Heard Shri A. M. Nabira, Advocate for the petitioners & Shri D.P. Lalwani, Advocate for the respondent.

2. This petition has been filed under article 227 of the Constitution of India read with section 482 of the Criminal Procedure Code seeking quashing of the order of issuance of process against the petitioners. It may be stated that the respondent has preferred a Criminal Complaint No.326/2005 in the court of J.M.F.C. Nagpur The complaint was for the offences punishable under section 406, 420, read with section 34 of I.P.C. It was alleged that the petitioners – accused have committed criminal breach of trust and caused financial losses to the respondent – complainant by not refunding security deposit amongst other allegations. The process was issued against the petitioners by the order dated 1.9.2007 passed by the learned J.M.F.C. Nagpur. Petitioners are challenging that order. Petitioners also seek quashing of the proceedings in Criminal Complaint Case No.326/2005.

3. Brief facts which need to be noted are that – the respondent – complainant and the petitioners are business firms. They entered into Distributorship Agreement on 31.12.2002 for distributing goods of the petitioner no.1 company in some parts of Maharashtra. Petitioner no.2 is the director of petitioner no. 1 which is a registered company. It is alleged that respondent approached with the proposal for carrying on the business of the distribution of the goods marketed by the petitioners. It is alleged that thereafter, there were some disputes between parties; so also exchange of notices and even civil suit was filed by the respondent – (complainant). Respondent – complainant also filed a criminal complaint as stated above for the aforesaid offences. When the said complaint was filed, the learned Magistrate initially called report under section 202 of Cr.P.C. After hearing the complainant, perusing his verification statement and report under section 202 of Cr.P.C., he issued process against the petitioners for the offences under section 406 and 420 of the I.P.C. This order dated 1.9.2007 is challenged in this petition. The quashing of the complaint case proceedings instituted by respondent – complainant is also sought.

4. Learned counsel for the petitioners – Shri Nabira submitted that there was an agreement of business between the parties. The bank guarantee was also to be furnished by the respondent. The agreement of business with all details was entered into between the parties on 31.12.2002. Thereafter, there was exchange of letters and notices between the parties. Respondent also filed Civil Suit for recovery of the due amount against the petitioners. The suit was for recovery of rupees nine lacs and odd bearing Civil Suit No.1032/2005. Almost simultaneously respondent – complainant filed the instant complaint against the petitioners for the aforesaid offences. It is further submitted that that the transaction between the complainant and the petitioners was of commercial & civil nature and therefore, there could not be any offence under section 420 or section 406 of the Indian Penal Code. According to him, as it was a matter of civil nature, criminal complaint would not lie. The same should not have been entertained by the learned Magistrate. According to him; the order of issuance of process was totally illegal. It causes prejudice and it is clearly abuse of process of law inasmuch as the matter between the parties is of civil nature and in fact civil suit was filed. Criminal complaint proceedings instituted against the present petitioners is one of the coercive method for getting success in the civil suit. It is also submitted by him that Director of the petitioner's company never signed any agreement and therefore, Director is not liable for any criminal offence. It is also his submission that during the exchange of correspondence and even notices there was no wh