IN THE HIGH COURT AT CALCUTTA

CRIMINAL REVISIONAL JURISDICTION

APPELLATE SIDE

PRESENT:

THE HON’BLE JUSTICE UDAY KUMAR

CRR 4089 OF 2022

VISHAL AGARWAL

-VS-

STATE OF WEST BENGAL & ANR.

For the Petitioner : Mr. Rachit Lakhmani

Mr. Anurag Sardar

For the State : Mr. Pawan Kr. Gupta

Mr. Shreyash Kr. Singh

For the Opposite Party No.2 : Mr. Satadru Lahiri

Ms. Swati Chowdhury

Reserved on : 16.09.2026

Pronounced on : 12.10.2026

UDAY KUMAR, J.: –

1. The petitioner before this Court, Shri Vishal Agarwal, claims ownership

of an industrial factory shed measuring approximately 16,000 square

feet of built-up area, situated at J.L. No. 2, Mouza Jala-Dhulagori, P.S.

Sankrail, District Howrah, in the State of West Bengal. Opposite Party

No. 2, Shri Vivek Agarwal, acting in collaboration with one Shri Brij Lal

Bansal on behalf of a proposed corporate entity (Bansal Poly Plast Pvt.

Ltd., Delhi), approached the petitioner with the expressed objective of

taking the said premises on lease to establish a manufacturing plant for

CRR 4089 OF 2022 2

plastic granules. Following initial deliberations, the parties executed a

Leave and License Agreement on December 11, 2018, contemplating a

12-month tenure commencing from January 1, 2019, to December 31,

2019, with a structured monthly rent escalation and a mandatory one-

year lock-in period. However, a closer scrutiny of this document reveals

that on the date of its execution, the proposed corporate entity had not

even been incorporated. Consequently, the agreement remained an

inchoate draft: the name of the licensee company was left blank, board

resolution particulars were missing, and post-dated cheques for

monthly rent were never furnished.

2. To secure the transaction and facilitate preliminary requirements,

certain financial exchanges nevertheless transpired between the parties.

Opposite Party No. 2 issued a security deposit cheque for Rs.

19,25,760/- (Cheque No. 106894 dated December 12, 2018) drawn on

Axis Bank, Howrah, which the petitioner successfully encashed.

Furthermore, toward electricity security, a cheque for Rs. 25,00,000/-

(Cheque No. 106895 dated December 19, 2018) was handed over.

Subsequently, upon a revision of the required electrical load for the

manufacturing unit from 250 KVA to 200 KVA, a sum of Rs.

20,00,000/- was transferred vide Cheque No. 106896 dated December

20, 2018 with the mutual understanding that the earlier issued cheque

of Rs. 25 lakhs dated December 19, 2018 would be returned by the

petitioner.

3. A sharp divergence in the factual narrative emerges at this juncture.

Opposite Party No. 2 alleges that upon being permitted an inspection of

CRR 4089 OF 2022 3

the premises on December 24, 2018, it transpired that the foundational

representations made by the landlord, regarding a ready 250 KVA

electrical load capacity, pre-installed exhaust chimneys, and proper

industrial flooring suitable for heavy machinery, were entirely false,

rendering the premises structurally unfit for manufacturing.

Conversely, the petitioner-landlord contends that the property was

accepted by the tenants on an "as-is-where-is basis" pursuant to Clause

11 of the License agreement, and that at the explicit verbal request of

the tenants, the petitioner undertook extensive factory flooring work in

the said premises amounting to Rs. 44,35,000/-, utilizing the Rs. 20

lakhs Cheque transfer made by the Opposite Party No. 2, while leaving

a substantial balance unpaid.

4. This commercial friction rapidly deteriorated into an exchange of formal

notices and cross-litigation. On February 11, 2019, Opposite Party No.

2 issued a legal notice demanding the refund of Rs. 39,25,760/- and

the return of uncashed cheques, thereby rescinding the License

arrangement. Finding his dues unpaid and apprehending evasion, the

petitioner lodged a General Diary (G.D. No. 972) at Bidhannagar Police

Station (South) on February 17, 2019. Thereafter, on March 14, 2019,

the petitioner presented the prior unreturned electricity security cheque

(No. 106895 for Rs. 25 lakhs), which was dishonoured upon

presentation due to stop-payment instructions. This dishonour

culminated in the issuance of a statutory demand notice under Section

138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as

the ‘N.I. Act’) on March 18, 2019, and the subsequent filing of a

CRR 4089 OF 2022 4

complaint case before the Court of the learned Additional Chief Judicial

Magistrate, Sealdah, registered as N.I. Act Case No. 122 of 2019.

5. As a direct counter-blast to the initiation of the statutory cheque-

bounce proceedings under the N.I. Act, Opposite Party No. 2 lodged a

criminal complaint at Golabari Police Station on April 25, 2019, alleging

cheating, criminal breach of trust, and criminal intimidation under

Sections 420, 406, and 506 of the Indian Penal Code, registered as

Golabari P.S. Case No. 148 of 2019. Following an investigation

including recording statements under Section 164 of the Code of

Criminal Procedure, the investigating agency submitted Charge Sheet

No. 149 of 2021 dated May 26, 2021, culminating in G.R. Case No.

2138 of 2019 before the Learned Chief Judicial Magistrate at Howrah.

Parallelly, Opposite Party No. 2 instituted a civil money suit (Money Suit

No. 148 of 2019) before the 3

rd Court of the learned Civil Judge (Senior

Division) at Howrah, for the recovery of the deposited sums.

6. It is against this backdrop of parallel civil, criminal, and statutory

trajectories that the petitioner Shri Vishal Agarwal has invoked the

inherent jurisdiction of this Court under Section 482 of the Code of

Criminal Procedure, 1973. By filing the instant criminal revision

application, C.R.R. No. 4089 of 2022, the petitioner is seeking the

quashing of the criminal proceedings arising out of Golabari P.S. Case

No. 148 of 2019 (corresponding to G.R. Case No. 2138 of 2019),

pending before the Court of the Learned Chief Judicial Magistrate at

Howrah, on the principal grounds that the dispute is predominantly

civil in nature, that the essential ingredients of Sections 420 and 406

CRR 4089 OF 2022 5

IPC are absent and mutually destructive, and that the criminal

proceeding is a malicious counter-blast designed to derail the Section

138 N.I. Act proceedings.

7. Mr. Rachit Lakhmani, learned counsel appearing for the petitioner,

submitted that the continuation of the criminal proceedings in G.R.

Case No. 2138 of 2019 constitutes a gross and flagrant abuse of the

process of law. He contended that when the foundational facts are

examined alongside contemporaneous documents and the chronological

sequence of notices, they indubitably establish that the dispute is

purely commercial in character, having been converted into a criminal

prosecution solely as a retaliatory pressure tactic.

8. The primary challenge of the Mr. Lakhmani is that the opposite party's

criminal complaint alleging initial deception and fraudulent

inducement, is entirely contrary to admitted records, inherently

improbable, and unworthy of belief by any prudent person. Expanding

on his challenge, he pointed out that Opposite Party No. 2 (Vivek

Agarwal), a self-admitted industrialist and businessman of substantial

means running multiple manufacturing units across states, explicitly

admitted in his legal notice dated February 11, 2019, that he personally

approached the petitioner and selected the factory premises after

careful evaluation. Furthermore, the Leave and License Agreement

dated December 11, 2018, was duly signed and executed by both

parties at the tenant's residence. Under Clause 11 of the said License

agreement, the opposite party No. 2 expressly accepted the property on

an "as is where is basis" after full inspection, and under Clause 12

CRR 4089 OF 2022 6

thereof, agreed that any customization, civil work, repairs, or

beautification of the said leased premises would be carried out

exclusively at his own expense. Consequently, the opposite party No. 2

is legally estopped from turning around and claiming that he was

fraudulently induced into entering the transaction or that the

landlord/petitioner failed to develop the property to his satisfaction.

9. Addressing the specific defence taken by the opposite party No. 2 in its

affidavit-in-opposition, Mr. Lakhmani submitted that the labelling the

December 11, 2018 agreement as an unexecuted worthless draft while

simultaneously admitting to the execution of stamped pages and the

making of substantial financial payments, such as encashing the

security deposit cheque of Rs. 19,25,760/- and of another amount Rs.

20 lakhs vide cheque transfer, exposes a glaring contradiction. He

reiterated that at the explicit verbal request of the Opposite Party No. 2,

the petitioner undertook extensive factory flooring work amounting to

Rs. 44,35,000/-, leaving a substantial balance unpaid, and that the

sudden narrative of fraud is nothing more than an afterthought

designed to evade legitimate commercial commitments.

10. It was vehemently urged that the criminal complaint was lodged on

April 25, 2019, purely as a malicious after-thought and counter-blast to

the statutory cheque bounce proceedings initiated by the petitioner

under the provisions of the N.I. Act. The chronology demonstrates that

after the Opposite Party No. 2 abruptly walked away, the petitioner

presented the electricity security cheque (No. 106895 for Rs.

25,00,000/-) issued by the said Opposite Party on March 14, 2019.

CRR 4089 OF 2022 7

Upon its dishonour due to stop-payment instructions, the petitioner

promptly issued a statutory demand notice on March 18, 2019, and

instituted a complaint under Section 138 of the N.I. Act (NI Act Case

No. 122 of 2019) on April 18, 2019. It was only upon feeling the

pressure of imminent prosecution under the N.I. Act that the opposite

party cooked up a false criminal narrative and filed the Golabari P.S.

FIR as a retaliatory shield.

11. To substantiate his such contention, learned counsel for the petitioner

placed strong reliance upon the binding judicial principles laid down by

the Hon’ble Supreme Court in Sunil Kumar v. Escorts Yamaha Motors

Ltd. & Ors., [(1999) 8 SCC 468] and in D.P. Gulati, Manager Accounts,

JetKing Infotrain Limited v. State of Uttar Pradesh & Anr., [(2015) 11 SCC

730], wherein it has been authoritatively held that an FIR lodged as a

counter-blast to cheque-bounce proceedings out of personal vendetta

constitutes an abuse of the process of law and is liable to be quashed.

Additionally, the learned counsel for the petitioner has also relied on

Mahmood Ali & Ors. v. State of U.P. & Ors., [(2023) 15 SCC 488], wherein

it has been underscored that to ascertain whether an FIR is tainted by

an ulterior motive of wreaking vengeance, the Court must look beyond

the bare text of the complaint into the attending circumstances and the

timeline leading up to its filing.

12. Mr. Lakhmani further submitted that even if the allegations in the

charge-sheet are accepted at their face value, the essential ingredients

constituting offences under Sections 420 and 406 of the IPC are

fundamentally missing insomuch as to make out an offence of criminal

CRR 4089 OF 2022 8

breach of trust punishable under Section 406 IPC, there must be a

clear entrustment of property or dominion over it acquired honestly,

followed by subsequent dishonest misappropriation. In the present

case, no money or property was ever entrusted in a fiduciary capacity;

rather, the funds received were standard security deposits and part-

payments made in furtherance of a commercial lease transaction.

13. Mr. Lakhmani contends further that the offence of cheating under

Section 420 IPC requires a dishonest or fraudulent intention (mens rea)

from the very inception of the transaction, which has not been

demonstrated in the present case. The petitioner argued that the

opposite party No. 2 cannot blow hot and cold simultaneously by

alleging a dishonest intention from inception to attract punishment

under Section 420 IPC while also claiming that property was lawfully

entrusted and subsequently misappropriated to attract the offence of

criminal beach of trust punishable under Section 406 IPC.

14. In support of his such contention, he relied heavily upon the

authoritative pronouncements of the Hon’ble Supreme Court in Lalit

Chaturvedi & Ors. v. State of U.P. & Anr., [2024 SCC OnLine SC 171] and

Delhi Race Club (1940) Ltd. & Ors. v. State of Uttar Pradesh & Ors.

[(2024) 10 SCC 690], wherein the Apex Court settled that Sections 406

and 420 of the IPC cannot be simultaneously applied to the same

transaction, as the mental elements and ingredients of both offences

are mutually destructive and legally inconsistent.

15. Mr. Lakhmani also drew the attention of this Court to a glaring anomaly

on the face of the police record itself, where the Investigating Officer, in

CRR 4089 OF 2022 9

the concluding paragraphs of the charge-sheet No. 149/2021, explicitly

recorded that the dispute essentially ‘arises out of a tenancy-related civil

matter’, contending that the said charge-sheet was submitted not on

the basis of independent criminal culpability as investigated by the said

Investigating Officer, but merely under direction and administrative

pressure from superior police authorities.

16. Finally, Mr. Lakhmani submitted that the Opposite Party No. 2 has

already approached the proper and efficacious forum for the

adjudication of their commercial grievances by instituting Money Suit

No. 148 of 2019 before the Civil Court at Howrah, wherein rival claims

regarding lease rentals, security adjustments, and flooring expenses

(amounting to Rs. 24.35 lakhs incurred by the petitioner) are actively

pending trial. Permitting a parallel criminal proceeding to continue over

a failed commercial lease agreement would convert the criminal court

into an instrument for recovery and persecution. Therefore, he prayed

that the criminal proceedings in G.R. Case No. 2138 of 2019 initiated

against the petitioner, along with the charge-sheet arising out of

Golabari P.S. Case No. 148 of 2019, be quashed and set aside in the

interest of justice.

17. Per contra, Mr. Satadru Lahiri, learned counsel appearing on behalf of

Opposite Party No. 2 (the complainant/tenant), and Mr. Pawan Kumar

Gupta, the learned Counsel for the State/Opposite Party No 1,

strenuously opposed the instant criminal revisional application and

submitting that the petition under Section 482 of the Code of Criminal

Procedure, 1973, is wholly misconceived, devoid of merit, and liable to

CRR 4089 OF 2022 10

be dismissed in limine with exemplary costs. It was contended that the

foundational materials collected by the investigating agency during a

thorough and impartial investigation have conclusively established a

prima facie case of criminal culpability against the petitioner-landlord

under Sections 420, 406, and 506 of the Indian Penal Code,

culminating in Charge Sheet No. 149 of 2021, and that this Court

ought not to interfere with such findings in exercise of its extraordinary

or inherent jurisdiction.

18. Elaborating upon the factual narrative from the opposite party's

perspective, it was submitted that the transactions between the parties

was vitiated by active deception and false representations right from its

inception. The opposite party, by way of false representation, was

allured into believing that the factory shed possessed all mandatory

industrial prerequisites, specifically a ready 250 KVA electrical

connection, proper industrial-grade flooring, and pre-installed exhaust

chimneys. The opposite party contended that the petitioner created a

false commercial urgency, inducing them to execute the draft Leave and

License Agreement on December 11, 2018, and part with substantial

sums of money totalling Rs. 39,25,760/- (comprising a security deposit

of Rs. 19,25,760/- via cheque and an electricity deposit of Rs.

20,00,000/- via cheque as well), alongside a blank electricity security

cheque of Rs. 25,00,000/- (Cheque No. 106895).

19. The learned counsels for the opposite parties forcefully highlighted that

it was only when physical inspection was finally permitted on December

24, 2018, that the complete fraud stood exposed, revealing that the

CRR 4089 OF 2022 11

shed lacked the promised electrical infrastructure, functional exhaust

chimneys and industrial flooring. Consequently, the transaction never

fructified, possession was never formally taken, and the License

agreement remained an incomplete draft. Finding themselves duped,

the opposite party rescinded the arrangement through the legal notice

dated February 11, 2019, demanding the refund of their deposited

monies.

20. Addressing the petitioner's plea of a "counter-blast," learned counsels

for the opposite parties submitted that the demand for a refund was

officially raised via the legal notice dated February 11, 2019, which the

petitioner chose to ignore. Instead, actuated by mala fides, the

petitioner illegally deposited the obsolete electricity security cheque (No.

106895 for Rs. 25 lakhs) on March 14, 2019, long after a replacement

amount of Rs. 20 lakhs had been paid via cheque, triggering formal

demand notice under Section 138 N.I Act as a pre-emptive shield, as

such the criminal prosecution initiated by the Opposite Party No. 2

cannot be termed a retaliatory counter-blast.

21. They further pointed out that the police complaint resulting in Golabari

P.S. Case No. 148 of 2019 was instituted on April 25, 2019, and the

charge sheet was submitted on May 26, 2021, whereas the petitioner's

Section 138 proceedings and subsequent summons only caught up with

the opposite party much later. Therefore, the criminal prosecution

initiated by the tenant cannot, by any stretch of imagination, be termed

a retaliatory counter-blast.

CRR 4089 OF 2022 12

22. The learned counsels for the opposite parties further contended that the

contentions raised by the petitioner, such as the condition of the

premises, the execution of flooring work worth Rs. 44.35 lakhs, and the

intent behind the financial transactions, are deeply rooted in disputed

questions of fact. Relying on a catena of decisions by the Hon'ble

Supreme Court settling the legal position, including Sesami Chemicals

Private Limited v. State of Meghalaya & Ors. [(2014) 16 SCC 711], S.P.

Gupta v. Ashutosh Gupta [(2010) 6 SCC 562], Kamal Shivaji Pokarnekar

v. State of Maharashtra & Ors., [(2019) 14 SCC 350] and Priti Saraf &

Anr. v. State (NCT of Delhi) & Anr., [(2021) 16 SCC 142], the opposite

parties urged that this Court, while exercising powers under Section

482 Cr.P.C., does not function as a trial court, cannot conduct a mini-

trial, and must not embark upon a roving inquiry into competing

factual versions. Once the police report and materials collected during

investigation disclose a prima facie commission of offences, the

prosecution must be permitted to proceed to its logical conclusion

through trial.

23. Regarding the concurrent invocation of Sections 406 and 420 IPC,

learned counsel for the opposite parties submitted that a criminal

transaction can manifest multiple facets, and the exact framing of

charges remains within the domain of the Trial Court under Section

216 or Section 228 of the Code, as recognized in State of Karnataka v.

M. Devendrappa & Anr., [(2002) 3 SCC 89]. Furthermore, the pursuit of

a civil remedy (such as Money Suit No. 148 of 2019 filed by the O.P. No.

CRR 4089 OF 2022 13

2 for recovery) does not ipso facto oust criminal liability where prima

facie case is clearly made out.

24. Finally, they pointed out that the petitioners approached this Court

with unclean hands, having suppressed material coexistent

communications, including the Opposite Party No. 2’s refund demand

notice dated February 11, 2019, and the advocate's reply dated April

03, 2019 to the petitioner’s demand notice dated March 18, 2019. On

all these counts, learned counsels for the opposite parties pray for the

outright dismissal of the instant criminal revisional application so that

the trial may commence unhindered.

25. Having heard the learned counsels appearing for the respective parties

at length, and upon a meticulous examination of the revisional

application, pleadings, concurrent documents, police charge-sheet, and

authoritative judicial pronouncements, this Court finds that the proper

disposal of the instant criminal revision application centres upon the

determination of the following core questions:

Firstly, Whether the dispute arising out of the failed

commercial lease transaction is predominantly and exclusively

civil in nature, thereby rendering the initiation and continuation

of criminal proceedings under Sections 420, 406, and 506 IPC

an abuse of the process of Court?

Secondly, Whether the essential ingredients necessary to

constitute the offences of cheating punishable under Section

420 IPC and criminal breach of trust punishable under Section

CRR 4089 OF 2022 14

406 IPC are prima facie disclosed, or whether the simultaneous

invocation of both sections in respect of the same transaction is

legally contradictory and mutually destructive?

Thirdly, Whether the criminal proceeding registered as

Golabari P.S. Case No. 148 of 2019 is a malicious counter-blast

instituted solely as a pressure tactic to circumvent the statutory

cheque-bounce proceedings initiated earlier by the petitioner

under Section 138 of the Negotiable Instruments Act, 1881?

Fourthly, Whether the rival factual contentions of the parties

constitute disputed questions of fact warranting a full-fledged

trial, or whether they justify interference of this Court within the

limited scope of inherent jurisdiction under Section 482

Cr.P.C.?

26. For the determination of the first question, I have taken into

consideration the foundational facts to examine the nature of the

transaction and the subsequent conduct of the parties as reflected in

the connected documents. The genesis of the present multi-forum

litigation traces back to November and December 2018, revolving

around a commercial real estate transaction that ultimately failed to

materialize. Indubitably, the petitioner is the owner of a factory shed

measuring approximately 16,000 square feet of built-up area situated

at Sankrail Industrial Park, Howrah. Opposite Party No. 2, Shri Vivek

Agarwal, acting in collaboration with Shri Brij Lal Bansal on behalf of a

CRR 4089 OF 2022 15

proposed corporate entity (Bansal Poly Plast Pvt. Ltd.), approached the

petitioner to lease the said premises/factory shed for establishing a

manufacturing plant for plastic granules. On December 11, 2018, the

parties executed a document styled as a Leave and License Agreement

contemplating a 12-month tenure commencing from January 01, 2019.

27. The core grievance urged by Opposite Party No. 2 in the impugned

criminal complaint is that he was deceived into parting with security

deposits totalling ₹39,25,760/- and issuing an electricity security

cheque of ₹25,00,000/- on the strength of false representations made

by the landlord regarding a ready 250 KVA electrical load, pre-installed

exhaust chimneys, and proper industrial flooring. However, upon a

deeper and holistic scrutiny of the record, this Court finds that the

opposite party’s own contemporaneous legal notice dated February 11,

2019, explicitly records that following their instructions, the premises

were selected and inspected at the time of executing the agreement .

Furthermore, Clause 11 of the Leave and License Agreement expressly

dictates that the licensee/Opposite Party No. 2 accepted the property on

an "as is where is basis" after full inspection, while Clause 12 thereof

stipulated that any customization, civil work, or repairs were to be

executed by the licensee/Opposite Party No. 2 at his own personal

expense.

28. When these foundational clauses of the License Agreement and

admissions of the Opposite Party No. 2 as reproduced from the demand

notice issued by him, are juxtaposed with subsequent events namely,

the disputes regarding flooring work, failure to pay monthly lease

CRR 4089 OF 2022 16

rentals, dishonour of security cheques, and eventual rescission of the

said License Agreement, it becomes abundantly clear that the present

lis revolves around the breach, frustration, and eventual fallout of a

commercial tenancy contract. Both parties have already recognized the

true character of this dispute by submitting themselves to the

jurisdiction of the Civil court at Howrah through Money Suit No. 148 of

2019, wherein the Opposite Party No. 2/tenant seeks the refund of

deposits and the Petitioner/landlord has lodged a comprehensive

counter-claim for unpaid rent dues and flooring expenses amounting to

Rs. 24.35 lakhs.

29. It is a well-settled principle of criminal jurisprudence, repeatedly

underscored by the Hon’ble Supreme Court, that civil liability cannot be

converted into criminal prosecution simply because a commercial

bargain has soured or a subsequent contractual breach has occurred.

While a breach of contract or unfulfilled commercial expectations may

give rise to a robust civil remedy for damages or recovery of money, it

does not ipso facto constitute an offence of cheating unless the

foundational ingredients of criminal intent from the inception of the

transaction are unmistakably demonstrated.

30. In this context, this Court draws immense guidance from the

authoritative pronouncement of the Apex Court in Dalip Kaur & Ors. v.

Jagnar Singh & Anr., [(2009) 14 SCC 696], wherein the Court observing

that civil disputes should not be permitted to be dragged into criminal

proceedings to exert undue pressure, had categorically held that an

ordinary breach of contract does not constitute the offence of cheating

CRR 4089 OF 2022 17

unless it is shown that the accused had fraudulent or dishonest

intention right from the inception of the transaction.

31. Similarly, in Sarabjit Kaur v. State of Punjab & Anr., [(2023) 5 SCC 360],

the Hon'ble Supreme Court emphasized that a civil dispute arising from

a mere breach of an agreement should not be weaponized into a

criminal prosecution, as doing so amounts to a clear abuse of the

process of the court. The relevant observations underscore that those

commercial transactions carrying civil remedies must find their

resolution in civil forums unless the ingredients of criminal deception

are manifestly and independently disclosed ab initio. Accordingly,

Question No. 1 is answered in the affirmative in favour of the petitioner,

holding that the dispute is predominantly and exclusively civil in

nature.

32. Now, for determination of the second Question, this Court turns to

evaluate the penal criminality alleged against the petitioner under

Sections 420 and 406 IPC. As it appears from the perusal of police

records, it is fact that the investigating agency, upon completion of

investigation in Golabari Police Station Case No. 148 of 2019,

submitted Charge Sheet No. 149 of 2021 on May 26, 2021,

recommending the petitioner to stand trial for offences punishable

under Sections 420, 406, and 506 of the Indian Penal Code, 1860. The

core question before this Court is whether the ingredients necessary to

sustain these penal provisions are legally discernible from the factual

matrix, or whether the simultaneous invocation of both Sections 406

CRR 4089 OF 2022 18

and 420 IPC suffers from an incurable legal contradiction and mutual

destructiveness.

33. To examine the sustainability of the offence of ‘cheating’ punishable

under Section 420 IPC, there must be a dishonest or fraudulent

intention (mens rea) from the very inception of the transaction. A mere

subsequent failure to fulfil a promise, or a eventual disagreement over

lease terms or a contractual default, by any stretch of imagination,

cannot be elevated to the offence of cheating unless a fraudulent design

to deceive the complainant from the outset is established.

34. In the present case, the record reflects that the parties executed the

‘Leave and License Agreement’ on December 11, 2018, and financial

exchanges (such as the encashment of security deposit cheque No.

106894 for ₹19,25,760/- and a subsequent cheque transfer of

₹20,00,000/-) took place in furtherance of a bona fide commercial

tenancy negotiations, with the opposite party's legal notice

acknowledging that the premises were selected and inspected following

their commercial objectives.

35. Conversely, to constitute an offence of ‘criminal breach of trust’

punishable under Section 406 IPC, there must be a clear and

unambiguous entrustment of property or dominion over it, acquired

lawfully and honestly, followed by subsequent dishonest

misappropriation or conversion to the accused's own use in violation of

a legal direction. In the context of a commercial lease, standard security

deposits and part-payments made toward contractual obligations do not

constitute entrustment in a fiduciary or criminal capacity; rather, they

CRR 4089 OF 2022 19

represent commercial advances subject to contractual adjustments and

liabilities.

36. In such event, the most critical legal infirmity troubling the impugned

charge-sheet is the simultaneous and contradictory invocation of

Sections 406 and 420 IPC in respect of the exact same transaction. It is

legally impossible for the prosecution/ complainant to blow hot and

cold air in the same breath inasmuch as simultaneously allege a

dishonest intention from inception (to attract punishment under

Section 420 IPC) while also asserting that property was lawfully

entrusted and subsequently misappropriated (to attract punishment

under Section 406 IPC).

37. This precise legal inconsistency has been authoritatively settled by the

Hon'ble Supreme Court in Lalit Chaturvedi (supra) wherein the Apex

Court emphatically held that Sections 406 and 420 of the IPC cannot be

simultaneously applied to the same transaction, as the mental

elements, foundational premises, and legal ingredients of both offences

are mutually destructive and legally inconsistent. One offence is

anchored on deception ab initio, while the other is anchored on lawful

entrustment followed by subsequent misappropriation and conversion.

38. The said legal proposition has been further reinforced by the Hon'ble

Supreme Court in Delhi Race Club (supra), wherein the Apex Court

reiterated that where the allegations fail to disclose the essential

ingredients of initial deception or lawful entrustment, permitting a

criminal prosecution to proceed under both mutually exclusive sections

amounts to a flagrant abuse of the process of law. Consequently,

CRR 4089 OF 2022 20

Question No. 2. is also answered in the affirmative in favour of the

petitioner, holding that the charge-sheet fails to disclose the necessary

ingredients of the alleged penal offences punishable under Sections 420

and 406 IPC.

39. The third question for determination requires a rigorous, chronological

examination of the sequence of legal steps taken by both parties to

ascertain whether the impugned criminal proceeding initiated by

Opposite Party No. 2 is an abuse of the process of law, designed

specifically as a retaliatory counter-blast to frustrate the statutory

cheque-bounce proceedings initiated earlier by the petitioner under the

N.I. Act.

40. A chronological appraisal of the sequence of legal steps reveals an

incontrovertible timeline. Following the breakdown of the transaction

and the Opposite Party No. 2's failure to clear their dues, the petitioner-

landlord deposited the electricity security cheque (No. 106895 for Rs.

25,00,000/-) on March 14, 2019. Upon its dishonour due to stop-

payment instructions, the petitioner promptly issued a statutory

demand notice under Section 138 of the N.I. Act on March 18, 2019,

and subsequently instituted N.I. Act Case No. 122 of 2019 on April 18,

2019 before the Court of the learned Additional Chief Judicial

Magistrate, Sealdah. It was only in the immediate shadow of these

imminent statutory proceedings, specifically on April 25, 2019, that

Opposite Party No. 2 lodged the criminal complaint at Golabari Police

Station, alleging cheating, criminal breach of trust, and criminal

intimidation under Sections 420, 406, and 506 IPC resulting in

CRR 4089 OF 2022 21

institution of the Golabari P.S. Case No. 148 of 2019 against the

petitioner. Although the Opposite Party No. 2 strenuously contends that

a formal refund demand notice was issued earlier on February 11,

2019, the sudden transformation of a civil commercial grievance into a

penal prosecution right after the initiation of Section 138 proceedings

speaks volumes regarding the true intent behind the FIR of the Golabari

P.S. Case No. 148 of 2019.

41. This Court is guided by the salutary principles laid down by the Hon’ble

Supreme Court regarding malicious counter-blasts and abuse of

criminal process. In Sunil Kumar (supra), the Apex Court authoritatively

held that an FIR lodged as a retaliatory counter-blast to cheque-bounce

proceedings out of personal vendetta constitutes a gross abuse of the

process of law and is liable to be quashed.

42. This principle was further underscored in D.P. Gulati, Manager

Accounts, JetKing Infotrain Limited (supra), wherein the Hon’ble

Supreme Court reiterated that when criminal proceedings are

manifestly initiated with an ulterior motive to pressurize an accused

and circumvent civil or statutory liabilities, the High Court, exercising

its inherent powers, must step in and quash the proceedings.

Furthermore, as expounded by the Apex Court in Mahmood Ali (supra)

to determine whether an FIR is tainted by an ulterior motive of

wreaking vengeance, the Court must look beyond the bare text of the

complaint into the attending circumstances, the conduct of the parties,

and the chronological timeline leading up to its filing.

CRR 4089 OF 2022 22

43. When the timeline of the present case is subjected to this judicial test,

it becomes abundantly clear that the criminal complaint was utilized as

a tactical shield to counter the statutory pressure of potential

prosecution under Section 138 of the N.I. Act. Permitting such a

proceeding to continue would subvert the criminal justice system into a

tool for coercion and pressure. Accordingly, the third Question is

answered in the affirmative in favour of the petitioner, as well.

44. Most crucially, the fourth and final point for determination is related to

the assessment of the fundamental limits of the extraordinary and

inherent powers vested in this Court under Section 482 of the Code of

Criminal Procedure, 1973, when confronted with a complex web of

disputed questions of fact in a commercial dispute. This Court is

acutely conscious of the well-established parameters governing the

exercise of quashing powers under Section 482 Cr.P.C., whereby a High

Court must refrain from conducting a mini-trial or a roving inquiry into

disputed factual assertions. However, this settled proposition operates

hand-in-hand with an equally vital rider that where the foundational

allegations fail to prima facie disclose the essential ingredients of a

criminal offence, or where the proceeding is manifestly attended with

mala fides and instituted as an instrument of coercion or a retaliatory

counter-blast, this Court is duty-bound to step in to prevent an abuse

of the process of law.

45. A careful analysis of the rival pleadings and affidavits reveals a sharp,

irreconcilable divergence in the factual narratives presented by the

parties. On the one hand, the petitioner-landlord vehemently contends

CRR 4089 OF 2022 23

that the factory shed was accepted by the tenants on an "as-is-where-is

basis" following thorough inspections, and that extensive flooring work

amounting to ₹44.35 lakhs was executed at the explicit verbal request

of the Opposite Party No. 2-tenants, thus utilizing the ₹20 lakhs

deposited by the said opposite party via a cheque. On the other hand,

Opposite Party No. 2 staunchly maintains that inspection was restricted

until December 24, 2018, that the premises completely lacked the

promised 250 KVA electrical infrastructure and industrial flooring, that

formal possession was never handed over, and that the petitioner’s

flooring narrative is a fabricated afterthought devoid of documentation.

46. In the unique factual matrix of the present case, while the competing

claims regarding the physical condition of the factory shed, the exact

electrical load capacities, and the execution of flooring work ordinarily

bear the character of disputed facts, their evaluation must be

contextualized within the broader legal findings arrived at by this Court

under Question Nos. 1, 2, and 3. Specifically, this Court has already

determined that the dispute is predominantly and exclusively civil in

nature, that the simultaneous invocation of Sections 406 and 420 IPC

is mutually destructive, and that the criminal complaint is a malicious

counter-blast designed to derail the statutory proceedings under

Section 138 of the Negotiable Instruments Act.

47. In such a scenario, permitting the criminal trial to proceed would force

the petitioner to undergo the rigorous ordeal of a criminal trial over a

matter that finds its proper and efficacious remedy within the pending

civil adjudication of Money Suit No. 148 of 2019 and the statutory

CRR 4089 OF 2022 24

framework of N.I. Act Case No. 122 of 2019. Accordingly, Question No.

4 is answered by holding that while the factual rivalries regarding

infrastructure and flooring would ordinarily necessitate a trial, the

overarching civil character of the present dispute, the legal

unsustainability of the penal charges, and the malicious counter-blast

nature of the FIR render the continuation of the criminal proceeding an

absolute abuse of the process of law, thereby warranting interference of

this Court under Section 482 Cr.P.C.

48. In view of the detailed discussions, the categorical findings recorded

hereinabove on Question Nos. 1 to 4 are:

a. It is conclusively held that the dispute between the parties is

predominantly and exclusively civil and commercial in nature,

arising out of a failed commercial lease transaction.

b. The simultaneous invocation of Sections 420 and 406 of the

Indian Penal Code is legally contradictory and mutually

destructive.

c. The criminal proceeding in Golabari P.S. Case No. 148 of 2019

(G.R. Case No. 2138 of 2019) is a retaliatory counter-blast

instituted to frustrate the statutory cheque-bounce proceedings

initiated under Section 138 of the Negotiable Instruments Act.

49. Consequently, the instant criminal revision application being C.R.R.

No. 4089 of 2022 is allowed.

50. The entire criminal proceeding in G.R. Case No. 2138 of 2019, arising

out of Golabari Police Station Case No. 148 of 2019, including Charge

Sheet No. 149 of 2021 and all consequential orders, pending before the

CRR 4089 OF 2022 25

Court of the Learned Chief Judicial Magistrate at Howrah, are hereby

quashed and set aside.

51. It is made clear that observations made in this judgment are strictly

confined to the quashing of the criminal proceedings and shall not

prejudice or influence the independent adjudication of the pending civil

proceedings in Money Suit No. 148 of 2019 or the statutory proceedings

in NI Act Case No. 122 of 2019 on their own merits.

52. Connected pending application(s), if any, stands disposed of

accordingly.

53. Interim order, if any, stands vacated forthwith.

54. There shall be no order as to costs.

55. Let a copy of this judgment along with the Trial Court Records (T.C.R.)

be transmitted down to the learned Trial Court for necessary

information and compliance.

56. Case diary, be returned to the Learned Counsel for the State.

57. Urgent photostat certified copy of this judgment, if applied for, be

supplied to the parties upon compliance with all requisite formalities.

(Uday Kumar, J.)