Criminal proceedings under S.406 and S.420 IPC cannot be sustained for simple breach of contract or failure to pay in commercial sales transactions; such disputes are essentially civil in nature, and using criminal law as a collection tool for recovery constitutes an abuse of the process of law.

THIS CRL.P IS FILED U/S.482 CR.P.C PRAYING TO QUASH IMPUGNED FIR IN CR.NO.212/2020 DATED 01.12.2020 REGISTERED WITH GIRINAGAR POLICE STATION, BENGALURU, VISHVESHWARAPURAM SUB-DIVISION FOR OFFENCES P/U/S 406, 420 AND 34 OF IPC ON THE FILE OF IV ADDL.C.M.M., NRUPATHUNGA ROAD, BENGALURU AND COMPLAINT DATED 01.12.2020 AT ANNEXURES - A AND B RESPECTIVELY QUA PETITIONER.

THIS PETITION IS COMING ON FOR ADMISSION, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR. JUSTICE RAVI V HOSMANI

ORAL ORDER

1. Challenging complaint/FIR in Crime no.212/2020 dated 01.12.2020 registered with Girinagar Police Station, Bengaluru, for offences punishable under Sections 406 & 420 read with Section 34 of Indian Penal Code, 1860 (IPC) on file of IV ACMM, Bengaluru, and for quashing complaint dated 01.12.2020 at Annexures-A and B respectively, this petition is filed.

2. Sri Sharath S Gowda, learned counsel for petitioner submitted, respondent no.2 was running business by name 'Trident Overseas Traders', Bengaluru and came in contact with petitioner through common friend Giridhar Prakash. During year 2020, a deal was struck for supply of 31,500 boxes of Medical gloves total for Rs.1,20,50,000/- of which half amount was to be paid within one week and remaining half, after supply of material. A sum of Rs.5,00,000/- was deposited into account of petitioner and therefore, a sum of Rs.45,00,000/- was deposited into account of one Neelesh Kumar Ramanlal. Prajapathi (Prajapathi). It was stated, petitioner had acted as a commission agent in transaction between respondent no.2 (complainant) and Prajapathi. On ground that there was non supply of goods and respondent no.2 was betrayed by petitioner, Prajapathi and Kuldeep Singh, complaint at Annexure-B was filed. It was submitted, entire reading of complaint only indicated that grievance of petitioner was about non supply of goods as per agreement and there was no allegation of any dishonest intention in entering into contract or dishonest intention in retaining money or misappropriation. Therefore, necessary ingredients either for offences under Section 406 or Section 420 of IPC were existed. Despite same, police have registered FIR against petitioner as accused no.1, Prajapathi as accused no.2 and Kuldeep Singh as accused no.3. Aggrieved thereby, this petition is filed.

3. At outset, it was submitted, petitioner having received commission as Agent had since refunded commission amount and same was also noted by this Court in ordersheet. Relying upon decision of Hon'ble Supreme Court in case of Delhi Race Club (1940) Ltd. & Ors. v. State of Uttar Pradesh & Anr. reported in (2024) 10 SCC 690 as well as Arshad Neyaz Khan v. State of Jharkhand & Anr. reported in 2025 LiveLaw (SC) 950, it was submitted that allegations of offences under Sections 406 and 420 could not co-exist. Therefore, complaint being registered for offences under Sections 406 and 420 against petitioner would be untenable and continuation of proceedings would amount to abuse of process of Court and sought for quashing.

4. Learned HCGP for respondent no.1-State, however opposed petition. It was submitted, reading of complaint would indicate that payment of Rs.40,00,000/- was made by complainant only after receipt of information by petitioner that goods were ready for delivery. Thus, there was inducement to make payment on basis of non-existent goods. In complaint, it was further stated that petitioner herein had sent videotape showing boxes with labels bearing name of complainant company as if to indicate goods were ready and would be delivered next day. Thi