Gujarat High Court
Krishnakumar Guruvachan vs State Of Gujarat on 24 July, 2025
NEUTRAL CITATION
R/SCR.A/1742/2017 ORDER DATED: 24/07/2025
undefined
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CRIMINAL APPLICATION (QUASHING) NO. 1742 of 2017
==========================================================
KRISHNAKUMAR GURUVACHAN & ANR.
Versus
STATE OF GUJARAT & ANR.
==========================================================
Appearance:
MR.D K.PUJ(3836) for the Applicant(s) No. 1,2
MR. MN MARFATIA(6930) for the Respondent(s) No. 2
MR. CHINTAN DAVE, PUBLIC PROSECUTOR for the Respondent(s) No. 1
==========================================================
CORAM:HONOURABLE MR. JUSTICE J. C. DOSHI
Date : 24/07/2025
ORAL ORDER
1. By way of this petition, filed under Section 482 of the Criminal Procedure Code, 1973, (for short "Cr.P.C."), the petitioners prayed for following reliefs.
"24(a). To call for the records and proceedings concerning FIR No.I/131/16 of Salabatpura Police Station, Surat and after examining the legality, validity and propriety of the same being in vogue, may be pleased to quash and set aside the same.
24(b). To direct the respondent No.1 to hold a departmental inquiry as against the erring police personnel of Salabatpura Police Station, Surat, responsible for colluding and conniving with the respondent No.2 in getting FIR No.131/16 registered against the petitioners with Salabatpura Police Station, Surat and thereupon causing harassment of the petitioners under the garb of conducting investigation."
2. The brief facts of the case are as under.
2.1. The petitioners are husband and wife, respectively and Page 1 of 16 Uploaded by NITIN INDRAVADANMAKWANA(HCW0110) on Thu Jul 31 2025 Downloaded on : Thu Jul 31 21:28:59 IST 2025 NEUTRAL CITATION R/SCR.A/1742/2017 ORDER DATED: 24/07/2025 undefined both of them had opened demat accounts with Rangta Rising Stock Private Limited (for short "Rungta" on or about 24.09.2015, being demat account Nos. K146 and D135, respectively.
2.2. As per the statement of accounts made available by Rungta while there is a debit of Rs.46,07,118.81 in the account of the 2nd petitioner, there is a credit of Rs.35,694.75 in the account of the 1st petitioner. The petitioners transacted in the shares of JRI Industries and Infrastructure Limited. From time to time, while the 1st petitioner remitted a sum of Rs.84,15,000/- to Rungta and the 2 nd petitioner remitted a sum of Rs.30,00,000/- to Runta. The petitioners through Rungta had purchased/sold from time to time scrip of JRI Industries and Infrastructure Limited and when the price of the scrip had reached to Rs.44.50 in the month of 17.11.2015, 1 st petitioner informed Rungta to dispose of the entire stock of 1,05,000 shares of JRI Industries and Infrastructure Limited and 1,29,980 shares of JRI Industries and Infrastructure Limited instantly and by which a sum of Rs.1,04,56,610/- were due and payable by Rungta to the petitioners. However, Rungta on behalf of the petitioners and without their expressed and/or implied knowledge of instructions wanted to manipulate the price of the scrip by disposing of those scrips which Rungta expected to go still high, however, in the meantime the price of the scrip of JRI Industries and Infrastructure Limited crashed and today the price of the said scrip is hovering around Rs.2.10.
2.3. Rungta, instead of making payment of Rs.1,04,56,610/- + payment of Rs.35.694.75 which is still shown in the credit of Page 2 of 16 Uploaded by NITIN INDRAVADANMAKWANA(HCW0110) on Thu Jul 31 2025 Downloaded on : Thu Jul 31 21:28:59 IST 2025 NEUTRAL CITATION R/SCR.A/1742/2017 ORDER DATED: 24/07/2025 undefined the 1st petitioner, is falsely claiming Rs.46,07,118.81 from the 2nd petitioner, without disclosing in the FIR that the shares of JRI Industries and Infrastructure Limited to the extent of 1,05,000 and 1,29,980 are still lying in the credit of the demat accounts of the petitioners and which shares were deliberately and with ulterior motive were not disposed of by Rungta when the price of the scrip had reached Rs.44.50 and in respect whereof specific instructions to dispose of were given by the 1 st petitioner on 17.11.2015.
2.4. Rungta and 1st petitioner have been trying to negotiate and reach to a conclusion in which Rungta promised and assured the 1st petitioner that they would settle the claim of the petitioners and they the petitioners may not precipitate the matter any further from their end by initiating any legal action against them and acceding to their request, the petitioners did not pursue the matter any further. However, to the utter shock and surprise of the petitioners, they received a summons from Salabatpura Police Station, Surat inter alia calling upon them to visit the police station for the purpose of investigation and accordingly the 1st petitioner visited Salabatpura police station and informed the police of the aforesaid facts. The police although promised and assured the 1 st petitioner that they would themselves ensure that the claim of the petitioners as against Rungta is amicably settled with their intervention and the 1st petitioner was further informed by Salabatpura Police Station officials not to precipitate the matter any further and that is the reason why the petitioners did not pursue the matter as against Runga. After about an year of the visit of the 1st petitioner to the police station, petitioner came to know that Page 3 of 16 Uploaded by NITIN INDRAVADANMAKWANA(HCW0110) on Thu Jul 31 2025 Downloaded on : Thu Jul 31 21:28:59 IST 2025 NEUTRAL CITATION R/SCR.A/1742/2017 ORDER DATED: 24/07/2025 undefined an FIR has been registered with Salabatpura Police Station and the police personnel even visited the residence of the petitioners on 28.12.2016 in the absence of petitioners.
2.5. FIR contains aforesaid facts, sought to be quashed by way present petition.
3. Heard, learned advocate Mr. D. K. Puj appearing for the petitioners, learned advocate Mr. M. N. Marfatia appearing for the respondent No.2 and learned Addl. Public Prosecutor Mr. Chintan Dave appearing for the State.
4. Some and substance of the arguments of learned advocate Mr. D. K. Puj for the petitioners is that plain reading of the FIR demonstrates that FIR is filed to recover the outstanding amount of Rs.36,29,420/-. He would further submit that the petitioners are maintaining demat accounts with complainant for the purpose of selling and purchasing shares in stock market. He would further submit that according to the FIR, the petitioners have purchased several shares of JRI Industries and Infrastructure Limited and did not pay amount of purchase of the shares. Learned advocate Mr. D. K. Puj in this regard would further submit that when the price of share of JRI Industries and Infrastructure Limited reached to Rs.44.50/- per share, the petitioners have telephonically instructed the complainant to sell the shares, however, the complainant expected to go price of share still high, and therefore, the complainant, who has been given instruction but did not sell the shares of JRI Industries and Infrastructure Limited on same price subsequently, the price of share is Page 4 of 16 Uploaded by NITIN INDRAVADANMAKWANA(HCW0110) on Thu Jul 31 2025 Downloaded on : Thu Jul 31 21:28:59 IST 2025 NEUTRAL CITATION R/SCR.A/1742/2017 ORDER DATED: 24/07/2025 undefined reduced to Rs.2.10. Learned advocate would further submit that instruction to sell the share of JRI Industries and Infrastructure Limited is telephonically recorded. He would further submit that complainant did not follow the instruction of petitioners, the profit of Rs.1,04,56,610/- would not gain by the petitioners due to fault of the complainant.
4.1. Learned advocate Mr. D. K. Puj would further submit that FIR is filed to convert the civil dispute into the criminal proceedings. The FIR, therefore, is abuse of process of law. He would further submit that essential ingredients of Sections 406 and 420 of IPC is upon such submission are missing.
4.2. Learned advocate Mr. D. K. Puj would submit to allow the petition and quash the FIR.
5. On the other hand, learned advocate Mr. M. N. Marfatia appearing for the respondent No.2 would submit that investigation is completed in the matter and chargesheet is filed against the petitioners, which indicates the cognizable offence against the petitioners. He would further submit that the cognizable offence under Section 406 and 420 of the IPC is disputable, the contention raised by the petitioners can count the most be a good defence and can be tested in trial. Therefore, the contention cannot be accepted at this juncture by taking by holding mini trial. Learned advocate Mr. M. N. Marfatia referred to the judgment delivered by Hon'ble Supreme Court in case of Kaptan Singh Vs. State of Uttar Pradesh, (2021) 9 SCC 35; State of Karnataka Vs. M. Devendrappa and Ors. MANU/SC/0027/2002; Sau. Kamal Page 5 of 16 Uploaded by NITIN INDRAVADANMAKWANA(HCW0110) on Thu Jul 31 2025 Downloaded on : Thu Jul 31 21:28:59 IST 2025 NEUTRAL CITATION R/SCR.A/1742/2017 ORDER DATED: 24/07/2025 undefined Shivaji Pokarnekar Vs. the State of Maharashtra & Ors. Passed in Criminal Appeal No.255 of 2019.
5.1. By making aforesaid submission, learned advocate Mr. M. N. Marfatia would submit to reject the petition.
6. Learned Addl. Public Prosecutor Mr. Chintan Dave appearing for the State by presenting report to the record filed by the Police Sub Inspector, Salabatpura Police Station, would submit that chargesheet is filed. He would also submit that contention raised by learned advocate for the petitioners that civil dispute has been given colour of criminality can be tested during trial.
6.1. Upon such submission, learned Addl. Public Prosecutor submitted to dismiss the petition.
7. I have heard the learned advocates of both sides. Considered rival submissions of learned advocates for both side. At the outset, let refer the center part of the, FIR which has taken up dispute between the parties.
"I am working in "Rungta Rising Stock Pvt. Ltd." on the post of Risk Management and our Company is dealing in purchase and sale of shares. Our company has its other Branches at Culcuta, Poona, Ahmedabad, Delhi and Rajkot and here is our "Head Office" All the deal of purchase & sale / sell are going on through this head office, and financial transactions are also run through "Insind Bank" in said bldg and prior to at about three months a staff member Shri. Amitbhai Gupta who was working in our Delhi Branch, he informed by phone that the party dealing in share market in the name of Reven Page 6 of 16 Uploaded by NITIN INDRAVADANMAKWANA(HCW0110) on Thu Jul 31 2025 Downloaded on : Thu Jul 31 21:28:59 IST 2025 NEUTRAL CITATION R/SCR.A/1742/2017 ORDER DATED: 24/07/2025 undefined Investment i.e. Krushna Kumar Guruvachan Brahamhabhatt R/o. 'B' Wing No.2 Divy Smit Housing Society, Opp. Gaurav Garden, Kandivali (W), Mumbai- 400067. Said party is good. And said Mr. Amit Gupta also recommended us to open the account of Krushanakumar Guruvachan Brahamhabhatt. So in our K.Y.C. Department on dated 24.09.2015 we filled the form in the name of Krushnakumar Guruvachan Brahamhabhatt and his wife Deepikaben's Pan Car, Passport Xerox copy and sent K.Y.C. form by courier and in this way and on this base Krushnakumar Guruvachan Brahamhabhatt's A/c. No.K- 146 and his wife's A/c. Deepikaben Krushnakumar Brahamhabhatt's A/c. No.'D' 135 were opened in our "Rungta Rising Stock Pvt. Ltd. Shop No.411-412, Empire State Bldg. 4th Floor, Near Udhana Darvaja, Surat and in our said company their share dealing remained continued upto two months only and during said two months upto two months only and during said two months they dealt in a good way in money transactions but thereafter on 16.11.2015 the said party i.e. Krushnakumar Guruvachan Brahamhabhatt informed us by phone that he desires to purchase 11,300 shares of JRI Industries & Infrastructure Company. So you please grant them credit and I will sent the payment to your company in evening by R.T.G.S. and as per this instruction we gave them credit limit of Rs.5,00,000/- in their account No.K-46 and by said credit facility in the name of our company they purchased 11,300 shares of JRI Industries and Infrastructure and its money value is worked out Rs.5,01,170/- and thereafter we reminded Krushnakumar for payment on tomorrow so we trusted in him we put faith in him and again when on date 17.11.2015 we made a call for the recovery of payment at that time he hold us that he was wishing to purchase 80,000 shares of JRI Industries and Infrastructure in the name of his wife Deepikaben Krushnakumar Brahamhabhatt in A/c. No.D-135 and also assured us that we would make both the payment at once only. So we gave credit limit in wife's A/c. No.D-135 for Rs.35,10,650 and due to our said credit limit Krushnakumar Brahamhabhatt Guruvachan purchased 80,000 shares of JRI Industries and Infrastructure Co. and its total worth is Rs.35,10,650/- and we reminded for the recovery of payment to him frequently but by showing Page 7 of 16 Uploaded by NITIN INDRAVADANMAKWANA(HCW0110) on Thu Jul 31 2025 Downloaded on : Thu Jul 31 21:28:59 IST 2025 NEUTRAL CITATION R/SCR.A/1742/2017 ORDER DATED: 24/07/2025 undefined various excuses and he didn't make payment but on date 10.12.2015 he deposited 40,000 shares in our account. However, from both of them still we have to recover total amount of Rs.36,29,420/- and for said amount they didn't make any payment till today."
8. In case of Ashok Kumar Jain Vs. the State of Gujarat and another, 2025 INSC 614, FIR registered with the same Salabatpura Police Station, for commercial transaction between the party for the offence under Sections 406 and 420 of IPC, the Supreme Court in para 9, 9.1, 9.2, 9.3, 9.4, 10, 11 and 12 held as under.
9. The FIR has been registered under sections 406 and 420 of the IPC. The The scope and expanse of these sections is better appreciated in the company of sections 405 and 415 of the IPC. This court in the case of Radheyshyam v. State of Rajasthan, culled out the following ingredients to constitute the Criminal breach of trust:
"11. For an offense punishable under Section 406 , IPC, the following ingredients must exist:
i. The accused was entrusted with property, or entrusted with dominion over property; ii. The accused had dishonestly misappropriated or converted to their own use that property, or dishonestly used or disposed of that property or willfully suffered any other person to do so; and iii. Such misappropriation, conversion, use or disposal should be in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract."
9.1. This court, while discussing the expression "entrustment" in Rashmi Kumar v. Mahesh Kumar Bhada, observed that it carries with it the implication that the person handing over any property or on whose behalf that property is handed over to another, continues to be its owner. Entrustment is not necessarily a term of Page 8 of 16 Uploaded by NITIN INDRAVADANMAKWANA(HCW0110) on Thu Jul 31 2025 Downloaded on : Thu Jul 31 21:28:59 IST 2025 NEUTRAL CITATION R/SCR.A/1742/2017 ORDER DATED: 24/07/2025 undefined law. It may have different implications in different contexts. In its most general significance, all its imports are handed over possession for some purpose which may not imply the conferment of any proprietary right therein. The ownership or beneficial interest in the property in respect of which criminal breach of trust is alleged to have been committed, must be in some person other than the accused and the latter must hold it on account of some person or in some way for his benefit.
9.2. Further, in Hridaya Ranjan Prasad Verma v. State of Bihar, this court observed as follows:
"15. In determining the question it has to be kept in mind that the distinction between mere breach of contract and the offense of cheating is a fine one. It depends upon the intention of the accused at the time of inducement which may be judged by his subsequent conduct but for this subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, that is the time when the offense is said to have been committed. Therefore it is the intention which is the gist of the offense. To hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise. From his mere failure to keep up promise subsequently such a culpable intention cannot be presumed."
(Emphasis supplied) 9.3. The ingredients to constitute an offense under sections 415 read with 420 of IPC have been considered and laid down by this court in Prof. RK Vijayasarathy and Anr v. Sudha Seetharam and Anr, as under:
"16. The ingredients to constitute an offense of cheating are as follows:
16.1. There should be fraudulent or dishonest inducement of a person by deceiving him: 16.1.1. The person so induced should be Page 9 of 16 Uploaded by NITIN INDRAVADANMAKWANA(HCW0110) on Thu Jul 31 2025 Downloaded on : Thu Jul 31 21:28:59 IST 2025 NEUTRAL CITATION R/SCR.A/1742/2017 ORDER DATED: 24/07/2025 undefined intentionally induced to deliver any property to any person or to consent that any person shall retain any property, or 16.1.2. The person so induced should be intentionally induced to do or to omit to do anything which he would not do or omit if he were not so deceived; and 16.2. In cases covered by 16.1.2. above, the act or omission should be one which caused or is likely to cause damage or harm to the person induced in body, mind, reputation or property.
17. A fraudulent or dishonest inducement is an essential ingredient of the offense. A person who dishonestly induces another person to deliver any property is liable for the offense of cheating.
18. xxx xxx xxx
19. The ingredients to constitute an offense under Section 420 are as follows:
19.1 A person must commit the offense of cheating under Section 415 ; and 19.2 The person cheated must be dishonestly induced to:
(a) deliver property to any person; or
(b) make, alter or destroy valuable security or anything signed or sealed and capable of being converted into valuable security."
(Emphasis supplied) 9.4 Put succinctly, to constitute an offense under sections 415 and 420 of the IPC, the above ingredients are present in the FIR.
10. This court in AM Mohan v. State Represented by SHO & Another, has observed as follows:
"13. It could be thus seen for attracting the provision of Section 420 of IPC, the FIR/complaint must show that the ingredients of Section 415 of IPC are made out and the person cheated must have been dishonestly induced to deliver the property to any person; or to make, alter or destroy valuable security or anything signed or Page 10 of 16 Uploaded by NITIN INDRAVADANMAKWANA(HCW0110) on Thu Jul 31 2025 Downloaded on : Thu Jul 31 21:28:59 IST 2025 NEUTRAL CITATION R/SCR.A/1742/2017 ORDER DATED: 24/07/2025 undefined sealed and capable of being converted into valuable security. In other words, for attracting the provisions of Section 420 of IPC, it must be shown that the FIR/complaint discloses:
(i) the deception of any person;
(ii) fraudulently or dishonestly inducing that person to deliver any property to any person; and
(iii) dishonest intention of the accused at the time of making the inducement."
(Emphasis supplied)
11. As stated in the FIR:
(i) In March 2012, the appellant had directly contacted the respondent no.2, gave him his visiting card, and saw the samples of the work being done done by the latter;
(ii) Further, the appellant also inquired from respondent no. 2 from whom he was purchasing the goods of sarees.
After 2-3 days, he came to the office of the appellant and demanded other samples;
(iii) Appellant had asked respondent no. 2 to prepare goods and informed that he would make the payments in 60 to 90 days; and
(iv) Appellant had assured and given trust for making timely payments, stating that he has his own house in Chennai and had good contacts with political persons.
12. From the above, respondent no. 2 has not availed the services of M/s. Oswal Overseas as a transport carrier. It is unclear whether the invoice has been raised in the name of the appellant or the exporter. The "bill of lading" would have disclosed the transfer of title in goods in favor of the appellant. On the contrary, the FIR is filed showing that the appellant, as accused, had an intention to cheat and commit breach of trust. The documents belie the allegations in the FIR. Looking at the controversy from any perspective, a mere Civil dispute has been given the color of an offense of cheating and criminal breach of trust. We have perused the FIR and are Page 11 of 16 Uploaded by NITIN INDRAVADANMAKWANA(HCW0110) on Thu Jul 31 2025 Downloaded on : Thu Jul 31 21:28:59 IST 2025 NEUTRAL CITATION R/SCR.A/1742/2017 ORDER DATED: 24/07/2025 undefined convinced that the inducement is an explanation to contradict the documents through which exports have been completed. In the circumstances of this case, by referring to inducement, the continuation of investigation / prosecution into the offense of cheating and breach of trust would amount to an abuse of the process of law. Further, what begs the question is whether such non- payment of the sale price can be an offense of criminal breach of trust and cheating at the hands of the second respondent. The answer is clearly no.
9. Recently, in case of Shailesh Kumar Singh Alias Shailesh R. Singh Vs. State of Uttar Pradesh & Ors., Criminal Appeal No.2963 of 2025, 2025 INSC 869, the Supreme Court in para No.9, 11, 13, 14 and 15 held as under.
9. What we have been able to understand is that there is an oral agreement between the parties. The Respondent No.4 might have parted with some money in accordance with the oral agreement and it may be that the appellant - herein owes a particular amount to be paid to the Respondent No.4. However, the question is whether prima facie any offence of cheating could be said to have been committed by the appellant.
11. The entire case is squarely covered by a recent pronouncement of this Court in the case of "Delhi Race Club (1940) Limited vs. State of Uttar Pradesh" reported in (2024) 10 SCC 690. In the said decision, the entire law as to what constitutes cheating and criminal breach of trust respectively has been exhaustively explained. It appears that this very decision was relied upon by the learned counsel appearing for the petitioner before the High Court. However, instead of looking into the matter on its own merits, the High Court thought fit to direct the petitioner to go for mediation and that too by making payment of Rs. 25,00,000/- to the 4 th respondent as a condition precedent. We fail to understand, why the High Court should undertake such exercise. The High Court may either allow the petition saying that no offence is Page 12 of 16 Uploaded by NITIN INDRAVADANMAKWANA(HCW0110) on Thu Jul 31 2025 Downloaded on : Thu Jul 31 21:28:59 IST 2025 NEUTRAL CITATION R/SCR.A/1742/2017 ORDER DATED: 24/07/2025 undefined disclosed or may reject the petition saying that no case for quashing is made out. Why should the High Court make an attempt to help the complainant to recover the amount due and payable by the accused. It is for the Civil Court or Commercial Court as the case may be to look into in a suit that may be filed for recovery of money or in any other proceedings, be it under the Arbitration Act, 1996 or under the provisions of the IB Code, 2016.
13. We also enquired with the learned counsel appearing for the Respondent No.4 whether his client has filed any civil suit or has initiated any other proceedings for recovery of the money. It appears that no civil suit has been filed for recovery of money till this date. Money cannot be recovered, more particularly, in a civil dispute between the parties by filing a First Information Report and seeking the help of the Police. This amounts to abuse of process of law.
14. We could have said many things but we refrain from observing anything further. If the Respondent No.4 has to recover a particular amount, he may file a civil suit or seek any other appropriate remedy available to him in law. He cannot be permitted to take recourse of criminal proceedings.
15. We are quite disturbed by the manner in which the High Court has passed the impugned order. The High Court first directed the appellant to pay Rs.25,00,000/- to the Respondent No.4 and thereafter directed him to appear before the Mediation and Conciliation Centre for the purpose of settlement. That's not what is expected of a High Court to do in a Writ Petition filed under Article 226 of the Constitution or a miscellaneous application filed under Section 482 of the Code of Criminal Procedure, 1973 for quashing of FIR or any other criminal proceedings. What is expected of the High Court is to look into the averments and the allegations levelled in the FIR along with the other material on record, if any. The High Court seems to have forgotten the well-settled principles as enunciated in the decision of this Court in the "State of Haryana & Others vs. Bhajan Lal & Others"
Reported in 1992 Supp.(1) SCC 335.Page 13 of 16 Uploaded by NITIN INDRAVADANMAKWANA(HCW0110) on Thu Jul 31 2025 Downloaded on : Thu Jul 31 21:28:59 IST 2025
NEUTRAL CITATION R/SCR.A/1742/2017 ORDER DATED: 24/07/2025 undefined
10. As stated in FIR, complainant "Rungta Rising Stock Pvt. Ltd." is stock broker having office at Surat. Petitioners have opened demat accounts with the complainant in the year 2015. The accounts were opened after completing K.Y.C. Then on 16.11.2015, the petitioner No.1 informed that he wants to purchase 11,300 shares of JRI Industries and Infrastructure and requested to grant them credit in his account. The total purchase value of such share comes to Rs.5,01,170/-. The transaction between the complainant and petitioners continued thereafter. The petitioner No.1 again informed that he wants to purchase further 80,000 shares of JRI Industries and Infrastructure in name of his wife i.e. petitioner No.2, and also asked for credit. According to the complainant, the petitioners paid consideration of purchase of share i.e. Rs.35,10,650/- and on frequent reminding of recovery of payment by the complainant, petitioners deposited 40,000 shares in their account on 10.12.2015. However, from petitioners, complainant has to recover total amount of Rs.36,29,420/-. Therefore, incident is reported to the police on 16.11.2015, which is culminating into FIR under sections 406, 420 and 414 of the IPC.
11. Learned advocate Mr.D. K. Puj for the petitioners referring to Annexure - B submitted that FIR is missing essential elements regarding the payment made by the petitioners. He would further submit that one petitioner's account with the complainant is having credit of Rs.35,694.75, and also shows multiple transactions subsequent to the alleged incident. He would also submit that petitioners even telephonically instructed the complainant to sell shares at the price of 44.50, Page 14 of 16 Uploaded by NITIN INDRAVADANMAKWANA(HCW0110) on Thu Jul 31 2025 Downloaded on : Thu Jul 31 21:28:59 IST 2025 NEUTRAL CITATION R/SCR.A/1742/2017 ORDER DATED: 24/07/2025 undefined however Rungta has kept shares in their accounts with speculation of rise in stock price, but later it fell to ground and as such huge loss occurred. He would further submit that instruction to sell entire pack of shares was given telephonically. As per rule, all such instruction recorded. Complainant suppressing all this aspects has filed malicious complaint. He would further submit that averments made in this regards are not controverted by the respondent by filing reply. He would also submit that invoice which is charged by the complainant contains arbitrary clause, but the complainant, without referring the dispute to the arbitration, filed criminal complaint and used the criminal complaint as a mode of recovery.
12. In Annexure D invoice generated by the complainant, the particular clause read as under:-
"Transactions mentioned in this contract note cum bill shall be governed and subject to the Rules, Bye-laws and Regulations and Circulars of the respective Exchanges on which trades have been executed and Securities and Exchange Board of India from time to time. The Exchanges provide Complaint Resolution, Arbitration and Appellate arbitration facilities at the Regional Arbitration Centres (RAC). The client may approach its nearest centre, details of which are available on respective Exchange's website. Please visit www.bseindia.com for BSE, www.mcx-sx.com for MCX-SX, www.nseindia.com for NSE and www.useindia.com for USE."
13. In all, it would be noticed from the aforesaid submission that it is yet another FIR filed at Salabatpura Police Station for commercial transaction under Sections 406 and 420 of IPC.
Page 15 of 16 Uploaded by NITIN INDRAVADANMAKWANA(HCW0110) on Thu Jul 31 2025 Downloaded on : Thu Jul 31 21:28:59 IST 2025NEUTRAL CITATION R/SCR.A/1742/2017 ORDER DATED: 24/07/2025 undefined The complainant remained unsuccessful to recover outstanding amount from the petitioners, filed present FIR. Quary was raised that whether civil suit or arbitration proceedings are initiated to recover outstanding amount, it is replied "No". Thus, FIR is found abuse of process, it lacks the intention to cause criminal breach of trust or cheating from inception. Hence, in absence of essential ingredients of sections 406 and 420 of IPC, the offence cannot be made out against petitioners.
14. As far as judgment upon which the learned advocate appearing for the respondent relied upon mainly states that the Court could not hold mini trial while exercising jurisdiction under section 482 of the Cr.P.C. No different ratio is reasoning out of the judgment. However, the FIR indicates that criminal complaint is initiated to recover amount through police authority, as such, since it is abuse of process of law, it cannot survive.
15. For the foregoing reasons, the petition stands allowed. The impugned FIR No.I/131/16 registered with Salabatpura Police Station for the offence punishable under Sections 406, 420 and 414 of the IPC and subsequent proceedings arising out of the said FIR are hereby quashed. Rule is made absolute. Direct service permitted.
(J. C. DOSHI,J) NITIN MAKWANA Page 16 of 16 Uploaded by NITIN INDRAVADANMAKWANA(HCW0110) on Thu Jul 31 2025 Downloaded on : Thu Jul 31 21:28:59 IST 2025