Calcutta High Court (Appellete Side)
Kusum Kanoria vs The State Of West Bengal & Another on 29 January, 2025
IN THE HIGH COURT AT CALCUTTA
CRIMINAL REVISIONAL JURISDICTION
Appellate Side
Present:
The Hon'ble Justice Ajay Kumar Gupta
C.R.R. 4226 of 2023
Kusum Kanoria
Versus
The State of West Bengal & Another
For the Petitioner : Mr. Manwendra Singh Yadav, Adv.
Ms. Satabdi Naskar, Adv.
Heard on : 06.12.2024
Judgment on : 29.01.2025
Ajay Kumar Gupta, J:
1. This instant Criminal Revisional application under Section
482 of the Code of Criminal Procedure, 1973 has been filed by the
petitioner/accused seeking for quashing of the proceeding being
C.N.S. No. 1097 of 2021 corresponding to F. No. CNS/481009/2021
2
(Shree Shyam Ply & Laminates Vs. Kusum Kanoria), for commission
of alleged offence under Sections 406/420 of the Indian Penal Code,
1860 and all orders passed therein including orders dated
03.12.2021 and 03.05.2023 now pending before the Court of the
Learned 19th Metropolitan Magistrate, Calcutta.
2. The facts of the case, in nutshell, are that a petition of
complaint dated 25.11.2021 along with certain documents was filed
before the Court of the Learned Additional Chief Metropolitan
Magistrate, 2nd Court, Calcutta seeking prosecution of the petitioner
for commission of offences under Sections 406/420 of the Indian
Penal Code, 1860. It has been contended by the complainant in the
said petition of complaint that the complainant is a supplier of
Plywood, Decorative Veneer, Laminates Wood, Highlighter and Allied
Products to their customers or retail business personals. They have
substantial reputation and goodwill in the market.
3. It has been alleged that the accused/petitioner allegedly
went to the complainant's office and represented herself as a reputed
businessman and deals in Plywood, Decorative Veneer, Laminates
Wood, Highlighter and Allied Products as a wholesaler. The
accused/petitioner represented having good market reputation and
very good business circle, had given complainant an impression of a
3
very good business in future. The complainant, believing the
reputation of the accused/petitioner, acceded to the proposal of the
accused/petitioner and agreed to supply Plywood as per demand of
the accused.
4. It was also alleged that believing upon the assurance of the
accused/petitioner, the complainant supplied plywood to the
accused/petitioner on credit from time to time as per order through
courier for a sum of Rs. 5,93,760/-. The complainant further alleged
that at the relevant times, the accused personally and also through
representative used to collect the plywood against proper bills.
5. It was further alleged that while receiving the plywood, no
objection/demur was made regarding the quality and quantity of the
plywood was ever raised. However, even after expiry of considerable
period of time, the accused/petitioner did not make payment in spite
of repeated demand. The accused/petitioner, on different pretext,
started asking for time to pay the dues amount. The accused person
avoided to meet with the complainant and stopped communicating
and also avoided picking phone calls of the complainant.
6. The complainant personally went to the office of the
accused/petitioner for asking payment, the accused/petitioner
allegedly became furious and started abusing the complainant in
4
filthy and decorative languages and further threatened with dire
consequences. The petitioner finally flatly refused to pay the money.
7. The complainant sent a legal notice dated 23.09.2020 asking
for payment of the said dues amount. But, even receiving the said
notice, the petitioner did not make any payment. It was further
alleged that from the very beginning or since inception, the
accused/petitioner cheated, misrepresented and had no intention to
make payment against supply of plywood sold to the
accused/petitioner thereby caused wrongful loss to the
complainant/opposite party no. 2 and further wrongful gain to her.
8. On the basis of said petition of complaint and documents
attached therewith, the Learned Additional Chief Metropolitan
Magistrate, 2nd Court, Calcutta took cognizance and transferred the
case to the file of the Learned Metropolitan Magistrate, 19th Court,
Calcutta for enquiry and disposal in accordance with law.
9. The Learned Metropolitan Magistrate, 19th Court, Calcutta
after examining the complainant and his witness by an order dated
08.12.2021, has pleased to issue summon upon the
petitioner/accused for commission of offences under Sections
406/420 of the Indian Penal Code, 1860. After receiving the said
summon, the petitioner, through her learned advocate, entered
5
appearance and filed a petition under Section 205 of the CrPC. The
said petition was heard on 04.08.2022 and upon hearing the learned
advocate, the Learned Magistrate has pleased to direct the accused,
inter alia, to file an affidavit in support of the undertaking given in the
petitioner under Section 205 of the CrPC. In pursuant to the said
direction, the petitioner has filed undertaking on affidavit on
07.12.2022.
10. On 03.05.2023, the petitioner, due to her indisposition,
could not appear before the Learned Court below and filed a petition
together with a medical certificate as she was advised rest by the
attending physician. The said petition was heard along with the
affidavit filed by the petitioner on 07.12.2022 and upon perusal of the
same, the Learned Magistrate was pleased to reject the petition filed
by the petitioner under Section 205 of the CrPC on the grounds that
the petitioner resides within the vicinity of the Learned Court below
and the personal appearance by the petitioner would not cause
enormous hardship to the petitioner. The Learned Court below did
not consider the medical document of physical unfitness of the
petitioner to turn up before the Court due to her old age and insisted
for personal appearance of the accused/petitioner.
6
11. Thereafter, the matter was fixed on 30.06.2023, 29.08.2023
and 27.09.2023. On 29.08.2023, the petitioner prayed for
dispensation of her personal appearance by filing a petition
supported by medical certificate for the reasons stated in the medical
certificate. However, the Learned Court below, by order dated
29.08.2023, directed the petitioner to appear on the next date, in
default, warrant of arrest shall be issued.
12. The petition under Section 205 of the CrPC was rejected on
erroneous grounds and mistaken premises that the petitioner has not
filed any medical certificate or personal appearance would not cause
hardship to the petitioner or the grounds laid down for allowing an
application under Section 205 of CrPC are not fulfilled by the
petitioner. Further, the Learned Court below failed to appreciate the
grounds contained in the petition under Section 205 of the CrPC and
the undertaking filed on affidavit seeking exemption from personal
appearance in its true perspective. The Learned Court below further
did not refer to and/or deal with the case law reported in (2001) 7
SCC 401 (Bhaskar Industries Ltd. Vs. Bhiwani Denim &
Apparels Ltd. and others) relied upon by the learned advocate for
the petitioner in course of such hearing.
7
13. The petitioner further contended that considering the
petition of complaint and the statement of the witnesses, 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 very inception can be said to have been made
out against the petitioner. Hence, this Criminal Revisional
application.
14. Despite service of notice, none appeared on behalf of the
opposite parties. No accommodation was sought for. Therefore, the
matter was taken up for hearing in the absence of the opposite
parties.
15. In course of hearing, learned counsel appearing on behalf of
the petitioner submitted that 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 plywood on
different dates to the petitioner. Whatever transaction made between
the parties was a business transaction, which never comes within the
domain of criminal act. Dispute regarding dues 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 business transaction. Though, the
8
complainant has supplied the plywood on several dates to the
petitioner but the petitioner and her mother-in-law, Padma Kanoria
already paid to the complainant by cheque in entirety and that would
be evident from the ledger account disclosed by the opposite party no.
2/complainant with the petition of complaint. Vouchers details, given
in the complaint, clearly indicated that the petitioner has already
paid more than 15 Lakhs to the complainant.
16. Even for the sake of argument, if any dues is pending that
would be attracted 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 petitioner, is clearly abuse of process of law and same is
liable to be quashed so far as the petitioner is concerned.
17. Finally, the learned counsel submitted that the complainant
made the written complaint before the Learned Trial Court is awful of
vague and non-specific and same does not disclose sufficient grounds
or ingredients to proceed against the petitioner. In such a situation,
criminal proceeding should not be allowed to be continued for
securing the ends of justice.
9
18. Heard the argument and submissions made by the learned
counsel appearing on behalf of the petitioner and on perusal of the
judgment referred by the learned counsel, this Court finds the
opposite party no. 2 had filed a petition of complaint alleging, inter
alia, that criminal breach of trust and cheating committed by the
Petitioner. The petitioner did not pay any amount indicates her
culpable intention from the beginning. The petitioner did not make
any payment even on repeated requests and written communication.
19. The complainant alleged that the petitioner represented
herself as a reputed businessman and dealers of Plywood, Decorative
Veneer, Laminates Wood, Highlighter and Allied Products as a
wholesaler at the beginning. Based on that, the complainant supplied
plywood worth Rs. 5,93,760/- on credit on different dates. The
dispute arises when the petitioner herein fails to make any payment
despite repeated demands and even after giving legal notice. The
complainant claims that the petitioner has no intention to pay,
leading to alleged cheating and misrepresentation. Whereas, the
petitioner herein contended that the dispute is purely civil in nature
and the criminal proceedings initiated against her are an abuse of
process of law. Offence as alleged is not at all attracted.
10
20. 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.1 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: -
"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
1
AIR 2024 SC 4531 : AIR Online 2024 SC 612.
11
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."
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
12
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
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
13
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
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
14
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 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
15
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
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
16
situation, both the offences cannot co-exist
simultaneously.”
21. The Hon’ble Supreme Court further laid down legal
propositions of law with regard to the applying 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
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
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
17understand 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.”
22. This Court also relied a judgment of the Hon’ble Supreme
Court in the case of The State of Kerala v. A. Pareed Pillai and
Anr.2, where it was held as follows: –
“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.”
23. Similarly, in the case in hand, there is nothing to show that
the petitioner had dishonest or fraudulent intention at the time of
placing order for supply of Plywood to the opposite party no. 2.
Complainant raised question about the outstanding dues amount.
Non-payment of outstanding dues amount or even breach of contract,
in commercial transaction, by no stretch of imagination, can be called
dishonest inducements. It was/is purely a non-fulfilment of contract
2
1972 Cri.L.J.1243
18
to pay the outstanding Bill amount of a commercial transaction,
which definitely comes under civil dispute. Simply because of the
amounts have not been paid or there are outstanding will not make it
a case of wilful or dishonest inducement or deception.
24. In the case of Haridaya Ranjan Prasad Verma and Ors. v.
State of Bihar and Anr.3, the Hon’ble Apex Court also held that: –
“There was no allegation in the complaint indicating,
expressly or impliedly, any intentional deception on
the 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”.
25. 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
Plywood. Rather, it appears the complainant/opposite party no. 2
3
(2000) 4 Supreme Court Cases 168
19
supplied Plywood amounting to Rs. 5,93,760/- on different occasions.
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 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. 5,93,760/- as alleged by the petitioner is not 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 406/120B of the
Indian Penal Code, 1860 is made out from the allegations made in the
complaint.
26. 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 petitioner right from the
inception of order of supply of Plywood even if no payment has been
made, that will neither tantamount to deception, fraudulent or
20
dishonest inducement nor would it amount to deception by
intentional means right from the beginning. 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.
27. In the case of Paramjeet Batra v. State of Uttarakhand4,
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 a4
(2013) 11 SCC 673
21cloak 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)
28. In the light of above discussions together with averments
contained in the petition of complaint, this Court finds ingredients of
the offences alleged by the opposite party no. 2 are absent. Merely
because non-payment of outstanding amount 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 commission of offence under Sections 406
and 420 of the Indian Penal Code, 1860.
29. 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 petitioner 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
22
pressurizing the petitioner into settling the dispute, 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.
30. Consequently, CRR No. 4226 of 2023 is allowed.
Connected application, if any, is, also thus, disposed of.
31. The proceeding being C.N.S. No. 1097 of 2021
corresponding to F. No. CNS/481009/2021 (Shree Shyam Ply &
Laminates Vs. Kusum Kanoria), for commission of alleged offence
under Sections 406/420 of the Indian Penal Code, 1860 now pending
before the Court of the Learned 19th Metropolitan Magistrate,
Calcutta is hereby quashed insofar as the petitioner is concerned and
all orders passed therein including orders dated 03.12.2021 and
03.05.2023 are set aside.
32. Let a copy of this Judgment be sent to the Learned Trial
Court for information.
33. Case Diary, if any, is to be returned to the learned counsel
appearing on behalf of the State.
34. Interim order, if any, stands vacated.
23
35. 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.)