Allegations of dishonest misappropriation and breach of trust in contractual agreements can sustain criminal liability under IPC, irrespective of the civil nature of disputes.

ORDER :

J. Sreenivas Rao, J.

This Criminal Petition has been filed under Section 482 of the Code of Criminal Procedure, 1973 , (for short, ‘the Cr.P.C .) by the petitioners/accused Nos.1 and 2 seeking to quash the proceedings in Crime No.88 of 2020 of Central Crime Station, Hyderabad, registered for the offences under Sections 406 and 420 of the Indian Penal Code, 1860 (for short, ‘the IPC ’).

2. Brief facts of the case:

2.1. Respondent No.2 is the Managing Director of M/s. Madhava Hytech Infrastructures (India) Private Limited lodged a complaint stating that he entered into a subcontract agreement dated 24.01.2015 with the petitioners, who are the Managing Director and Director of M/s. Satya Kalyan Constructions Private Limited, for the construction of a bridge across the Hagari River on the Ravari–Belur State Highway (SH- 63) at Siriguppa, Bellary District, Karnataka. As per the terms of the agreement, respondent No.2 has to pay the bill amounts to the company of the petitioners after deducting 5% service charges. The substantial amounts were transferred through bank transactions under running Bills Nos. B(10), B(11), and B(12) for purchase of 329.374 tons of TMT, 30 tons of HT Steel, for construction of ramp/embankment for bridge approach and proposing recovery of Rs.1,65,05,006/- is being recovered from the running account bills.

2.2. However, the petitioners purchased lesser quantities of steel and other materials and diverted the same to their private projects. The petitioners have also failed to execute the agreed work and dishonestly retained certain construction equipment, such as, hydraulic jacks, shutter vibrators, chain pulleys, and other accessories worth approximately Rs.21 lakhs.

2.3. Respondent No.2 further stated that despite receiving an amount of Rs.3,86,36,723/-, the petitioners did not complete the work and have caused a loss of Rs.2,99,32,858/- to him. The petitioners by playing fraud had caused loss to a tune of Rs.3,20,32,858/- to his company. Basing upon the same, he filed a complaint before the Central Crime Station, Hyderabad, which was registered as Crime No. 88 of 2020 on 31.07.2020 for offences punishable under Sections 406 and 420 of the IPC .

3. Heard Mr. V. Murali Manohar, learned counsel, representing Mr. G. Vamshi Krishna, learned counsel for the petitioners, Mr. B. Nalin Kumar, learned Senior Counsel, representing Mr. K. S. Rahul, learned counsel for respondent No.2, and Mr. M. Vivekananda Reddy, learned Assistant Public Prosecutor appearing for respondent No.1 State.

4. Submissions of the learned counsel for the petitioners:

4.1. Learned counsel submitted that the petitioners have not committed any offence and there are no specific overt acts or instances against the petitioners to attract the ingredients under Sections 406 and 420 of the IPC . He further submitted that the nature of the allegations made in the complaint are purely civil in nature, arising out of a contract agreement dated 24.01.2015 entered by respondent No.2 company with the petitioners’ company namely M/s. Satya Kalyan Constructions Pvt. Ltd., represented by its Managing Director, in respect of construction o