Calcutta High Court (Appellete Side)
Keyur J. Shah vs State Of West Bengal & Anr on 21 November, 2013
Author: Joymalya Bagchi
Bench: Joymalya Bagchi
1 C.R.R.982 of 2013 Keyur J. Shah Vs. State of West Bengal & Anr.
Mr.Debasish Roy
Mr.Niladri Sekhar Ghosh. .. for the petitioner
(in C.R.R.3339 of 2010)
Mr.Sanjoy Banerjee. .. for the State.
Mr.Tirthankar Ghosh
Mr.Koushik Kundu
Mr.Ganesh Prasad Shaw .. for the petitioner.
(in C.R.R.982 of 2013)
Mr.Sanjoy Banerjee. .. for the State.
Heard on: 21.11.2013.
Judgement on: 21.11.2013.
Joymalya Bagchi, J. -Criminal proceeding being G.R.Case No.763 of 2010 pending before the learned Judicial Magistrate, 2nd court at Arambagh, Hooghly arising out of Khanakul Police Station Case No.217 of 2010 dated 13.09.2010 under sections 406/420/506 of the Indian Penal Code has been assailed.
The petitioner is the Managing Director of M/s.Marvel Gem & Jewellery Pvt. Ltd., having its office at 31, Oceanic Apartment, Dr.Tajaboli Road, Bhulabhai Desai Road, Mumbai - 400 026. The petitioner carries on business in dealing with gold jewellery throughout the country. It has been pleaded in the petition that the opposite party no.2 being the de facto complainant was an employee of the petitioner's company since July 2009 and in usual course of business entrusted with raw gold for converting it to finished products/jewelleries at 2 Mumbai and Kolkata and to sell them on behalf of the petitioner's company in various places in India.
It is further claimed that on 21.06.2010, the petitioner called upon the opposite party no.2 at the residence of one Vijay Talwar, BB-53, Salt Lake, Sector-1, Kolkata - 64, but he failed to turn up, as a result a criminal case being Bidhannagar (North) Police Station Case No.124 of 2010 dated 07.07.2010 under sections 420/406/408 of the Indian Penal Code was registered for investigation.
It appears that in course of investigation, further statement was recorded on behalf of the petitioner stating that no entrustment of gold was, in fact, made at Kolkata. Such gold ornaments were entrusted at Mumbai and criminal cases have been registered at Mumbai too. On such premise, investigation of the aforesaid case was sought to be transferred to Mumbai. Such transfer was challenged by the opposite party no.2 in C.R.R.No.3339 of 2010. The said revisional application has been disposed of with direction upon Investigating Agency to conclude the investigation. The issue of jurisdiction has been kept open and may be raised by the parties, if so advised, before the trial court after filing of police report.
However, the contention of the petitioner in the instant revisional application is that to cover up his misdeeds, opposite party no.2 has falsely instituted the impugned criminal proceeding being Khanakul Police Station Case No.217 dated 13.09.2010 under sections 406/420/506 of the Indian Penal Code and the same is liable to be quashed.
Mr.Ghosh, learned counsel, on behalf of the petitioner has urged that the allegations in the FIR including the materials collected in course of investigation do not disclose the essential ingredients of the alleged offences. The impugned criminal proceeding has been maliciously instituted to wreak vengeance on the petitioner and is liable to be quashed being an abuse of process of court 3 Mr.Roy, learned counsel for the opposite party no.2, submitted that the petitioner was sought to be inducted as a working partner in the petitioner's business and a sum of Rs.5 lakhs was taken as security for such induction on at the promise that the said sum should be refunded upon termination. Neither the said sum, nor the dues arising from such relationship have been refunded. The allegations disclose the ingredients of the alleged offences and the instant case was lodged prior to the registration of FIR against the opposite party no.2. The learned lawyer for the State has produced the case diary.
In order to examine the rival submissions of the parties, one must analyze the uncontroverted allegations in the FIR, which form the substratum of the impugned criminal case.
In the FIR, the opposite party no.2 has, inter alia, alleged that the petitioner is the proprietor of M/s.Marvel Gem & Jewellery Pvt. Ltd. and that he carried on business in gold jewellery. It is further alleged that the opposite party no.2 carries on business in fabrication and manufacture of jewellery and, in view of his reputation, the petitioner gave a proposal to induct him as a minor working parent with right to share profits in the letter's business. The petitioner assured a minimum income of Rs.2 lakhs per month in course of negotiations. A sum of Rs.5 lakhs was deposited with the petitioner by the opposite party no.2 as security deposit on promise of being refunded upon termination of the business relationship. The opposite party no.2 was made to sign on blank papers and/or blank letter heads of the petitioner's firm. The opposite party no.2 was inducted into the business of the petitioner's company and their relationship by continued to sometime to the tireless efforts of the opposite party no.2, the business of the petitioner's firm soured. However, the dues of the opposite party no.2 was not regularly met and upon request, the petitioner assured to reconcile the same with near future.
On or about February 2010 on the advice of the petitioner, the opposite party no.2 shifted his activities to Kolkata to expand the business in and around 4 the city. The opposite party no.2 took steps for opening show-rooms in Kolkata and also invested moneys for developing the business of the petitioner's concern in Kolkata.
Suddenly, to the utter surprise of the opposite party no.2, he found that the customers had been advised to directly deal with the petitioner at Mumbai. On contacting the petitioner, the opposite party no.2 was that the petitioner did not wish to pursue their business relationship any longer. When the opposite party no.2 demanded his dues, that is a sum of Rs.8 lakhs inclusive of Rs.5 lakhs deposited by him as Fixed Deposit with the petitioner's concern, as aforesaid, the petitioner refused to make such payment and threatened to implicate him in false criminal cases by mis-utilizing the bank documents signed by the petitioner at the time of entering into the business transaction and kept with the petitioner's concern. He also threatened with other dire consequences.
On the basis of such allegations, the instant criminal case was started against the petitioner under section 420/406 of the Indian Penal Code.
I have perused the statements recorded in course of investigation, which reiterates the aforesaid allegations. However, no document was seized during investigation to show that a sum of Rs.5 lakhs as claimed was deposited as security deposit by the opposite party no.2 with the petitioner's concern. However, in course of hearing, the opposite party no.2 submitted documents being an acknowledgement purportedly signed by the petitioner showing that a sum of Rs.5 lakhs was invested by the opposite party no.2 as security deposit in the business of the petitioner for inducting him as minor working partner therein on the promise to refund the said sum of such business relationship came to an end.
The uncontroverted allegations in the instant case portrays a continuing relationship between the parties appears that out of free will the parties being 5 impressed by their respective reputations in the field of jewellery had entered into such relationship. There is no whisper of any dishonest or fraudulent representation inducing the opposite party no.2 to enter into such business relation with the petitioner. It is true that it has been stated in the FIR that the petitioner had assured a minimum sum of Rs.2 lakhs per month as profit/ income for the opposite party no.2 in such business. Such assurance being held out by one businessman to another in the backdrop of the facts of the case must be construed to be an expectation of profit arising out such business and definitely not a dishonest representation, which was known to be false by the petitioner at the inception of the transitions. That apart, there are allegations of failure to pay the dues of the opposite party no.2 under the agreement, which without anything more, would constitute a civil wrong arising out of breach of contract.
The distinction between an offence of cheating and that of mere breach of agreement is time yet a distinct one. A civil wrong arising out of a breach of agreement may also gave rise to an offence of cheating when the facts disclose that a party to the agreement was induced to enter into the same and part with property on the basis of false and dishonest representation is knowingly held act to him at the inception of the transaction otherwise would not have done. However, mere failure to fulfill a promise does not constitute cheating although it may give rise to a loss and a claim for damages in Civil Law.
In V.P.Shrivastava vs. Indian Explosives Limited and Ors., reported in (2010) 10 SCC 361, The Apex Court held as follows:-
"It is well settled that in order to constitute an offence of cheating, it must be shown that the accused had fraudulent or dishonest intention at the time of making the representation or promise and such a culpable intention right at the timeof entering into an agreement canot be persumed merely from his failure to keep the promise subsequently. (Also see Hira Lal Hari Lal Bhagwati vs. CBI, 10 (2003) 5 SCC 257 : 2003 SCC (Cri) 1121)."6
In Anil Mahajan vs. Bhor Industrids Ltd and Anr., reported in (2005) 10 SCC 228, the Apex Court observed that the substance of the accusation and not the forensic expression employed therein must be seen. It held -
"The substance of the complaint is to be seen. Mere use of the expression "cheating" in the complaint is of no consequence. Except mention of the words "deceive" and "cheat" in the complaint filed before the Magistrate and "cheating" in the complaint filed before the police, there is no averment about the deceit, cheating or fraudulent intention of the accused at the time of entering into MOU wherefrom it can be inferred that the accused had the intention to deceive the complainant to pay. According to the complainant, a sum of Rs.3,05,39,086 out of the total amount of Rs.3,38,62,860 was paid leaving balance of Rs.33, 23,774. We need not go into the question of the difference of the amounts mentioned in the complaint which is much more than what is mentioned in the notice and also the defence of the accused and the stand taken in reply to notice because the complainant's own case is that over rupees three crores was paid and for balance, the accused was giving reasons as above-noticed. The additional reason for not going into these aspects is that a civil suit is pending inter se the parties for the amounts in question."
In G.Sagar Sri and Another vs. State of U.P. and others, reported in (2000) 2 SCC 636, the Apex Court held as follows:-
"Jurisdiction under Section 482 of the Code has to be exercised with great care. In exercise of its jurisdiction the High Court is not to examine the matter superficially. It is to be seen if a matter, which is essentially of a civil nature, has been given a cloak of criminal offence. Criminal proceedings are not a short cut of other remedies available in law. Before issuing process a criminal court has to exercise a great deal of caution. For the accused it is a serious matter. This Court has laid certain principles on the basis of which the High Court is to exercise its jurisdiction under Section 482 of the code. Jurisdiction under this section has to be exercised to prevent abuse of the process of any court or otherwise to secure the ends of justice.
In the facts of the case, I am unable to accept the contention of the opposite party no.2 that the uncontroverted allegations in the false or FIR/charge-sheet disclose any dishonest representation held out by the 7 petitioner at the inception of the transaction, which he knew or believed to be untrue. Subsequent failure to fulfill a promise in the absence of the aforesaid incriminating circumstance would not disclose the essential ingredients of cheating though it may give rise to a civil wrong.
Coming to the other charge, i.e. criminal breach of trust, I find that investigation does not reveal any documentary evidence supporting the allegation of depositing of Rs.5 lakhs with the petitioner. However, in course of arguments document has been filed to that effect showing that the aforesaid sum was invested the business of the petitioner's concern for inducting the opposite party no.2 as a minor working partner on promise to refund the same on termination of such relationship..
If the aforesaid document is taken into consideration and read in the backdrop of the uncontroverted allegations of the case, it would appear that if is the complainant's case that such sum was invested as a consideration for his induction as a minor working partner with a right to share the profits of such business. If that it so, then failure to return such sum in addition to other dues payable to opposite party no.2 (who claims himself a partner to such business) amounts to a dispute arising out of settlement of accounts upon dissolution of a such relationship and not a case of misappropriation of entrusted properly by the petitioner).
One must also not lose of the fact that there is a counter claim at the behest of petitioner against the opposite party no.2 that he has misappropriated raw gold entrusted to him resulting in registration of a case against him. In the backdrop of such attending circumstance, mere failure to refund the aforesaid sum and other dues upon termination of business relationship can be invested with the requisite mens rea so as to justify of chance of criminal breach of trust.
Accordingly, I allow the application and quash the impugned criminal proceeding being G.R.Case No.763 of 2010 pending before the learned Judicial 8 Magistrate, 2nd court at Arambagh, Hooghly arising out of Khanakul Police Station Case No.217 of 2010 dated 13.09.2010 under sections 406/420/506 of the Indian Penal Code. The petitioner be discharge from the bail bond, if any. The observations made by me are for the purpose of disposal of this application and shall not have any binding effect on other collateral proceeding pending by and between the parties, which needless to mention, shall be disposed of in accordance with law.
The aforesaid application is accordingly allowed of.
Let the document filed by the opposite party no.2 be kept with the record.
(Joymalya Bagchi,J.)