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Calcutta High Court (Appellete Side)
D. K. Enterprises Pvt. Ltd. & Anr vs The State Of West Bengal & Anr on 23 July, 2025
2025:CHC-AS:1371
IN THE HIGH COURT AT CALCUTTA
CRIMINAL REVISIONAL JURISDICTION
Appellate Side
Present:
The Hon'ble Justice Ajay Kumar Gupta
C.R.R. 777 of 2018
D. K. Enterprises Pvt. Ltd. & Anr.
Versus
The State of West Bengal & Anr.
For the Petitioners : Mr. Dipankar Saha, Adv.
Mr. Bikash Shaw, Adv.
Mr. Subham Kr. Das, Adv.
Heard on : 16.06.2025
Judgment on : 23.07.2025
Ajay Kumar Gupta, J:
1. The petitioner no. 1, a company registered under the
Companies Act, 1956 and petitioner no. 2, the Director of the said
company, have filed this Criminal Revisional application under
Section 401 read with Section 482 of the Code of Criminal Procedure,
2025:CHC-AS:1371
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1973 (hereinafter referred to as 'CrPC'), seeking for quashing of the
proceedings being CS 41478 of 2017 for the alleged commission of
offence punishable under Sections 420/406/422/34 of the Indian
Penal Code, 1860, pending before the Court of the Learned
Metropolitan Magistrate, 19th Court at Calcutta.
2. The brief facts, leading to the filing of this instant Criminal
Revisional application, are as under:
2a. The opposite party no. 2 filed a Complaint Case under
Section 200 of the CrPC registered being CS 41478 of 2017 against
the company and its Director under Sections 420/406/422/34 of the
Indian Penal Code, 1860 with an allegation, inter alia, that the
opposite party no. 2 dealing with the manufacturing and supply of
pure activated carbon and different types of other materials. The
accused persons (petitioners herein) are the customers doing
business under the name and style of M/s. D. K. Enterprises Pvt.
Ltd.
2b. The accused nos. 2 and 3 being the responsible persons of
the said company came to the complainant's place of business and
introduced themselves as successful businessman. They assured the
complainant that they would place a large quantity of orders if the
terms of payment would consider. On the basis of the said assurance,
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given by the accused persons, the opposite party no. 2 delivered the
goods i.e. best quality of Granular Activated Carbon etc. raising the
invoices for the same. A balance sum of Rs. 4,52,075/- is due against
the goods supplied as per the tax invoices.
2c. The accused persons duly received all the goods without any
objection or demur. However, they did not pay the balance sum of Rs.
4, 52,075/- and the same is still lying outstanding. Despite repeated
demands made through telephonic calls, notices, emails and personal
visit to the place of business of the accused persons, no payment was
made. Finally, on 30th March, 2017, the accused persons flatly denied
any receipt of goods and also threatened the complainant using slang
and filthy languages. Thereafter, a legal demand notice dated
05.04.2017 was issued through learned advocate and duly served.
Despite that, the accused persons did not make any payment.
Accordingly, the accused persons had cheated the opposite party no.
2 by practising fraud and also committed criminal breach of trust
compelling the complainant to file complaint under Section 200 of the
CrPC against them.
2d. On the contrary, the case of the present petitioners is that
they are actually engaged exclusively in software developments and
have no nexus whatsoever with the opposite party no. 2. The
petitioners never dealt with or trade in Granular Activated Carbon or
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4
any related product. The petitioners had/have no business
connections with the complainant as the place of business of the
petitioners is located solely in Chennai and they have no business
connection with the complainant. It is further alleged that the
complainant has mistaken them for another entity with a similar
name operating out of Maharashtra. The invoices and road challans
relied upon by the complainant bear addresses located in Thane and
Bhiwandi, Maharashtra, which have no link with the petitioners. The
email communication allegedly sent to the address "DKENT @
REDIFFMAIL.COM" is not associated with the petitioners.
2e. It is further case of the petitioners that even if taken at face
value of the complaint and accepted entirety allegations they also do
not disclose the commission of any criminal offence. Whatever
disputes raised by the complainant in his complaint are within the
scope of a civil dispute and, in such event, the criminal prosecution is
not at all permissible in law. Hence, this Criminal Revisional
application.
SUBMISSIONS ON BEHALF OF THE PETITIONERS:
3. Learned counsel appearing on behalf of the Petitioners
vehemently argued and advanced his submission under four distinct
limbs.
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3a. Firstly, there is no sufficient material whatsoever to suggest
any contractual, commercial, legal business relationship between the
petitioners and the opposite party no. 2. The invoices and the road
challans relied upon by the complainant refer to two addresses i.e.
Thane and Bhiwandi, Maharashtra, which have no connection with
the petitioners.
3b. Secondly, even if all allegations in the complaint are taken
at face value, the essential ingredients of cheating, criminal breach of
trust or fraudulent disposition of property or any type of threat are
not made out even prima facie against the present petitioners.
Moreover, no specific dates, place, mode of transaction or evidence
brought to show involvement of the petitioners with regard to any
type of threat in any manner whatsoever. It is also not demonstrated
that petitioner no. 2 played any role for commission of any alleged
offences.
3c. Thirdly, the petitioner no. 1's place of business is situated at
Chennai and petitioner no. 2, Director of petitioner no. 1/company is
also from Chennai i.e. beyond the territorial jurisdiction of the
learned Magistrate, who took cognizance against the present
petitioners without following the mandatory provisions of Section 202
of the CrPC before issuing process and failure to follow such
mandatory provision, the entire case vitiated only on such score.
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3d. Lastly, the Learned Magistrate took cognizance and issued
process in a very casual and mechanical manner and without
applying judicious mind or without evaluating that the complainant
has not disclosed the sufficient materials to constitute offence under
Sections 420/406/422/34 of IPC. To bolster his submission, the
learned counsel has placed reliance upon the following judgments as
under: -
1. Rama Devi Vs. State of Bihar & Ors.1;
2. V.P. Shrivastava Vs. Indian Explosives Ltd. & Ors.2;
3. Ashok Chaturvedi & Ors. Vs. Shitul H.
Chanchani & Anr.3;
4. State of A.P. Vs. Gourishetty Mahesh and Ors.4;
5. Manoj Mahavir Prasad Khaitan Vs. Ram Gopal
Poddar & Anr.5;
6. Delhi Race Club (1940) Limited & Ors. Vs. State
of Uttar Pradesh & Anr.6.
3e. Finally, the learned counsel prays for quashing of the
aforesaid proceedings considering the aforesaid facts thereof.
1
(2010) 12 SCC 273;
2
(2010) 10 SCC 361;
3
(1998) 7 SCC 698;
4
(2010) 11 SCC 226;
5
(2010) 10 SCC 673;
6
(2024) 10 SCC 690.
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4. On the other hand, none appeared on behalf of the opposite
parties despite service. Nevertheless, several opportunities having
been provided, no one had appeared on behalf of the opposite parties.
In such circumstances, the fate of the Petitioners could not be left at
the 'mercy' of the opposite parties and, thus, the Court proceeds to
adjudicate the matter on merits, without the presence of the opposite
parties.
DISCUSSIONS, ANALYSIS AND CONCLUSION OF THIS COURT:
5. Considering the submissions made by the learned counsel
appearing on behalf of the petitioners, judgments relied upon by the
petitioners and on perusal of the record, it reveals the Opposite party
has initiated a proceeding under Section 200 of the CrPC for
commission of the offence punishable under Sections
420/406/422/34 of the IPC against the Company and others, who
were associated with the company, namely, M/s. D. K. Enterprises
Pvt. Ltd. The Petitioners, however, claim they are in no way connected
with any business transaction with the complainant. They
categorically deny placing any orders or receiving any goods from the
complainant's company. These are disputed questions of fact that
require appreciation of oral or documentary evidence by both sides
and can only be adjudicated after conclusion of full-fledged trial.
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6. It transpires from the record, before issuing process the
Learned Magistrate perused the complaint supported by an affidavit,
recorded the statements of complainants and another witness and,
thereafter, took cognizance and issue process after being satisfying
the mandatory procedural mandate under Section 202 CrPC. The
contention of none compliance of mandatory provision of Section 202
has no force and convincing. Thus, issue as aforesaid raised by
petitioners cannot be taken into account of the valid ground to quash
the proceedings.
7. In course of hearing, learned counsel appearing on behalf of
the petitioners submitted that even for the sake of argument, the
business transactions taken place between the parties, then the
allegation made by the opposite party no. 2/complainant is purely
civil in nature. The allegation of complainant is mainly that
complainant has supplied best quality of Granular Activated Carbon
etc between 2014 to 2016 to the petitioners and there is due of
balance sum of Rs. 4,52,075/= with the petitioners. Whatever
transactions taken place between the parties was a commercial
transaction, which never comes within the domain of criminal act.
Dispute regarding balance due could be decided by the Civil Court
and not by the Criminal Court. Question of inducement or cheating
to the supplier/complainant never arose when there were terms of
2025:CHC-AS:1371
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business transactions. Though, the complainant has alleged that
they supplied the best quality of Granular Activated Carbon etc on
several dates to the petitioners, Petition of complaint clearly indicates
and admits that the petitioners have paid some amount to the
complainant.
8. Even for the sake of argument, if any dues are pending that
lies in initiating a civil suit for recovery. The complainant has filed
this complaint with an allegation for offence punishable under
Sections 406/420/422/34 of the IPC though no ingredients fulfilled
either in complaint or in deposition. Therefore, the proceeding,
initiated against the petitioners, is clearly abuse of process of law and
same is liable to be quashed so far as the petitioners are concerned.
9. The complainant made the written complaint before the
Learned Magistrate is awful of vague and non-specific and the 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.
10. The complainant alleged that the petitioners represented
themselves as a reputed businessman and dealing with activated
carbon and different types of other materials at the beginning. Based
on that, the complainant supplied best quality of Granular Activated
2025:CHC-AS:1371
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Carbon etc on credit on different dates between the years 2014 to
2016. The dispute arises when the petitioners herein fail to make
payment of balance amount despite repeated demands and even after
giving legal notice through learned advocate. 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.
Offence as alleged is not at all attracted.
11. 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.7 in paragraph nos. 24 to
30 as under: -
"24. This Court in its decision in S.W. Palanitkar &
Ors. v. State of Bihar & Anr. reported in (2002) 1
SCC 241: AIR 2001 SC 2960) expounded the
difference in the ingredients required for constituting
an of offence of criminal breach of trust (Section 406
IPC) viz-a-viz the offence of cheating (Section 420).
The relevant observations read as under: -
7
(2024) 10 SCC 690
2025:CHC-AS:1371
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"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)
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."
2025:CHC-AS:1371
12
25. 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
willfully 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
ii. legal contract touching the discharge of trust (see:
S.W.P. Palanitkar (supra).
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
2025:CHC-AS:1371
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3) the consent that any persons shall retain any
property and finally intentionally inducing that person
to do or omit to do anything which he would not do or
omit (see: Harmanpreet Singh Ahluwalia v. State
of Punjab, (2009) 7 SCC 712: (2009) Cri.L.J. 3462
(SC))
26. 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.
27. 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 405 of IPC, punishable under
Section 406 of IPC, is committed by the accused, then
in the same breath it cannot be said that the accused
has also committed the offence of cheating as defined
and explained in Section 415 of the IPC, punishable
under Section 420 of the IPC.
28. 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 remedy for damages in civil courts but, any
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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 &
Ors., reported in (1973) 2 SCC 823: (AIR 1974 SC
301) as under:
"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 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 Penal Code,
1860. There is nothing in the complaint to show
that the respondents 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, 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
2025:CHC-AS:1371
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him in the month of December might create civil
liability on the respondents for the offence of
cheating.”
29. 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 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.
30. 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. 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
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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. 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.”
12. 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:
“42. 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
2025:CHC-AS:1371
17breach 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
a FIR, this responsibility is of the police – to
thoroughly ascertain whether the allegations levelled
by the informant indeed falls 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.
43. 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 viz-a-viz 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 the IPC (now BNS, 2023) are not
twins that they cannot survive without each other.”
13. This Court also placed reliance on a judgment of the Hon’ble
Supreme Court in the case of The State of Kerala v. A. Pareed
Pillai and Anr.8, where it was held as follows: –
8
1972 Cri.LJ. 1243
2025:CHC-AS:1371
18“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.”
14. Similarly, in the case in hand, there is nothing to show that
the petitioners had any dishonest or fraudulent intention at the time
of placing order for supply of Granular Activated Carbon etc.
Complainant raised question about the outstanding dues when it
became due. Non-payment of outstanding dues or even breach of
contract, in a commercial transaction, by no stretch of imagination,
can be called a dishonest inducement. It was/is purely a non-
fulfilment of contract to pay the outstanding amount of a commercial
transaction, which definitely comes under civil dispute. It is an
admitted fact that the accused persons have paid some of the bill
amount. Simply because the amounts have not been paid or there are
outstanding will not make it a case of wilful or dishonest inducement
or deception.
15. In the case of Haridaya Ranjan Prasad Verma and Ors. v.
State of Bihar and Anr.9, the Hon’ble Apex Court also held that: –
“There was no allegation in the complaint indicating,
expressly or impliedly, any intentional deception on9
(2000) 4 Supreme Court Cases 168
2025:CHC-AS:1371
19the part of the appellants’ right from the beginning of
the transaction. The Hon’ble Apex Court drew
distinction between cheating from mere breach of
contract. According to the Hon’ble Apex Court,
definition of cheating contemplates two separate
classes of acts namely deception by fraudulent or
dishonest inducement and deception by intention.
Deception by fraudulent or dishonest inducement
must be shown to exist right from the beginning of the
transaction”.
16. It is not the case of the opposite party no. 2, in the present
case, that the petitioner was deceived by fraudulent or dishonest
inducement from the beginning or at the time of order of supply of
Granular Activated Carbon etc. Rather, it appears the
complainant/opposite party no. 2 supplied the best quality of
Granular Activated Carbon etc on different occasions between the
years 2014 to 2016. Therefore, culpable intention, right from the
beginning when the orders were placed, cannot be presumed simply
from mere failure of a person to keep up 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. Outstanding
amount of Rs. 4, 52,075/- as alleged by the petitioner is not the
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outcome of the dishonest intention of the petitioner from the very
inception of the transaction cannot be presumed. In my view, neither
the offence of cheating punishable under Section 420 of the Indian
Penal Code, 1860 is made out from the complaint nor can I persuade
myself to hold that an offence punishable under Sections
406/422/34 of the Indian Penal Code, 1860 are made out from the
allegations made in the complaint.
17. 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 the order for supply of Granular Activated Carbon etc.
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 as the
accused have paid some amount of the bill as raised by the
complainant. 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
outstanding amount cannot be termed as criminal act in the facts of
this case.
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18. In the case of Paramjeet Batra v. State of Uttarakhand &
Ors.10, 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:-
“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)
19. In the light of the above discussions together with averments
contained in the petition of complaint, this Court finds that the
10
(2013) 1 C Cr LR (SC) 755
2025:CHC-AS:1371
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ingredients of the offences alleged by the opposite party no. 2 are
absent. Merely, because of non-payment of outstanding amount does
not constitute an offence punishable under Sections 406 and 420 of
the Indian Penal Code, 1860. The allegations in the complaint do not
spell out any essential ingredients for the commission of offence
under Sections 406 and 420 of the Indian Penal Code, 1860.
20. The disputes between the parties are purely civil in nature and
criminal proceeding in such a civil nature case should not be allowed
to be continued any further against the present petitioners otherwise
it would be an abuse of process of law. The Hon’ble Supreme Court
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 occurred in a commercial transaction. Attempt to
convert a civil dispute into a criminal matter, potentially aimed at
pressurizing the petitioner into settling the dispute, by way of filing
this 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.
21. Consequently, CRR No. 777 of 2018 is allowed. Connected
applications, if any, are also, thus, disposed of.
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22. The proceeding being CS 41478 of 2017 for commission of
alleged offences under Sections 420/406/422/34 of the Indian Penal
Code, 1860, pending before the Court of the Learned Metropolitan
Magistrate, 19th Court at Calcutta is hereby quashed insofar as the
petitioners are concerned, and all orders passed therein in respect of
the present petitioners are also set aside.
23. Let a copy of this Judgment be sent to the Learned
Magistrate for information.
24. Interim order, if any, stands vacated.
25. 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.)
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