A mere breach of contract does not constitute criminal liability unless fraudulent intent is established; criminal proceedings cannot be used to exert pressure in civil disputes.

Order :

FARJAND ALI, J.

1. By way of filing this instant Criminal Miscellaneous Petition under Section 482 of the Code of Criminal Procedure, the petitioner seeks quashing of F.I.R. No. 53/2021, registered at Police Station Pachpadra, District Barmer, for alleged offenses under Sections 420 and 406 of the Indian Penal Code, 1860, on the ground that the allegations made in the FIR are false, baseless, and do not disclose the commission of any cognizable offense, thereby amounting to an abuse of the process of law.

2. The brief facts of the present case are that the petitioner no.1 is the proprietor of D.S. Enterprise (hereinafter referred to as “DSE”), a firm engaged in civil construction work, and petitioner no. 2 is the power of attorney holder of the firm. DSE was awarded the civil work contract for the Barmer- Palanpur Pipeline Project by Hindustan Petroleum Corporation Limited (HPCL) at the Barmer Dispatch Terminal, amounting to Rs. 23,06,16,963/-. Upon securing the contract, DSE commenced mobilization activities at the project site. Subsequently, the complainant introduced himself as the proprietor of M/s. Godara Infratech & Power Industries (hereinafter referred to as “GIPI”) and expressed interest in executing the contract work.

3. Pursuant thereto, an Internal Memorandum of Financial Understanding (IMOFU) was executed between DSE and GIPI on 18.12.2012, followed by another IMOFU on 22.12.2012. As per these agreements, GIPI undertook the responsibility of arranging finances for the entire project and agreed to indemnify DSE against any liabilities arising therefrom. Additionally, GIPI was required to pay a 3.5% royalty to DSE, of which 2% was paid, while the remaining 1.5% was to be deducted from bills. However, GIPI failed to fulfill its obligations, resulting in delays in project execution. Consequently, DSE received notices from Mecon Limited on 12.11.2020 and 08.12.2020 and a letter from HPCL on 09.01.2021 regarding slow progress. Ultimately, GIPI halted the work entirely on 06.01.2021.

4. Despite multiple meetings between DSE and GIPI representatives on 06.01.2021, 07.01.2021, 09.01.2021, and 10.01.2021, urging resumption of work, GIPI failed to comply. When DSE attempted to undertake the work, the complainant allegedly obstructed entry, issued threats, and resorted to coercion by forcefully seizing documents and endangering the lives and property of DSE staff. In light of these developments, DSE suffered financial setbacks and issued a letter to GIPI on 12.01.2021, highlighting an investment of Rs. 1.05 crore and an outstanding amount of Rs. 33 lakhs. Notices dated 27.01.2021 and 02.02.2021 were subsequently issued, seeking compensation for the delay and non-payment of dues.

5. Due to GIPI’s continued non-performance, HPCL terminated the contract on 12.03.2021, leading to the forfeiture of DSE’s bank guarantee and withholding of retention money. It has been stated by the petitioners that instead of fulfilling its financial obligations, the complainant filed an FIR at Police Station, Pachpadra against petitioner no. 1, leveling allegations against petitioner no. 2 regarding the non-opening of an escrow account, despite the IMOFU stipulating that the escrow account would be operational from RA Bill 4.

6. Upon investigation, the police authorities found the dispute to be civil in nature. Subsequently, a settlement was proposed, wherein DSE was to issue an NOC to HPCL, and GIPI was to pay Rs. 22,92,624/-, inclusive of GST. The settlement terms were confirmed by GIPI via WhatsApp and email on 03.06.2021 and 04.06.2021, respectively. However, when DSE’s representatives arrived in Pachpadra on 15.06.2021 for execution of the settlement agreement, the complainant and his associates allegedly confined them unlawfully and coerced them into signing the NOC under duress. Thereafter, the complainant reneged on the settlement terms.

7. The petitioners asserted that the impugned FIR was filed as a means to exert undue pressure, particul