2024 (3) TMI 442 - HC - Indian Laws

Calcutta HC quashes criminal proceedings under Sections 406/409/420/120B IPC finding no prima facie evidence of dishonest misappropriation or fraud

Calcutta HC allowed revision application and quashed criminal proceedings against petitioners under Sections 406/409/420/120B IPC. Court found no prima ... Criminal breach of trust - loan and its repayment - dishonest intention or not - proceeding under Section 138 of the N.I. Act is pending - Parallel proceedings or not - HELD THAT:- In the present case, the dispute relates to a loan and its repayment. There is absolutely no material on record to prima facie show that the accused has dishonestly mis-appropriated or converted the property for his own use. There is a strong case of repayment in this case. In respect of the present dispute even though a proceeding under Section 138 of the N.I. Act is pending, the present case under Sections 406/409/420/120B of IPC on the same dispute is maintainable as, though the facts may overlap but the ingredients of offences in the two proceedings are entirely different. In the present case, admittedly there was a business transaction between the parties but there is no case against the petitioners that he dishonestly induced the complainant. There was neither any deceit nor any inducement to deceive the complainant. The transaction was admittedly for the benefit of both the parties. The fact of wrongful loss of one resulting in wrongful gain of another is not present in this case as loan has been admitted and the dispute relates to its repayment. Thus the ingredients required to constitute the offence under Section 420 IPC are clearly absent in the present case. In the present case there is no materials to show that there was any existence of dishonest/fraudulent intention while making any initial promise that is from the beginning of formation of contract - The petitioners were repaying the loan as agreed, when they decided to the clear the dues prematurely. In the Present case, there is no substance in the allegations and no material exists to prima facie make out the complicity of the petitioner in a cognizable offence as alleged. As such the proceedings in this case should be quashed by exercising this courts inherent powers for ends of justice and to prevent the abuse of process of the court. Revision application allowed. Issues Involved:1. Quashing of the proceedings under Sections 406/409/420/120B of the Indian Penal Code.2. Allegations of false statements and use of false evidence.3. Civil nature of the dispute and applicability of criminal charges.4. Dual proceedings under IPC and NI Act for the same loan amount.5. Abuse of process of court and inherent powers under Section 482 Cr.P.C.Summary:Issue 1: Quashing of the proceedings under Sections 406/409/420/120B of the Indian Penal Code.The petitioners sought to quash the proceedings in Complaint Case no. C.S. 32544 of 2019, arguing that the loan amount of Rs. 50 Lakhs taken from the opposite party no. 2 was repaid in December 2016. They contended that the allegations of non-payment and threats were baseless. The court found no material to prove 'dishonest intention' or 'mens rea,' and no misappropriation of the entrusted property, as repayment was made either in cash or by post-dated cheque. Thus, the essential ingredients of criminal breach of trust and cheating were absent, leading to the quashing of the proceedings.Issue 2: Allegations of false statements and use of false evidence.An application under Section 340 Cr.P.C. was filed by the opposite party no. 2, alleging that the petitioners made false statements in their revisional applications. The court noted discrepancies between the first and second revisional applications regarding the discharge of liability. However, it concluded that the dispute was civil in nature and did not warrant criminal proceedings.Issue 3: Civil nature of the dispute and applicability of criminal charges.The court emphasized that the dispute related to a loan and its repayment, which is a civil matter. It cited several judgments to support the principle that mere non-payment or underpayment does not constitute an offense under Section 420 IPC. The court highlighted the absence of fraudulent or dishonest intention from the inception, which is crucial for constituting an offense under Section 420 IPC.Issue 4: Dual proceedings under IPC and NI Act for the same loan amount.The court addressed the maintainability of simultaneous proceedings under Sections 406/409/420/120B IPC and Section 138 of the NI Act. It referred to the Supreme Court's judgment in Sangeetaben Mahendrabhai Patel vs State of Gujarat & Anr., which allowed dual proceedings if the ingredients of the offenses are different. However, it found that the allegations in the IPC case did not constitute a prima facie offense, leading to the quashing of the IPC proceedings.Issue 5: Abuse of process of court and inherent powers under Section 482 Cr.P.C.The court exercised its inherent powers under Section 482 Cr.P.C. to quash the proceedings, citing the absence of prima facie evidence and the civil nature of the dispute. It relied on various judgments to illustrate that criminal proceedings should not be used to settle civil disputes or exert pressure on the accused.Conclusion:The revisional application CRR 3637 of 2019 was allowed, and the proceedings in Complaint Case no. C.S. 32544 of 2019 under Sections 406/409/420/120B IPC were quashed. The court also rejected CRAN 5 of 2023, stating that there was no merit in the application. All connected applications were disposed of, and interim orders were vacated. The judgment was directed to be sent to the trial court for compliance.