding production of any

forged/false document. Therefore, there appears to be every reasons to

believe that the allegation of production of forged/ false document is an

afterthought. It is also important to mention that the money was paid in the

year 2009 which is much prior to the alleged production of forged and false

documents allegedly in 2013. Therefore, even by going the allegations in the

22

FIR qua forgery no initial deception was made on the strength of the alleged

forged /false documents and therefore it has hardly any impact in the

impugned transaction. From the unimpeachable document annexed by the

petitioner, it appears that the petitioners obtained NOC of Chief Fire Officer

on 2

nd February, 2013 and also obtained NOC of High Rise Buildings on

21.03.2013. Petitioners specific case is that since there was no response

from the Hon’ble Home Department in respect of representation made for

Jail NOC, the petitioner again applied for Jail NOC to the Hon’ble Home

Department on 12

th February, 2014. It is submitted in the writ petition no.

1734 of 2013 that the Hon’ble Court by its order dated 08.05.2014 directed

the State Authorities to grant NOC in respect of buildings mentioned

therein. After passing the aforesaid order of High Court the petitioner again

made a representation to the Hon’ble Home Department on 22.05.2014,

requesting them to give the Jail NOC. It is also submitted by the petitioner

that subsequently they shifted 346 tenants to temporary alternate

accommodation and paid them license fee since the Municipal Corporation

were to demolish the unsafe buildings. As a result Shreepati filed another

Writ Petition no. 1673 of 2014 where the petitioners prayed for necessary

direction upon the State Authorities to grant Jail NOC and to consider and

dispose of the application for sanctioning the plans of Shreepati. Said writ

petition was disposed of on 27.04.2014 directing the State authorities to

consider and decide the petitioners representation dated 22.05.2014. It is

petitioner’s specific case that in the month of July 2024 the State

authorities have approved the sanction plan and have also issued

commencement certificate in favour of Shreepti and Mrs. Bhattacharya

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learned counsel appearing on behalf the petitioners submits that presently

the construction of proposed building is going on.

36. To attract penal consequences under section 464 of IPC the

prosecution must establish that the accused had made the fake document.

In the present case no such document connecting the appellant to the

making of fake document has been produced. Similarly offences under

section 468 IPC and section 471 IPC are not attracted if the requisite mens

rea i.e. dishonest intention to cause wrongful loss to the complainant and

the wrongful gain to the petitioner has been demonstrated. In the present

case admittedly the payment of Rs. 3.30 crores in 2009 was not dependent

on the production of alleged forged municipal documents allegedly procured

in 2013. It is also interesting in note that even on 05.02.2019 when the

complainant filed affidavit in connection with CP (IB) /4148 of 2018 there

was no allegation of forgery or production of fake documents by Shreepati.

The charge of forgery was only levelled in the FIR in 2020, though such

charges of forgery bereft of any material, in as much as the First Informant

could not produce any document to substantiate even prima facie the

charge of forgery.

37. One more aspect of the present case is that without offering any valid

explanation the FIR has been lodged after making inordinate delay of 11

years from the date of payment. In the instant case the money was paid in

2009 whereas the agreement for sale entered into in March, 15, 2011. Such

amount was converted to a pure and simple loan on March, 15, 2015,

however the FIR was lodged only on January, 18, 2020. No explanation for

such delay was found in the FIR. Approaching the court at a much belated

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stage for a rightful cause is generally considered as good ground for its

rejection at the threshold. Learned counsel for the petitioners submits even

if all the allegations in the complaint are taken as correct complaint has

been filed in the year 2020 while the agreement for sale was executed in

2011. No suit for specific performance of contract was filed within a period

of more than 9 years and in this circumstances the complaint is an abuse of

court process to enforce civil rights which had become legally unenforceable.

Therefore, if the facts of the case is appreciated there remains no shadow of

doubt that the complaint filed by the complainant after an inordinate

unexplained delay of about 11 years from the date of payment, is nothing

but sheer misuse and abuse of the process of law to settle the personal

scores with the petitioners and therefore, continuation of such malicious

prosecution would only be further abuse and misuse of process of law, more

particularly when neither the allegations made in the complaint disclose any

prima facie case against the petitioners. The allegations made against the

petitioners are absurd and improbable and that no prudent persons can

ever reach to a conclusion that there is sufficient ground for proceeding

against the petitioner/accused.

38. Mr. Banerjee learned counsel for the OP while opposed prayer for

quashment heavily relied upon the order passed by the Supreme Court on

17.11.2022 is SLP (Criminal NO. 36500/2022), whereby the court observed

that the High Court’s interim order directing to stay arrest on condition of

the petitioner’s depositing the amount of Rs. 3.30 crore and the direction

upon the petitioner to join investigation while staying the arrest does not

25

call for interference by Supreme Court. Therefore, according to Mr. Banerjee

the investigation must not be quashed in view of aforesaid order.

39. This court by an order dated 20.10.2022 stayed the warrant of arrest

and search warrant with the observation that the investigation in this case

shall proceed in accordance with law. Such order was passed while moved

the stay application by the petitioners as an interim relief against which the

aforesaid SLP was preferred and the order was passed. Therefore, the order

by which the Apex Court refused to interfere is purely interim in nature and

has been granted only till final disposal of the Application. The instant case

pertains to prayer for quashment of the proceeding. The Apex court in that

order also clarified that they do not find any reason to interfere with the

order “at this stage”. which means the effect of order was confined to a

particular stage.

40. It is well settled that the finding arrived at in dealing with interim

order pending disposal of the main petition, even if it relates to any material

question involved in the main petition, it may not take place of finding in the

final decision of the petition. The Apex Court in the case of Amaresh Tiwari

Vs. Lalta Prasad Dubey and another reported in (2000) 4 SCC 440 held

in para 10 that it is settled law that interim orders even though they may

have been confirmed by the higher courts never bind and do not prevent,

passing of contrary order at the stage of final hearing.

41. In conclusion I am of the view that the allegations made in the FIR

even if given face value and taken to be correct in its entirety do not disclose

any criminal offence. For the purpose of adjudication of the present

application this Court has taken into consideration not only the admitted

26

facts but also the pleading of the parties. What has been depicted may at

best amounts to negligence/and or breach of contract on the part of the

petitioners, which simplicitor does not constitute offences as alleged in the

FIR. Allegations must disclose the necessary ingredients which is completely

lacking in the present context. In All Cargo Movers India Pvt. Ltd. Vs.

Dhanesh Badarmal Jain and another, reported in (2017) 14 SCC 776,

the court categorically observed, it is one thing to say that the court at this

juncture would not consider the defence of the accused but it is another

thing to say that for exercising the inherent jurisdiction of this court it is

impermissible also to look to the admitted documents. It was further

observed criminal proceeding should not be encouraged when it is found to

be malafide or otherwise an abuse of the process of the court. The Superior

courts while exercising this power should also strive the ends of justice

(para 16).

42. In view of aforesaid discussion CRR 3931 of 2022 stands allowed.

43. The impugned proceeding being Kalighat P.S. Case no. 19 of 2020

under section 406/418/420/467/468/471/120B of the IPC pending before

learned Chief Judicial Magistrate Alipore is hereby quashed.

44. However since it is admitted positon that petitioner received an

amount of Rs.3.30 crores from the first informant, which has been kept

deposited before Registrar General of this Court in view of the direction

passed on 20.10.2022, the first informant/opposite party would be at liberty

to pray for refund of said amount from Registrar General of this court and in

the event of making such prayer by the op no. 2, the Registrar General shall

27

pay the said amount along with accrued interest to Opposite party no.2 on

proper receipt

Urgent Xerox certified photocopies of this Judgment, if applied for, be given

to the parties upon compliance of the requisite formalities.

(DR. AJOY KUMAR MUKHERJEE, J.)