Criminal machinery cannot be applied to disputes primarily of a civil nature without clear evidence of fraud or deception at inception.

JUDGMENT :

MILIND N. JADHAV, J.

1. Heard Mr. Ghag, learned Advocate for Applicant; Ms. Gajare- Dhumal, learned APP for Respondent No.1 - State and Mr. Malik, learned Advocate for Respondent No.2/Intervener - First Informant.

2. This Anticipatory Bail Application is filed under Section 438 of Code of Criminal Procedure, 1973. Applicant apprehends arrest since he is named in FIR bearing No. 1448 of 2024 dated 21.12.2024 registered with Amboli Police Station for offences punishable under Sections 420 and 409 of the Indian Penal Code, 1860 (for short "IPC"). The FIR was transferred to Economic Offences Wing (EOW) Unit – 5, General Cheating III, Mumbai and re-numbered as CR No.74 of 2024.

3. Prosecution case emanates from the version narrated by Respondent No.2 – Complainant in the FIR. The version initiates in the backdrop of a Sole Selling Distribution Agreement dated 08.06.2023 (“Agreement” hereinafter) the terms of which, according to Prosecution, have been breached by Applicant. This breach led to termination of the Agreement by the counter party – Hunnar Jewels (Hereinafter “the Company”) on 07.11.2023. There was a Novation of Contract in May 2024 between parties. According to Complainant, there was breach committed thereafter. Prosecution asserts that Applicant was obligated, post to return back the gold stock received by him under terms of the Agreement/Novation back to Complainant Company. Prosecution alleges that Applicant refrained from returning back the balance gold stock and misappropriated the same. This led Respondent No.2 (CFO of the Complainant Company) to lodge the FIR on 21.12.2024. Charges are under Sections 409 and 420 of the Indian Penal Code 1860 (for short “IPC”).

4. Mr. Ghag, learned Advocate appearing for Applicant in support of the Application would submit that Applicant has abided by all terms and conditions of the Agreement and was consternated upon receipt of termination letter dated 07.11.2023 which, according to him, was sudden and unexpected. He would stress on the fact that the termination letter was the first instance of any communication between parties where possibility of termination was put forth by Complainant Company. He would submit that even in the prosecution complaint essential ingredients of Section 409 and Section 420 of IPC are not satisfied and hence there is no prima facie case made out whatsoever by prosecution against the Applicant. He would submit that even if there is a dispute raised due to any alleged breach, the same would be civil in nature since rights of parties are governed by terms and conditions of the Agreement which was terminated and Novation was exercised and therefore the Company should exercise remedy as recited in the agreement i.e. either referring the dispute to arbitration as per clause 16 of the Agreement or approach the Civil Court of appropriate original civil jurisdiction against Applicant. He would submit that invoking criminal action/offence in the alternative belatedly in such facts where rights of parties are governed by mutual agreement and terms of contract is impermissible as there is no element of deceit or fraud involved at the inception stage in the present case. In support of his above submissions, he would refer to and rely on the following decisions of the Supreme Court:-

(i) Jay Shri & Anr. Vs. State of Rajasthan, 2023 SCC OnLine SC 54 

(ii) Rikhab Birani & Anr. Vs. State of Uttar Pradesh, SLIP (Cri) No. 8592 of 2024 

(iii) Siddharam Satlingappa Mhetre Vs. State of Maharashtra and Ors. 2010 SCC OnLine SC 1375

5. PER CONTRA, Ms. Gajare – Dhumal Learned APP for Respondent – State would vehemently oppose the Application. She would s