Isabella Mariam

The Calcutta High Court Single Bench of Justice Dr. Ajoy Kumar Mukherjee quashed criminal proceedings instituted against the petitioner in connection with an alleged fraudulent loan transaction of Rs. 12 crores, involving an advance of Rs. 42.28 lakhs. The court held that the allegations, even if taken at face value, did not disclose the commission of offences under Sections 406, 417, or 420 of the Indian Penal Code.

The petitioner, accused of criminal misconduct in connection with GR Case No. 2828 of 2021, approached the High Court under Section 482 CrPC to quash the proceedings pending before the Additional Chief Judicial Magistrate, Uluberia, Howrah. The case originated from a complaint by the President of Sanjiban Hospital, who claimed to have entered into an agreement with the petitioner for a Rs. 12 crore loan at an interest rate of 24% per annum.

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According to the complaint, the petitioner had allegedly represented that he would provide the loan in exchange for an upfront payment of Rs. 42.28 lakhs towards advance interest and service charges. It was further alleged that the petitioner showed the complainant a cheque dated 05.10.2021 for Rs. 10 crores (No. 017749, drawn on Punjab National Bank, Manicktala Branch) and assured that the remaining Rs. 2 crores would follow soon. Relying on this, the complainant transferred Rs. 42.28 lakhs to the petitioner. However, the loan was never disbursed.

The petitioner, represented by Mr. Ayan Basu, argued that the complaint arose from a purely civil dispute regarding refund of the advance amount and did not establish criminal intent. He cited that the sessions judge had already observed in Misc. Case No. 133 of 2022 that the alleged cheque shown as inducement was blank and still attached to the original cheque book. The cheque, he contended, had never been used.

Further, the petitioner claimed that several proceedings under Section 138 of the Negotiable Instruments Act were already pending against the complainant for bounced cheques issued in the petitioner's favour. He also alleged that the complainant had earlier deceived him by issuing a cheque signed by a person who had died a year before.

In response, the opposite party (complainant), represented by Mr. Dipanjan Dutt, argued that the petitioner dishonestly induced him to part with Rs. 42.28 lakhs and misappropriated the amount. He contended that the amount was entrusted to the petitioner in the nature of a fiduciary arrangement, to be adjusted only upon actual disbursement of the loan, which never materialised. He further claimed that showing of the cheque amounted to inducement and that there was no explanation from the petitioner regarding how the complainant came to know the cheque particulars.

To support his contentions, the complainant cited various precedents, including:

• State of Orissa & Anr v. Saroj Kumar Sahoo [(2005) 13 SCC 540]

• Rajesh Bajaj v. State NCT of Delhi & Ors [(1999) 3 SCC 259]

• K. Jagadish v. Udaya Kumar G.S. & Anr [(2020) 14 SCC 552]

• State of Haryana v. AGM Management Services Ltd. [(2006) 5 SCC 520]

However, the court noted that these decisions did not apply in the present case due to lack of prima facie evidence.

Justice Dr. Ajoy Kumar Mukherjee examined the materials on record, including the cheque and related reports from the Punjab National Bank.

In quoting from the judgment of the Sessions Court in Misc. Case No. 133 of 2022, the judge recorded: "It is seen by this court that the cheque is blank and there is not a single word written in the said cheque and the said cheque is still attached to the original cheque book... this court also finds that... no transaction has been made by the cheque No. 017749."

The court held that these documents were unimpeachable and could be considered even at the quashing stage under Section 482 CrPC. Further, the investigation had not yielded witness testimony supporting the complainant’s claim that the cheque was shown as inducement.

Regarding Section 420 IPC, the court stated: "Refusal to return money which was given for processing loan and towards advance interest cannot constitute offence under section 420 of the IPC... offence under section 420 or 417 of the IPC has not been made out in the absence of any dishonest inducement on the part of the petitioner herein."

On the allegation of criminal breach of trust under Section 406 IPC, the court analysed the requirement of "entrustment" and found no material or averment indicating that the petitioner was entrusted with the amount in a fiduciary capacity. The court stated:

"There is nothing either in complaint or the material placed before me pointing to the fact that any property was entrusted as such to the complainant which he dishonestly converted for his own use..."

The court reiterated that merely not refunding money paid for services or contractual obligations did not, per se, constitute criminal breach of trust. The judgment referenced Indian Oil Corporation v. NEPC (India) Ltd. [(2006) 6 SCC 736], noting that:

"Any effort to settle civil dispute and claims which do not involve any criminal offence by applying pressure through criminal prosecution should be deprecated and discouraged."

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The judge also quoted the principle laid down in Gyan Singh v. State of Punjab [(2012) 10 SCC 303], affirming that the Legislature intended to criminalize only those breaches accompanied by fraudulent or deceptive inducement.

Concluding that no offence under Sections 406, 417, or 420 IPC was made out, the court ordered: "Present application being CRR 2732 of 2022 stands allowed. The impugned proceeding being GR. Case 2828 of 2021 in connection with Uluberia P.S case no. 384 of 2021 dated 08.12.2021 presently pending before learned ACJM, Uluberia, stands quashed."

Advocates Representing the Parties

For the Petitioner: Mr. Ayan Basu, Ms. Juin Dutta Chakraborty, Mr. Kushal Roy, Mr. Sumit Routh, Mr. Bidan Modak, Ms. Arpita Kundu

For the Respondents: Mr. Dipanjan Dutt, Mr. Pijush Biswas, Mr. Madhusudan Sur, Ld. APP, Mr. Manoranjan Mahata

Case Title: Bikasija Bhattacharjya @ Bikasija Bhattacharya vs. The State of West Bengal & Anr

Case Number: CRR 2732 of 2022

Bench: Justice Dr. Ajoy Kumar Mukherjee

[Read/Download order]