Commercial Disputes Involving Allegations of Deception and Dishonest Intention Since Inception Warrant Criminal Prosecution

The petitioners (accused) challenged a complaint case pending before the Judicial Magistrate, 8th Court, Calcutta, for offences under Sections 406/409/420/120B of the IPC.

The complainant alleged that the petitioners, representing themselves as a profitable company, induced the supply of electrical items worth ₹11,15,297/- between January and August 2015.

Despite deliveries made via Murshidabad Road Transport, the petitioners failed to pay, citing financial crisis and eventually denying the transaction entirely.

The petitioners moved the High Court for quashing the proceedings, initially claiming they "never had any business dealings" with the complainant.

However, after the complainant produced invoices and ledger extracts in an affidavit-in-opposition, the petitioners shifted their stand to disputing the authenticity and delivery of the specific bills in question.

1. Whether the complaint should be quashed under Section 482 of the Cr.P.C. on the grounds that the dispute is purely civil in nature and lacks criminal intent.

2. Whether the ingredients of Section 406 (Criminal Breach of Trust) and Section 420 (Cheating) are prima facie made out despite the petitioners' denial of the transaction.

The court applied Section 415 and 420 (Cheating) and Section 406 (Criminal Breach of Trust) of the IPC, specifically referencing Illustrations (f) and (g) of Section 415 regarding fraudulent intent.

It relied on Ravindra Kumar Madanlal Goenka v. Rugmini Ram Raghav Spinners Pvt. Ltd., holding that defense evidence cannot be meticulously evaluated at the quashing stage.

The court applied Lal Moni Devi v. State of Bihar, which establishes that facts may simultaneously give rise to civil and criminal liability.

The court relied on Rajesh Bajaj v. State of NCT Delhi, asserting that commercial transactions often involve cheating if there is an intention to deceive from the inception.

The principle that dishonest intention can be inferred from subsequent conduct and circumstances was drawn from Shivanarayan Kabra v. State of Madras.

The court observed that the complainant provided specific allegations of inducement and subsequent denial of liability.

It found the petitioners' shifting defense—moving from a total denial of any business relationship to a dispute over specifically "unauthenticated" bills—to be a significant indicator of prima facie dishonest intention.

The court noted that the delivery challans with transporter endorsements and the petitioners' act of returning bills constituted triable issues of fact that could only be resolved through evidence and cross-examination.

It rejected the argument that the dispute was purely civil, reasoning that the allegation of receiving goods while intending to evade payment from the outset fell squarely within the realm of criminal cheating.

The court emphasized that it cannot embark on a detailed inquiry into the reliability of documents or defense materials under Section 482 jurisdiction.

The court held that the subsequent conduct of the petitioners, including contradictory stands on oath, prima facie demonstrated the existence of criminal elements.

Relative to the prayer for prosecution under Section 340 of the Cr.P.C. (CRAN 10 of 2025), the court kept the issue open for future consideration after the adjudication of the trial.

The revisional application was dismissed, and all interim stays were vacated.