IN THE HIGH COURT AT CALCUTTA

CRIMINAL REVISIONAL JURISDICTION

Appellate Side

Present:

The Hon’ble Justice Ajay Kumar Gupta

C.R.R. 2012 of 2018

Rohit Patni & Anr.

Versus

G. Jagwani & Anr.

For the Petitioners : Mr. S. Talukdar, Adv.

Mr. Anirudhya Dutta, Adv.

For the Opposite Party No. 1 : Ms. Rajnandini Das, Adv.

Mr. Karan Bapuli, Adv.

Heard on : 22.12.2025

Judgment on : 07.01.2026

2

Ajay Kumar Gupta, J.:

1. This instant Criminal Revisional application has been filed by the

petitioners/accused persons under Section 482 of the Code of

Criminal Procedure, 1973 (in short Cr.P.C.), seeking quashing of the

proceeding arising out of Complaint Case No. C-4252 of 2016 under

Sections 420/406/120B of the Indian Penal Code, 1860 (in short IPC)

initiated by the Opposite Party No. 1 under Section 156(3) of the

Cr.P.C. before the Learned Chief Judicial Magistrate, Alipore on 23

rd

November, 2016, which was subsequently converted to Section 200 of

the Cr.P.C., now pending before the Court of the Learned 5

th

Judicial

Magistrate, Alipore, South 24 Parganas.

FACTS OF THE CASE:

2. The aforesaid proceeding was initiated on the basis of a petition of

complaint filed by the opposite party no. 1 alleging, inter alia, that the

petitioners, being the Directors of M/s Ankit Metal & Power Ltd.,

introduced their company to opposite party no. 1’s company, M/s.

Jagwani Projects (P) Ltd. for purchasing and receiving regular supply

of Iron Ores Fines with an assurance of payments in accordance with

the supplies.

3. Based on such representation, the opposite party no. 1’s company

effected the supply of Iron Ores Fines from time to time, amounting to

a total sum of Rs. 34,26,406/-. It was alleged that despite lapse of a

3

reasonable period of time, the petitioners deliberately neglected to

make payments of the aforesaid dues, thereby causing financial loss

to the complainant. Repeated requests were made, both written and

verbal, including an advocate’s notice demanding payment, but it was

all in vain.

4. It was further alleged that on 25.10.2016, when representatives of the

opposite party no. 1’s company visited the office of the accused

persons demanding payment, the accused persons not only refused

to clear the dues, but also abused and humiliated them. Such

conduct of the accused revealed a clear modus operandi showing that

the petitioners had, from the inception, dishonestly induced the

complainant to supply goods without any intention to make payment,

thereby committing offences under sections 420/406/120B of the

IPC.

5. Upon hearing the complainant and on perusal of the petition filed

under Section 156(3) of the Cr.P.C., the learned Court below took

cognizance under Section 190(1) of the Cr.P.C. after converting it to a

complaint under Section 200 of the Cr.P.C. and transferred the case

to the Learned 5

th

Judicial Magistrate for its disposal.

6. The learned Trial Court, upon examining the witnesses on oath,

found sufficient materials against the accused persons suggesting

commission of offence punishable under Sections 420/406 of the

4

IPC. The petitioners contend that even considering the petition of the

complainant and the statement of the witnesses, the learned Court

took cognizance under Section 202 of the CrPC on solemn affirmation

as sacrosanct, no case under Sections 406/420 of the IPC and

inducement from the very inception can be said to have been made

out against the petitioners. Hence, this Criminal Revisional

application.

ARGUMENTS ON BEHALF OF THE PETITIONERS:

7. The petitioners contended that they are innocent and the complaint

under Section 156(3) of Cr.P.C. is concocted and fabricated. The

proceeding has been initiated on suppression of material facts and

documents before the Learned Magistrate in the petition, and the

same is wanting in bona fides and is frivolous, vexatious or

oppressive, and as such, the same is liable to be quashed.

8. In course of hearing, learned counsel further submitted that the

allegation made by the opposite party no. 1/complainant is purely

civil in nature. The complainant admittedly supplied Iron Ore Fines,

pursuant to business orders on different dates, to the petitioners’

company. Whatever transaction was made between the parties was a

business transaction. Disputes regarding dues could be decided by

the Civil Court and not by the Criminal Court. The question of

inducement or cheating to the supplier/complainant never arose

5

when there were terms of business transaction. Though the

complainant has supplied the Iron Ores Fines on several dates to the

petitioners’ company but the complainant did not disclose the general

terms of the purchase orders, being clause 5, that if any dispute

arose between the parties, the matter would be referred to

Arbitration.

9. The learned counsel further contended that there was nothing due

and payable by the Petitioners’ company against the transaction with

the opposite party no. 1’s company. The Petitioners’ company had

issued several letters to the complainant via e-mail regarding the low

quality as well as short supply of Iron ore fines supplied by the

opposite party no.1 company during the year 2014-15. However, they

received no response. The same was also not referred to arbitration to

resolve the issue between the parties.

10. Even for the sake of argument, if any dues are pending, that would

attract a civil suit for recovery. The complainant has filed this

complaint with an allegation for offence punishable under Sections

406/420 of the IPC though no ingredients fulfilled either in complaint

or through deposition. Therefore, the proceeding, initiated against the

petitioners, is clearly abuse of process of law and same is liable to be

quashed insofar as the petitioners are concerned.

6

11. Finally, the learned counsel submitted that the written complaint

made by the complainant before the Learned Trial Court is awful,

vague and non-specific and same does not disclose sufficient grounds

or ingredients to proceed against the petitioners. In such a situation,

criminal proceeding should not be allowed to be continued for

securing the ends of justice.

12. Learned counsel has placed reliance on the following judgments in

support of his submission as under:

i. Anil Mahajan Vs. Bhor Industries Ltd. and Anr.

1

particularly

paragraphs 3, 5, 6 and 8 to 10;

ii. Krishna Lal Chawla and Ors. Vs. State of Uttar Pradesh &

Anr.

2

particularly paragraphs 17 to 23, 26 and 27;

iii. V.Y. Jose and Anr. Vs. State of Gujarat and Anr.

3

;

iv. Naresh Kumar and Anr. Vs. State of Karnataka & Anr.

4

;

v. Delhi Race Club (1940) Ltd. and Ors. Vs. State of Uttar

Pradesh and Anr.

5

.

ARGUMENTS ON BEHALF OF THE OPPOSITE PARTY NO. 1:

13. Learned counsel appearing on behalf of the opposite party no. 1

vigorously objected the prayer for quashing of the proceeding and

1

(2005) 10 SCC 228;

2

(2021) 5 SCC 435;

3

(2009) 3 SCC 78;

4

2024 SCC OnLine SC 268;

5

2024 SCC OnLine SC 2248.

7

further submitted that the Petitioners have dishonestly induced the

complainant’s company to supply and deliver the iron ore fines on an

undertaking that cost of product/material would be paid by them

soon after receipt of the invoice/bills as they had placed orders after

satisfying the quality of Iron Ores Fines but they intentionally did not

pay the amount of Rs.34,26,406/- and further raised question about

the quality of Iron Ores Fines intentionally and thereby caused huge

loss to the complainant’s company.

14. It was further submitted that when some representatives were sent to

the accused persons asking them to remit the amount of Rs.

34,26,406/-, but they did not pay any heed to make payment, rather

insulted them in abusive language in order to avoid payment. It is

alleged that the accused persons intentionally induced the

complainant’s company to supply goods under the impression that

they had a good reputation in the market and would pay the invoices

in time, but they did not do so, and instead, duped and cheated,

causing huge loss. The accused persons deliberately refused to make

the payment of the bill amount.

15. The petitioners raised about the inferior quality of iron ore fines

supplied in the year 2014 only to avoid payment. They continued to

place fresh purchase orders in the year 2015 and received goods. Iron

ore fines were supplied to the petitioners as per the standard

8

percentage, containing 57.03% of Iron (Fe) i.e. within the percentage

stipulated in the purchase orders, and thus, the question of raising

inferior quality was only to stall payment intentionally from the very

inception. Not a single furtherance was paid to the complainant’s

company.

16. Learned counsel further contended that the judgments relied by the

petitioners are not at all applicable in the present facts and

circumstances of this case because if the facts prove one of several

possible offences, the accused can be charged with all of them or in

the alternative under the purview of Section 221 of the Cr.P.C.

Therefore, the court should not be justified in embarking upon an

enquiry as to the reliability or genuineness or otherwise of the

allegations made in the complaint at the initial stage.

17. Learned counsel has placed reliance on the following judgments in

support of her submission as under:-

i. Arun Bhandari Vs. State of U.P and Ors.

6

particularly

paragraphs 24 and 27;

ii. S.R. Sukumar Vs. S. Sunaad Raghuram

7

;

iii. Rocky Vs. State of Telengana & Anr.

8

;

iv. Pinku Roy and Ors. Vs. Ranjit Debnath and Anr.

9

.

6

(2013) 3 S.C.R. 961;

7

(2015) 9 S.C.R. 1105;

8

2025 INSC 1384;

9

2018:GAU-AS:218

9

FINDINGS AND ANALYSIS OF THIS COURT:

18. Heard the arguments and submissions made by the learned counsels

appearing on behalf of the respective parties and upon perusal of the

judgments referred to by the learned counsels, this Court finds that

the opposite party no. 1 had filed a petition of complaint alleging,

inter alia, that criminal breach of trust and cheating were committed

by the Petitioners with criminal conspiracy. The petitioners' failure to

pay any amount indicates their culpable intention from the

beginning. The petitioners allegedly did not clear any dues, in spite of

repeated requests and written communication.

19. The complainant alleged that the petitioners represented the

company as a reputable one at the beginning. Based on that, the

complainant supplied Iron ore fines worth Rs. 34,26,406/-, on credit

on different dates. The dispute arises when the petitioners herein fail

to make any payment despite repeated demands. The complainant

claims that the petitioners have no intention to pay, leading to alleged

cheating and misrepresentation. Whereas, the petitioners herein

contended that the dispute is purely civil in nature and the criminal

proceedings initiated against them are an abuse of process of law.

The offence as alleged is not at all attracted.

20. The petitioners raised concerns about the quality of Iron ore Fines.

The quality was lower than the average quality. It also drew the

10

attention of this court to the arbitration clause, if any disputes arose

between the parties in a business transaction, disputes should have

referred to the Arbitrator. The criminal complaint was intentionally

filed to recover the dues, basically based on a business transaction,

even though it is a civil dispute. The allegations of offence committed

by the accused are regarding breach of trust and cheating, as well as

criminal conspiracy under Section 420/406/120B of the IPC.

21. Before deciding the case in hand, this court would like to assess the

ingredients required for the aforesaid sections.

22. The differences in the ingredients required for an offence of Criminal

Breach of Trust and Cheating have been highlighted by the Hon’ble

Supreme Court in the case of Delhi Race Club (1940) Ltd. & Ors vs.

State of Uttar Pradesh & Anr.

10

in paragraph nos. 35 to 43 as

under: -

“Difference between criminal breach of trust and cheating

35. This Court in its decision in S.W. Palanitkar v. State of

Bihar [S.W. Palanitkar v. State of Bihar, (2002) 1 SCC 241: 2002

SCC (Cri) 129] expounded the difference in the ingredients required

for constituting of an offence of criminal breach of trust (Section

406 IPC) vis-à-vis the offence of cheating (Section 420). The

relevant observations read as under: (SCC p. 246, paras 9-10)

“9. The ingredients in order to constitute a criminal breach of

trust are : (i) entrusting a person with property or with any

dominion over property; (ii) that person entrusted : (a)

10

(2024) 10 SCC 690.

11

dishonestly misappropriating or converting that property to his

own use; or (b) dishonestly using or disposing of that property or

wilfully suffering any other person so to do in violation (i) of any

direction of law prescribing the mode in which such trust is to be

discharged, (ii) of any legal contract made, touching the

discharge of such trust.

10. The ingredients of an offence of cheating are : (i) there

should be fraudulent or dishonest inducement of a person by

deceiving him, (ii)(a) the person so deceived should be induced

to deliver any property to any person, or to consent that any

person shall retain any property; or (b) the person so deceived

should be intentionally induced to do or omit to do anything

which he would not do or omit if he were not so deceived; and

(iii) in cases covered by (ii)(b), the act of omission should be one

which causes or is likely to cause damage or harm to the person

induced in body, mind, reputation or property.”

36. What can be discerned from the above is that the offences of

criminal breach of trust (Section 406 IPC) and cheating (Section

420 IPC) have specific ingredients:

In order to constitute a criminal breach of trust (Section

406 IPC)

(1) There must be entrustment with person 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 disposed of the property or wilfully

suffers any other person so to do in violation of:

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

trust is discharged; or

12

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

Palanitkar [S.W. Palanitkar v. State of Bihar, (2002) 1 SCC 241

: 2002 SCC (Cri) 129] ).

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 person to deliver

any property, or

(3) The consent that any person shall retain any property and

finally intentionally inducing that person to do or omit to do

anything which he would not do or omit (see : Harmanpreet

Singh Ahluwalia v. State of Punjab [Harmanpreet Singh

Ahluwalia v. State of Punjab, (2009) 7 SCC 712 : (2009) 3 SCC

(Cri) 620] ).

37. Further, in both the 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.

38. In our view, the plain reading of the complaint fails to spell out

any of the aforesaid ingredients noted above. We may only say,

with a view to clear a serious misconception of law in the mind of

the police as well as the courts below, that if it is a case of the

complainant that offence of criminal breach of trust as defined

under Section 405IPC, punishable under Section 406IPC, 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 415IPC, punishable under

Section 420IPC.

39. Every act of breach of trust may not result in a penal offence of

criminal breach of trust unless there is evidence of manipulating

act of fraudulent misappropriation. An act of breach of trust

involves a civil wrong in respect of which the person may seek his

13

remedy for damages in civil courts but, any breach of trust with a

mens rea, gives rise to a criminal prosecution as well. It has been

held in Hari Prasad Chamaria v. Bishun Kumar Surekha [Hari

Prasad Chamaria v. Bishun Kumar Surekha, (1973) 2 SCC 823:

1973 SCC (Cri) 1082] as under: (SCC p. 824, para 4)

“4. We have heard Mr Maheshwari on behalf of the appellant and

are of the opinion that no case has been made out against the

respondents under Section 420 of the Penal Code, 1860. For the

purpose of the present appeal, we would assume that the various

allegations of fact which have been made in the complaint by the

appellant are correct. Even after making that allowance, we find

that the complaint does not disclose the commission of any offence

on the part of the respondents under Section 420 of the Penal

Code, 1860. There is nothing in the complaint to show that the

respondent had dishonest or fraudulent intention at the time the

appellant parted with Rs 35,000. There is also nothing to indicate

that the respondents induced the appellant to pay them Rs 35,000

by deceiving him. It is further not the case of the appellant that a

representation was made by the respondents to him at or before

the time he paid the money to them and that at the time the

representation was made, the respondents knew the same to be

false. The fact that the respondents subsequently did not abide by

their commitment that they would show the appellant to be the

proprietor of Drang Transport Corporation and would also render

accounts to him in the month of December might create civil liability

for them, but this fact would not be sufficient to fasten criminal

liability on the respondents for the offence of cheating.”

40. To put it in other words, the case of cheating and dishonest

intention starts with the very inception of the transaction. But in

the case of criminal breach of trust, a person who comes into

possession of the movable property and receives it legally, but

illegally retains it or converts it to his own use against the terms of

the contract, then the question is, in a case like this, whether the

14

retention is with dishonest intention or not, whether the retention

involves criminal breach of trust or only a civil liability would

depend upon the facts of each case.

41. The distinction between mere breach of contract and the

offence of criminal breach of trust and cheating is a fine one. 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, but for this, the subsequent conduct is not the

sole test. 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, it is

this intention, which is the gist of the offence.

42. Whereas, for the criminal breach of trust, the property must

have been entrusted to the accused or he must have dominion over

it. The property in respect of which the offence of breach of trust

has been committed must be either the property of some person

other than the accused or the beneficial interest in or ownership of

it must be of some other person. The accused must hold that

property on trust of such other person. Although the offence i.e. the

offence of breach of trust and cheating involve dishonest intention,

yet they are mutually exclusive and different in basic concept.

43. There is a distinction between criminal breach of trust and

cheating. For cheating, criminal intention is necessary at the time

of making a false or misleading representation i.e. since inception.

In criminal breach of trust, mere proof of entrustment is sufficient.

Thus, in case of criminal breach of trust, the offender is lawfully

entrusted with the property, and he dishonestly misappropriated

the same. Whereas, in case of cheating, the offender fraudulently

or dishonestly induces a person by deceiving him to deliver any

property. In such a situation, both the offences cannot co-exist

simultaneously.”

15

23. The Hon’ble Supreme Court further laid down legal propositions of

law with regard to the application of Sections 406 and 420 of the

Indian Penal Code in the said particular case as follows:

“54. When dealing with a private complaint, the law enjoins upon

the Magistrate a duty to meticulously examine the contents of the

complaint so as to determine whether the offence of cheating or

criminal breach of trust as the case may be is made out from the

averments made in the complaint. The Magistrate must carefully

apply its mind to ascertain whether the allegations, as stated,

genuinely constitute these specific offences. In contrast, when a

case arises from an FIR, this responsibility is of the police — to

thoroughly ascertain whether the allegations levelled by the

informant indeed fall under the category of cheating or criminal

breach of trust. Unfortunately, it has become a common practice for

the police officers to routinely and mechanically proceed to register

an FIR for both the offences i.e. criminal breach of trust and

cheating on a mere allegation of some dishonesty or fraud, without

any proper application of mind.

55. It is high time that the police officers across the country are

imparted proper training in law so as to understand the fine

distinction between the offence of cheating vis-à-vis criminal

breach of trust. Both offences are independent and distinct. The

two offences cannot coexist simultaneously in the same set of

facts. They are antithetical to each other. The two provisions of IPC

(now BNS, 2023) are not twins that they cannot survive without

each other.”

16

24. This Court also relied on a judgment of the Hon’ble Supreme Court in

the case of The State of Kerala v. A. Pareed Pillai and Anr.

11

,

wherein it was held as follows: -

"16. ……………… To hold a person guilty of the offence of cheating, it

has to be shown that his intention was dishonest at the time of

making the promise. Such a dishonest intention cannot be inferred

from the mere fact that he could not subsequently fulfill the promise."

25. Similarly, in the case at hand, there is nothing to show that the

petitioners had dishonest or fraudulent intentions at the time of

placing an order for supply of iron ore fines to the opposite party no.

1. The complainant raised a question about the outstanding dues

amount. Non-payment of outstanding dues amount or even breach of

contract, in a commercial transaction, by no stretch of imagination,

can be called dishonest inducements. It was/is purely a non-

fulfilment of contract to pay the outstanding Bill amount of a

commercial transaction, which definitely comes under civil dispute.

Mere unpaid dues will not make it a case of willful or dishonest

inducement or deception. In the present case, the petitioners have

raised about the quality of goods supplied time to time by email even

then the complainant’s company supplied goods time to time till

2015.

11

1972 Cri.L.J.1243

17

26. The purchase orders, annexed with the application, clearly show that

from 2014 to 2015, several orders were placed time to time for the

supply of Iron ore Fines (RM) involving crores of rupees. It appears

the petitioners have paid crores and crores to the complainant’s

company. Only disputes arise when a sum of Rs. Rs. 34,26,406/-

became due.

27. The purchase order further indicates some general terms before

supply of Iron ore fines (RM). Out of those terms, two are stipulated

herein in verbatim.

i. In the event, the supplier fails to deliver the goods of the ordered

quality or deliver different and/or sub-standard make/quality, the

company reserves right to reject the material and inform the supplier

to lift the material from our stores at his own cost. Incoming freight, if

any, paid for these shall also be recovered. Breakage/loss if any

during transit due to poor packing or handling shall be to supplier’s

account.

ii. ARBITRATION: All disputes of differences whatsoever arising

between the parties out of or in relation to work/supply of work

order/purchase order or effect to dis-contract or breach thereafter

shall be settled amicably. However, if the parties are unable to solve

them amicably, the same shall be finalized setting by arbitration and

reconciliation. The award may in pursuance thereafter shall be final

and binding on the parties.

18

28. Despite of aforesaid clear terms, the complainant’s company did not

avail the remedy rather filed a criminal complaint before the

magistrate under Section 156 (3) of the CrPC. However, the learned

magistrate converted the said complaint under Section 200 of the

CrPC and issued process against the petitioners. The Magistrate

should have considered the allegations made in the said complaint. It

is the duty of the Magistrate to issue process after being satisfied

with the prima facie materials, but there was failure on the part of

the Magistrate. It is clear from the substance that the dues are

basically from long-standing business transactions due to issue of

quality of goods supplied and are purely civil in nature. Requisite

averments so as to make out a case of cheating and criminal breach

of contract are absolutely absent.

29. The Hon’ble Supreme Court has emphasised on the duty of the

Magistrate while taking cognizance before issuing process in the Case

of Krishna Lal Chawla (supra), particularly paragraph nos. 17, 18

and 19 thereof are stipulated herein below:

“17. Immediately after the criminal justice system is set in

motion, its course is almost entirely dependent on the judicial

application of mind by the Magistrate. When a police complaint

is filed on the commission of a cognizable offence under Section

154 CrPC, the Magistrate decides if the charge against the

accused person is made out before the trial begins. Separate

19

procedure is prescribed if the complaint under Section 200 CrPC

is filed. The aforesaid provisions make it abundantly clear that

the Magistrate carries the stream of criminal proceeding

forward after it is set in motion by the informant/complainant.

Consequently, and automatically, the Magistrate also carries

the responsibility for ensuring this stream does not carry

forward in cases where it should not.

18. The aforesaid powers bestowed on the Magistrate have

grave repercussions on individual citizens' life and liberty.

Thus, these powers also confer great responsibility on the

shoulders of the Magistrate — and must be exercised with great

caution, and after suitable judicial application of mind.

Observations in a similar vein were made by this Court

in Pepsi Foods Ltd. v. Special Judicial Magistrate [Pepsi

Foods Ltd. v. Special Judicial Magistrate, (1998) 5 SCC

749 : 1998 SCC (Cri) 1400] : (SCC p. 760, para 28)

“28. Summoning of an accused in a criminal case is a

serious matter. Criminal law cannot be set into motion

as a matter of course. It is not that the complainant has

to bring only two witnesses to support his allegations in

the complaint to have the criminal law set into

motion. The order of the Magistrate summoning the

accused must reflect that he has applied his mind to the

facts of the case and the law applicable thereto. He has

to examine the nature of allegations made in the

complaint and the evidence both oral and documentary

in support thereof and would that be sufficient for the

complainant to succeed in bringing charge home to the

accused. It is not that the Magistrate is a silent spectator

20

at the time of recording of preliminary evidence before

summoning of the accused. The Magistrate has to

carefully scrutinise the evidence brought on record and

may even himself put questions to the complainant and

his witnesses to elicit answers to find out the

truthfulness of the allegations or otherwise and then

examine if any offence is prima facie committed by all or

any of the accused.”

(emphasis supplied)

This Court, thus, clearly emphasised that the power to issue a

summoning order is a matter of grave importance, and that the

Magistrate must only allow criminal law to take its course after

satisfying himself that there is a real case to be made.

19. Similarly, the power conferred on the Magistrate under

Section 202 CrPC to postpone the issue of process pursuant to a

private complaint also provides an important avenue for filtering

out of frivolous complaints that must be fully exercised. A four-

Judge Bench of this Court has eloquently expounded on this

in Chandra Deo Singh v. Prokash Chandra Bose [Chandra

Deo Singh v. Prokash Chandra Bose, AIR 1963 SC 1430 :

(1963) 2 Cri LJ 397] : (AIR p. 1433, para 7)

“7. … No doubt, one of the objects behind the provisions

of Section 202 CrPC is to enable the Magistrate to

scrutinise carefully the allegations made in the

complaint with a view to prevent a person named

therein as accused from being called upon to face an

obviously frivolous complaint. But there is also another

object behind this provision and it is to find out what

material there is to support the allegations made in the

21

complaint. It is the bounden duty of the Magistrate while

making an enquiry to elicit all facts not merely with a

view to protect the interests of an absent accused

person, but also with a view to bring to book a person or

persons against whom grave allegations are made.

Whether the complaint is frivolous or not has, at that

stage, necessarily to be determined on the basis of the

material placed before him by the complainant.”

(emphasis supplied)

Thus, it is clear that, on receipt of a private complaint, the

Magistrate must first, scrutinise it to examine if the allegations

made in the private complaint, inter alia, smack of an instance

of frivolous litigation; and second, examine and elicit the

material that supports the case of the complainant.”

30. In the decision in the case of Haridaya Ranjan Prasad Verma and

Ors. v. State of Bihar and Anr.

12

, the Hon’ble Apex Court also held

that: -

“15. In determining the question, it has to be kept in mind that the

distinction between mere breach of contract and the offence of

cheating is a fine one. It depends upon the intention of the accused

at the time of inducement which may be judged by his subsequent

conduct but for this subsequent conduct is not the sole test. Mere

breach of contract cannot give rise to criminal prosecution for

cheating unless fraudulent or dishonest intention is shown right at

the beginning of the transaction, that is the time when the offence

is said to have been committed. Therefore, it is the intention which

is the gist of the offence. To hold a person guilty of cheating it is

12

(2000) 4 Supreme Court Cases 168

22

necessary to show that he had fraudulent or dishonest intention at

the time of making the promise. From his mere failure to keep up

promise subsequently such a culpable intention right at the

beginning, that is, when he made the promise cannot be

presumed.”

31. In the instant case, the opposite party no. 1 does not allege that the

petitioners were deceived by fraudulent or dishonest inducement

from the beginning or at the time of order of supply of iron ore fines.

Rather, it appears that the complainant/opposite party no. 1

supplied iron ore fines on different occasions from 2014 to 2015.

Therefore, culpable intention, right from the beginning when the

orders were made, cannot be presumed simply from mere failure of a

person to keep up a promise subsequently. It depends upon the

intention of the accused at the time of inducement. The subsequent

conduct is not the sole test. The Court must decide on the basis of

the substance of the complaint and not on the basis of mere use of

the expression “cheating” in the complaint. It cannot be presumed

that an outstanding amount of Rs. 34,26,406/-, as alleged by the

opposite party no. 1, is not the outcome of the dishonest intention of

the petitioners from the very inception of the transaction.

32. This Court is of the view that neither the offence of cheating

punishable under Section 420 of the Indian Penal Code, 1860, nor

the offences punishable under Sections 406/120B of the Indian Penal

23

Code, 1860, are made out from the complaint converted under

Section 200 of the CrPC.

33. Upon perusal of the copy of petition of complaint, it further shows

that there was no fraudulent or dishonest inducement or deception

by intentional practice by the petitioners right from the inception of

order of supply of iron ore fines even if no payment has been made,

that will neither tantamount to deception, fraudulent or dishonest

inducement nor would it amount to deception by intentional means

right from the beginning. The petitioners represented the company as

a reputable one at the beginning is not sufficient. Therefore, the case

either under Section 420 or 406 of IPC, in the facts of this case, has

not been made out. Non-payment of the outstanding amount cannot

be termed as criminal act in the facts of this case. The disputes

between the parties apparently appear as civil disputes.

34. In the case of Paramjeet Batra v. State of Uttarakhand

13

, the

Hon’ble Court recognized that although the inherent powers of a High

Court under Section 482 of the Code of Criminal Procedure, 1973

should be exercised sparingly, yet the High Court must not hesitate

in quashing such criminal proceedings which are essentially of a civil

nature. This is what was held:

13

(2013) 11 SCC 673

24

“12. While exercising its jurisdiction under Section 482 of the Code

the High Court has to be cautious. This power is to be used

sparingly and only for the purpose of preventing abuse of the

process of any court or otherwise to secure ends of justice.

Whether a complaint discloses a criminal offence or not depends

upon the nature of facts alleged therein. Whether essential

ingredients of criminal offence are present or not has to be judged

by the High Court. A complaint disclosing civil transactions may

also have a criminal texture. But the High Court must see whether

a dispute which is essentially of a civil nature is given a cloak of

criminal offence. In such a situation, if a civil remedy is available

and is, in fact, adopted as has hesitate to quash the criminal

proceedings to prevent abuse of process of the court.”

(Emphasis supplied)

35. In light of the above discussions, together with averments contained

in the petition of complaint, this Court finds that the ingredients of

the offences alleged by the opposite party no. 1 are absent. Mere non-

payment of the outstanding amount based on quality dispute of

goods supplied does not constitute offences punishable under

Sections 406 and 420 of the Indian Penal Code, 1860. The allegation

in the complaint does not spell out any essential ingredients for the

commission of an offence under Sections 406 and 420 of the Indian

Penal Code, 1860.

36. The disputes between the parties are purely civil in nature, and

criminal proceedings of such nature should not be allowed to

continue any further against the present petitioners, otherwise it

25

would be an abuse of process of law. The Hon’ble Supreme Court has

time and again deprecated the proceedings initiated under Section

406/420 of the Indian Penal Code on the allegation of non-payment

of outstanding dues occurring in a commercial transaction. Attempt

to convert a civil dispute into a criminal matter, potentially aimed at

pressurizing the petitioners into settling the dispute or recovering

dues, by way of filing the criminal complaint, should not be

encouraged. Accordingly, this Court would like to invoke its inherent

power under Section 482 of the Code of Criminal Procedure, 1973 for

quashing of the said criminal proceeding.

37. Consequently, CRR No. 2012 of 2018 is allowed. Connected

applications, if any, are, also thus, disposed of.

38. The proceeding being Complaint Case No. C-4252 of 2016 under

Sections 420/406/120B of the Indian Penal Code, 1860 (in short IPC)

initiated by the Opposite Party No. 1 now pending before the Court of

the Learned 5

th

Judicial Magistrate, Alipore, South 24 Parganas is

hereby quashed insofar as the petitioners are concerned.

39. Let a copy of this Judgment be sent to the Learned Trial Court for

information.

40. Interim order, if any, stands vacated.

41. All parties shall act on the basis of a server copy of this judgment

duly downloaded from the official website of this Court.

26

42. Urgent photostat certified copy of this Judgment, if applied for, is to

be given as expeditiously to the parties on compliance of all legal

formalities.

(Ajay Kumar Gupta, J)

P. Adak (P.A.)