The court's inherent power to quash the FIR was exercised due to the peculiar facts of the case and the lack of establishment of criminal conduct in the realm of contracts.

1. The petitioners who are accused 1 and 2 seek to quash FIR in Crime No.501 of 2005 on the file of the 1st respondent for alleged offences under Sections 420, 465, 471, 468 r/w. 120(b) IPC.

2. The petitioner 1 and 2 are father and son. The 1st petitioner is the proprietor of M/s. Tropical Exports and is dealing in the business of purchase and sale of unclaimed and uncleared goods. Twenty sets of windmills of 20 KW capacity had remained uncleared with the customs authority since 1996 and in an auction conducted on 20.12.2003 for sale thereof, A1 purchased the same. He had paid a sum of Rs.2,50,000/- as advance. The auction has been conducted by the custodian (M/s. Sanco Trans Ltd.) and the balance was payable after the Commissioner of Customs confirmed the same. On receipt of confirmation letter dated 23.12.2003, A1 approached various parties towards effecting sale of the windmills as the items were huge and were difficult to store in any godown. The 2nd respondent/complainant was one of such persons approached and the letter of communication dated 23.12.2003 issued by the custodian was shown to him.

3. The 2nd respondent/complainant caused inspection of goods by his personnel and quoted Rs.1,60,00,000/- as sale price and on further negotiation, the consideration was arrived at Rs.1,30,25,000/- on 22.03.2004.Under letter dated 06.04.2004, the 2nd respondent/ complainant accepted the offer and issued a post dated cheque dated 08.04.2004 for Rs.25,00,000/-.The 2nd respondent/complainant addressed another letter dated 10.04.2004 referring to the offer of A1 for sale of windmills at a price of Rs.1,30,25,000/- and to the advance of Rs.25,00,000/-paid by him. Along with such letter the 2nd respondent/ complainant enclosed two cheques dated 12.04.2004 and 28.04.2004 respectively for sums of Rs.83,00,000/- and Rs.23,55,250/-.The cheque of Rs.83,00,000/- was duly honoured on presentation. The other cheque was returned for the reason payment stopped’. The 1st petitioner caused a legal notice on 03.05.2004 informing of possible action under Section 138 of the Negotiable Instruments Act. On receipt of such notice, the 2nd respondent/complainant entered into further negotiation with the 1st accused, as a result of which the same price was reduced by Rs.20,00,000/-.In keeping with such new agreement, the 2nd respondent/complainant issued two letters dated 06.05.2004, informing under one that the previous offer has been superceded and accepting the revised offer and under the other effecting payment of a sum of Rs.3,35,250/- towards final settlement.

4. After a string of transactions between the 1st petitioner and the 2nd respondent/complainant, the 2nd respondent/complainant has preferred a complaint on 03.05.2005 with the 1st respondent alleging that he was made to believe that the company of the 1st accused has purchased the windmill consignment for Rs.1,25,00,000/- at the customs auction and that he was shown a photocopy of the intimation letter from the custodian. He was led to believe that if he invested a sum of Rs.1,31,55,250/-, he would obtain substantial gains. The accused undertook responsibility to ensure sale of the equipment and impressed upon him the urgency to deposit a sum of Rs.25,00,000/- towards purchase price payable under the auction conducted. It also was impressed upon him that if the balance sum was not paid, the advance amounts paid by the 1st petitioner would be forfeited. The 2nd respondent/complaintant further informed the details of payments effected by him and that the goods were delivered to him and an invoice was raised by the concern of the 1st petitioner on 12.04.2004 for Rs.1,31,55,250/-.The 2nd respondent/ complainant further has stated that having a suspicion over the purchase amount payable by the 1st accused, he had stopped payment of a cheque of Rs.23,55,250/- and that the price was then reduced to Rs.1,11,30,250/-.

5. The explanation offered for delay in filing the complaint was that th