Sarada Jute Mills Pvt. Ltd. & Ors. Vs P.G. Electricals. (Calcutta High Court)
Conclusion: A criminal revisional application filed by a firm and its directors for non-payment of tax invoice dues was dismissed as a prima facie case had been made out against assessee, observing that their conduct of denying the transaction after receiving goods indicated a dishonest intention from the inception.
Held: Assessee-company had invoked the inherent jurisdiction of the High Court under Section 482 Cr.P.C. seeking quashing of complaint proceedings alleging offences under Sections 406/409/420/120B IPC. The complaint alleged that the accused persons, acting as directors and executives of a company, induced the complainant by false representations regarding business credibility and assured payment, thereby procuring supply of electrical goods worth Rs. 11,15,297/- under multiple invoices during the period 21.01.2015 to 22.08.2015. Despite repeated demands, payment was not made and the accused ultimately denied the transactions. Assessee contended that no transaction ever took place, that the complaint was unsupported by valid invoices or delivery challans, and that the dispute, if any, was purely civil in nature. It was further urged that essential ingredients of Sections 406 and 420 IPC, namely entrustment and dishonest intention from inception, were absent, and that the complaint was filed with delay to exert pressure. The opposite party resisted the petition contending that documentary materials including invoices, delivery challans with transporter endorsements, ledger entries, bank statements, and prior correspondence prima facie established the transactions. It was submitted that such factual disputes could only be adjudicated at trial and not in proceedings under Section 482 Cr.P.C. It was held that the complaint disclosed allegations of inducement, supply of goods based on representations, non-payment, and subsequent denial of transactions. These allegations, taken at face value, satisfy the essential ingredients of the offence of cheating under Section 420 IPC. Mens rea or dishonest intention at inception can be inferred from the conduct of the accused, including their subsequent denial and shifting stand. The mere fact that the dispute arises out of a commercial transaction or involves recovery of money did not preclude criminal prosecution where the allegations disclose elements of deception or fraudulent inducement. Civil liability and criminal culpability may coexist. Issues such as genuineness of invoices, proof of delivery, transporter endorsements, ledger reconciliation, and authenticity of documents were matters requiring evidence and cross-examination. These could not be adjudicated in proceedings under Section 482 Cr.P.C. Delay, in the absence of clear prejudice or explanation negating criminality, did not by itself render the complaint liable to be quashed, particularly where allegations disclose continuing conduct culminating in denial of liability. In light of the materials on record, it could not be said that the criminal proceedings were frivolous or constitute abuse of the process of court. A prima facie case having been made out, the matter must proceed to trial. Allegations regarding false statements on oath and suppression of material facts were considered premature at this stage and left open for consideration after adjudication of the main proceedings.
