SC – Criminal Law Cannot Be Used for Recovery of Terminated Contract Dues
Comments on the post of Pooja Dua and the Judgment dated 29.9.2026 of the Surpeme Court of India in Criminal Appeal No.4637 of 2026 of Indroneel Goho Vs. Razouvnuo Thong and another
The appellant was serving as the Chief Executive Officer of Darjeeling Organic Tea Estates Private Limited (hereinafter referred to as the “Company”) and was authorised to act on its behalf. Respondent No. 1, who is the proprietor of C.R. Traders, entered into negotiations with the Company in relation to the Jamguri Tea Estate situated at Golaghat, Assam. Prior to the execution of the agreement, respondent No. 1 addressed a communication dated 31.05.2021 to UCO Bank in relation to the Tea Estate and its mortgage with the Bank.
3.2. A Memorandum of Understanding dated 01.06.2021 (hereinafter referred to as the “MoU”) was thereafter executed between the Company and C.R. Traders. The appellant signed the MoU on behalf of the Company in his capacity as its authorised signatory. Pursuant thereto, respondent No. 1 transferred an amount of Rs. 40,00,000/- (Rupees Forty Lakh only) to the bank account of the Company on 07.06.2021 in two transactions of Rs. 39,95,000/- (Rupees Thirty-Nine Lakh Ninety-Five Thousand only) and Rs. 5,000/- (Rupees Five Thousand only).
3.3. Disputes subsequently arose between the parties regarding performance of the obligations under the MoU. The MoU was terminated by a communication dated 26.07.2021 on the ground that respondent No. 1 had failed to comply with its terms and conditions.
Thereafter, the respondent no.1 filed criminal complaint against the appellant for offences under Sections 417 and 420 IPC.
The High Court was correct in observing that the existence of an
Comments on the post of Pooja Dua and the Judgment dated 29.9.2026 of the Surpeme Court of India in Criminal Appeal No.4637 of 2026 of Indroneel Goho Vs. Razouvnuo Thong and another
The appellant was serving as the Chief Executive Officer of Darjeeling Organic Tea Estates Private Limited (hereinafter referred to as the “Company”) and was authorised to act on its behalf. Respondent No. 1, who is the proprietor of C.R. Traders, entered into negotiations with the Company in relation to the Jamguri Tea Estate situated at Golaghat, Assam. Prior to the execution of the agreement, respondent No. 1 addressed a communication dated 31.05.2021 to UCO Bank in relation to the Tea Estate and its mortgage with the Bank.
3.2. A Memorandum of Understanding dated 01.06.2021 (hereinafter referred to as the “MoU”) was thereafter executed between the Company and C.R. Traders. The appellant signed the MoU on behalf of the Company in his capacity as its authorised signatory. Pursuant thereto, respondent No. 1 transferred an amount of Rs. 40,00,000/- (Rupees Forty Lakh only) to the bank account of the Company on 07.06.2021 in two transactions of Rs. 39,95,000/- (Rupees Thirty-Nine Lakh Ninety-Five Thousand only) and Rs. 5,000/- (Rupees Five Thousand only).
3.3. Disputes subsequently arose between the parties regarding performance of the obligations under the MoU. The MoU was terminated by a communication dated 26.07.2021 on the ground that respondent No. 1 had failed to comply with its terms and conditions.
Thereafter, the respondent no.1 filed criminal complaint against the appellant for offences under Sections 417 and 420 IPC.
The High Court was correct in observing that the existence of an arbitration clause does not, by itself, bar criminal proceedings. That proposition, however, does not answer the real question. The Court must first determine whether the allegations disclose the essential ingredients of the criminal offence alleged. In the present case, the material does not disclose sufficient factual foundation to infer that the appellant, at the inception of the transaction, acted with the dishonest intention necessary to constitute cheating.
