Criminal proceedings cannot be initiated for recovery of money arising from a civil agreement; allegations under IPC Section 420 require proof of fraudulent intent from the contract's inception.

ORDER :

M. Nagaprasanna, J.

The petitioners/accused Nos. 1 to 5 are before this Court calling in question registration of a crime in Crime No.131 of 2022 for offences punishable under Sections 406 and 420 r/w. 34 of the IPC and pending before the 4^th Additional Chief Metropolitan Magistrate, Bengaluru.

2. Heard Sri D.R. Ravishankar, learned senior counsel appearing for petitioners, Sri B.N. Jagadeesha, learned Additional State Public Prosecutor appearing for respondent No.1 and Sri R. Swaroop Anand, learned counsel appearing for respondent No.2.

3. Facts, in brief, germane are as follows: -

The 2^nd respondent is the complainant. A complaint comes to be registered on 17-05-2022 alleging that, the 2^nd respondent is a sub-contractor and a holder of sub-contract agreement with M/s Shapoorji Pallonji and Company Private Limited (hereinafter referred to as ‘the Company’ for short) for supply, installation and commissioning for plumbing, electrical and other works to the Sea Bird Residential Project, a Naval project at Karwar. It is the case of the complainant that petitioners are the representatives of the Company and the Company is in the business of construction infrastructure and real estate. On 07.12.2018, the officials of the Company represented to the 2^nd respondent that the Company has been awarded contract from Indian Navy to design and construct residential buildings and township along with related common facilities, trunk infrastructure and utility through design – Project Seabird at Naval Base, Karwar (hereinafter referred as ‘the project’ for short). The Company on the same day is said to have expressed its willingness to sub-contract the work to any interested and capable party by way of tender. Based on the contract specification given by the Indian Navy, the Company through the petitioners represented that it is sub-contracting the work of Indian Navy. It is then, the complainant/2^nd respondent and the petitioners enter into a sub-contract. The complainant participated in the tender and the Company awarded the tender to the 2^nd respondent/complainant for construction.

4. It is the contention in the complaint that through various work orders the petitioners sub-contracted the work of the said project to the 2^nd respondent. Under the terms of work orders, it was agreed between the parties that officials of the Company are liable to pay 95% of the bill amount for the works executed by the complainant within 30 days from the date on which the complainant submits the running bill to the Company. The remaining 5% of the bill amount from each work orders shall be retained by the Company. The complaint further narrates that the complainant began to execute the project by purchasing raw material from third parties for which third parties raised invoices against the complainant. The complainant then invested huge sums of money and paid all those bills. The 2^nd respondent used to raise running bills as obtaining in the agreement and part payments were being made by the Company. The Company represented by the petitioners is said to have defaulted in making further payments and the total amount outstanding to be paid as on the date of registration of the complaint was Rs.3,18,77,169.36. Since bills were not paid and the Company wanted to escape liability, the complainant registers the complaint. The registration of the complaint drives these petitioners to this Court in the subject petition.

5. This Court has stalled further investigation by gr