Mrs. Arti Bhandari Vs State of West Bengal and Another

@JUDGMENTTAG-ORDER

Partha Sakha Datta, J.@mdashBy this revisional application dated 22-1-2007 u/s 482, Cr.P.C. prayer has been made for quashing of a proceeding being CGR No. 936 of 2005 arising out of Ekbalpore PS case No. 71 dated 11-4-2005 u/s 420 of the IPC culminating in submission of charge-sheet under the aforesaid section of the law. The OP No. 2 who is the managing partner of a concern called "Nelufer''s Collections" filed a petition before learned CJM, Alipore, South 24 Pgs, against the present petitioner alleging that the accused/petitioner who is a nonresident Indian running business under the name and style of "Artee Collection Inc", having office at a place in Hudson, USA came to India and proposed to the complainant to enter into partnership with the accused to which the complainant agreed and since then the Export Credit Guarantee Corporation withdrew their commercial risk coverage of the complainant''s export to "Artee Collection Inc" and the complainant on purchase order placed by the accused persons continued to export to the accused persons high valued embroderied and printed furnishing fabrics on terms of payment on documents against the acceptance for payment within 90 days from the date of Airway bill through Hudson Savings Bank, USA and through the complainant''s banker Oriental Bank of Commercial Overseas Branch, Kolkata allegedly the accused to gain more confidence of the complainant and fulfil a dishonest and fraudulent intention to cheat the accused/petitioner had been sending her purchase order and upon receipt of the shipment had been remitting payments within 90 days till the month of August 2004. Since September 2004 the accused persons started cheating the complainant by delaying the payments in spite of receipt of the goods as per the purchase order given by the accused persons and further induced the complainant to deliver the goods against purchase order sent by her. On good faith the complainant exported 14 shipments since September 2004 to the accused persons, the total value of which was $ 51274. 24. After receiving their aforesaid goods exported by the complainant to the accused persons and for non-payment of the dues to the accused persons approximately in the sum of Rs. 20 lakh in Indian currency the complainant intimated the accused persons on several occasions to pay the dues but the accused paid no heed and threatened the complainant with dire consequences. The complainant came to the accused when the accused came to Kolkata on 16-3-2005 and requested her to make payment of the money but the accused denied and told that as she is an NRI residing in the USA the complainant would not be able to do anything against her.

2. The grounds of revision are that the allegations in the petition of complaint are absolutely concocted, fabricated and with mala fide intention of depriving the legitimate claim of the petitioner of the profits of the partnership firm, that the learned Judicial Magistrate without application of mind took cognizance of the offence upon receipt of the charge-sheet, that there is no iota of material in the petition of complaint against the petitioner that can constitute any cause of action or any cognizable offence, there was no question of false inducement by the petitioner with a motive of deceiving the OP No. 2, that the ingredients of the offence of Section 415 of IPC are basent in the petition of complaint because as a partner of the firm, the petitioner has invested huge amount of money in the partnership firm after being inducted as a partner of the complainant''s partnership firm and thus the question of deceiving the complainant with a false statement could not arise, that alleged act of the petitioner may give rise to a civil dispute but the purported criminal proceeding initiated by the OP No. 2 with a mala fide intention is a sheer abuse of the process of the Court and accordingly the proceedings be quashed.

3. On 14-2-2001 a deed of agreement was entered into by the OP No. 2, the managing partner of the "Nelufer''s Collections" arid another with the present petitioner hereby the present petitioner was inducted as a partner. The petitioner instituted a civil suit being TS 60/05 with the learned Civil Judge (Sn. Div.) 5th Court. Alipore under Title Suit No. 60/05 against the de facto complainant and one Seema Hasnain who are the partners of the firm praying for winding up of the affairs of the dissolved partnership firm and for direction upon the complainant and another partner to pay petitioner her share of profits and for perpetual injunction.

4. Learned Advocate for the petitioner Mr. Ranadev Roychowdhury submitted that the petition of complaint does not disclose any commission of offence of cheating on the ground that the petitioner and the de facto complainant as also one Seema Hasnain were partners of "NELUFER''S COLLECTIONS". One Naseera Hassan was also a partner with the complainant and Seema Hasnain and the said Naseera Hassan having retired from the firm the petitioner accused was inducted as a partner on 14-2-2001 as a result of which the petitioner had a share to the extent of 50% while the complainant had a share of 40% and Seema Hasnain had a share of 10%. The OP No. 2 and Seema Hasnain who conducted the business of the firm did not render proper details of the business and even after request through letter dated 9-5-2005 with subsequent reminders the petitioner failed to get a proper and satisfactory reply with regard to the accounts from the other two partners. The OP No. 2 gave a notice of dissolution of the partnership firm to the detriment of the interest of the petitioner for which the petitioner instituted the civil suit as above. The OP No. 2 with a view to suppressing her misdeed and to deprive the legitimate claim of the petitioner has filed the instant false criminal proceeding.

5. The decision in Murari Lal Gupta v. Gopi Singh (2006) 2 SCC 430, Ram Biraji Devi and Another Vs. Umesh Kumar Singh and Another, Anil Mahajan v. Bhor Industries Ltd. (2006) 1 SCC 746, S.W. Palanitkar and others Vs. State of Bihar and another, , Thelapalli Raghavaiah Vs. Station House Officer and Others, , Vijaya Rao v. State of Rajasthan (2005) 7 SCC 69 , Hridaya Ranjan Pd. Verma and Others Vs. State of Bihar and Another, , G.V. Rao v. L.H.V. Prasad reported in 2000 CriLJ 3487 , Uma Shankar Gopalika v. State of Bihar (2005) 10 SCC 336 have been cited in support of the submission of the learned Advocate appearing for the petitioner. In the case of Murari Lal Gupta v. Gopi Singh it was found that the petitioner entered into an agreement to sell certain property in Delhi for Rs. 4.50 lakh out of which Rs. 3.50 lakh was paid by the complainant and the balance amount was to be paid at the time of registration of sale deed but the petitioner failed to honour the agreement and in the context as above it was held that the allegations did not constitute offence of cheating. It was observed there that the petition of complaint did not make any averment so as to infer any fraudulent or dishonest inducement having been made by the petitioner pursuant to which the respondent parted with the money. In the case of Ram Biraji Devi v. Umesh Kumar Singh (supra), the appellant after taking a sum of Rs. 80 lakh refused to transfer the plot and a case u/s 406/419/420, IPC was registered and the Hon''ble Court upon examination of the version in the complaint was pleased to hold that the complaint could not make out any prima facie case. In Anil Mahajan''s case (supra), distinction was drawn between offence of cheating and breach of trust and it was held that mere failure of a person to keep up promise subsequently, a culpable intention right at the beginning, i.e. when he made the promises cannot be presumed and the subsequent conduct is not the sole test. The facts were that the respondent company filed a complaint against the appellant alleging that the memorandum of understanding was executed between the accused appellant and the complainant for supply of goods stipulating that 50% of the payment against monthly quantity would be given in advance and balance 50% on receipt of the goods. The complainant delivered goods worth Rs. 3,38,62,860/- to the accused and out of the said sum the accused paid Rs. 3,05,39,086/-leaving balance of Rs. 33,23,774/-. The accused did not make further payment and in the context it was held that the petition of complaint did not give rise to any offence of cheating. In the case of S.W. Palanitkar (supra), it was held that the intention of cheating must be shown to exist at the time of making of the inducement. It was held that every breach of trust may not result in a penal offence of criminal breach of trust unless there is evidence of a mental act of fraudulent misappropriation and act of breach of trust involves a civil wrong in respect of which the person wronged may seek his redress for damages in a civil Court but a breach of trust with mens rea gives rise to a criminal prosecution as well. In the decision it was held that the appellant company entered into an agreement with respondent No. 2 on certain terms and conditions and it was held that the appellant No. 7 contacted the respondent No. 2 and induced him to enter into agreement assuring him of huge profit at the time of arriving at such agreement opinion of the other appellants either met the respondent No. 2 or induced him to enter into any agreement with a view to cheating him. It was the case that there was no supply of goods at all because there was supply of 400 tonnes of fertilizer which was of course less than the required quantity. In the situation their Lordships held that it cannot be said that there was conspiracy or connivance between the other appellants and the appellant No. 7. With reference to the decision in Madhavrao Jiwajirao Scindia and Others Vs. Sambhajirao Chandrojirao Angre and Others, , it was held that when a prosecution at the initial stage is asked to be quashed the test to be applied by the Court is as to whether the un-controverted allegations as made prima facie established the offence. The decision in Hridaya Ranjan Pd. Verma 2000 Cri LJ 2983 was also referred to in S. W. Palanitkar (supra) and it was held in Hridaya Ranjan Pd. Verma that mere breach of trust cannot give rise to the criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction. Thus, it is the intention which is the gist of the offence and to hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise. There the appellants sold lands to the co-operative society of which the respondent No. 2 was the secretary. On registration of the sale deed three cheques were issued by the respondent No. 2 in favour of the appellants which were dishonoured by the bank. Then the appellants filed FIR under Sections 406, 420 and 120-B, IPC while respondent No. 2 filed a complaint before the learned CJM against the appellant alleging commission of offence under Sections 418, 420, 423, 469, 504 and 120B, IPC, The appellants preferred revisional application before the High Court for quashing of the proceeding and it was held by their Lordships of the Supreme Court that on reading of the Section it is manifest that in the definition there are set forth two separate classes of acts which the person deceived may be induced to do. In the first place he may be induced fraudulently or dishonestly to deliver any property to any person while the second class of acts set forth in the section is the doing or omitting to do anything which the person deceived would not do or omit to do if he were not so deceived. It was held that in the first class of cases the inducing must be fraudulent or dishonest. In Uma Shankar Gopalika (supra), the accused and his deceased brother who were directors of a company financed for purchase of truck by the complainant on hire purchase agreement. Subsequently the said truck became traceless. The complainant submitted claim before Insurance Company. Accused asked the complainant to permit him to handle the insurance claim. The complainant acceded to the request of the accused on assurances given by the accused that out of a claim of Rs. 4,20,000/- received complainant would be paid Rs. 2,60,000/- but despite the claim being allowed accused failed to pay to the complainant the share amount. It was held that in the absence of any allegation in the complaint that at the very inception there was any intention on behalf of the accused to cheat the offence under Sections 420/ 120-AB, IPC could not be made out.

6. Learned Advocate for the petitioner submitted that the petition of complaint does not show that at the very inception of the transaction the accused had any dishonest intention of cheating the complainant and a reading between the lines of the petition of complaint it cannot be inferred that the accused induced the complainant to part with delivery of goods intending from the very inception of the transaction that she would not make payment of the money on account of the goods delivered inasmuch as the petition of complaint avers that payment continued to be made by the accused in favour of the OP-No. 2, complainant till August 2004 and it was only after September 2004 that there allegedly occurred non-payment of money as against 13 bills allegedly valued at $ 51274.24 representing a sum of Rs. 24 lakhs. According to the learned Advocate for the complainant there was no trouble or allegation of non-payment on account of the goods delivered against the petitioner/accused between the year 2001 since when the petitioner came to be associated with the OP No. 2 in the business transaction and in September 2004.

7. Learned Advocate for the complainant submits that non-payment of 24 lakhs has to be attributed to the dishonest intention on the part of the petitioner and after the confidence of the petitioner upon the complainant was reposed the petitioner started avoiding payment on account of the goods. It has been submitted that in the petition of complaint it has been stated that with the dishonest and fraudulent intention the petitioner sometime in the year 2001 offered proposal to the complainant to enter into partnership business with her as one of the partners and the complainant blindly and in good faith entered into partnership business with the said petitioner/ accused on 14-2-2001. Since the year of 2001 upon entering into partnership business with the accused the Export Credit Guarantee Corporation withdrew their commercial risk coverage of the complainant-firm for export to "Artee Collection Inc" and the complainant upon receipt of purchase order placed by the accused petitioner continued to export to the accused high valued embroderied and printed furnishing fabrics on terms of payments on documents against acceptance for payment within 90 days from the date of airway bill through Hudson Savings Bank in USA and the complainant''s banker in Kolkata. It has been submitted that with a view to gaining more confidence upon the complainant and with a view to fulfilling her dishonest and fraudulent intention the petitioner had been sending purchase order and upon receipt of the shipment made payment of the bills till August 2004 whereafter default came to be committed. The default was committed during the period from September 2004 to March 2005 relating to 13 transactions. Now the question is whether on the facts and in the circumstances it can be said that failure on the part of the petitioner to make payment worth Rs. 24 lakh said to be the value of the goods the petitioner can be said to have committed offence of cheating or of criminal breach of trust.

8. In terms of the petition of complaint since the year of 2001 the complainant OP No. 2 upon receipt of purchase order started despatching the embroderied and printed furnishing fabrics to the petitioner and payments were initially received within 90 days from the date of airway bill. Allegedly since September 2004 by the time when the complainant reposed confidence upon the petitioner the accused/petitioner started cheating her by delaying the payments in spite of the receipt of goods. The petitioner by making payments initially allegedly achieved confidence of the complainant and being induced by the petitioner when goods were being exported payments came to be stopped since September 2004. According to the complainant she exported 14 shipments beginning from 30th September 2004 and ending with 24th February 2005, the value of which was Rs. 24 lakh but no payment was made. The deed of agreement between the complainant and the petitioner and one Smt. Seema Hasnain was drawn up on 14-2-2001 whereby the petitioner was inducted as one of the partners. By virtue of this agreement the opposite party surrendered 5% out of her existing 60% share and Smt. Seema Hasnain surrendered her 9% share out of 19% and Smt. Naseera Hassan surrendered her entire 16% share. This partnership business related to carrying of business of embroderied work and printing of saree dress materials and all kinds of fabrics under the names and style of "Nelufer''s Collections". In terms of the partnership agreement the new partner namely the petitioner would share the profit and loss of the partnership firm upon payment to partners remuneration to the extent of 50%. This partnership business "Nelufer''s Collections" appears to have no direct nexus with the petitioner''s own running business under the name and style of "Artee Collection Inc" which she had been operating in USA but the goods used to be exported by the opposite party to the petitioner/accused in USA were the goods produced or manufactured by the partnership firm of "Nelufer''s Collections" of which the petitioner is one of the partners. The product of the partnership goods were sent from time to time by the complainant-opposite party to the petitioner who used to on receipt of the goods sell them in USA through her business concern named "Artee Collection Inc". Reasonably it can be said that the profit out of sale made by the petitioner of the products of "Nelufer''s Collections" of which the petitioner is a partner were to be shared by all the partners of the partnership firm. The agreement of partnership firm which is relied on by the complainant also in the petition since converted into FIR u/s 156(3) Cr.P.C. contains Clause 5 stipulating that for further expansion of business and to ensure more and more export orders from the USA and Europe the petitioner has been inducted as one of the partners by the existing three partners for which the petitioner introduced Rs. 10 lakh as capital out of which Rs. 2 lakh would be paid to Smt. Naseera Hassan as she was surrendering her 16% share. The business was the embroderied work and printing of saree, dress materials and all kinds of fabrics and product of this "Nelufer''s Collections" were sent to the petitioner who allegedly did not make payment of the exports. The petitioner instituted a civil suit against the complainant opposite party and another partner basing the same agreement of partnership business on 20-5-2005 praying for winding up of the affairs of the dissolved partnership firm and taking of accounts and direction upon the opposite party to pay to the petitioner her share of profits and her share of capital invested in the said partnership from with interest and perpetual injunction to restrain the opposite party and another partner from conducting any business in the name of the partnership firm in terms of the plaint instituted by the petitioner. By a notice dated 9th May 2005 the partnership business was dissolved with immediate effect and the opposite party and another partner were fraudulently carrying on business of the firm, and profits were not being accounted for by them. Petition of complaint was lodged by the opposite party with the learned ACJM, Alipore on 12-4-2005 while the suit by the petitioner against the opposite party was instituted on 20-5-2005. Partnership business commenced with the petitioner on 14-2-2001 and the alleged cheating commenced from September 2004. During the period from February 2001 when the petitioner was inducted as a partner and August 2004 no default in depatching sale proceeds of the partnership products or criminal breach of trust or cheating took place and in the circumstances it is difficult to say and more particularly in the absence of any averment to that effect that right in February 2001 when the petitioner was inducted as a partner the petitioner had intention to cheat the opposite party by taking partnership goods in USA and misappropriating the sale proceeds that non-payment from September 2004 constituted cheating. The petitioner''s personal business in the name and style of "Artee Collection Inc" has no concern with the goods transmitted to the petitioner in the USA for sale. A question of law has arisen whether a partner of a firm can be said to have committed criminal breach of trust or cheating in respect of the partnership business of which he is a partner in the FIR. It does not appear that the petitioner had dishonest intention of cheating the complainant or committing criminal breach of trust at the inception of the transaction of the business. Even after February 2001 when the petitioner was inducted as a partner of the partnership business the opposite party used to send the products of her firm to the petitioner in the USA and would receive price of goods from the accused. There was no trouble between the parties between February 2001 and August 2004. Default commenced from 30th September 2004 and it is difficult in this circumstances to say that the petitioner had dishonest motive of cheating the complainant. It is only in paragraph 5 of FIR where it has been said that to gain confidence of the opposite party and to fulfil her dishonest and fraudulent intention to cheat, payments were made regularly within 90 days within the month of August. There is no averment of dishonest intention on the part of the petitioner at the inception of the partnership firm. In Hridaya Ranjan Pd. Verma and Others Vs. State of Bihar and Another, it has been held that in the absence of averment of dishonest intention from the beginning of the transaction mere failure to keep up the promise does not constitute cheating. The same decision was reached in Ram Biraji Devi and Another Vs. Umesh Kumar Singh and Another, , S.W. Palanitkar and others Vs. State of Bihar and another, , Vijaya Rao v. State of Rajasthan (supra).

9. The learned Advocate for the opposite party referred to Minu Kumari and Another Vs. The State of Bihar and Others, wherein it was held that criminal proceeding should not be quashed when evidence has not been collected and facts are incomplete and hazy. This is not the case here in the instant case. Learned Advocate for the opposite party referred to also Rajesh Bajaj Vs. State NCT of Delhi and Others, wherein it was held that many a cheating is committed In the course of commercial or money transaction. I having regard to the facts of the case before us this decision does not appeal to be appropriately applicable because having gone through the petition of complaint and the revisional application vis-a-vis the partnership agreement dated 14-2-2001 which is relied on by both the parties it appears that favour of civil dispute outweighs the alleged criminal offence of cheating. The question was whether a partner can be said to have committed criminal breach of trust or of cheating in respect of the partnership business. A Full Bench of this Court, Bhuban Mohan Das Vs. Surendra Mohan Das, answers the question and it was held by Their Lordships of the High Court that excepting in the case where the special agreement fiduciary obligations have been cast a partner cannot be charged u/s 406, IPC in respect of the partnership jointly belonging to him and the complainant partner. It was held that where a partner holds property belonging to the partnership he holds it as one of the partners entitled to hold it and until dissolution of accounts it cannot be said that he holds the property in a fiduciary capacity. Therefore on the basis of the proposition of law as laid down in the decision above it cannot be said that the petitioner committed criminal breach of trust or of cheating. It is not that the complainant was sending goods/products of different concern or of her own exclusive business to the petitioner in the USA. The complainant had been doing her business with the petitioner until February 2001 and before the petitioner was inducted as a partner. Alleged criminal breach of trust or cheating took place in September 2004 and it continued till March 2005. In April 2005 FIR was lodged by the opposite party while in May 2005 the petitioner instituted the suit for accounts and winding up of partnership firm in the civil Court at Alipore. The goods in respect of which money was not allegedly despatched to the complainant from USA were the goods of the partnership firm and if it is said that the petitioner has misappropriated the sale proceeds of the partnership goods then it comes to this that she has misappropriated the property of the partnership firm of which she is a partner which is Impossible in the law in view of the proposition of propounded by the Full Bench of this Court as referred to above.

10. In the circumstances, I hold that the revisional application has to succeed and accordingly I quash the criminal proceeding. Urgent xerox certified copy shall be provided if applied for.