Blue contract violation is not in itself a criminal offense, the Supreme Court said. (File)
New Delhi:
Blue contract violation is not in itself a criminal offense and leads to civil liability for damages, the Supreme Court said on Tuesday.
A bank of Justices SA Nazeer and Krishna Murari said the difference between breach of contract alone and fraud, which is a criminal offense, is good.
“There can be no doubt that a blue breach of contract is not in itself a criminal insult and leads to civil liability for damages ….
“While breach of contract may not lead to criminal prosecution for fraud, fraudulent or dishonest intent is the basis of the offense of fraud,” the bank said.
The Supreme Court made these observations while hearing an appeal from the Managing Director and the directors of a company challenging an order of the Calcutta Supreme Court refusing to abolish the proceedings against them in a case of fraud and criminal breach of trust.
In January 2008, respondent no. 2, an authorized representative of SMC Global Securities Ltd, Delhi wanted to make an investment on its behalf with the appellants.
It was mutually agreed between the parties that respondent number 2 invest an amount of Rs. 2.5 crore with the company instead of owning 2,50,000 shares of Priknit Apparel Pvt. Ltd Subsequently, Respondent No. 2 submitted their submission form along with the check of Rs. 2.5 crore.
Later, an allotment letter was sent in favor of respondent no.
After failing to bring the IPO as the Memorandum of Understanding, Respondent No. 2 issued a legal notice dated to the appellants, who responded promptly to the legal notice, which rejected all the allegations in the legal notice. . Later, a criminal case was filed against the appellants.
The Supreme Court has ruled that in the case of the complaint of no.
“After going through the complaint / FIR and even the charge sheet, it can not be said that the amendments in the FIR and the allegations in the complaint against the appellant constitute an insult under section 405 (Criminal Violation of Trust.) & 420 (cheating) of the Indian Penal Code, 1860.
“Even in a case where allegations are made in relation to failure of the accused to keep his promise, in the absence of a guilty intention at the time of the promise is absent, no insult under section 420 IPC can be said to have been settled,” he said. Bench.
The Supreme Court has said that in the instant case, there is no evidence to show that the appellants had a mala fide intent against the respondents, which is clearly deductible from the MOU that was reached between the parties.
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