Civil and criminal proceedings can coexist if a prima facie case of criminal offense exists, despite underlying commercial nature.

ORAL ORDER

IN CRL.P.NO.2320 OF 2025:

The petitioners who are accused Nos.1 and 2 stand at the doors of this Court calling in question registration of a crime in Crime No. 476 of 2024 for offence punishable under Sections 316 (2) and 318(4) and 3(5) of the BNS which are Sections 406 , 420 and 34 of the IPC , the earlier regime.

2. Shorn of unnecessary details, facts in brief germane, are as follows:

2.1. The petitioners and the 2^nd respondent have a transaction. The transaction is a distribution agreement between the two. The petitioners are Directors of one M/s Sterne India Pvt. Ltd., a Company involved in the business to business commerce venture that helps physical stores by using technology to offer 10 times larger product selection and better prices on over 10,000 products from more than 100 brands. The Company runs a platform in the name and style of “Arzooo”. The Company enters into a distribution agreement with the complainant for sale of products that the 2^nd respondent would manufacture through the platform “Arzooo”. After dealing with the complainant for about 3 years, the business goes wrong for the reason that the stock of ₹ 8.3 crores taken from the hands of the 2^nd respondent, for sale in the platform Arzooo, though were sold, the proceeds of sale of the products never reached the petitioners. But the allegation is that, the petitioners have purchased properties from the sale proceeds of the products of the complainant. Based upon the said Act of the petitioners, a complaint comes to be filed by the complainant which becomes a crime in Crime No. 476 of 2024 for the aforesaid offences.

2.2. The moment the crime is registered, the petitioners knock at the doors of this Court on 24-02-2025 and the co- ordinate bench of this Court has granted an interim order of stay. Therefore, the investigation has not taken place in the case at hand. The matter is thus heard at this stage.

3. Heard Sri Pradeep Gundappa B attur, learned counsel appearing for petitioners, Sri .N.Jagadeesha, learned Additional State Public Prosecutor appearing for respondent No.1 and Sri Dilip Kumar I.S., learned counsel appearing for respondent No.2.

4. The learned counsel appearing for the petitioners would vehemently contend that the ingredients of Section 316 (2) or 318(4) of the BNS is ostensibly absent in the case at hand, as it was a business transaction between the petitioners and the 2^nd respondent. If the petitioners had intention to defraud or cheat the complainant, they would not have transacted with the respondent/complainant for over 3 years and to the tune of ₹40 crores. The learned counsel submits that it is purely a matter which is arising out of a financial transaction and has been dressed with a colour of crime. This must not be permitted to be continued, as it would become an abuse of the process of the law.

5. The learned counsel appearing for the 2^nd respondent, complainant submits that generally if the transaction would go wrong, it would undoubtedly become a case of financial transaction having gone wrong. In the case at hand, it is the case of the complainant that accused wanting to defraud the complainant has misappropriated the fund, though it may not be since inception, but in a particular transaction and submits that these petitioners are facing proceedings all over the Nation on identical acts of hoodwinking the agreement holders through the distribution agreement and selling goods through the platform Arzooo. In that light, both the learned Additional State Public Prosecutor and the learned counsel for the complainant would seek dismissal of the petition.

6. I have given my anxious consideration to the submissions m