SANDEEP JATIA vs STATE OF WEST BENGAL AND ANR

IN THE HIGH COURT AT CALCUTTA
CRIMINAL REVISIONAL JURISDICTION
APPELLATE SIDE
Present:
The Hon’ble Justice Rai Chattopadhyay
CRR 200 of 2015
With
CRAN 3 OF 2015 (Old No., CRAN 4091 of 2015)
With
CRAN 7 of 2016 (Old No.CRAN 4449 of 2016)
With
CRAN 14 of 2018 (Old No.CRAN 2051 of 2018)
Sandeep Jatia
Vs
The State of West Bengal & Anr.
Mr. Sekhar Kumar Basu, Id. Senior Adv.,
Mr. Soubhik Mitter,
Mr. Soumya Banerjee,
Mr. Sucheta Banerjee. … for the petitioner
Mr. Saswata Gopal Mukherjee, Id. P.P.,
Mr. Imran Ali,
Ms. Debjani Sahu. … for the State
Heard on: 12.05.2023, 10.01.2023, 17.01.2023, 27.02.2023, 17.05.2023.
Judgment on: 12.11.2026; Uploaded on: 12.11.2026
(1) The criminal proceeding being GR Case No. 4419 of 2013, arising out of
Asansol (South) Police Station case No. 422 of 2013, dated 21.10.2013, under
sections 420, 406,465, 467, 468 and 120B of the Indian Penal Code, 1860, is

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challenged in the instant revision, which is now pending in the Court of
Additional Chief Judicial Magistrate at Asansol. The revisionist/petitioner has
prayed for quashing of the entire criminal proceeding as mentioned above.

Allegations made in the F.I.R/complaint :
(2) The complainant being engaged in transport business had decided to purchase
a pair of chassis. The complainant came to know that Tata Motors introduced
a scheme from the month of March 2013, to grant concessions to purchasers
in the last part of March, 2013. Thus, he contacted with the Regional Sales
Manager, Mr. Rahul Singh of M/s SREI Equipments Finance Limited
[accused No.4 in the complaint]. At his instance, the complainant was
introduced to the Branch Manager Mr. Rajesh Mehta, Area Sales Manager
Mr. Mukesh Mishra and the Managing Director Mr. Sandip Jatia of M/s
French Motor Car Company Limited [accused persons No. 1, 2 and 3
respectively, the accused No.3 being the petitioner in the instant revision], at
their Asansol showroom, with further introduction that the company deals
with new chassis of trucks and buses, from Tata Motors. The complainant
finally decided after discussion to purchase two Tata LP chassis in the month
of May 2013 at a total price of Rs.2,18,644/-. According to the complainant he
was given to understand that the year of manufacturing of the said vehicles
was in 2013, each of those having twelve wheels.

(3) The complainant had entered into two hire purchase agreements with accused
No.5 on behalf of accused No.7, which he says to have been done by him only
at the instance of the accused persons No.1, 2 and 3 [No.3 being the petitioner

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in the instant revision]. An amount of Rs.1,00,000/- was paid by the
complainant instantaneously whereas each vehicle was priced at Rs.2,18,644/-
and the complainant was required to pay instalments @ Rs.1,25,000/- per
month. Two sale certificates were issued in his favour, both dated 22.6.2013
and the two vehicles were delivered to the complainant. The complainant had
registered the vehicles in his name on and from 04.7.2013.
(4) As per the complainant, breach has occurred in the following manner. First
that the company of the present petitioner did not provide accessories, like
extra tyres and tools, which were required to be delivered at the time of
delivery of the vehicle, but was never done. Second, the performance of the
vehicles was found to be unsatisfactory. Third, though the complainant sought
for intervention of the accused persons in this regard, but it was not to any
avail due to alleged non cooperation by the accused persons including the
petitioner. Then only, when the complainant had contacted Tata Motors, he
came to know for the first time that the said two vehicles were not the new
ones and its manufacturing was in the year 2011. For this reason, it should
have been priced at a much lower rate than the rate at which it has been sold
to the complainant. Therefore, finally the complainant has stated that he has
been induced to believe a wrong fact as true at the instance of the said accused
persons, which caused him to part with this money and thus, he has been
cheated by the accused persons including the present petitioner.
(5) Hence, the complainant filed a complaint dated 07.10.2013 under section
156(3) of the Cr.P.C before the ACJM Asansol, which has later been
registered as FIR being Asansol (South) Police Station case No. 422 of 2013,

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dated 21.10.2013, under sections 420, 406,465, 467, 468 and 120B of the
Indian Penal Code.

The petitioner’s version :
(6) Certain facts are admitted in this case. The petitioner in the instant revision
has admitted that the complainant was a purchaser of two 2011 made chassis
by way of executing a hire purchase agreement. What the petitioner has
denied is the allegation of cheating said to have been committed by him, being
the Managing Director of the company. According to the petitioner, the
complainant after having due knowledge of the year of manufacture of the
vehicles, has consciously agreed to purchase the same at a heavily discounted
price, which is said to be much less than the actual market price of the
vehicles as on the date of sale. The petitioner has denied that the vehicles were
not new as alleged, though admitted that those were manufactured in 2011,
though sold in 2013, to the complainant. The petitioner has also stated that
shortfall of supply of five tyres was duly compensated by refunding a further
sum of Rs.95,000/- to the complainant, which has been duly accepted and
received by him, though suppressed in the complaint. According to the
petitioner, there has not been any unlawful inducement of the complainant as
alleged and entire business deal of sale and purchase of the two vehicles were
done by the complainant with due knowledge and consent. The petitioner has
also denied to have possessed any mala fide intention from the inception, as
alleged. Thus, the petitioner has sought for quashing of the criminal
proceeding against him, as aforementioned.

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The petitioner’s argument :
(7) That, in the chargesheet no role has been particularly ascribed to the present
petitioner as to how the petitioner was involved in the offence as alleged; that,
there is no allegation that the petitioner at any point of time had
misrepresented any fact or illegally gained any money or forced any document
or entered into any criminal conspiracy with the other accused persons. That,
the present petitioner has been made an accused in the case only for the reason
that he was the Managing Director of the company. That, there is no material
on record collected by the investigating agency to substantiate that the
petitioner had any role to play in the said transactions entered into by the
company with the complainant. That the company has not been made a party
in the instant case. That, the petitioner merely being the Managing Director of
the company cannot be made vicariously liable for the alleged offence
committed by the company or its other officers, if any, at all.
(8) It has been submitted that the complainant consciously agreed to purchase the
2011 model to appeal a huge discount as much as open amount of Rs.
7,00,000/-. As per the petitioner, the sale price of the vehicles is to be quoted
as per that fixed on the date of sale. The company quoted bills on 31.5.2013 of
an amount of Rs.21,88,644/- for each of the vehicles sold, as it was the selling
price on the date. The company allowed discount of Rs.3,50,000/- per vehicle
sold amounting to a total discount of Rs.7,00,000/-. Thus, the net price of each
vehicle stood at Rs. 18,38,644/-, which, according to the petitioner, was much
less than the market price of the vehicle as on the date of sale. The petitioner

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has further stated in admitted that the said vehicles were purchased by the
company from the Tata Motors on 30.9.2011 and 30.11.2011 respectively,
when selling price of the said vehicles was Rs. 19,63,128/- each. The
petitioner’s further contention is that no sooner the company came to know
about non-supply of accessories to the complainant like tyres [5 in number], a
sum of Rs.95,000/- was immediately refunded to the complainant vide cheque
No. 875715 dated 16.8.2013, towards the short supply of tyres. Thus,
according to the petitioner no case of cheating as alleged can be found to have
been made out, on plain reading of the complainant, as against him.
(9) The following two judgments have been relied on by the petitioner:
a. Priyanka Srivastava and Another versus State of Uttar Pradesh and Another
reported at (2015) 6 SCC 287; and

b. Lalita Kumari versus Government of Uttar Pradesh and Others reported at
(2014) 2 SCC 1.

State opposes the petitioner’s contentions, argument and prayer:
(10) The State is represented in this case. The State has supported the
complaint as well as the chargesheet and said that the instant is a fit case to be
sent for trial as sufficient materials are available against the accused persons
including the present petitioner, to have been involved in commission of
offence as alleged against them. According to the State the present revision is
a misconceived one and bears no cogent grounds so that this Court may
interfere with the criminal proceeding being GR Case No. 4419 of 2013,
arising out of Asansol (South) Police Station case No. 422 of 2013, dated

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21.10.2013, under sections 420, 406,465, 467, 468 and 120B of the Indian
Penal Code, in exercise of its extraordinary power of revision.

Discussion and decision :
(11) The question which falls for determination in the instant revision is
whether, upon a consideration of the allegations contained in the complaint,
the materials collected during investigation and the legal principles governing
the exercise of the inherent and revisional jurisdiction of the High Court, the
continuation of the criminal proceeding against the present petitioner would
be legally sustainable, or whether the same would amount to an abuse of the
process of the Court. The answer to this question necessarily requires an
examination of the essential ingredients of the offences alleged, the distinction
between a civil or commercial dispute and a criminal offence, and, more
particularly, the circumstances in which an individual occupying the position
of Managing Director of a company may be subjected to criminal prosecution
for transactions undertaken in the course of the company's business.

(12) It is a settled principle of criminal jurisprudence that the power of the
High Court to quash a criminal proceeding is extraordinary in character and is
required to be exercised sparingly, cautiously and only where the
circumstances of the case justify such interference. The celebrated decision of
the Hon'ble Supreme Court in State of Haryana v. Bhajan Lal, reported at
1992 Supp (1) SCC 335 , identifies illustrative categories of cases in which
such jurisdiction may appropriately be exercised. Amongst those categories
are cases where the allegations, even if taken at their face value and accepted

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in their entirety, do not prima facie constitute any offence or make out a case
against the accused; cases where the allegations are so inherently improbable
that no prudent person could reasonably conclude that sufficient grounds exist
for proceeding against the accused; and cases where the criminal proceeding
is otherwise manifestly attended with mala fides or constitutes an abuse of the
process of the Court. These categories are illustrative and not exhaustive. The
governing consideration is whether the continuation of the prosecution is
justified by the allegations and the materials legally available against the
person sought to be prosecuted. The aforesaid principle has been consistently
reiterated in subsequent decisions of the Hon'ble Supreme Court, including
Madhavrao Jiwajirao Scindia v. Sambhajirao Chandrojirao Angre, reported at
(1988) 1 SCC 692 , and Zandu Pharmaceutical Works Ltd. v. Mohd. Sharaful
Haque, reported at (2005) 1 SCC 122 . The High Court, while exercising such
jurisdiction, is not expected to conduct a meticulous examination of the
evidence, determine the ultimate truth of disputed factual assertions, or
undertake a premature assessment of the credibility of the prosecution
witnesses. Equally, however, the power to prosecute cannot be permitted to
operate as an instrument of harassment where the allegations, viewed in their
entirety and without entering into a disputed trial of facts, fail to disclose the
essential ingredients of the alleged offence. The jurisdiction is thus intended
neither to stifle a legitimate prosecution nor to compel an accused to undergo
a criminal trial in the absence of a legally sustainable accusation.
(13) A further fundamental principle relevant to the present controversy is
the distinction between the offence of cheating and a mere breach of a

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contractual or commercial obligation. In Hridaya Ranjan Prasad Verma v.
State of Bihar, reported at (2000) 4 SCC 168 , the Supreme Court explained that
the distinction between a mere breach of contract and the offence of cheating
depends substantially upon the intention of the accused at the time of the
alleged inducement. For the offence of cheating, dishonest or fraudulent
intention must exist at the inception of the transaction; a subsequent failure to
fulfil a promise or contractual obligation does not, by itself, establish that the
promise was made dishonestly from the beginning. The subsequent conduct of
the accused may be relevant in determining the original intention, but such
conduct cannot, standing alone, substitute for the requisite dishonest intention
at the time when the inducement is alleged to have occurred. The same
doctrinal distinction has been recognised in Indian Oil Corporation v. NEPC
India Ltd., reported at (2006) 6 SCC 736 , wherein the Hon'ble Supreme Court
cautioned against converting disputes essentially arising out of commercial
transactions into criminal proceedings merely because the complainant alleges
that a contractual obligation has not been performed. The principle does not
mean that a commercial transaction is immune from criminal scrutiny. Where
the factual allegations disclose that a party was dishonestly induced to part
with property by a deliberate misrepresentation made with the requisite
intention, the existence of a contractual relationship will not prevent criminal
prosecution. The decisive consideration is whether the alleged conduct
satisfies the ingredients of the particular criminal offence, rather than whether
the same facts may also give rise to a civil remedy.

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(14) The allegations in the present case also require consideration in the
light of the settled law governing criminal liability for offences allegedly
committed in the course of a company's business. In S.K. Alagh v. State of
Uttar Pradesh, reported at (2008) 5 SCC 662 , the Hon'ble Supreme Court
reiterated that the Indian Penal Code does not ordinarily recognise vicarious
criminal liability of a director or officer merely by reason of his official
position, in the absence of a statutory provision creating such liability or
material establishing his direct involvement in the commission of the offence.
In that case, the Court specifically examined the requirements of criminal
breach of trust and emphasised that the liability contemplated by Section 406
of the Indian Penal Code cannot be fastened upon a Managing Director
merely because the relevant commercial transaction was undertaken by the
company. The principle was further elaborated in Sunil Bharti Mittal v.
Central Bureau of Investigation, reported in (2015) 4 SCC 609 . The Hon'ble
Supreme Court held that an individual may be prosecuted for an offence
committed in the course of a company's affairs where sufficient material
establishes his active role coupled with the requisite criminal intent. The
doctrine of vicarious liability cannot, however, be invoked automatically
merely because the individual is a director or Managing Director of the
corporate entity. The criminal intent of the person who constitutes the
directing mind of a company may, in appropriate circumstances, be attributed
to the company; the reverse proposition, namely, that every act of the
company must automatically be attributed to its director, does not follow.

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Individual criminal liability must be founded upon the requirements of the
offence and the material disclosing the individual's participation.
(15) Turning to the facts of the present case, the complaint originated from
a commercial transaction concerning the purchase of two Tata LP chassis by
the complainant, who was engaged in the transport business. According to the
complaint, the complainant was introduced to the concerned officers of
French Motor Car Company Limited, including the present petitioner, who
was its Managing Director. The complainant alleges that he was given to
understand that the two chassis were manufactured in the year 2013, whereas
he subsequently learnt from Tata Motors that the vehicles had actually been
manufactured in 2011. The complaint further alleges non-supply of certain
accessories, including tyres and tools, and unsatisfactory performance of the
vehicles. On the basis of these allegations, the complainant asserted that he
had been induced to purchase the vehicles at a price higher than that which
would have been appropriate for vehicles of their actual manufacturing year.
The petitioner, on the other hand, has admitted the sale of the two
(16)
vehicles in 2013 and their manufacture in 2011, but has denied that the
manufacturing year was concealed from the complainant or that the
transaction was attended by dishonest intention from its inception. His case is
that the complainant purchased the vehicles with knowledge of their
manufacturing year and accepted a substantial discount in the sale price. The
petitioner has also asserted that a sum of Rs.95,000/- was refunded to the
complainant towards the alleged short supply of tyres. These assertions have
been recorded as the petitioner's defence; their truth cannot be finally

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adjudicated in the present proceeding merely by preferring one party's version
over the other.
(17) Nevertheless, the existence of competing factual assertions does not
dispense with the duty of the Court to examine whether the allegations and the
materials collected during investigation disclose the essential ingredients of
the offences alleged against the particular accused. Insofar as the allegation of
cheating under Section 420 of the Indian Penal Code is concerned, the
prosecution must be founded upon material disclosing deception and
dishonest or fraudulent inducement of the complainant to deliver property,
with the requisite intention existing at the time of the inducement. The fact
that the vehicles were manufactured in 2011 but sold in 2013 may constitute a
relevant circumstance; it does not, in isolation, establish that the petitioner
dishonestly misrepresented their manufacturing year or participated in a
design to induce the complainant to part with his money. Similarly, the
alleged non-supply of accessories and the subsequent complaint regarding the
performance of the vehicles may give rise to contractual or civil
consequences. Those circumstances do not, without more, prima facie
establish the commission of cheating or criminal breach of trust. To bring an
offence under Sections 405 and 406 of the Indian Penal Code on record, the
complainant must disclose entrustment of property, or dominion over
property, and dishonest misappropriation, conversion, use or disposal in the
manner contemplated by the statutory provision. A failure to supply an agreed
accessory, without the necessary entrustment and dishonest misappropriation,
cannot automatically be equated with criminal breach of trust. The allegations

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relating to Sections 465, 467 and 468 must likewise disclose the making or
use of a false document, as legally required for the particular offence, together
with the other essential statutory ingredients. A general allegation of
commercial misrepresentation cannot, by itself, establish forgery or forgery
for the purpose of cheating.
(18) The petitioner is arraigned as an accused principally in his capacity as
Managing Director of French Motor Car Company Limited. No particular role
has been attributed to him in the charge-sheet demonstrating that he
personally made the alleged misrepresentation, dishonestly induced the
complainant to part with money, misappropriated any entrusted property,
forged any document, or participated in a criminal conspiracy with the other
accused persons. It can also be found that the company itself has not been
impleaded as an accused. The legal significance of these circumstances must
be assessed in conjunction with the actual allegations and the materials
collected during investigation. The fact that the petitioner was introduced to
the complainant or held the office of Managing Director cannot, without
further material, establish his criminal involvement. Conversely, if the
complaint or the charge-sheet contained specific material showing that he
knowingly represented the vehicles to be of a different manufacturing year,
authorised or participated in the creation of false documents, or acted in
concert with others pursuant to a criminal conspiracy, the prosecution could
not be quashed merely because the transaction was commercial in nature or
because the company had not been arraigned. The decisive consideration is
whether the materials disclose an individual act or participation attributable to

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the petitioner, accompanied by the requisite criminal intention, rather than an
assumption of guilt arising solely from his designation.
(19) On the factual basis placed before this Court, and subject to the
absence of such specific material in the charge-sheet, the prosecution’s case
appears to rest upon the petitioner's association with the company and the
collective allegation that the complainant was induced to purchase the
vehicles. Such an omnibus attribution, without a discernible factual
foundation establishing the petitioner's own participation in the alleged
offences, would not satisfy the standard contemplated in S.K. Alagh (supra)
Sunil Bharti Mittal (supra)
and . Criminal liability cannot be inferred merely
from corporate status.
(20) The principle which emerges from the authorities discussed above is
that the High Court must examine the allegations as a whole, assume the
factual allegations to be true for the limited purpose of the quashing inquiry,
and determine whether the essential ingredients of the offences alleged are
thereby disclosed. The Court must not conduct a mini-trial, resolve disputed
questions of fact, or accept the petitioner's defence merely because it appears
plausible. Equally, the Court is not required to permit a criminal trial to
continue where the allegations, even taken at their face value, fail to disclose
the requisite criminal ingredients or where the materials do not establish any
legally sustainable basis for proceeding against the particular accused. In the

absence of material showing that the petitioner personally participated in the
alleged misrepresentation, acted with the requisite dishonest intention,
committed an act of criminal breach of trust, made or used a false document,

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or entered into a criminal conspiracy, the mere fact that he was the Managing
Director of the company cannot sustain the prosecution against him. The
principle in Sunil Bharti Mittal (supra) is directly relevant to this aspect.
Individual criminal liability requires a factual foundation demonstrating the
individual's active role and the requisite criminal intent, unless the applicable
statute expressly provides otherwise. The present case, on the materials
discussed herein above, does not disclose such a foundation against the
petitioner. This Court is, therefore, of the view that, to the extent the
prosecution against the present petitioner is founded merely upon his position
as Managing Director and upon general allegations concerning a commercial
transaction, without specific material disclosing the ingredients of the
offences alleged against him, the continuation of the criminal proceeding
would not be justified in law. Such continuation would expose the petitioner
to a criminal trial without a sufficient legal basis for attributing the alleged
offences to him individually. The circumstances, as recorded in the materials
placed before this Court, bring the case within the principle recognised in
State of Haryana v. Bhajan Lal, namely, that a criminal proceeding may be
quashed where the allegations and materials, taken at their face value, fail to
disclose a prima facie offence against the accused concerned.
(21) For the reasons aforesaid, the criminal proceeding being G.R. Case
No. 4419 of 2013, arising out of Asansol (South) Police Station Case No. 422
of 2013 dated 21 October 2013, under Sections 420, 406, 465, 467, 468 and
120B of the Indian Penal Code, 1860, insofar as the same is directed against
the present petitioner, is held to be unsustainable in law and is accordingly

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quashed. The proceedings against the other accused persons, if any, shall not
be affected by this order and may continue in accordance with law. The
criminal revision is accordingly allowed to the aforesaid extent.
(22) Urgent certified copy of this judgment, if applied for, be
supplied to the parties upon compliance with all requisite
formalities.

( Rai Chattopadhyay, J.)