The Calcutta High Court has quashed criminal proceedings for cheating and criminal breach of trust against Indian Compressors Limited (ICL) and its Managing Director Hemant Didwania, holding that the case arose out of a purely commercial transaction that had been amicably settled between the parties.
The bench of Justice Uday Kumar, exercising inherent powers under Section 482 of the Code of Criminal Procedure, set aside the FIR, charge sheet, and all consequential proceedings, observing that continuation of the trial would amount to an abuse of the process of law.
The case originated from a commercial transaction involving the export of centrifugal pumps to Bangladesh. A dispute arose between Indian Compressors Limited and the complainant company over an alleged typographical error in valuation of spare parts, reportedly caused by a mistake in currency conversion from USD to INR.
While the petitioners claimed the error was bona fide, the complainant alleged that ICL had dishonestly adjusted ₹3.29 lakh from a GST security deposit, leading to the registration of an FIR on 26 January 2023 at South Bidhannagar Police Station under Sections 406 and 420 of the Indian Penal Code.
Despite the dispute involving a relatively small amount, the police proceeded to freeze the company’s bank accounts, which carried a credit limit of nearly ₹27 crore. The High Court strongly criticised this action, terming it grossly disproportionate and indicative of investigative overreach.
The Court noted that such coercive measures effectively paralysed a running business and suggested that the criminal machinery had been deployed as an “arm-twisting tactic” for civil recovery.
A charge sheet was eventually filed in April 2023, prompting the company and its Managing Director to approach the High Court seeking quashing of the proceedings.
During the pendency of the criminal revision, both sides filed a joint application informing the Court that they had amicably resolved their disputes through a Memorandum of Settlement. The defacto complainant appeared in person before the Court and expressly stated that he did not wish to pursue the criminal case any further.
The central question before the High Court was whether non-compoundable offences under Sections 406 and 420 IPCcould be quashed on the basis of a private settlement between parties.
Relying on landmark Supreme Court judgments including Gian Singh v. State of Punjab and Narinder Singh v. State of Punjab, the Court held that The power of the High Court under Section 482 CrPC is distinct from statutory compounding under Section 320. Criminal proceedings can be quashed even for non-compoundable offences when the dispute is overwhelmingly civil or commercial in nature. The decisive factor is whether continuation of the prosecution would serve the ends of justice or merely waste judicial time.
The Court emphasised that for an offence of cheating under Section 420 IPC, dishonest intention must exist at the inception of the transaction, which was clearly absent in the present case.
Justice Uday Kumar drew a clear distinction between a civil breach of contract and a criminal offence of cheating, observing that the dispute stemmed from an accounting discrepancy rather than any pre-meditated fraud.
The judgment categorically stated that freezing bank accounts worth ₹27 crore for a ₹3.3 lakh dispute was unjustified and unsustainable.
Allowing the revision petition, the High Court has quashed the FIR, charge sheet, and all criminal proceedings. Lifted the debit freeze on the company’s bank accounts with immediate effect. Directed the investigating officer to inform banking authorities forthwith. Discharged the petitioners from their bail bonds. Held that continuation of the trial would be a futile exercise.
Case Details
Case Title: Indian Compressors Limited & Anr. Vs State of West Bengal & Anr.
Case No.: CRR 530 of 2023
Date: 30.01.2026
Counsel For Petitioner: Sandipan Ganguly, Sr. Adv.
Counsel For Respondent: Rituparna De Ghosh, Ld. Adv.
