Calcutta High Court (Appellete Side)

M/S. Bharat Nre Coke Limited & Anr vs State Of West Bengal & Anr on 20 April, 2023

20.04.2023

Court No.35
Item No. 36 CRR 2831 of 2016
(p.a) With
CRAN 13 of 2020 (Old No: CRAN 1277 of 2020)

M/s. Bharat NRE Coke Limited & Anr.
Vs.
State of West Bengal & Anr.

Mr. Madhusudan Sur,
Ld. A.P.P
Mr. Dipankar Paramanick.

... For the State

Mr. Sabyasachi Banerjee,
Mr. Ayan Bhattacharya,
Mr. Moti Sagar Tiwari,
Mr. Ravindra Tiwari
... for the Petitioner

Mr. Amitava Pain
...for the Opposite Party No.2

In this order, this Court shall make an effort to answer the

question as to whether a company, whose share prices are dropped

being subject to market volatility, can be fastened in criminal liability,

for an alleged act of cheating, that there was a presumption of the price

of the share to surge up.

The criminal justice system was set in motion with filing of the

complaint case No. C/74/2015 by the opposite party

No.2/complainant, dated 04.05.2015, under Sections

420/406/504/506 IPC, in the Court of Ld. Chief Metropolitan

Magistrate, Kolkata. The complainant preferred the same under
2

provisions of Section 156 (3) of the Cr.P.C on the allegations inter alia

as follows:-

Before five years from the date of lodging the complaint, the

complainant invested Rs.50,000/- in the company namely Gujarat NRE

Mineral Resources Ltd., (renamed as the present petitioner) by way of

purchasing 2250 equity shares. She has stated that before such

investment she was introduced to the co-accused, i.e, one Mr. Vimal

Taparia, the Secretary of the said company. Allegedly she was induced

fraudulently to pour in the said amount of money in lieu of company's

shares on the assurances made of the complainant, to be benefited in

future, by rise of the share prices and enlistment of the company's

shares in the stock exchange. The sum and substance of the

complainant's allegation would be that only due to such assurance of

future benefit subject to rise of share prices, she had parted with her

money to the accused company. She has further stated that

assurances were given of immediate enlistment of company's share in

the open market so that the share price becomes more than what was

on her date of purchase. She alleges that in spite of assuring her and

procuring money from her on those false assurances, the accused

company has never enlisted their shares for open market and in turn

and with time the price of the shares has dropped to the detriment of

financial interest of the complainant. Thus she has alleged of suffering

unlawful loss due to alleged commission of cheating by the company

upon her, making unlawful gain thereby, for which she has taken
3

shelter under law, by lodging the complaint as above.

Mr. Banerjee, who is representing the petitioner/company, firstly

submit that company's functioning and policy regarding enlistment of

share would depend on the business profile thereof, which is a

continuing affair and depends upon the business condition and market

volatility. By referring to the complaint it has been pointed out that in

absence of any specific allegation as to how the assurance was extended

to the complainant as alleged, the averments to that effect made in the

complaint appears to be only vague. He elaborates that the shares of

the company has been taken by the complainant from the open market.

The complainant has hold those shares for a considerable period of time

and also as per complainant's own statement, has enjoyed bonus

shares with respect to her such holding. So far as the allegation of

fraudulent and dishonest inducement of the complainant by the

company for purchasing those shares are concerned, according to Mr.

Banerjee there would be no revelation above the same in the complaint

with any cogent and sufficient material and hence no case has been

made out in the same under Section 420 IPC against the petitioner

company. Mr. Banerjee, has requested for quashing of the criminal

proceedings against his client.

By referring to the Judgment of Vijay Kumar Ghai & Ors. vs. State

of West Bengal & Ors., reported in (2022) 7 SCC 124, Mr. Banerjee has

submitted that even in a case where the parties were bound by a

contract (MOU), the Hon'ble Supreme Court was not inclined in favour
4

of exercise of discretionary and extraordinary power by the High Court

under Section 482 Cr.P.C, on the ground of absence of culpable

intention, at the time of making the promise. He indicates that, in this

case, there exists even no privity of contract, between the parties.

Opposite parties are represented including the State. Mr. Amitava

Pain appearing for the opposite party No.2 has been very categorical

about the fact that his client was fraudulently induced at one point of

time regarding imaginary windfall that shares purchased by her would

bring her riches. This is the only reason for the complainant to infuse

Rs.50,000/- for purchase of petitioner's shares. Though, finally the

promise was not kept by the petitioner company to list their company in

the exchange and in effect the price of those shares, obtained by his

client on the basis of the false promise, had gone down, with time.

Thus, according to Mr. Pain, the complainant has suffered injuries and

predicaments to her financial interests and had to take shelter in the

Court of law with the allegation of criminal charges against the

petitioner company. Mr. Pain has prayed for dismissal of petitioner's

prayer in this case and has urged that the trial should proceed

expeditiously.

Mr. Madhusudan Sur, who is representing the State in this case

has submitted the case diary in Court. From the same he has relied on

the materials and raised strong objection to the contentions of Mr.

Banerjee in support of the petitioner. It is submitted that materials in

case diary clearly indicates that though promised, the petitioner
5

company has failed to enlist itself with the stock exchange. As per the

materials in case diary, he says, that the complainant, who initially

acted on the basis of the promise of the company, was thus defrauded.

Perused the materials available before me and those in the case

diary. According to the complaint dated 04.05.2015, the complainant

obtained shares of the petitioner company at the inducement of the

same, which was not only dishonest but fraudulent and thus allegedly

she was deceived from the point of inception of the transaction with the

petitioner company. She alleged of having been assured by the

company of enlistment thereof in due course of time to result in rise of

their share price. That, the complainant alleges, the company has not

done and ultimately the share prices went downward resulting into her

financial loss against those. She has also alleged that the petitioner

company has turned down her prayer for refund of amount of

Rs.50,000/-, so invested by her in the company against those shares

owned by her.

In this respect the documents, i.e, reply of the petitioner dated

13.10.2014 to the demand letter of the ld. Advocate for the complainant

dated 08.09.2014 may be referred to where the petitioner company has

categorically explained as regards difficulties in listing the company

with the exchange and company's future plan regarding the same. As a

matter of fact listing a company with the exchange and open its shares

to the market is essentially and solely a policy decision of the Board

which is depended on various factors including the fundamental
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business strategy of a company. Anyone can dream and may also

express about the future prospects of his own business to persons at

large. Even, for the sake of argument in this case, if it is held that any

such enthusiastic and futuristic words were ever expressed to the

complainant, regarding the future prospect of the company, that

cannot, by any stretch of imagination be held to be an inducement

extended to her to act in a particular way, as envisaged in law, to come

to a finding regarding existence of ill intention of the company or

anybody on its behalf to deceive the complainant. What would

constitute to be an act of deception or fraudulent and dishonest

inducement has been clearly and categorically made to be understood

under Section 415 IPC which may be extracted here for the purpose of

discussion:-

"415. Cheating.--Whoever, by deceiving any person, fraudulently
or dishonestly induces the person so deceived to deliver any
property to any person, or to consent that any person shall retain
any property, or intentionally induces the person so deceived to do
or omit to do anything which he would not do or omit if he were not
so deceived, and which act or omission causes or is likely to cause
damage or harm to that person in body, mind, reputation or
property, is said to "cheat".

Explanation.--A dishonest concealment of facts is a deception
within the meaning of this section."

The judgment of Vijay Kumar Ghai (Supra) may beneficially be

relied on the note as follows:-

"31. ***************

The essential ingredients of the offence of cheating are:
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1. Deception of any person

2. (a) Fraudulently or dishonestly inducing that person-

(i) to deliver any property to any person; or

(ii) to consent that any person shall retain any property; or

(b) intentionally inducing that person to do or omit to do anything
which he would not do or omit if he were no so deceived, and
which act or omission causes or is likely to cause damage or
harm to that person in body, mind, reputation or property."

********************

35. To establish the offence of cheating in inducing the delivery of property, the following ingredients need to be proved:

(i) The representation made by the person was false.

(ii) The accused had prior knowledge that the representation he made was false.

(iii) The accused made false representation with dishonest intention in order to deceive the person to whom it was made.

(iv) The act where the accused induced the person to deliver the property or to perform or to abstain from any act which the person would have not done or had otherwise committed."

It is to be noted in this case that none of the ingredients as

envisaged by the Hon'ble Apex Court, could be found to have been

fulfilled, in the complaint against the petitioner.

So far as the complainant's allegation referring to non-refund the

invested amount is concerned, it has to be understood that under the

statutory frame of the affairs of a company, any money invested therein

against equity shares, has a definite process, to be complied with,

before the same can be returned back to the share holders. Again, the

same is also a matter of policy decision of the Board, i.e, for 'buy back'

of the shares. The submissions made on behalf of the petitioner is

accepted, that, every now and then, with any share holder coming up

with the prayer for return of money against the purchased shares, the

same cannot forthwith be returned by the company, unless there is a

'buy back' scheme of shares in existence. That too has to be through a

duly set up machinery like exchange and/or brokers etc.

The complainant's alleged purchasing and holding shares due to

the fraudulent inducement of the petitioner and deception, is vague,

rather unsubstantiated. The complaint is a nonspeaking one as regards

the mode and manner of alleged conduct of the petitioner, to find prima

facie from the same any ingredient as to the offence under Section

420,406 of IPC. What the petitioner is disputing is regarding the

allegation of fraudulently inducing complainant to purchase the shares

and also allegation of not refunding the money to her intentionally and

motivatedly. So far as the ingredients of offence of 'cheating' under

Section 415 IPC are concerned vis-à-vis the allegations levelled against

the petitioner in the complainant as discussed above, this Court is

constrained to find that no such ingredient of offence is made out

against the petitioner in the said complaint. Rather the complaint of

the opposite party No.2 is vague and non-specific so far as the role of

the present petitioner in the fraudulent conduct as alleged by the

complainant. Under such circumstances the ratio decided in the

judgment of Vijay Kumar Ghai (Supra) shall squarely be applicable in

this case and the same would render the present criminal proceeding to

be an abuse of the process of Court as well as that of law, if be

proceeded with against the present petitioner. The relevant portion may

be extracted, as herein below:-

"40. Having gone through the complaint/FIR and even the charge- sheet, it cannot be said that the averments in the FIR and the allegations in the complaint against the appellant constitute an offence under Section 405 and 420 IPC, 1860. Even in a case where allegations are made in regard to failure on the part of the accused to keep his promise, in the absence of a culpable intention at the time of making promise being absent, no offence under Section 420 IPC can be said to have been made out. In the instant case, there is no material to indicate that the appellants had any mala fide intention against the respondent which is clearly deductible from the MOU dated 20-08-2009 arrived between the parties.

******************

47. ************** At the same time, in order to attract the ingredients of Sections 406 and 420 IPC it is imperative on the part of the complainant to prima facie establish that there was an intention on part of the petitioner and/or others to cheat and/or to defraud the complainant right from the inception. Furthermore it has to be prima facie established that due to such alleged act of cheating the complainant (Respondent No. 2 herein) had suffered a wrongful loss and the same had resulted in wrongful gain for the accused(the appellant herein). In absence of these elements, no proceeding is permissible in the eyes of law with regard to the commission of the offence punishable under Section 420 IPC."

Thus it is held that, no case is made out against the petitioner, in

the complaint. In that event, to proceed against it any further would

amount to gross abuse of Court's process, which is to be prevented by

this Court, in exercise of power under Section 482 Cr.P.C.

For the reasons as discussed above this revision being C.R.R 2813

of 2016 should succeed. C.R.R 2831 of 2016 is allowed. The criminal

proceeding pursuant to C. Case No. 74 of 2015 dated 04.05.2015,

under Sections 420/406/504/506 IPC, in the Court of the Ld. Chief

Metropolitan Magistrate at Kolkata is quashed and set aside.

Connected application being CRAN 13 OF 2020 (Old CRAN No:

1277 of 2020) is disposed of.

Case diary be return.