Without Company and Persons Responsible for Day-to-Day Affairs, Prosecution of Petitioner Alone Clearly an Abuse of Process of Law: Calcutta High Court

In a significant judgment, the Calcutta High Court has quashed criminal proceedings against a company director in a cheating case, citing the absence of charges against the company and its responsible individuals.

Legal Point: The judgment focuses on the distinction between corporate and individual criminal liability, particularly in cases of alleged cheating under IPC sections 420, 120B, and 34. The Court emphasized the necessity of implicating the company or its responsible individuals in cases involving corporate affairs.

Facts and Issues: The case, CRR 1826 of 2019, involves Gopal Sanei, a director of Sanei Motors, accused of cheating in a vehicle sale. The complainant alleged non-refund of advance payment after cancelling the vehicle agreement. The company, however, was not made a party in the proceedings.

Justice Shampa Dutt cited various Supreme Court judgments to distinguish civil wrongs from criminal offences. She noted that for criminal liability under Section 420 IPC, there must be evidence of fraudulent or dishonest inducement. The Court observed:

"In Lalit Chaturvedi & Ors. vs State of Uttar Pradesh & Anr., the Supreme Court emphasized that the mere breach of contract or non-payment doesn't constitute a criminal offence under IPC Sections 420 and 406."

Regarding corporate criminal liability, the judgment relied on Sunil Bharti Mittal Vs Central Bureau of Investigation, clarifying that without sufficient evidence of a director's active role and criminal intent, their prosecution is unsustainable.

Decision: The Court quashed the proceedings against all accused, including Gopal Sanei, holding the prosecution of the petitioner alone as an abuse of the legal process. The judgment states, "Without the Company and the persons responsible for the day to day affairs of the Company, the prosecution of the petitioner alone... is bad in law."

Date of Decision: April 5, 2024

Gopal Sanei @ Gopal Kumar Sanei Vs The State of West Bengal & Anr.