No prima facie case established against accused for financial transactions under IPC as the dispute is civil in nature.

ORDER :

SYAM KUMAR V.M., J.

1.This Criminal Miscellaneous Case is filed by these petitioners seeking to quash Annexure J FIR in Crime No. 790 of 2020 on the files of Hill Palace Police Station, Ernakulam City and to quash all consequential proceedings arising from Crime No.790 of 2020.

2. The petitioners are the accused in Crime No.790 of 2020 on the files of Hill Palace Police Station, Ernakulam City registered by the SHO upon a private complaint lodged by the 2nd respondent before the Judicial First Class Magistrate Court, Tripunithura. The offences alleged against the petitioners are under Sections 406, 417, 418, 420, 424 and120 B of the Indian Penal Code.

3. The prosecution case is that the 1st petitioner Company, incorporated on 04.05.2016 at Mumbai, had the 2nd respondent as its Managing Director at the relevant time. The 1st petitioner Company borrowed Rs.2.50 Crores from the 2nd respondent for the purpose of meeting financial requirements of the Company. The said amount was agreed to be repaid within 6 months along with interest at 6.75%. Upon failure to repay the said amount, the petitioners have been accused of committing the above mentioned offences.

4. Heard Sri.Millu Dandapani, the learned counsel for the petitioners, Sri.Saiby Jose Kidangoor for the 2nd respondent/de- facto complainant and Smt.Maya M.N, the learned Public Prosecutor.

5. It is contended by the learned counsel for the petitioners that the FIR did not disclose prima facie case or any offence against the petitioners. It is to be noted that the 2nd respondent initially approached the police and preferred Annexure A complaint. On preliminary enquiry, police found that the dispute arose out of a civil transaction and therefore, did not register any crime. Thereafter, the 2nd respondent approached the Judicial First Class Magistrate Court, Tripunithura and filed a private complaint.

6. It is submitted that, to meet the financial requirements for executing a project, the Company borrowed Rs.2.50 Crores from the 2nd respondent, who himself procured five post-dated cheques for Rs.2 Crores and executed an agreement fastening liability on the 1st petitioner Company. It is further submitted that the entire amount, except Rs.73,38,500/- has been repaid, which has been admitted by the 2nd respondent and is evident from the FIR itself. It is contended that no fraudulent or dishonest intention existed from the inception of transaction and, therefore, the essential ingredients of the offence of cheating under Section 420 IPC are not made out. Similarly, no amount borrowed from the 2nd respondent is fraudulently misappropriated, a small due in returning the amount does not constitute an offence under Section 406 .

7. It is submitted that in Annexure A complaint, the 2nd respondent has alleged that he was induced by petitioner Nos.2 to 5. However, it is pertinent to note that the Annexure B agreement was executed on 02.03.2019, and Annexure A complaint itself states that the alleged inducement by petitioners No.2 to 5 occurred on or around 02.03.2019. In this regard, it is significant that the 2nd petitioner joined the 1st petitioner Company as a Director only on 16.12.2019, much after the execution of Annexure B agreement. Likewise, the 3rd and 5th petitioners are not signatories to Annexure B agreement and there is no board resolution passed on behalf of the petitioner Company. Thus, the petitioners 2,3 and 5 have no personal knowledge of the transaction alleged in the FIR. Though one Sri.Manoj Mangattuthodi was a signatory to Annexure B agreement, no case has been registered against him, as he was granted protection under Clause 9 of the said agreement, which specifically provide