Criminal proceedings against individuals in a contractual dispute must establish criminal intent; otherwise, matters should be addressed through civil litigation, preventing abuse of legal process.

ORDER :

SACHIN SHANKAR MAGADUM, J.

This petition is filed by the petitioner - sole accused seeking quashing of the proceedings pending in Crime No.0303/2024 for the offences punishable under Sections 506 and 420 of Indian Penal Code, 1860 on the file of the VII Additional Chief Metropolitan Magistrate Court, Nrupatunga Road, Bangalore.

2. The gist of the complaint is that respondent No.2 – a Private Limited Company entered into a sale–purchase agreement with Jambu Odisha Trade Private Limited, of which the present petitioner–accused is one of the Directors. The principal allegation of respondent No.2, as the complainant, is that despite the execution of the agreement between the two companies, Jambu Odisha Trade Private Limited, after receiving delivery of 20,000 Metric Tonnes of Iron Ore Fines, failed to deliver the same to the complainant. On the strength of this allegation, respondent No.2 lodged a written complaint before the jurisdictional Police Station, asserting that the company and its officials had committed offences punishable under Sections 420 and 506 of the Indian Penal Code. Acting on the said complaint, the jurisdictional police registered a crime against the accused.

3. Aggrieved by the initiation of criminal proceedings, the petitioner, who is a Director of Jambu Odisha Trade Private Limited, has approached this Court by way of the present petition seeking quashing of the proceedings. The challenge is laid primarily on two grounds: (i) That the petitioner, merely by virtue of being a Director, could not have been prosecuted unless the company itself was arrayed as the principal accused; and (ii) That a plain reading of the written complaint demonstrates that the dispute, at its core, arises out of a contractual transaction, and therefore, Respondent No.2 was not justified in giving a civil dispute the colour of a criminal prosecution.

4. Per-contra, learned Senior Counsel appearing for respondent No.2 has sought to justify the registration of the crime on the basis of the written complaint in its entirety. It is submitted that the materials placed on record disclose sufficient grounds to infer that the petitioner harboured a dishonest intention to cheat respondent No.2 at the inception of the transaction, thereby attracting the ingredients of the alleged offences.

5. Having heard learned counsel for the parties as well as the learned High Court Government Pleader, this Court has bestowed its anxious consideration on the rival contentions and has carefully examined the judgments rendered by the Hon’ble Supreme Court in S.N.Vijayalakshmi v. State of Karnataka, [AIR 2025 SC 3601] and in Shailesh Kumar Singh @ Shailesh R. Singh v. State of Uttar Pradesh & Others, [2025 INSC 869]. Before delving into the merits of the matter, this Court considers it apposite to reproduce paragraph Nos.6 to 9 of the written complaint, which read as follows:

"6. Jambu's director Mr.Sailen Dass visited our corporate office on 21^st December, 2023 to meet to our directors and we entered into two new contracts:

i) 20,000 MT IOF (Fe 55%) for Rs.2200/MT (delivery within 20 working days) (Offer copy and Performa invoice attached as Annexure 5)

ii) 3,000 MT IOF (Fe 57%) for Rs.5800/MT (delivery within 7 working days from mining permit) (Offer copy and Performa invoice attached as Annexure 6)

iii) We also sent purchase orders on 21^st December 2023 specifying the urgent delivery terms of 7 working days (Purchase Orders as Annexure - 7).

7. Between December 21^st 2023 and January 10^th 2024, we made further payments to Jambu despite their continued delays and promises of material delivery. (Bank statement attached as Annexure 8 for each payment).

8. On January 3^rd 2024, they offered 5400 MT ready stock at yard (Fe 55%) f