The court ruled that an FIR cannot be registered under the Securities Contract (Regulation) Act without a written complaint, and mere allegations without evidence do not constitute criminal breach of trust.

ORAL ORDER

1. By way of this application under Section 482 of the Code of Criminal Procedure, 1973 (hereinafter referred to as “Cr.P.C.”), the applicant has prayed to quash and set aside compliant/FIR being C.R. No. 11191032220366 of 2022 registered with City Maninagar Police Station, Ahmedabad City for the offences punishable under Sections 406, 420 and 120B of IPC as well as Sections 23(e), 23(f), 23(g), 23(h), and 23(i) of the Securities Contract (Regulation) Act, 1957 and under Section 12A of the Gujarat Prevention of Gambling Act, 1887 and all the consequential proceedings arising therefrom.

2. The facts of the case are that the complainant, a police constable, received a message from the control room stating that, according to information provided by a private individual, a person was using a mobile application called Meta Traders 5 to trade in the stock market. Consequently, the respondent complainant raided the premises and lodged an FIR after taking the applicant to the police station.

3. Learned advocate for the applicant submits that the applicant has nothing to do with the offence and he is falsely implicated in it. It is submitted that there is a specific bar contained in Section 26 of the Act, and the Court could not have taken cognizance based on a police report in view of this bar. In the present case, in the absence of a complaint in writing filed before the appropriate court, the lower court took cognizance of the alleged offenses based on a police report, which is clearly in contravention of the provisions of Section 26. Therefore, the entire proceedings are illegal and liable to be quashed. It is further submitted that the allegations leveled against the present petitioner are far from the truth and do not constitute criminal breach of trust. In light of Section 26 of the Act, the lower court ought not to have taken cognizance of the offenses based on a police report. Therefore, the application may be allowed.

4. Learned APP has strongly opposed the present application and submits that the accused persons were engaging in trading in securities without a license or permission and without entering into a contract with SEBI, in violation of the provisions of the Act. During the raid, the police found accused persons at the scene of the offense, along with documents and other materials such as a computer, register, etc., as stated in the FIR. During the raid, the police discovered certain computer printouts containing codenames. As a result, the petitioner has committed criminal breach of trust and other offences under the Securities Contract (Regulation) Act . He therefore, requested to dismiss the present application.

5. Having heard learned advocates on both the sides and considering the fact, it appears from the complainant that on the complainant, a police constable, received a message from the control room stating that, according to information provided by a private individual, a person was using a mobile application called Meta Traders 5 to trade in the stock market. Consequently, the respondent complainant raided the premises and lodged an FIR after taking the applicant to the police station.

6. In view of the above, there is no direct evidence or material to suggest that there was any entrustment of property. The allegations in the complaint accuse the petitioner of engaging in fraud and misconduct, but nowhere is it alleged that he pocketed money by causing a loss to anyone or obtaining wrongful gain. Even if this fact is accepted, it constitutes merely a breach of the Securities Contract (Regulation) Act, which has been wrongly characterized as criminal breach of trust. Criminal breach of trust, as defined in Section 405 of the IPC, is as follows:

"Whoever, being entrusted with property, or having dominion over property, dishonestly misappropriates or converts that property to their own use, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which s