Non-Payment of Rent Does Not Constitute Criminal Breach of Trust: Calcutta High Court

High Court quashes proceedings against ECE Industries Limited, emphasizing civil nature of the dispute over scaffolding rent.

The Calcutta High Court has quashed the criminal proceedings initiated against ECE Industries Limited and its representatives in a case that highlighted the distinction between civil disputes and criminal offences. The judgment, delivered by Justice Ajoy Kumar Mukherjee, underscores that non-payment or under-payment of rent does not constitute criminal breach of trust, emphasizing the civil nature of the underlying dispute.

The petitioners, ECE Industries Limited and its Regional Manager, succeeded in a tender process for installing a lift as floated by BHEL. They issued a work order for scaffolding to the opposite party, GPS Builder, who raised invoices that were duly paid by the petitioners initially. However, disputes arose when the extension of the work order was not granted beyond December 2019, and GPS Builder continued to raise invoices for rent of scaffolding items that remained on-site. The petitioners refused to pay the subseq’ent invoices, leading to the initiation of criminal proceedings under Sections 406 (criminal breach of trust), 506 (criminal intimidation), and 120B (criminal conspiracy) of the IPC.

Justice Mukherjee noted that the dispute was fundamentally civil, revolving around the quantum of rent and the removal of scaffolding materials from the site. “By no stretch of imagination can it be said that there was any entrustment or misappropriation or dishonest usage or disposal of the property,” the judgment stated.

The court highlighted that the allegations, even if taken as true, did not disclose any criminal offence. It was emphasized that non-payment of rent does not amount to criminal breach of trust, which requires dishonest misappropriation or use of property. “There is a clear distinction between a civil wrong in the form of breach of contract and a criminal offence,” Justice Mukherjee observed.

The court found that the initial depositions under Section 202 Cr.P.C. did not disclose any criminal intent. The witnesses merely stated that rent was due and the petitioners’ security staff had prevented them from collecting their scaffolding materials, which did not constitute a criminal act.

The judgment elaborated on the principles governing the issuance of process in criminal proceedings. It was noted that the magistrate must be satisfied that there are sufficient grounds for proceeding. In this case, the court found the magistrate’s order to issue process as cryptic and unsubstantiated by the allegations in the complaint. “A civil dispute which ought to have been resolved through the forum of civil court has been given colour of criminality,” Justice Mukherjee stated.

Justice Mukherjee remarked, “The mere fact that the petitioner did not pay the money to the complainant does not amount to criminal breach of trust.” He further emphasized, “No case at all has been made out for which the machinery of the criminal court can be invoked.”

The Calcutta High Court’s decision to quash the criminal proceedings against ECE Industries Limited highlights the judiciary’s commitment to preventing the misuse of criminal law in civil disputes. This judgment reinforces the legal distinction between civil and criminal matters and emphasizes the importance of appropriate legal forums for resolving different types of disputes.

Date of Decision: 23 July 2024