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2026 Supreme(Guj) 1104
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
M.K. THAKKER, J.
Ritesh Bishwanath Kedia - Applicant
Versus
State Of Gujarat & Anr. – Respondents
R/Criminal MISC. Application (For Quashing & Set Aside FIR/Order) No. 11125 of 2021 With Criminal MISC. Application (For Vacating Interim Relief) No. 1 of 2022 With R/Criminal MISC. Application No. 12416 of 2021 With R/Criminal MISC. Application No. 7525 of 2022 With Criminal MISC. Application (For Vacating Interim Relief) No. 1 of 2022
Decided On : 13-04-2026
For the Applicant : Mr. Deep S. Chachan, Sudhanshu A. Jha, Mr Ashish Dagli, Mr Abhist Thaker.
For the Respondents: Mr Ronak Raval, Addl.Public Prosecutor, Mr Maulin Raval, Mr Gaurang Vaghela, Ms Priya Shah And Mr Darshan Bhojak for Raval & Trivedi Associates
Criminal proceedings involving commercial disputes should not be quashed when an FIR prima facie discloses evidence of planned fraudulent intent or a pattern of deceptive practices, as the court must avoid conducting a mini-trial at the threshold and allow the statutory investigative process to proceed.
Headnote:(A) Indian Penal Code, 1860 - Sections 406, 409, 420, 120B - Criminal Procedure Code, 1973 - Section 482 - Quashing of FIR - Business transactions - When allegations indicate a pattern of mass deception and fraudulent intent, criminal proceedings should not be quashed at the initial stage even if a contractual relationship exists. (Paras 9, 10.5, 11)
(B) Criminal Procedure Code, 1973 - Section 482 - Inherent powers of High Court - Scope of inquiry - Court must examine the allegations and materials for prima facie veracity without conducting a 'mini-trial' or evaluating evidence at the pre-trial stage. (Paras 10.2, 10.4)
Facts of the case:
The applicants sought to quash a criminal FIR concerning outstanding payments in commercial dealings. The complainant alleged that the applicants employed a deceptive business strategy involving initial payments to build trust, followed by mass defaults after procuring substantial quantities of goods, affecting numerous individuals. The applicants contended that the dispute was essentially civil, related to contractual defaults during a pandemic, and argued that insolvency proceedings rendered the criminal investigation an abuse of process.
Findings of Court:
The court found that while some disputes are purely civil, the presence of prima facie evidence of organized deceptive practices and consistent modes of cheating across multiple jurisdictions necessitates a full investigation. The court held that commercial relationships do not grant immunity from criminal prosecution if ingredients of cheating and breach of trust are disclosed.
Issues: Whether criminal proceedings originating from a commercial dispute should be quashed when the allegations suggest systemic fraudulent intent, and whether the court should intervene in an ongoing police investigation at the threshold stage.
Ratio Decidendi: Inherent powers are to be exercised sparingly and only in exceptional cases; where an FIR discloses prima facie commission of cognizable offences, the investigative process must not be obstructed, as the truthfulness of allegations is a matter for trial and not for preliminary quashing. Consistency in modus operandi towards multiple victims serves as a key indicator of fraudulent intent from the inception of contractual ties.
Result: Applications dismissed.
JUDGMENT :
M.K. THAKKER, J.
1 Since the issues raised in these applications are similar and arise out of the same FIR, they are being decided by this common judgment. The facts of Criminal Misc. Application No.11125 of 2021 are taken for the purpose of adjudication.
2 These applications are filed by the accused seeking quashment of the FIR registered with DCB Police Station, Ahmedabad City, being I-C.R. No.11191011210023 dated 13.03.2021, for the offences punishable under Sections 406, 409, 420 and 120B of the Indian Penal Code. As per the case of the complainant, Chintan Kishore Bhatiya, the proprietor of G.H. Enterprise, who is engaged in the business of readymade garments, he came into contact with Rajesh Baid, Ritesh Kedia and Manish Kakraniya in the year 2017–2018, who are the Directors of City Life Retail Pvt. Ltd., a Kolkata-based company.
2.1. As per the allegations made in the FIR, the accused persons used to visit Ahmedabad, select the goods and thereafter place orders. On placing such orders, they used to provide advance shipping notifications, and at times placed urgent orders. As per the terms of the business arrangement, a credit period of 120 days was agreed upon between the parties. Pursuant to the orders placed by the accused, the complainant supplied goods worth approximately Rs.1 crore, out of which an amount of Rs.40,59,397/- remained unpaid. It is further alleged that initially the payments were made regularly, however, subsequently the accused persons started delaying the payments. When the complainant approached the accused for the outstanding dues, he came to know that similarly about 44 other persons had also been duped by the accused persons by adopting the same modus operandi.
2.2. As per the allegations made in the complaint, the accused persons had opened about 100 shops in different parts of the country. It is further alleged that when the Garment Association blacklisted the company of the accused, namely City Life Retail Pvt. Ltd., the accused persons started a new business in the name of Sanvi Retail Pvt. Ltd. It is also stated by the first informant that several FIRs have been registered against the accused persons in different States. Since the accused persons failed to make payment for the goods supplied and thereby allegedly cheated the complainant, the offences under Sections 406, 420 and 120B of the Indian Penal Code came to be registered, and subsequently Section 409 of the Indian Penal Code was also added. All three applicants have approached this Court by filing separate applications seeking quashment of the aforesaid FIR.
3 Heard learned advocates Mr. Sudhanshu Jha, Mr. Ashish Dagli and Mr. Abhist Thaker for the respective applicants, learned advocate Mr. Maulin Raval for respondent No.2 and learned APP Mr. Ronak Raval for the respondent–State.
Submissions of learned advocate Mr. Sudhanshu Jha appearing for the applicant in Criminal Misc. Application No.11125 of 2021:
4 Learned advocate Mr. Sudhanshu Jha submits that the alleged offence is essentially a civil dispute which has been given the colour of a criminal proceeding. It is submitted that even if the allegations made in the FIR are taken at their face value and accepted in their entirety, the same do not constitute any cognizable offence warranting criminal prosecution.
4.1. Learned advocate Mr. Jha further submits that on a bare reading of the impugned complaint, it clearly emerges that the dispute pertains to contractual obligations which the accused could not fulfil due to the COVID-19 pandemic, and the same has been sought to be converted into a criminal offence. It is contended that the machinery of criminal investigation has been set in motion in a mala fide manner, and what is essentially a recovery dispute has been given the colour of a criminal case. It is further submitted by the learned advocate Mr. Jha that the implication of the applicants on the premise of vicarious liability qua the purchaser company is contrary to law and
