In an application under section 482 CrPC, while allowing the criminal revision the high court of Calcutta observed that if the complaint has been initiated by suppressing material fact it cannot be allowed and if the agreement was between the companies and the offense was committed by the company then the criminal proceeding cannot be allowed to survive without the company being arrayed as an accused.
Brief Facts:
The current application had been filed under section 482 of CrPC which challenges the propriety and legality of a case pending before the learned Judicial Magistrate under sections 418/420/120B/34 of the Indian Penal Code, 1860. The petitioners are the accused who are the managing director of Lanco Infratech Limited. It has been alleged that the complainant used to supply dissolved acetylene oxygen industrial cylinders to the construction site of the accused persons at Sirwani, Singtham. But in the breach of understanding the company Lanco Infratech Limited failed to return the empty cylinders and denied the obligation by simply stating that they never received the said cylinders. Thereby the accused company misappropriated the cylinders of the company worth Rs. 38,66,500/-. With regards to the same the complainant had filed a petition against the accused thereafter summons were issued against the accused persons and they had said that they would pay a certain amount in installments upon withdrawal of the complaint case and an agreement was made. Later on, after the withdrawal the accused person did not honor the terms of the settlement and they even refused to talk to the complainant it was then alleged that had there been no such inducement on the part of the accused persons the complainant would not have entered into the settlement agreement or withdrawn the complaint case. Then the magistrate as per section 200 CPC issued a process upon the accused but the accused persons did not appear before the trial court and a warrant of arrest was issued.
Contentions of the Petitioner:
The Learned Counsel for the Petitioner has submitted that the provision of section 202 of CrPC has not been complied with by the Judicial Magistrate and no inquiry was held as has been mentioned under section 202 CrPC. It was also contended that the complainant suppressed the material fact and set the criminal proceeding into motion which amounts to abuse of process of law.
Observations of the Court:
The Court noted the events that transpired to the agreement between the parties, it was then noted that by the order of the NCLT, the company had slipped into moratorium under section 14 of the IPC at the instance of the creditor and Sri Savan Godiawala was appointed as Interim Resolution Professional. It was then noted that because of this development, the company was prohibited from transferring, encumbering, alienating, and disposing of its assets or any legal right or potential interest. As a result, the company was sufficiently prevented from complying with the terms of the settlement. The court then further noted that this fact was known to the complainant and as a corporate creditor he lodged his claim before the resolution professional and presently the company is in liquidation. The court then noted that It cannot be said that the company or its alter ego Managing Directors had any mens rea to induce or cheat the complainant company. On the other hand, the complainant filed this petition of complaint with mala fide intention suppressing this material fact. Accordingly, the court concluded that the proceeding may be quashed invoking the provisions of section 482 CrPC. The court then noted that the complainant had the obligation to participate and lodge its claim before the Resolution Professional but the embargo of Section 14 of IBC is not applicable in a criminal proceeding. The court then also noted that to constitute an offense of cheating the complainant is to show prima facie that since the inception of the transaction the accused persons had the intention to cheat the complainant. It was also noted that to hold a person culpable for committing an offense within the meaning of Section 415 of the Indian Penal Code, it is necessary to say that the said person had fraudulent or dishonest intentions at the time of making promises or induce other persons intentionally to do or omit to do anything which he would not do if he were not so induced and deceived. Then it was noted that the company LITL had paid a certain sum of money and if there had been an intention on the part of the accused to defraud the complainant then they would not have even paid that sum of money. This factum of payment rules out the existence of required mens reas to commit the offence. The court also noted that commercial disputes virtually cropped up and it is civil which has been imbibed with the color of criminality. The court then referred to certain cases and concluded that the criminal proceeding in question was attended with mala fide as it was initiated after suppressing the material facts. It was also noted that if any offense were committed it was committed by the company and the criminal proceeding cannot be allowed to survive without the company being arrayed as accused.
The decision of the Court:
The court concluded that the proceedings pending before the Judicial Magistrate cannot be allowed to remain in force and should be set aside and consequently the criminal revision petition was allowed.
Case Title: G. Venkatesh Babu & Anr. v. The State of West Bengal & Anr.
Coram: Hon’ble Justice Siddhartha Roy Chowdhury
Case no.: CRR 82 of 2021, CRAN 1 of 2022 and CRAN 2 of 2022
Advocate for the Appellant: Mr. Arjun Syal, Adv., Mr. Akhilesh Wahal, Adv. Mr. Hillol Saha Poddar, Adv.
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