Authority: Calcutta High Court (High Court at Calcutta)

Order Date: 15 June 2026

Case Overview

  • Parties: Petitioners – Pharma Corp Inc Ltd (pharmaceutical manufacturer, office in Indore, Madhya Pradesh); Opposite Party No. 2 – unnamed West Bengal‑based distributor (office in Howrah). The State of West Bengal is listed as the respondent in the caption.
  • Nature of proceedings: Revisional application (CRR 698 of 2023) filed under Sections 397, 401 read with 482 of the Code of Criminal Procedure, seeking quash of a private criminal complaint (Case No. CS/51484 of 2022) pending before the Metropolitan Magistrate, 10th Court, Calcutta, under IPC Sections 406, 420, 120B.
  • Background: In March‑April 2019 the distributor approached Pharma Corp for distribution of its medicines in West Bengal. An agreement was executed granting a 75‑day credit period. The first invoice was raised on 15‑Apr‑2019. Between April 2019 and October 2019 the distributor placed multiple orders totaling ₹1,39,40,454, of which ₹81,70,599 was paid after credit notes, leaving an outstanding balance of ₹47,33,582.
  • Default and notices: On 17‑Dec‑2019 Pharma Corp emailed the distributor demanding payment. The distributor replied on 20‑Dec‑2019 claiming a purchase‑return of ₹10,82,149. Pharma Corp rejected the return, stating the goods were non‑returnable and demanded payment of the undisputed ₹37,64,301. A security cheque for the same amount was deposited on 21‑Jan‑2020 but was dishonoured on 23‑Jan‑2020. Pharma Corp issued a legal notice on 9‑Feb‑2020 invoking Section 138 of the Negotiable Instruments Act and threatening a criminal complaint under Section 420 IPC if payment was not made within 15 days.
  • Parallel criminal complaint: The distributor filed a complaint on 21‑Jun‑2022 before the 10th Metropolitan Magistrate alleging fraud, criminal breach of trust and conspiracy (IPC 406, 420, 120B). The magistrate, after examining the complainant, found a prima‑facie case and issued process under Section 204 Cr.P.C.
  • Petitioner’s contentions: The petitioner argued that an enquiry under Section 202 Cr.P.C was mandatory because the accused company resides outside the magistrate’s territorial jurisdiction (Indore, Madhya Pradesh). The petitioner also contended that Sections 405 and 420 cannot co‑exist in the same complaint and that the dispute is essentially civil – a breach of contract – not a criminal offence.
  • Opposite Party’s contentions: The distributor maintained that the petitioner induced it to part with ₹37,64,301 on false representations, supplied inferior goods, failed to return the part‑payment of ₹25 lakhs made on 7‑Apr‑2020, and therefore committed offences under IPC 406, 420 and conspiracy under 120B.
  • Judicial analysis: The Court examined precedents (Vijay Dhanuka v. Najima Mamtaz, Arshad Neyaz Khan v. State of Jharkhand, Satishchandra Ratanlal Shah, Hridaya Ranjan Prasad Verma, Vijay Kumar Ghai, etc.). It held that:
  • No entrustment of property was established; the transaction was a commercial loan/distribution arrangement.
  • The magistrate failed to conduct the mandatory enquiry under Section 202 before taking cognizance, violating the amendment to Cr.P.C. that makes such enquiry compulsory when the accused resides outside the jurisdiction.
  • The allegations do not satisfy the essential ingredients of offences under Sections 406 and 420 (absence of fraudulent inducement and dishonest conversion).
  • The matter is essentially a civil breach of contract, for which civil remedy, not criminal prosecution, is appropriate.
  • Conclusion of the Court: The proceedings under IPC 406/420/120B are devoid of a prima‑facie case, the magistrate’s order is contrary to Supreme Court jurisprudence, and proceeding would amount to abuse of process.

Final Outcome

  • The revisional application CRR 698 of 2023 is allowed.
  • The criminal proceedings pending before the Metropolitan Magistrate, 10th Court, Calcutta under Sections 406, 420, 120B IPC are quashed.
  • All connected applications are disposed of.
  • An urgent certified copy of the order may be provided to the parties upon compliance with procedural requirements.

Topics: Criminal Law, Pharmaceutical Distribution