Calcutta High Court (Appellete Side)

M/S. Pawan Kumar Sethia & Ors vs The State Of West Bengal & Anr on 26 July, 2022

             IN THE HIGH COURT AT CALCUTTA
            CRIMINAL REVISIONAL JURISDICTION
                     APPELLATE SIDE

Present:
The Hon'ble Justice Ajoy Kumar Mukherjee

                            C.R.R. 628 of 2020
                      M/s. Pawan Kumar Sethia & Ors.
                                    -vs-
                      The State of West Bengal & Anr.


For the Petitioners                  : Mr. Anirban Dutta
                                       Mr. Biswanath Patra
                                       Ms. Priyanka Mukherjee
                                       Mr. Aditya Roy
                                       Mr. Sayantan Sinha

For the O.P. No. 2                   : Md. Karim Warsi
                                       Ms. Arpita Mondal
                                       Md. Rahim Waris

For the State                        : Mr. Ranabir Roy Chowdhury
                                       Mr. Sandip Chakraborty
                                       Mr. Mainak Gupta


Heard on                              : 9.6.2022

Judgment on                           : 26.07.2022


      Ajoy Kumar Mukherjee, J.

Judgment referred on behalf of petitioners

a) Alpic Finance Limited Vs. P. Sadasivan and another (2001) 3 SCC 513.

b) S.K. Alagh Vs. State of U.P. & others (2008) 5 SCC 662.

c) Sushil Sethi and another Vs. State of Arunachal Pradesh & others

(2020) 3 SCC 240.

d) V.Y. Jose & another Vs. State of Gujarat & another ( 2009) 3SCC 78.

e) Sharad Kumar Sanghi Vs. Sangita Rane (2015) 12 SCC 781.

f) Pepsi Food Ltd. & another Vs. Special Judicial Magistrate & others

(1998) 5SCC 749.

g) Masand Saiyed Vs. State of Gujarat & Others (2008) 5 SCC 668.

h) G. Sagar Suri & another Vs. State of U.P. & others (2000) 2 SCC 636.

i) M.S. Banga Vs. State of W.B. & another (2004) SCC OnLine Cal 443.

j) Satish Chandra Ratanlal Shah Vs. State of Gujarat & another (2019) 9

SCC 148.

Judgments referred on behalf of opposite Party No. 2

a) Ramveer Upadhyay & another Vs. State of U.P. & another (special

Leave Petition (Cri) No. 2953 of 2022.

b) Hamida Vs. Rashid (appeal (cri) 632 of 2007).

c) Jagmohan Singh Vs. Vimlesh Kumar & others (Criminal Appeal No.

741/2022 arising out of SLP (cri) No. 9339 of 2021).

d) Md. Allauddin Khan Vs. The State of Bihar & others.(criminal Appeal

No. 675/2019 arising out of SLP (Cri) No. 1151 of 2018).

1. The present revisional application has been preferred for quashing of the

proceeding including charge-sheet no. 115 of 2018 dated 21.7.2018 in

connection with Beniapukur Police Station RI-III/13 dated 1.4.2013 under

Sections 406/420/471/468/504/506(ii)/120B of the Indian Penal Code

corresponding to GR case no. 1123 of 2013 pending before the court of learned

Additional Chief Judicial Magistrate, Sealdah.

2. The allegations levelled by opposite party no. 2 namely, Narayan Prasad

Saraff against the present petitioners in the written complain dated 04.03.2013

may be summarized as follows:-

(I) the petitioners induced the opposite party no. 2 to manage look

after the building construction work at their firm at Malda on

monthly remuneration of Rs. 25 thousand per month and on being

induced, the opposite party no. 2 agreed to manage and look after

the said work and for that purpose, on 6.1.2000 the petitioners

executed a power of attorney in his favour in respect of said

construction work at Malda and further they executed another

registered power of attorney on 19.7.2001.

(II) In the early part of the year 2003 the petitioners requested him to

give the financial assistance of Rs. 4 lakhs and on goof faith he

gave a sum of Rs. 4 lakhs and they undertook that they will pay

said amont of Rs. 4 lakhs along with substantial interest to

opposite party no. 2 within a year.

(III) As per power of attorney dated 6.1.2000 followed by registered

power of attorney dated 19.1.2001, the opposite party no. 2 looked

after and manage, control and performed the works in respect of

said Malda property but the petitioner did not pay a single rupee to

him as remuneration.

(IV) Sometime in middle part of 2004, when opposite party no. 2

demanded the return of loan amount of Rs. 4 lakhs along with

interest as well as remuneration of Rs. 25 thousand per month

since January 2001, the petitioners only to pacify him made a

settlement whereby agreed and undertook to pay the loan amount

of Rs. 4 lakhs along with substantial interest thereon and monthly

remuneration of Rs. 25 thousand per month since January, 2001

till March, 2004 within 31.3.2005 and settlement was held on

27.8.2004.

(V) The petitioners also requested him to continue the work as per

power of attorney and considering the relation, the opposite party

no. 2 continued the construction work. The petitioners with

fraudulent mala fide and dishonest intention of cheating and

misappropriation for achieving their wrongful gain, they adopted

dilatory tactics. Due to prolonged wait for almost three years and

sensing something wrong, firstly on 2.1.2008, the opposite party

went to their office and demanded Rs. 4 lakhs along with Rs. 25

thousand per month remuneration since January 2000 to January

2008 totaling to the tune of Rs. 25 lakhs (Rs. 4 lakhs as loan

amount and Rs. 21 lakhs as remuneration) along with substantial

interest.

(VI) When the opposite party no. 2 clarified that he will not continue as

their attorney-holder the petitioners issued another written

undertaking on 2.1.2008 to pay entire amount of Rs. 25 lakhs

along with interest within six months from the date and

considering such undertaking dated 2.1.2008 the opposite party

no. 2 again got duped and agreed to wait till June 2008.

(VII) Suddenly on 22nd March, 2008 the petitioners demanded from

him Rs. 20 lakhs as consideration amount received by opposite

party no. 2 for Malda property and after receiving such letter he

was asked and traumatized and gave reply by a letter dated

1.4.2008 to show the documents and papers in support of their

illegal demand.

(VIII) After knowing ill motive and breach of trust, the opposite party no.

2/complainant made a paper publication on 21.04.2008 about his

voluntary decision of surrender of attorney. The opposite party no.

2 again received a letter on 10.4.2008 issued by the petitioners

wherein they again tried to levy an allegation against him and

opposite party no. 2 once again by a letter dated 8.5.2008 called

upon to pay his legitimate claim and tender apology for making

baseless allegations. Petitioners after receiving such reply on

8.5.2008 came to his place and requested him not to take legal

steps and prayed to give them some more time to pay Rs. 25 Lakhs

along with substantial interest thereon within July, 2009. Opposite

party no. 2 decided to wait but nothing materialized from the

petitioners and since then, several times opposite party no. 2 went

to the office of the petitioners and tried to contact with him but the

petitioners avoided. Ultimately he could contact on 13.10.2012

when once again he was assured to pay after Durga Puja 2012.

Opposite party No.2 then realized that the petitioners in collusion

with each other has defrauded the opposite party no. 2 taking

undue advantage of the trust reposed on them by rendering

services and giving loan to them and he has been deceived by them

and the petitioners are not willing to pay his legitimate claim

intentionally and they are delaying the matter with ill motive.

(IX) Opposite party no. 2 sent advocate's letter dated 19.11.2012

whereby he called upon the petitioners to pay entire dues to the

tune of Rs. 27 Lakhs (25 lakhs dues and 2 lakhs as damages

including interest) which was duly received by the above persons

but in spite of that the petitioners did not pay a single paisa to the

opposite party and now started threatening him with dire

consequences.

3. Mr. Anirban Dutta, learned counsel on behalf of petitioners submits that

as per development agreement, it was agreed by opposite party no. 2 that an

amount of Rs. 50 lakhs will be paid to the petitioners as owner thereof together

with entire 4th floor be handed over to the petitioners apart from other terms as

settled with regard to the construction work. Accordingly, the power of attorney

was executed in favour of the opposite party no. 2 by the petitioners to perform

the aforesaid work towards completion of the said project and there was no

specific term for monthly remuneration of opposite party no. 2. The assignment

was entrusted upon the opposite party no. 2 being trusted person to the

petitioners family based on just half and half profit and loss share basis for

either of the side towards project excluding aforesaid payment of Rs. 50 lakhs

and handing over the entire 4th floor of the new building apart from the

expenses of the project.

4. Mr. Dutta, learned Advocate further submitted that project of the new

building was completed in compliance of all the formalities and the sale of

residential flats were made by opposite party no. 2 by executing deeds and all

the consideration money were received by the opposite party no. 2 but even

after repeated request on several occasions, the amount of Rs. 50 lakhs being

the land cost of the project including the entire 4 th floor of new building was

not given by the opposite party no. 2 to the petitioners. The petitioner no. 1

had filed complain vide GR 731 of 2008 before the learned 13 th Metropolitan

Magistrate, Kolkata on the ground of misappropriation to the tune of Rs. 24.30

lakhs by the opposite party no. 2 with regard to the development and sale of

shop rooms as well as Malda property. During the course of trial, the opposite

party no. 2 filed an application under Section 239 of the Code of Criminal

Procedure with a prayer for discharge which was heard and learned Magistrate

was pleased to reject the prayer. Being aggrieved by and dissatisfied with the

order, the opposite party no. 2 preferred a revisional application before the

High Court, Calcutta being CRR 3536 of 2012 but the Hon'ble High Court also

turned down the prayer on 18.10.2012 and the matter remanded to the trial

court to decide all the issues on the basis of evidence on record.

5. Mr. Dutta, contended that as a counter blast and also to avoid payment

of Rs. 50 lakhs and in order to avoid handing over the 4 th floor of the new

building and also to get rid of the trial in connection with aforesaid criminal

case being GR 731 of 2008 filed by the present petitioners, the opposite party

no. 2, had filed a complaint case being no. C/4635 of 2009 before the learned

Chief Judicial Magistrate at Alipore , which was dismissed by the court.

6. Here the opposite party no. 2 has come up with new story that monthly

remuneration of Rs. 25 thousand for the work of the project as alleged is due

and payable by the petitioners though nowhere it has been mentioned that the

opposite party no. 2 is entitled to get any amount of remuneration for the

aforesaid construction work. The opposite party no. 2 further created a story

that once upon a time, the petitioner asked the opposite party no. 2 for

advancing loan of Rs. 4 lakhs for recovery from their hard days and financial

crisis and the opposite party no. 2 paid the said amount of Rs. 4 lakhs but the

fact remains that the amount of Rs. 4 lakhs and an additional amount of Rs. 1

lakh had already been received by opposite party no. 2 himself by issuing

several cheques in his favour as he was entrusted for handling over the bank

affairs during construction work. The petitioner demanded the amount of Rs.

1 lakh that had been taken by the opposite party no. 2 with interest since

2005.

7. It has been further contended on behalf of petitioners that the opposite

party no. 2 lodged the false and fabricated first information report with the

Beniapukur police station by creating jurisdiction, which is baseless,

unauthorized and upon taking cognizance of the first information report, police

authorities issued a number of notices upon all the petitioners and the

petitioners attended the police station and stated the truth before the police.

8. The petitioners submitted that in view of the First Information Report,

the opposite party no. 2 lodged a complaint case being 253 of 2013 before the

learned Additional Chief Judicial Magistrate at Sealdah for taking cognizance of

the offence under Sections 406/420/471/468/504/506(ii)/120B of the Indian

Penal Code and after getting notice sent by the court, the petitioners appeared

before the learned court and took steps time to time.

9. In spite of taking all the steps before the police authorities and the

learned court as well as the dismissal of the false and fabricated case of the

opposite party no. 2, no order passed by the learned court to that effect. On the

other hand, the police authorities filed a charge-sheet on 21.7.2018 and

learned court has taken cognizance upon charge-sheet mentioned offences

against petitioners which is unwarranted, unlawful having no iota of truth.

10. Mr. Dutta strenuously argued that to facilitate day to day work and

smooth operation of business a separate Bank A/C was opened to which

opposite party No. 2 was a signatory and cheque book was given to opposite

party No.2. In 2005, opposite party No. 2 sold part of property valued at Rs, 4,

30, 000/- by virtue of four agreements on 05.08.2005 but had not deposited

the amount to petitioner's firm's Bank A/C. Thereafter opposite party No. 2 had

drawn five cheques in his favour of an amount of Rs, 5,00,000/- which were

cleared and credited to his account. After prolonged persuasion when the

opposite party no. 2 did not pay the amount received by him as proceeds from

the sale, the petitioner thereafter cancelled the said power of attorney and to

that effect a letter dated 17.2.2006 was sent to the Sub-Registrar for the

purpose of cancellation. Even after cancellation of the power of attorney the

opposite party no. 2 fraudulently tried to sell portion of the property of the

petitioners by preparing six agreements dated 24.04.2007 and misappropriated

an amount of Rs. 20 lakhs. The opposite party no. 2 also forged signature of

the petitioners to issue cheques and the petitioner were shocked to receive

notice under Section 138 of the Negotiable Instrument Act. By a letter dated

23.3.2008 a demand was made to the opposite party no. 2 about the sale

proceeds totaling to Rs. 20, 30,000/- which has been misappropriated by him

and opposite party no. 2 gave a reply on 1.4.2008 stating that he is under no

obligation to pay the amount quoted. The petitioners filed an application under

Section 156 (3) of the Code of Criminal Procedure which was registered as GR

731 of 2008 and upon direction to Posta Police Station case no. 58 dated 16.5.

2008 under Sections 120B/406/420/467/468 of the Indian Penal Code was

started and after completion of investigation, charge-sheet also submitted on

18.4.2009.

11. Petitioners further argued that all the agreements were made with

petitioner No.1 M/S Pawan Kumar Sethia, a partnership firm, and allegations

leveled against said partnership firm, but the firm has not been made a party

and there is no specific allegation against any particular partner of the firm.

Accordingly petitioners contended when firm has not been arrayed as a party

no proceeding can be initiated against the other petitioners and they cannot be

fastened with vicarious liability.

12. I have gone through the written complain along with the statements

recorded under Section 161 Cr.P.C. It appears from the statements that the

main dispute relates to non-payment of remuneration to the extent of Rs.

25,000/- per month and also for non-payment of Rs. 4 lakhs which the

complainant/opposite party has paid to the company on 03.03.2003.

13. Learned counsel appearing on behalf of the petitioners submits that from

the power of attorney it is clear that there was no agreement of payment of any

remuneration of Rs. 25,000/- per month for making the construction work as

alleged. It is further submitted on behalf of the petitioners that out of loan

amount of Rs. 4 lakhs they have already paid the complainant/opposite party

no. 2 to the tune of Rs. 5 lakhs.

14. Learned counsel on behalf of the opposite party no. 2 has pointed out the

settlement dated 27.08.2004 and contended that it was settled that payment of

Sri Saraff @ Rs. 25,000/- per month for looking after the Malda project as

remuneration will be considered, finalised and payable within March, 2005.

15. Learned counsel on behalf of the petitioners by showing a letter which

was received by Beniapukur P.S. on 22nd April, 2016 contended that vide

cheque No. 652805 to 652808 and 652816 on different dates, Rs. 5 lakhs was

paid to the opposite party no. 2 and as such no amount is due towards the

aforesaid loan amount. On the basis of direction made by this court on April,

29th, 2022 the investigating officer has expressed his opinion that letter dated

22.04.2016 (as above) has got no connection with the instance case and

Narayan Prosad Saraff is still entitled to get Rs. Four Lakhs from the said firm.

So the report of investigating officer also makes it clear that dispute relates to

payment of money, which one party claimed to have paid while denied by the

other.

16. The allegation against the petitioner is that petitioner No.1/firm and

other petitioners have cheated opposite party No.2 and thereby dishonesty

induced him to do contain acts. There is no allegation that the petitioners

made any wilful misrepresentation . Even according to FIR, initially opposite

party No.2 had admittedly good relationship with the partners/petitioners and

considering relationship he agreed to mange , look after the work of accused

person's firm and for which they entered into an agreement and the petitioners

executed two power of attorney in his favour but the grievance of the opposite

party no.2 is that the petitioners failed to discharge their contractual

obligations i.e. payment of monthly salary of Rs, 25,000/- and repayment of

loan of Rs, 4,00,000/- though such allegations were denied by petitioners

herein. A purely civil dispute has been brought to criminal court by the

opposite party No.2 against present petitioners and neither the FIR nor the

materials in case diary discloses any prima facie material to show how each

petitioner under their individual or collective capacity has committed offence

under sections 406/420/471/468/504/506/120B of I.P.C. The civil dispute on

the issue of alleged breach of contract has been given a cloak of criminal

offence by the opposite party no. 2 as a sort cut of other remedies available in

law. A mere breach of promises relating to payment of monthly salary or

repayment of loan with interest within a stipulated period does not ipso facto

constitute the offence of criminal breach of trust contained in section 405 of

I.P.C. without there being a clear case of entrustment. Fraudulent or dishonest

representation to cheat from the very beginning of the transaction is completely

absent in the present case since there is a serious dispute between the parties

over the issue as to whether it was at all agreed to give opposite party no.2

monthly remuneration and also whether the loan has been paid from the asset

of partnership firm or not.

17. It is well settled from various decisions that the court must ensure that

criminal prosecution is not used as an instrument of harassment or for seeking

private vendetta to pressurise other side. The FIR also does not disclose what

role was played by each petitioner i.e. petitioner no. 2 & 3 who are house

wives and partner of petitioner no.1/firm with regard to offence of forgery of

valuable security for the purpose of cheating . No forged document has been

seized by police during investigation. The charge-sheet discloses contractual

obligation and breach thereof, for which remedy is available in civil court.

There is no prima facie material that the present petitioners committed offence

under sections 406/420/471/468/504/506/120B I.P.C. The partnership firm

has not been made accused in this case. The concept of vicarious liability is

also not found under the I.P.C. Accordingly the continuation of criminal

proceeding will be sheer abuse of the process of the court.

18. In this context the observation made by Apex Court in SatishChandra

Ratanlal Shah vs. State of Gujarat and another reported in (2019) 9 SCC

148, may be quoted:-

"12. In this context, we may note that there is nothing either in the complaint or in any material before us, pointing to the fact that any property was entrusted to the appellant at all which he dishonestly converted for his own use so as to satisfy the ingredients of Section 405 punishable under Section 406 IPC. Hence the learned Magistrate committed a serious error in issuing process against the appellant for the said offence. Unfortunately, the High Court also failed to correct this manifest error."

"13. Now coming to the charge under Section 415 punishable under Section 420 IPC. In the context of contracts, the distinction between mere breach of contract and cheating would depend upon the fraudulent inducement and mens rea. (See Hridaya Ranjan Prasad Verma v. State of Bihar [Hridaya Ranjan Prasad Verma v. State of Bihar, (2000) 4 SCC 168 : 2000 SCC (Cri) 786] .) In the case before us, admittedly the appellant was trapped in economic crisis and therefore, he had approached Respondent 2 to ameliorate the situation of crisis. Further, in order to recover the aforesaid amount, Respondent 2 had instituted a summary civil suit seeking recovery of the loan amount which is still pending adjudication. The mere inability of the appellant to return the loan amount cannot give rise to a criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, as it is this mens rea which is the crux of the offence. Even if all the facts in the complaint and material are taken on their face value, no such dishonest representation or inducement could be found or inferred."

"14. Moreover, this Court in a number of cases has usually cautioned against criminalising civil disputes, such as breach of contractual obligations (refer to Gian Singh v. State of Punjab [Gian Singh v. State of Punjab, (2012) 10 SCC 303 : (2012) 4 SCC (Civ) 1188 : (2013) 1 SCC (Cri) 160 : (2012) 2 SCC (L&S) 988] ). The legislature intended to criminalise only those breaches which are accompanied by fraudulent, dishonest or deceptive inducements, which resulted in involuntary and inefficient transfers, under Section 415 IPC."

19. Similarly in G. Sagar Suri and another vs. State of U.P. and others it

was observed by Apex Court:-

"8. 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."

20. The case laws as cited by opposite party No. 2 as above has got no

connection in the present context as there is no disagreement in the well

settled proposition of law that while dealing with an application under section

482 of Cr.P.C. High Court has no jurisdiction to appreciate the evidence in the

proceeding or to embank upon an enquiry into whether there is reliable

evidence or not but only to confine itself as to whether allegations levelled in

the FIR prima facie discloses cognizable offence or not.

21. From the aforesaid facts and circumstances of the case, it is clear that

dispute between the parties is purely civil in nature and neither the contents of

FIR nor materials in case diary prima facie discloses cognizable offence against

the accused persons.

22. In view of the aforesaid facts and circumstances of the case, I find that