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2025 Supreme(Online)(Chh) 10275
IN THE HIGH COURT OF CHHATTISGARH AT BILASPUR
Ramesh Sinha, CJ, Bibhu Datta Guru, J
Rajesh Sharma – Appellant
Versus
State of Chhattisgarh – Respondent
CRMP No. 2705 of 2024 | CRMP No. 2723 of 2024 | CRMP No. 2708 of 2024
For the Petitioners: Shri Aman Saxena
For the Respondents: Shri Hariom Rai
A dispute arising from a commercial transaction cannot constitute a criminal offense without evidencing criminal intent; such matters should be adjudicated in civil courts.
Headnote:(A) Indian Penal Code, Sections 409, 420, 120-B - FIR filed against Directors of Company alleging cheating and criminal breach of trust in business transactions. The petitioners contested the FIR on grounds of being merely related to a civil dispute, with payments made exceeding Rs. 18 crores for supply of goods. - The court found the allegations insufficient to establish criminal intent, emphasizing the jurisdiction of civil courts for such disputes. (Paras 3, 8)
(B) Dispute Nature - The court ruled that disputes arising from business transactions should not be confused with criminal prosecutions unless clear criminal intent can be established. Business disputes should be resolved in civil courts rather than through criminal proceedings. (Paras 8, 9)
Facts of the case:
The petitioners, directors of a steel company, were accused of cheating by failing to pay a significant debt owed to the complainant's company concerning an ongoing commercial transaction. However, they contended the dispute was civil.
Findings of Court:
The court identified the FIR as an attempt to frame a civil dispute as a criminal matter, and quashed the FIR, asserting that legal recourse for the complainant lies in civil court.
Issues: The primary issue was whether the allegations constituted a criminal offense or were purely a civil dispute.
Ratio Decidendi: The court reaffirmed that to establish cheating, there must be demonstrable evidence of intent to defraud from the outset, which was not present in this case, and issues of monetary recovery are to be resolved in civil courts.
Result: All petitions stand allowed. The FIR was quashed.
| Table of Content |
|---|
| 1. description of parties and overview of allegations. (Para 3) |
| 2. court's finding on civil nature of dispute. (Para 7) |
Per Ramesh Sinha , Chief Justice
18.08.2025
1. Since all the petitions arising out of same crime number, they are being considered and decided by this common order.
2. The present Cr.M.Ps have been filed with the following prayer:-
“1. It is, therefore, prayed that this Hon'ble Court may kindly be pleased to quash and set aside the impugned First Information Report (F.I.R) No 0447/2024 dated 17.06.2024 (Annexure-P/1) filed by the Respondent at Police Station Telibandha, Dist. Raipur (C.G) whereby the Petitioners have been accused of offences punishable under Sections 420 and 409, 120-B of the Indian Penal Code , as per FIR, in the interest of justice.
2. That the entire record of the aforementioned case be called for just decision in the case.
3. This Hon'ble court may pass any other order that it deems fit in the interest of justice, equity and good conscience.”
3. (A) Learned counsel for the petitioners would submit that the petitioners are Directors at Satya Iron and Steel Pvt. Ltd. and the complainant/respondent No.3, namely, Anup Agrawal, Director of Sarvmangla Infrabuild Pvt. Ltd. He further argued that the petitioners Company and complainant Company regularly sell and purchase steel goods (Mild Steel Blade) to produce finished goods (Mild Steel Pipes). The petitioners Company till date has paid upwards Rs. 18 crores towards the dues to the complainant Company and directly to other vendors as directed by the complainant Company. The petitioners Company has also supplied finished goods to the complainant Company.
(B) Learned counsel submits that the complainant on 17.06.2024 has lodged the FIR under Section 409 , 420 read with Section 120-B of the Indian Penal Code (IPC) with an averment that the present petitioners along with other co-accused, Rakesh Sharma (brother of petitioner No. 1), Prince Sharma (son of petitioners) and Kushal Dudeja (broker), with an intention to cheat the complainant, purchased steel goods (Mild Steel Blade) to produce finished goods (Mild Steel Pipes). The complainant in the FIR further alleged that the Company of the present petitioners along with other co-accused have not made the payment to the tune of Rs. 10,17,00,797. Therefore, by non-payment of the balance amount, the Company has caused a loss of Rs. 10,17,00,797/- to the Company of the complainant, and therefore, the petitioners have committed cheating and criminal breach of trust on account of their failure to make payment for the aforesaid balance amount.
(C) Learned counsel for the petitioners states that the petitioner, namely, Rakesh Sharma in CRMP No. 2708 of 2024 is the brother of co-accused Rajesh Sharma. The petitioner/Rakesh Sharma is not a Director or an employee at accused Company, he has already partitioned way back on 15.06.2009 and has been living separately from the rest of the family and is not involved in business with any other family members. Similarly, the petitioner, namely, Prince Sharma in CRMP No. 2723 of 2024 is son of co-accused, namely, Rajesh Sharma and Anju Sharma, who are Director at Satya Iron and Steel Pvt. Ltd. The petitioner/Prince Sharma is merely a student who was studying at Mumbai in Mithibai College of Arts, Chauhan Institute of Science and Amrutbhen Jivanlal College of Commerce and Economics. He also submits that when the present transaction was ongoing, the petitioner/Prince Sharma is not a Director or an employee at their parents Company. It is further contended by the learned counsel for the petitioners that the dispute between the petitioners and the complainant is purely commercial transaction of civil in nature and no criminal offence is made out aInstitute of Science and Amrutbhen Jivanlal College of Commerce and Economics. He also submits that when the present transaction was ongoing, the petitioner/Prince Sharma is not a Director or an employee at their parents C
