Gujarat High Court

Umesh Rameshbhai Bhatia vs State Of Gujarat on 16 January, 2025

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                                     IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                            R/CRIMINAL MISC. APPLICATION (FOR QUASHING & SET ASIDE
                                           FIR/ORDER) NO. 829 of 2025

                       ==========================================================
                                                    UMESH RAMESHBHAI BHATIA
                                                              Versus
                                                     STATE OF GUJARAT & ANR.
                       ==========================================================
                       Appearance:
                       MR. RADHESH Y VYAS(7060) for the Applicant(s) No. 1
                       MR.YOGESH M VYAS(7258) for the Applicant(s) No. 1
                       MS. CHETNA M. SHAH, APP for the Respondent(s) No. 1
                       ==========================================================

                         CORAM:HONOURABLE MR. JUSTICE SANDEEP N. BHATT

                                                              Date : 16/01/2025
                                                                 ORAL ORDER

1. The present application is filed for seeking the

following reliefs:

"A. This application may be admitted and allowed.

B. YOUR LORDSHIPS may be pleased to quash and set- aside the FIR NO. 11210047230253/2023, registered by Udhna Police station, Surat City, Dist. Surat, for the offences punishable u/s. 406, 408, 409, 120B 34, 504, 506(2) of Indian Penal Code (Annexure-A) and and all further proceedings i.e charge sheet (Annexure-B)and Criminal case no. 69942 of 2023 pending before Ld.10th Addl.Sr.Civil

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Judge and A.C.J.M, surat (Annexure-C) in the interest of justice.

C. Pending hearing and final disposal of the application, YOUR LORDSHIPS may be pleased to stay the further proceedings arising from FIR NO. 11210047230253/2023, registered by Udhna Police station, Surat City, Dist. Surat, for the offences punishable u/s. 406,408, 409, 120B 34, 504, 506(2) of Indian Penal Code 1860(Annexure-A) i.e Criminal case no. 69942 of 2023 pending before Ld.10th Addl.Sr.Civil Judge and A.C.J.M, in the interest of justice.

D. YOUR LORDSHIPS may be pleased to grant such other and further reliefs as may be deemed, fit, just and proper in the interest of justice."

2. Brief facts as per the case of the applicant in this

application are as such that the present applicant was doing business on behalf of the firm and has entered

into commercial activities with different business entities,

whereby textile goods was supplied to them by proper

bill but these business entities after purchasing the

goods and receiving, have not paid the amount

outstanding to the firm belonging to the complainant and

in furtherance of common intention these business

entities and present applicant have committed 'criminal

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breach of trust. Thereafter, it is stated that the above-

referred FIR was investigated and the inquiry officer has

filed a final report, being charge sheet no. 151/2023 on

27/07/2023 and Criminal case no. 69942 of 2023 is

registered. Furthermore, it is case of the present

applicant that the allegation made by the complainant is

false and frivolous rather it is an attempt to convert

civil dispute into criminal by clever drafting. It is further

stated that by misusing the police machinery of the state

present complaint is filed with ulterior motive to extort

the money, tarnish the image of the applicant in the

society and as a short cut to the civil proceedings to

recover outstanding amount due to commercial sale

transaction. Furthermore, it is case of the present applicant that it is stated that as an arm-twisting

technique to settle private dispute of complaint with the

present applicant, the police has also joined the hands

with the complainant. During the course of the

investigation, the I.O. has exercised the power to seize or

Freeze/prohibit the operation of bank accounts belonging

to the present applicant and his family members i.e wife,

son and mother (They are not named as Accused in FIR/

Charge sheet). Because of such technique, the applicant

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and entire family is at the verge of vegrancy. The

condition of applicant is so precarious that whole family

is surviving at the mercy of relatives and friends. The

mother of the applicant is battling with cancer and there

is no money for medicine either. Furthermore, it is case

of the present applicant that on bare reading of FIR and

investigation papers does not discloses the offence as

alleged and continuation of proceedings against present

applicant is abuse of process of law. Hence, this

applicant has been preferred.

3. Heard Mr. Radhesh Vyas, learned advocate for the

applicant, Mr. Nasir Saiyed, learned advocate for the

respondent No.2 - complainant and Ms. Chetna M. Shah, learned APP for the respondent - State.

4.1 Mr. Radhesh Vyas, learned advocate for the

applicant has submitted that the present applicant is

wrongly implicated in the alleged offence as at the best,

the dispute, which is alleged by the FIR, can be

considered as a civil dispute, which the complainant has

tried to convert into criminal dispute by cleverly drafting

the complaint as some and substance of the entire

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complaint is that the present applicant was doing

business on behalf of the firm and has entered into

commercial activities with the different business entities

whereby textile goods were supplied to them by proper

bill but these business entities after purchasing the

goods and receiving the goods, have not paid the amount

outstanding to the firm belonging to the complainant and

in furtherance of common intention, these business

entities and present applicant have committed 'criminal

breach of trust'. Furthermore, he has submitted that

continuation of the proceedings pursuant to the present

FIR would amount to misuse of the police machinery,

which is filed with ulterior motive to extort money.

Furthermore, he has submitted that applicant has been falsely roped in the alleged offence as there is an

ongoing dispute with his employer as a part of an arm

twisting technique. Thus, alleged complaint has been

filed.

4.2 Furthermore, he has submitted that the applicant

was working in the firm in the capacity of marketing

head and role of the applicant being marketing head was

to do marketing in the field by showing samples and

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accepting the orders on behalf of the firm only. It is

also submitted that even if it is considered that whole

FIR is truth then also dispute can be considered as a

non-payment of money of commercial transaction and the

complainant has availed shortcut for recovery of

outstanding dues from the commercial transaction by

making the present applicant 'scapegoat'. Furthermore, he

has relied upon the decision of this Court in the case of

Arvindbhai Maganlal Master vs. State of Gujarat

reported in 2015 (1) GLH 149, and has submitted that

clever drafting of complaint to recover outstanding dues

will not help to convert the complaint from actual civil

dispute to criminal dispute. Furthermore, he has

submitted that certain complaints are also filed under the Negotiable Instruments Act against the other accused

persons by the present applicant and, therefore, the

present applicant is falsely roped into the present FIR

by the complainant. Lastly, he has submitted that

considering the judgment of the Hon'ble Apex Court in

the cases of (i) Delhi Race Club (1940) Ltd. and Ors. vs.

State of Uttar Pradesh and Anr. reported in Criminal

Appeal No.3114 of 2024, (ii) Robert John D'Souza and

Others vs. Stephen Vs. Gomes and Another reported in

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(2015) 9 SCC 96, and (iii) N. Raghvender vs. State of

Andhar Pradesh, CBI, reported in Criminal Appeal No.5

of 2010, and has submitted that present complaint is

nothing but an abuse of process of law and therefore,

the same is required to be quashed and set aside.

5. Per contra, Ms. Chetna M. Shah, learned APP for the respondent - State has strongly opposed the

submissions made at the bar. He has tendered a report

received from the concerned police station and has

further submitted that pursuant to the FIR, charge-sheet

is also filled and now the trial is also commenced and

the same is at the stage for the process to the accused th and next date is 28 March, 2025. She has further

submitted that on bare reading of the FIR, the role of the applicant is clearly stated in detail as the present

applicant - Umesh Rameshbhai Bhatia is handling the

trading business of wepfab firm and during the period of

2022 till 31st December, 2022, the present applicant -

Umesh Rameshbhai Bhatia as well as co-accused -

Harishkumar @ Haris Master, Vedprakash as well as

Ramesh Narsaiya have created various firms with the

help of near relatives in the name of Shreeji Fashion,

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Shri Kali Mahalaxmi Enterprise, Satguru Synthetics,

Ganpati Fabrics, Radhe Fashion, Tushar Silk Mills, Mohi

Silk, and JMD Enterprise, and also executed the rent

agreement of such firms and the account of such firms

are opened in HDFC Bank, Vesu Branch and in collusion

of each other, cheques were executed from the proprietor

of such firms and such cheques were kept in the custody

of the present applicant and thereafter, further

transaction from some dummy firms are also entered and

total goods of Rs.15,64,52,095/- are sent to the different

dummy firms from the wepfab firm and thereafter,

amount of Rs.15,64,52,095/- outstanding of wepfab firm

was not recovered by the present applicant - Umesh

Rameshbhai Bhatia by breaching the trust put by the wepfab firm and thereafter, when the complainant has

asked for the same, he has threatened and, therefore,

the complaint is filed for criminal breach of trust as well

as cheating. After investigation, the charge sheet is filed

against the present applicant and other co-accused and

the matter is now at the stage of further process and

accordingly, now matter is proceeded further and is at

the stage of issuance of process and, therefore, she has

submitted that prima face, cases is made out and no

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interference of this Court is required to be called for at

this stage.

6. Mr. Nasir Saiyed, learned advocate for the

respondent No.2 - complainant has submitted that he

will file his Vakalatnama as he has instructions to

appear on behalf of the complainant. He has supported

submissions made the bar by the learned APP and has

submitted that the complainant is cheated by the present

applicant and other persons by way of conspiracy and,

therefore, all the ingredients of the sections alleged in

the FIR are satisfied and, therefore, after proper

investigation, police has also filed charge-sheet against

the present applicant and other accused persons and,

therefore, when the prima facie case is made out and the trial is about to commenced, no interference of this

Court is required to be called for by this Court. He has

relied upon the judgment of the Hon'ble Apex Court in

the case of Neeharika Infrastructure Pvt. Ltd. versus

State of Maharashtra and Others reported in 2021 SCC

OnLine SC 315, and more particularly para 80 is

relevant, and has submitted that the present application

is required to be dismissed.

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7.1 It have considered the rival submissions made at

the bar. It is fruitful to refer the provisions of Sections

406, 408, 409, 120B 34, 504, 506(2) of Indian Penal

Code, as under:

"Section 406 in The Indian Penal Code, 1860:

406. Punishment for criminal breach of trust.--

Whoever commits criminal breach of trust shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both.

Section 408 in The Indian Penal Code, 1860:

408. Criminal breach of trust by clerk or servant.--

Whoever, being a clerk or servant or employed as a clerk or servant, and being in any manner entrusted in such capacity with property, or with any dominion over property, commits criminal breach of trust in respect of that property, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.

Section 409 in The Indian Penal Code, 1860:

409. Criminal breach of trust by public servant, or by banker, merchant or agent.--

Whoever, being in any manner entrusted with property, or with any dominion over property in his capacity of a public servant or in the way of his business as a banker, mer- chant, factor, broker, attorney or agent, commits criminal

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breach of trust in respect of that property, shall be punished with imprisonment for life, or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine.

Section 120B in The Indian Penal Code, 1860:

120B. Punishment of criminal conspiracy.--

(1) Whoever is a party to a criminal conspiracy to commit an offence punishable with death, imprisonment for life or rigorous imprisonment for a term of two years or upwards, shall, where no express provision is made in this Code for the punishment of such a conspiracy, be punished in the same manner as if he had abetted such offence. (2) Whoever is a party to a criminal conspiracy other than a criminal conspiracy to commit an offence punishable as aforesaid shall be punished with imprisonment of either description for a term not exceeding six months, or with fine or with both.

Section 34 in The Indian Penal Code, 1860:

34. Acts done by several persons in furtherance of common intention.--

When a criminal act is done by several persons in furtherance of the common intention of all, each of such persons is liable for that act in the same manner as if it were done by him alone.

Section 504 in The Indian Penal Code, 1860:

504. Intentional insult with intent to provoke breach of the peace.--

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Whoever intentionally insults, and thereby gives provocation to any person, intending or knowing it to be likely that such provocation will cause him to break the public peace, or to commit any other offence, shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both.

Section 506 in The Indian Penal Code, 1860:-

506. Punishment for criminal intimidation.--

Whoever commits, the offence of criminal intimidation shall be punished with imprison-ment of either description for a term which may extend to two years, or with fine, or with both;

If threat be to cause death or grievous hurt, etc.-- And if the threat be to cause death or grievous hurt, or to cause the destruction of any property by fire, or to cause an offence punishable with death or imprisonment for life, or with imprisonment for a term which may extend to seven years, or to impute, unchastity to a woman, shall be punished with imprisonment of either description for a term which may extend to seven years, or with fine, or with both."

7.2 On bare reading of the FIR, it transpires that there

is transaction done through the present applicant, who is

handling business of wepfab firm and in

collusion/connivance of the other persons, some other

firms are also created and then, in turn, the transaction

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were made with some dummy firms and, therefore, good

of huge amount are sold to such dummy firms through

the help of one person, which is co-accused Rajendra @

Guddubhai Ramkishor Mishra, who works of agent of

grey cloth business. It also transpires that thereafter, the

charge-sheet is filed after full-fledged investigation,

whereby many statements were recorded and from the

tenor of the statements, on perusal for the sanctification

of the Court, it is found that the applicant has also

annexed some statements and documents with the

present application and the Court has cursorily perused

the said documents. On perusal of such documents also,

it transpires that there is serious allegation against the

present applicant, which prima facie constitute offence of criminal breach of trust. It also transpires that offence of

cheating is also made out from the bare reading of the

FIR. It is pertinent to note that provisions of Section

120B of the Indian Penal Code, which is criminal

conspiracy is also invoked in the FIR and considering

the role of the various accused petitioners, and

considering the modus operandi of opening the accounts,

I am of the view that prime facie, case is made out

against all the accused and investigating officer after

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thorough investigation has filed the charge-sheet against

all the accused and some of the persons are also shown

as witnesses in the charge-sheet and, therefore, I am of

the view that arguments which are advanced by learned

advocate for the applicant, though it sounds very

attractive but in the facts and circumstances of the

present case, yet are not helpful to the facts of the

present case.

7.3.1 It is fruitful to refer the judgment of the

Hon'ble Apex Court in the case of Delhi Race Club

(1940) Ltd. and Ors. (supra), more particularly,

paragraph Nos.25, 33 and 36 are relevant, as under:

"25. What can be discerned from the above is that the offences of criminal breach of trust (Section 406 IPC) and cheating (Section 420 IPC) have specific ingredients.

In order to constitute a criminal breach of trust (Section 406 IPC): -

1) There must be entrustment with person for property or dominion over the property, and

2) The person entrusted: -

a) dishonestly misappropriated or converted property to his own use, or

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b) dishonestly used or disposed of the property or willfully suffers any other person so to do in violation of:

i. any direction of law prescribing the method in which the trust is discharged; or ii. legal contract touching the discharge of trust (see: S.W.P. Palanitkar (supra).

Similarly, in respect of an offence under Section 420 IPC, the essential ingredients are: -

1) deception of any person, either by making a false or misleading representation or by other action or by omission;

2) fraudulently or dishonestly inducing any person to deliver any property, or

3) the consent that any persons shall retain any property and finally intentionally inducing that person to do or omit to do anything which he would not do or omit (see:

Harmanpreet Singh Ahluwalia v. State of Punjab, (2009) 7 SCC 712 : (2009) Cr.L.J. 3462 (SC)).

33. It has been held in State of Gujarat v. Jaswantlal Nathalal reported in (1968) 2 SCR 408, "The term "entrusted" found in Section 405 IPC governs not only the words "with the property" immediately following it but also the words "or with any dominion over the property"

occurring thereafter--see Velji Raghvaji Patel v. State of Maharashtra [(1965) 2 SCR 429]. Before there can be any entrustment there must be a trust meaning thereby an obligation annexed to the ownership of property and a

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confidence reposed in and accepted by the owner or declared and accepted by him for the benefit of another or of another and the owner. But that does not mean that such an entrustment need conform to all the technicalities of the law of trust -- see Jaswantrai Manilal Akhaney v. State of Bombay [1956 SCR 483]. The expression "entrustment"

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. Further the person handing over the property must have confidence in the person taking the property so as to create a fiduciary relationship between them. A mere transaction of sale cannot amount to an "entrustment"".

36. From the aforesaid, there is no manner of any doubt whatsoever that in case of sale of goods, the property passes to the purchaser from the seller when the goods are delivered. Once the property in the goods passes to the purchaser, it cannot be said that the purchaser was entrusted with the property of the seller. Without entrustment of property, there cannot be any criminal breach of trust. Thus, prosecution of cases on charge of criminal breach of trust, for failure to pay the consideration amount in case of sale of goods is flawed to the core. There can be civil remedy for the non-payment of the consideration amount, but no criminal case will be maintainable for it. [See : Lalit Chaturvedi and Others v. State of Uttar Pradesh and Another : 2024 SCC OnLine SC 171 & Mideast Integrated Steels Ltd. (MESCO Steel Ltd.) and Others v. State of Jharkhand and Another : 2023 SCC

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OnLine Jhar 301]."

7.3.2 It is also fruitful to refer the judgment of the

Hon'ble Apex Court in the case of Robert John D'Souza

and Others (supra), more particularly, paragraph Nos.7 to

16 are relevant, as under:

"7. Arguments were advanced by learned counsel for the parties on the above lines pleaded before us. Having considered the submissions of the learned counsel for the parties what is apparent in the present case is that the complainant is not the member of Mukka Welfare Society. It is also not disputed that the sale deeds in question were executed way back in the year 1996 and the complainant, who is not even member of the Society, raises the issue that the sale deeds were executed for the benefit of the Directors of the Society, after a long gap of more than twelve years. Sale deeds in question are registered, and not declared null and void by any court of law. It is also relevant to mention here that admittedly earlier a complaint was made by the complainant to the Deputy Commissioner in the year 2009, which was got investigated by the police and the result of the investigation was that no offence was found committed by the appellants on the ground that the dispute is of civil in nature.

8. In view of the above facts, apparent on the record, we are of the view that the High Court and the courts

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below have committed grave error of law in ignoring the same. Needless to say that to constitute an offence punishable under Section 406 IPC, the essential ingredient is the "entrustment" of the property. The complaint filed by the complainant nowhere discloses that the land in question purchased in the year 1978 was entrusted to the Society for the benefit of others. It is only after entrustment is shown, it can be said that there was criminal breach of trust.

9. In Ram Narayan Popli v. Central Bureau of Investigation[1], this Court, per majority, has explained "entrustment" in paragraph 363 as under: -

"The term "entrustment" is not necessarily a term of law. It may have different implications in different contexts. In its most general signification all it imports is the handing over possession for some purpose which may not imply the conferring of any proprietary right at all."

10. In State of Gujarat v. Jaswantlal Nathalal[2], this Court in paragraph 8 has observed that a mere transaction of sale cannot amount to an entrustment.

11. At this stage we also think it proper to observe that in the present case, even if the allegations made in the complaint are taken to be true, the ingredients of the offence punishable under Section 409 IPC for which appellants are summoned, are also not made out. To constitute an offence punishable under Section 409 IPC, apart from entrustment, it is also essential requirement that it should be shown that the accused has acted in the

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capacity of a public servant, banker, merchant, factor, broker, attorney or agent. It is nowhere shown in the complaint that the appellants have acted in any of the above capacities.

12. As far as offence of cheating is concerned, the same is defined in Section 415 IPC, for which the punishment is provided under Section 420 IPC.

Section 415 reads as under:-

"415. Cheating. - Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to "cheat".

Explanation. - A dishonest concealment of facts is a deception within the meaning of this section.Illustrations ..............."

From the above language of the Section, one of the essential ingredients for the offence of cheating is deception, but in the present case, from the contents of the complaint it nowhere reflects that the complainant was deceived or he or anyone else was induced to deliver the property by deception. What was done, was so reflected in the

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resolutions, and sale deeds.

13. In Mathavrao Jiwajirao Scindia and others v. Sambhajirao Chandrojirao Angre and others[3], a three- Judge Bench of this Court has laid down the law as to quashment of proceedings under Section 482 CrPC as follows:-

"7. The legal position is well settled that when a prosecution at the initial stage is asked to be quashed, the test to be applied by the court is as to whether the uncontroverted allegations as made prima facie establish the offence. It is also for the court to take into consideration any special features which appear in a particular case to consider whether it is expedient and in the interest of justice to permit a prosecution to continue. This is so on the basis that the court cannot be utilised for any oblique purpose and where in the opinion of the court chances of an ultimate conviction is bleak and, therefore, no useful purpose is likely to be served by allowing a criminal prosecution to continue, the court may while taking into consideration the special facts of a case also quash the proceeding even though it may be at a preliminary stage."

14. In Suresh v. Mahadevappa Shivappa Danannava and another[4], criminal prosecution was quashed by the Court in respect offence of cheating noticing that the complaint was filed after a lapse of ten years.

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15. In Inder Mohan Goswami and another v. State of Uttaranchal and others[5], this Court in paragraphs 25 and 46 has observed as under: -

"25. Reference to the following cases would reveal that the courts have consistently taken the view that they must use this extraordinary power to prevent injustice and secure the ends of justice. The English courts have also used inherent power to achieve the same objective. It is generally agreed that the Crown Court has inherent power to protect its process from abuse. In Connelly v. DPP (1964 AC 1254) Lord Devlin stated that where particular criminal proceedings constitute an abuse of process, the court is empowered to refuse to allow the indictment to proceed to trial. Lord Salmon in DPP v. Humphrys (1977 AC 1) stressed the importance of the inherent power when he observed that it is only if the prosecution amounts to an abuse of the process of the court and is oppressive and vexatious that the judge has the power to intervene. He further mentioned that the court's power to prevent such abuse is of great constitutional importance and should be jealously preserved.

xxx xxx xxx

46. The court must ensure that criminal prosecution is not used as an instrument of harassment or for seeking private vendetta or with an ulterior motive to pressurise the accused. On analysis of the aforementioned cases, we are of the opinion that it is neither possible nor desirable to lay down an

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inflexible rule that would govern the exercise of inherent jurisdiction. Inherent jurisdiction of the High Courts under Section 482 CrPC though wide has to be exercised sparingly, carefully and with caution and only when it is justified by the tests specifically laid down in the statute itself and in the aforementioned cases. In view of the settled legal position, the impugned judgment cannot be sustained."

16. In view of the above discussion and facts and circumstances of the case, we are of the view that none of the offences for which the appellants are summoned, is made out from the complaint and material on record. We further find that it is nothing but abuse of process of law on the part of the complainant to implicate the appellants in a criminal case after a period of twelve years of execution of registered sale deeds in question, who is neither party to the sale deeds nor a member of the Society. Therefore, we allow the appeal and set aside the orders passed by the High Court and that of the courts below. Accordingly, the order passed by the Magistrate summoning the appellants in the criminal complaint filed by respondent No. 1, in respect of offences punishable under Sections 406, 409 and 420 IPC, also stands quashed."

7.3.3 It is also fruitful to refer the judgment of the

Hon'ble Apex Court in the case of N. Raghvender

(supra), more particularly, paragraph Nos.41 and 42 are

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relevant, as under:

"41. Section 409 IPC pertains to criminal breach of trust by a public servant or a banker, in respect of the property entrusted to him. The onus is on the prosecution to prove that the accused, a public servant or a banker was entrusted with the property which he is duly bound to account for and that he has committed criminal breach of trust. (See: Sadupati Nageswara Rao v. State of Andhra Pradesh9).

42. The entrustment of public property and dishonest misappropriation or use thereof in the manner illustrated under Section 405 are a sine qua non for making an offence punishable under Section 409 IPC. The expression 'criminal breach of trust' is defined under Section 405 IPC which provides, inter alia, that whoever being in any manner entrusted with property or with any dominion over a property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property contrary to law, or in violation of any law prescribing the mode in which such trust is to be discharged, or contravenes any legal contract, express or implied, etc. shall be held to have committed criminal breach of trust. Hence, to attract Section 405 IPC, the following ingredients must be satisfied:

(i) Entrusting any person with property or with any dominion over property;

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(ii) That person has dishonestly mis-appropriated or converted that property to his own use;

(iii) Or that person dishonestly using or disposing of that property or wilfully suffering any other person so to do in violation of any direction of law or a legal contract."

7.4 Furthermore, in light of the above decisions, there

is no quarrel about the proposition of law laid down by

the Hon'ble Apex Court in the aforesaid judgment, but

considering the facts of the present case, it specifically

comes out evenafter investigation that prima facie, offence is made out and the charge-sheet is required to

be filed as the present applicant being an authorized

person to look after the business of wepfab firm has

misused his position by allegedly colluding with the other firms by creating such firm and thereafter, entering into

transaction of some other dummy firms and accordingly,

goods of more than Rs.15 crores were sold and the

amount is not repaid. It cannot be said that merely the

present application is having only civil colour as dispute

is essentially about non-payment of the amount from the

commercial transaction.

7.5 Furthermore, looking to the conduct of the parties,

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it is also emerging from the record that bogus firms are

created in collusion/connivance with the respective

proprietors by the present applicant and considering the

role of the present applicant to sell the goods to the

dummy firms, it clearly indicates that the involvement of

the applicant in alleged offence is prima facie established.

7.6 At this stage, it would be fruitful to refer to the

recent decision of the Hon'ble Apex Court in the case of

Somjeet Mallick versus State of Jharkhand and others

reported in (2024) 10 SCC 527, more particularly Paras :

15, 17and 18 thereof, which read as under :

" 15. Before we proceed to test the correctness of the impugned order, we must bear in mind that at the stage of deciding whether a criminal proceeding or FIR, as the case may be, is to be quashed at the threshold or not, the allegations in the FIR or the police report or the complaint, including the materials collected during investigation or inquiry, as the case may be, are to be taken at their face value so as to determine whether a prima facie case for

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investigation or proceeding against the accused, as the case may be, is made out. The correctness of the allegations is not to be tested at this stage.

17. It is trite law that FIR is not an encyclopaedia of all imputations. Therefore, to test whether an FIR discloses commission of a cognizable offence what is to be looked at is not any omission in the accusations but the gravamen of the accusations contained therein to find out whether, prima facie, some cognizable offence has been committed or not. At this stage, the Court is not required to ascertain as to which specific offence has been committed.

18. It is only after investigation, at the time of framing charge, when materials collected during investigation are before the Court, the Court has to draw an opinion as to for commission of which offence the accused should be tried. Prior to that, if satisfied, the Court may even discharge the accused. Thus, when the FIR alleges a dishonest conduct on the part of the accused which, if supported by materials, would

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disclose commission of a cognizable offence, investigation should not be thwarted by quashing the FIR."

In light of the above decision, the Hon'ble Apex

Court has stated that the mere fact that a dispute is of

a civil nature is not sufficient to establish criminal

liability. In cases like the present one, which involve

elements of criminality and possess a criminal texture, it

is essential to consider the matter in its entirety.

Furthermore, considering that charge-sheet has been filed

following the FIR, in this respect, it is pertinent to refer

to the judgment of the Hon'ble Apex Court in the case

of Neeharika Infrastructure Pvt. Ltd. (supra). Specifically,

paragraph 80 of the judgment is relevant and is as follows:

"80. In view of the above and for the reasons stated above, our final conclusions on the principal/core issue, whether the High Court would be justified in passing an interim order of stay of investigation and/ or "no coercive steps to be adopted", during the pendency of the quashing petition under Section 482 Cr.P.C and/or under Article 226 of the Constitution of India and in what circumstances and whether the

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High Court would be justified in passing the order of not to arrest the accused or "no coercive steps to be adopted" during the investigation or till the final report/chargesheet is filed under Section 173 Cr.P.C., while dismissing/disposing of/not entertaining/not quashing the criminal proceedings/complaint/FIR in exercise of powers under Section 482 Cr.P.C. and/or under Article 226 of the Constitution of India, our final conclusions are as under:

i) Police has the statutory right and duty under the relevant provisions of the Code of Criminal Procedure contained in Chapter XIV of the Code to investigate into a cognizable offence;

ii) Courts would not thwart any investigation into the cognizable offences;

iii) It is only in cases where no cognizable offence or offence of any kind is disclosed in the first information report that the Court will not permit an investigation to go on;

iv) The power of quashing should be exercised sparingly with circumspection, as it has been observed, in the 'rarest of rare cases (not to be confused with the formation in the context of death

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penalty).

v) While examining an FIR/complaint, quashing of which is sought, the court cannot embark upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR/complaint;

vi) Criminal proceedings ought not to be scuttled at the initial stage;

vii) Quashing of a complaint/FIR should be an exception rather than an ordinary rule;

viii) Ordinarily, the courts are barred from usurping the jurisdiction of the police, since the two organs of the State operate in two specific spheres of activities and one ought not to tread over the other sphere;

ix) The functions of the judiciary and the police are complementary, not overlapping;

x) Save in exceptional cases where non-interference would result in miscarriage of justice, the Court and the judicial process should not interfere at the stage of investigation of offences;

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xi) Extraordinary and inherent powers of the Court do not confer an arbitrary jurisdiction on the Court to act according to its whims or caprice;

xii) The first information report is not an encyclopaedia which must disclose all facts and details relating to the offence reported. Therefore, when the investigation by the police is in progress, the court should not go into the merits of the allegations in the FIR. Police must be permitted to complete the investigation. It would be premature to pronounce the conclusion based on hazy facts that the complaint/FIR does not deserve to be investigated or that it amounts to abuse of process of law. After investigation, if the investigating officer finds that there is no substance in the application made by the complainant, the investigating officer may file an appropriate report/summary before the learned Magistrate which may be considered by the learned Magistrate in accordance with the known procedure;

xiii) The power under Section 482 Cr.P.C. is very wide, but conferment of wide power requires the court to be more cautious. It casts an onerous and more diligent duty on the court;

xiv) However, at the same time, the court, if it

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thinks fit, regard being had to the parameters of quashing and the self-restraint imposed by law, more particularly the parameters laid down by this Court in the cases of R.P. Kapur (supra) and Bhajan Lal (supra), has the jurisdiction to quash the FIR/complaint;

xv) When a prayer for quashing the FIR is made by the alleged accused and the court when it exercises the power under Section 482 Cr.P.C., only has to consider whether the allegations in the FIR disclose commission of a cognizable offence or not. The court is not required to consider on merits whether or not the merits of the allegations make out a cognizable offence and the court has to permit the investigating agency/police to investigate the allegations in the FIR;

xvi) The aforesaid parameters would be applicable and/or the aforesaid aspects are required to be considered by the High Court while passing an interim order in a quashing petition in exercise of powers under Section 482 Cr.P.C. and/or under Article 226 of the Constitution of India. However, an interim order of stay of investigation during the pendency of the quashing petition can be passed with circumspection. Such an interim order should not require to be passed routinely, casually and/or

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mechanically. Normally, when the investigation is in progress and the facts are hazy and the entire evidence/material is not before the High Court, the High Court should restrain itself from passing the interim order of not to arrest or "no coercive steps to be adopted" and the accused should be relegated to apply for anticipatory bail under Section 438 Cr.P.C. before the competent court. The High Court shall not and as such is not justified in passing the order of not to arrest and/or "no coercive steps" either during the investigation or till the investigation is completed and/or till the final report/chargesheet is filed under Section 173 Cr.P.C., while dismissing/disposing of the quashing petition under Section 482 Cr.P.C. and/or under Article 226 of the Constitution of India. xvii) Even in a case where the High Court is prima facie of the opinion that an exceptional case is made out for grant of interim stay of further investigation, after considering the broad parameters while exercising the powers under Section 482 Cr.P.C. and/or under Article 226 of the Constitution of India referred to hereinabove, the High Court has to give brief reasons why such an interim order is warranted and/or is required to be passed so that it can demonstrate the application of mind by the Court and the higher forum can consider what was weighed with the High Court while passing such an interim

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order.

xviii) Whenever an interim order is passed by the High Court of "no coercive steps to be adopted"

within the aforesaid parameters, the High Court must clarify what does it mean by "no coercive steps to be adopted" as the term "no coercive steps to be adopted" can be said to be too vague and/or broad which can be misunderstood and/or misapplied."

7.7 In light of the overall facts and circumstances of

the case, I am of the opinion that no ground is made

for the interference of this Court. On the contrary,

allowing such an application by quashing the proceedings

against the present applicant would amount to premium

treatment to dishonesty, which is prima facie evident from the applicant's conduct, based on the allegations

and the materials available on record. Therefore, I found

that this is not a fit case where this Court should

exercise its discretion in favour of the present applicant

as the present application is found meritless and is

required to be dismissed and is dismissed, accordingly

with no order as to costs.