Inability To Pay Portion Of Owed Money Can’t Lead To Criminal Prosecution Unless Fraudulent Intention Shown Right From Beginning: Calcutta High Court

The Calcutta High Court on Monday quashed the criminal proceedings under Sections 484, 406 and 34 of IPC against a businessman who had allegedly refused to pay a portion of the price of goods purchased by him, on the ground that the accused did not have any fraudulent or dishonest intention right from the beginning of the transaction.

The single judge bench of Justice Ajoy Kumar Mukherjee observed:

“Someone’s inability to pay a portion of the price of goods purchased by him cannot give rise to a criminal prosecution or criminal breach of trust or cheating unless fraudulent and dishonest intention is shown right from the beginning of the transaction, as mens rea is the crux of the offence.”

The opposite party had filed a complaint before the ACJM, Dinhata alleging that he was owed Rs. 9,25,000/- by the petitioner but was paid back only Rs. 5,00,000. When the opposite party demanded the rest amount, the petitioner refused to pay the same, the court was told.

The petitioner filed an application under Section 482 of CrPC before the High Court praying for quashing of proceedings under Section 484 (Counterfeiting a mark used by a public servant), Section 406 (Punishment for criminal breach of trust) and Section 34 (Acts done by several persons in furtherance of common intention) pending before the Judicial Magistrate, Cooch Behar.

The counsel appearing for the petitioner submitted that the allegations which are levelled against the petitioners are completely frivolous and baseless. He further submitted that the entire complaint is motivated by malice and malafide and has no basis in reality.

The said "no dishonest representation or inducement could be found or inferred right from the beginning", since the petitioner has paid Rs. 5,00,000 out of total outstanding amount Rs. 9,25,000.

"So it cannot be said that right from the beginning of the transaction, the petitioner had any fraudulent or dishonest intention i.e. the mens rea,” it added.

The court further observed that the Supreme Court has cautioned in number of cases against criminalizing civil disputes such as breach of contractual obligation.

“The legislature intend to criminalize only those breaches which are accompanied by fraudulent, dishonest or deceptive inducements,” the court said.

The Court said that continuation of the criminal proceedings pending against the present petitioners will be sheer abuse of the process of court in view of the fact that there is remote chance of convicting present petitioners either under section 420 or under section 406 of IPC, on the basis of the materials available in the record

Accordingly, the court quashed the proceedings under Sections 420, 406 and 34 IPC against the petitioners.

Case Title: Girish Lahoti & Anr. v. Firdous Alam

Coram: Justice Ajoy Kumar Mukherjee

Click Here to Read/Download Judgment