Commercial disputes arising from contractual obligations should be resolved through civil remedies and not criminal prosecution unless fraudulent intent is demonstrated.

ORDER :

1. The petitioner is seeking quash of CC.No.2079 of 2024 on the file of Chief Metropolitan Magistrate, Visakhapatnam. The petitioner is facing trial for alleged offence under Section 406 , 420, 120-B read with 34 of IPC.

2. The learned counsel for the petitioner submits that the petitioner and the 2nd respondent entered into an agreement for sale and purchase of Indonesian steam coal vide contract No. LIPL-SAS/01/1/2018. The 2nd respondent is the seller and the petitioner is the buyer as per the agreement. The agreement was entered on 24.01.2018.

3. It is submitted that the petitioner also made payment of rupees one crore only to the 2nd respondent on signing of the agreement and also issued post dated cheques in anticipation of supply of coal by the 2nd respondent. It is also submitted that the supply of coal and purchase of coal could not materialize and that the petitioner failed to make payment of Rs.10,23,22,100/- towards cost of material and demurrage to a tune of Rs.73,00,000/-.

-

4. It is alleged that the petitioner conspired to cheat the 2nd respondent by getting the material delivered and subsequently selling it in the market and also not paying up the 2nd respondent the amounts due towards the supplies. Alleging that the petitioner and others have cheated the 2nd respondent, the complaint was filed.

5. The police after investigation filed a charge sheet by holding that the petitioner in collusion with others have violated Article 3 of the Sale Purchase Agreement and as such caused huge loss to the 2nd respondent and held that liable for punishment for offence under Section 420 , 406, 120-B read with 34 of IPC.

6. The learned counsel for petitioner places reliance on Anil Mahajan Vs. Bhor Industries Ltd and another , (2005) 10 SCC 228 the Hon’ble Supreme Court held that when there is a dispute between ^the parties arising out of a transaction involving passing of valuable properties between them, the aggrieved person may have a right to sue for damages or compensation. It was held that when the parties entered into an agreement and when one party fails to discharge the contractual obligation, the aggrieved party could have to invoke the civil remedies.

7. The learned counsel for petitioner also places reliance on Chava Venu and another Vs. State of A.P. and another , 2005 (2) ALD (Cri.) (NOC) 17 (AP) this Court held that when the disputes are civil in nature continuation ^of criminal proceedings under Section 420 of IPC and quashed the case.

8. Notice sent to the 2nd respondent was returned unserved with an endorsement refused. Hence, this Court is proceeding further as the 2nd respondent has not evinced any interest in pursuing the matter.

9. Heard the learned counsel for the petitioner and the learned Assistant Public Prosecutor for the State. Perused the material on record.

10. The agreement of sale and purchase of Indonesian Steam Coal dated 24.01.2018 is entered between Lotus Inter Trade Private Limited and Sneha Analytics and Scientific. The petitioner and the 2nd respondent have signed as authorized signatories for the said agreement.

11. Article 16 of the Agreement provides for a dispute resolution mechanism. The parties would have to invoke the arbitration clause for redressing their grievances or disputes which are arising out of or in connection with the agreement.

12. On facts, admittedly the contractual obligation is allegedly not complied by the petitioner. On the contrary the petitioner submits that non-payment for the material supplied is completely a different aspect and that the petitioner cannot be charged off offences under Section 406 and 420 of IPC having paid an amount of ru