The power to quash criminal proceedings should be exercised sparingly, and a prima facie case for trial must be made out before interference under Section 482 of the Code of Criminal Procedure.

JUDGMENT

Amit B. Borkar, J. - This is an application under Section 482 of the Code of Criminal Procedure challenging registration of First Information Report No.86/2018 with the non-applicant No.1 -Police Station dated 19/02/2018 for the offence punishable under Section 406 of the Indian Penal Code.

2. The First Information Report came to be registered against the applicants and others with the accusation that the cotton supplied by the non-applicant No.2 to the applicants was converted into thread and as per the agreement dated 07/09/2013, in case of failure on the part of the applicants to repay the amount of cotton supplied by the non-applicant No.2 to the applicants, the applicants were prohibited from selling cotton yarn manufactured and supplied by the non-applicant No.2. With these accusations, it is alleged that the cotton entrusted by the non-applicant No.2 with the applicants had been dishonestly converted into own property by the applicants and have sold it in the market contrary to the agreement between the non-applicant No.2 and the applicants.

3. The applicants, therefore, have challenged registration of First Information Report by way of present criminal application. This Court on 07/06/2018 issued notice to the non-applicants. The non-applicant No.2 in pursuance of the notice issued by this Court, has filed reply. It is stated that the applicants had specifically agreed that they shall not sell cotton supplied by the non-applicant No.2 without written permission of the non-applicant No.2. It is further stated that various cheques which have been issued for repayment of the cotton supplied by the non-applicant No.2 to the applicants, have been dishonoured. There is civil suit for recovery of said amount filed before the Civil Judge Senior Division, Nagpur bearing Special Civil Suit No.610/2017 which is pending. It is further stated in para 9 of the reply that the applicants are in-charge of day to day affairs of M/s. Subburaj Spinning Mills Pvt. Ltd. and have dishonestly used and disposed of cotton supplied by the non-applicant No.2. Therefore, prima facie, ingredients of the offence punishable under Section 406 of the Indian Penal Code are made out.

4. The non-applicant No.1 has also filed reply and it has been stated in the reply that the applicants had purchased cotton worth Rs. 17,07,44,417/- and towards repayment of the said cotton, initially, the applicants had paid an amount of Rs.13,85,88,285/- to the non-applicant No.2. However, the applicants failed to repay balance amount of Rs.3,21,56,172/-. It is further stated that in pursuance of the contract between the applicants and the non-applicant No.2, the applicants were supposed to manufacture yarn out of cotton supplied by the non-applicant No.2 and pay amount to the applicants which the applicants have failed to repay the same. It is stated that the applicants had given false assurance to the non-applicant No.2 that they will manufacture yarn out of cotton supplied by the non-applicant No.2 and will refund the said amount to non-applicant No. 2 but the applicants failed to repay the said amount to the non-applicant No.2.

5. We have carefully considered the contents of the First Information Report and the replies filed by the non-applicant No.1 and the non-applicant No.2. On meaningful reading of the First Information Report, it appears that the principal accusation of the non-applicant No.2 against the applicants is that the applicants were not supposed to sell the cotton yarn manufactured out of cotton supplied by the non-applicant No.2 without written permission from the non-applicant No.2. The allegation of the non-applicant No.2 is to the effect that the applicants have dishonestly converted cotton supplied by the non-applicant No.2 to the applicants and have sold it in the open market without written permission from the non-applicant No.2.

6. The scope and reach of the powers of this Court under Section 482 of the Code of Criminal Procedure in entertaini