Sri Anish Bansal vs. The State Of Karnataka
Original PDF →Both these petitions arise out of a solitary crime registered in Crime No.211 of 2026 for offences punishable under Sections 61(2), 316(5), 318(4), 336(3), 338, 340(2) r/w 3(5) of the BNS, pending before the III Additional Chief Judicial Magistrate, Bengaluru. Petitioners in Criminal Petition No.7411 of 2026 are accused Nos.1 and 2 and the petitioners in Criminal Petition No.7492 of 2026 are accused Nos.3 to 6. 2. Heard Sri Sandesh J. Chouta, learned senior counsel appearing for the petitioners in Criminal Petition No.7411 of 2026 and petitioner Nos.2 to 4 in Criminal Petition No.7492 of 2026, Sri Balagopal Menon, learned counsel appearing for petitioner No.1 in Criminal Petition No.7492 of 2026, Sri B.N. Jagadeesha, learned CORAM: THE HON'BLE MR JUSTICE M.NAGAPRASANNA
6 State Public Prosecutor-1 appearing for respondent No.1 and Sri K.N. Phanindra, learned senior counsel appearing for respondent No.2 in both the cases.
The facts, in brief, would be narrated hereunder with reference to the averments made in Criminal Petition No.7411 of 2026, which are common in the other criminal petition as well.
The 2nd respondent is the complainant. A complaint comes to be registered on 15-05-2026, alleging that the relationship between the complainant and the petitioners were built on mutual trust and deteriorated into financial irregularities due to concealment of material facts from investors and unilateral actions by accused No.
The financial diversion and fraud involving accused No.1, his wife - accused No.2 and other co-accused are also alleged. The fulcrum of the allegation was that petitioner No.2 in the subject petition operates a sole proprietary concern called M/s RCPC, which is in the same line of business as the complainant. This was never disclosed to the Board and the operations went on between June, 2022 and April, 2024. M/s RCPC had purchased 16 platform subscriptions, where all payments were routed through the
7 personal UPI handles of accused No.
Several of these transactions are said to have been underpriced or activated entirely free of cost bypassing the company’s internal payment dashboards to conceal the transactions. Therefore, there was a concealment of transactions.
A forensic audit report is said to have been generated, which highlighted siphoning of ₹11.90 lakhs in one of the transactions under the false head of marketing expenses through fabricated proof of service and invalid email domains. Therefore, these were branded as ghost consultants, as ₹2.27 lakhs were shown as payment towards payroll without there being any CRM activity or attendance records. Another consultant on the same line was paid ₹5.69 lakhs through private arrangement, which is omitted in the Monthly Information System that was submitted to the investors. Detailed testing of 46 sample transactions revealed ₹49.98 lakhs adverse findings and ₹41.27 lakhs missing contracts either backdated or deliberate pattern of under-reporting expenses in investor reports. Based upon the said allegations, the accused are drawn into the web of proceedings by the complainant. The
8 crime comes to be registered on 15-05-2026. Even before the ink on the crime could dry, the subject petitions are preferred on 25th May, 2026 and 01st June, 2026. 3. 3. Owing to the submissions of the learned senior counsel and the learned counsel representing the petitioners, a coordinate bench of this Court grants an interim order of stay on 26-05-2026 in Criminal Petition No.7411 of 2026 and in the other petition, this Court has granted interim order on 10-06-2026. The parties were directed to explore the possibility of a settlement, if it could be, in terms of an order dated 24-06-2026 and the parties thereafter reported that there is no settlement in the light of the allegations being serious. Therefore, the matters are heard on their merit.
The learned senior counsel Sri Sandesh J.Chouta appearing for the petitioners, except for Sri Anish Bansal, accused No.3 would vehemently contend that a pure and simple financial transaction between the parties is projected to become a crime. This is sans countenance in the light of a plethora of judgments rendered by the Apex Court that a commercial transaction cannot be given a colour of crime. The learned senior counsel would submit that the
9 complaint allegations, even if taken as correct, would not amount to any of the offences that are now alleged. He would submit that the remedy available to the complainant was to register a complaint under the Companies Act, 2013 ('the Act' for short) before the Serious Fraud Investigation Office and not to invoke the penal provisions under the BNS. He would submit that the allegations that are now alleged are identical to those that could be alleged under the Act and would take this Court through a comparative table depicting the provisions of the Act and the BNS both being identical. Therefore, learned senior counsel would submit that the Act should have been invoked and not the provisions under the BNS.
The learned counsel Sri Balagopal Menon appearing for accused No.3/petitioner No.1 in Criminal Petition No.7492 of 2026 would adopt the submissions made by the learned senior counsel.
Per contra, the learned senior counsel Sri K.N. Phanindra representing the complainant would submit that the crime is registered on 15-05-2026. Even before any investigation could commence, the petitioners are before this Court. The allegations
10 would clearly indicate cognizable offences. If they are cognizable offences, without a speck of investigation, this Court should not interfere at the stage of crime. Whether it involves financial transactions or otherwise, is a matter which can be deciphered only when a charge sheet is filed against the petitioners. Merely because invocation of provisions under the Act is available, it would not mean that penal provisions under the BNS must not be invoked. He would submit that the petitioners have systematically indulged in defrauding the company by allegedly routing payments through their private companies. He would submit that the complaint is in great detail projecting forensic reports, albeit in the draft stage, by Deloitte and legal notices issued on the basis of the said report.
The learned State Public Prosecutor-1 Sri B.N. Jagadeesha would also seek dismissal of the petitions contending that this is not a stage at which this Court should interfere, particularly when there is a report, which clearly holds against the petitioners.
I have given my anxious consideration to the submissions made by the respective learned counsel and have perused the material on record.
11
The afore-narrated facts and link in the chain of events are what is averred in the petitions. The issue lies in a narrow compass. Respondent No.2 registers a complaint on 15th May, 2026. Since the entire issue has triggered from the complaint, I deem it appropriate to notice the same. It reads as follows:
“To
Date: 15 May 2026
Station House Officer, HSR Layout Police Station Sector 1, HSR Layout, Bengaluru, Karnataka 560102
Subject: Written complaint seeking registration of FIR and investigation against Mr. Kanishk Shukla and others under Sections 61(2), 316(5), 318(4), 336(3), 338, 340(2) and 3(5) of the Bharatiya Nyaya Sanhita, 2023, in respect of cognizable offences of criminal conspiracy, criminal breach of trust by agent, cheating, forgery and use of forged documents, committed in Bengaluru in the affairs of M/s Expertia AI Technologies Private Limited, with manifest dishonest intent to defraud its shareholders, investors and vendors.
Dear Sir,
The present complaint is being filed by Mr. Akshay Gugnani, S/o Sanjeev Gugnani, aged about 30 years, Co-founder, Director and Shareholder of M/s Expertia AI Technologies Private Limited, R/o B-74, Soami Nagar, New Delhi - 110017, also residing at 4102, Sobha Cinnamon and Saffron Apartment, Silver County Rd, Lakedew Residency- Phase 2, Bengaluru, Karnataka 560068, Mob. No. +91-9962644521, Email: akshay@expertia.ai, akshaygugnani@gmail.com (hereina fter referred to as the "Complainant"), against the following persons:
12 Accused No. 1 (Principal Accused):
Mr. Kanishk Shukla, S/o Mr. Ramesh Shukla, Co-founder and Chief Executive Officer of M/s Expertia AI Technologies Private Limited, R/o B604, The Central Regency Address apartment, Ambalipura - Sarjapur Road, 34, Bellandur Main Rd, Bellandur, Bengaluru, Karnataka 560103 and previously residing at 2081, Sobha Iris, Bellandur, Bengaluru 560103, Karnataka. Mob. No. +91-99000 66024, +91-9910069892; Email: kanishk@expertia.ai, kanishk.shukla@gmail.com (hereina fter referred to as "A-1" / "Kanishk").
Other Persons Involved (proposed accused, subject to investigation):
(a) Mrs. Ruchi Shukla (maiden name: Ruchi Chaturvedi), wife of A-1, sole proprietor of M/s RC Project Consultancy ("RCPC");
(b) Mr. Anish Bansal, Finance Consultant, Expertia, and a person having a personal and professional association with A-1 spanning approximately over a decade dating back to A-1's earlier venture in or around 2008;
(c) Mr. Anil Kumar Bhat C, Senior Sales Manager, Expertia, and a person having a personal and professional association with A-1 spanning approximately over a decade dating back to A-1's earlier venture in or around 2008;
(d) Mr. Chandra Sekhar H.N., father of Anil Kumar Bhat C and purported “marketing consultant” of Expertia;
(e) Mr.Ramesh Singh B, purported “marketing consultant” of Expertia;
(f) Ms. Krishna Bipin Vyas, purported "consultant" of Expertia;
(g) such other persons as may be revealed during the course of investigation.
The Complainant most respectfully submits as under:
M/s Expertia AI Technologies Private Limited ("the Company" / "Expertia") is a private limited company
13 incorporated in 2020 under the Companies Act, 2013, with its registered office at 677, 1st Floor, Suite No. 621, 27th Main, 13th Cross, Sector 1, HSR Layout, Bengaluru, Karnataka – 560 102. The Company is engaged in the business of providing an AI-driven SaaS recruitment platform.
The Complainant and A-1 are the only Co-founders and Directors of the Company. The Company has, since incorporation, raised aggregate external investment of approximately Rs. 21 crore across three institutional funding rounds from investors including Chiratae Ventures India Fund IV, Endiya Partners, Rockstud Capital Investment Fund-II, Flipkart Internet Private Limited and Entrepreneur First, against rights and protections recorded in the Share Subscription Agreement dated 14.02.2025, the Amended and Restated Shareholders' Agreement dated 14.02.2025 ("SHA"), and the Founders' Employment Agreements dated 20.03.2025. The Company was, at its peak, valued at approximately INR 96 crores. As on date, approximately INR 7.5 crores remains in the Company's accounts, and the residual equity value stands materially impaired and at risk of being eroded by the continuing acts. of A-1. 3. The Complainant respectfully submits that his relationship with Accused No. 1 was, at the inception and for a substantial period thereafter, one founded upon mutual trust, confidence, and a common commitment towards the establishment and growth of the Company as its Co-founders. However, when the Complainant became aware of certain unexplained discrepancies in the financial reporting, operational functioning, and overall conduct of Accused No. 1 in the affairs of the company. The Complainant states that the deterioration in the relationship between the parties was not the genesis of the present complaint; on the contrary, such deterioration was itself a direct consequence of the subsequent discovery of the acts and omissions complained of herein. The Complainant’s concerns in relation to the
14 financial irregularities, concealment of material facts from investors, and unilateral actions of Accused No. 1 in the management of the Company led to the engagement of M/s Deloitte Touche Tohmatsu India LLP by the institutional investor, Flipkart Internet Private Limited, for the purpose of conducting a forensic investigation into the affairs of the company. The draft Forensic Report issued by Deloitte in September 2025 thereafter substantiated and documented the irregularities which had come to be suspected by the Complainant, and prima facie revealed a sustained pattern of conduct on the part of Accused No. 1, whereby he exploited his position as Co-founder, Director and Chief Executive Officer, and the control thereby vested in him over the Company's finances and operations, to secure wrongful gain for himself and persons closely connected to him, while causing corresponding wrongful loss to the Company, its shareholders, investors, vendors and other stakeholders. The Complainant therefore submits that the present complaint is not an outgrowth of any personal discord, founder-level disagreement, or civil dispute, but is being preferred bona fide and in discharge of his duties and obligations as a Co-founder, Director and shareholder, for the purpose of setting the criminal law in motion in respect of specific cognizable offences disclosed by the forensic material now available.
A-1, in his capacity as Co-founder, Director, Chief Executive Officer and authorised signatory of the Company, was at all material times entrusted with the management, control and operation of the Company's funds, books of account, banking operations, vendor onboarding, customer invoicing, employee/consultant engagements and reporting to investors. He thus stood in a position of trust and as an agent of the Company, its shareholders and investors within the meaning of Section 316(5) of the BNS.
Without prejudice to the existence of shareholder/founder disputes, the present
15 complaint is not filed merely in respect of differences in management, commercial judgment, or founder-level disagreements. The present complaint concerns specific acts involving diversion of Company assets, concealment of related-party dealings, fabricated documents, false proofs of service, ghost consultants, falsification and misreporting of investor-facing records, and misuse of entrusted Company funds. These acts disclose cognizable criminal offences independent of, and in addition to, any civil, contractual, shareholder or corporate remedies that may also be available.
Following a complaint, the investor Flipkart Internet Private Limited engaged M/s Deloitte Touche Tohmatsu India LLP ("Deloitte") to undertake a forensic investigation, by way of specific agreed-upon investigative procedures, into the affairs of the Company. Deloitte issued its draft Forensic Report titled "Project Circle - Draft Report" in September 2025, covering the review period 01.04.2022 to 15.06.2025 (the "Forensic Report"). The findings recorded therein are based on the Company's own books of account, system metadata, GST/MCA records, Razorpay and UPI data, the BHIVE office attendance register, physical site visits and corporate intelligence enquiries independently undertaken by Deloitte.
The Forensic Report records multiple adverse findings of dishonest, fraudulent and fabricated conduct directly attributable to A-1, in collusion with his wife, Ruchi Shukla, and the persons named above. The dishonest acts are not isolated; they form a deliberate, sustained and concealed pattern, executed through forged and fabricated documentary trails, with the object of siphoning the Company's revenue to A-1's wife's entity, inflating expenses through ghost consultants, misreporting figures to investors, and unilaterally controlling the Company in defiance of the agreed wind- down.
16
RCPC is the sole proprietorship of Mrs. Ruchi Shukla, wife of A-1, as confirmed by GST records. RCPC is engaged in the same line of business as Expertia, namely posting of jobs, identification of candidates and HR-recruitment services. The existence and operations of RCPC, as well as the relationship of Mrs. Ruchi Shukla with A-1, were never disclosed by A-1 to the Board, the shareholders or the investors, in breach of his fiduciary duties as a Director and Founder bound by the SHA.
Between June 2022 and April 2024, RCPC purchased 16 subscriptions of the Company's platform of an aggregate invoice value of approximately INR 1.28 lakhs. The Razorpay/UPI trail establishes that each and every payment purportedly made by RCPC to the Company was in fact routed through the personal UPI handles of A-1 himself, namely “kanishk.shukla@okhdfcbank", "kanishk.shukla@okicici", "9900066024@paytm" and "9900066024@upi", all tied to A-1's mobile number, thereby showing that A-1 was operating both sides of the transaction and controlling the inflows from his wife's entity.
In 7 of these 16 transactions, RCPC was charged a price substantially below the prevailing rate at which similar subscriptions were sold to arm's- length customers, causing a quantified loss of approximately INR 0.53 lakhs to the Company.
In 3 further instances during July 2024 to September 2024, subscriptions were activated for RCPC entirely free of cost, causing a further quantified loss of approximately INR 0.55 lakhs to the Company.
Of the 16 invoices issued to RCPC, only 1 corresponding entry exists in the Company's mandatory "Payment Request - Tracker" maintained by the Sales/Technology team. The remaining 15 invoices were created and the
17 underlying subscriptions activated outside, and in deliberate circumvention of, the Company's standard internal control protocol. The said activations were operationally possible only through the Company's internal payment dashboard, to which Anish Bansal had sole access credentials. The very purpose of bypassing the Tracker was to ensure that the diversion to. A-1's wife's entity did not surface in regular reporting to the Board and the investors.
The Forensic Report further records, at Observation, 1.6, that Deloitte conducted physical site visits to two addresses associated with RCPC. At the GST-registered address in Gwalior, the premises were found to be a residential property with no signboard, staff, or indicia of business operations. RCPC's website was also non- operational and displayed only a "launching soon" message. The absence of any business premises, the non-functional website, the routing of all payments through A-1's personal UPI, and the family-address overlap collectively establish that RCPC was not an arm's-length commercial entity but a conduit operated for the benefit of A-1 and his immediate family.
The Forensic Report records that A-1, in conspiracy with Anil Kumar Bhat C, his father Chandra Sekhar H.N., and Ramesh Singh B, caused the Company to pay INR 11.90 lakhs against four sample transactions under the false head of "Marketing Expense - Calling", without any written agreement, and on invoices which themselves charged an additional amount over and above the amounts purportedly paid to alleged sub-consultants.
The proofs of service filed by Chandra Sekhar H.N. and Ramesh Singh B, which formed the foundation for these payments, are stated to be fabricated and unreliable. Of 1,627 companies claimed to have been onboarded, 254 had invalid email addresses or non-existent domains, 16 had no email address at all, and only 70 ever proceeded to purchase a subscription. The supporting documents
18 were thus created to procure release of Company funds, and the services for which payment was taken were never rendered.
Nine persons who had earlier appeared as sub- consultants under Anil, Chandra Sekhar and Ramesh were thereafter directly placed on the Company's rolls as consultants. In respect of two of them, namely Aishwarya Dani and Julee A, no CRM account, no Google Workspace activity and no attendance was recorded on the Company's systems, yet payments aggregating INR 2.27 lakhs were caused to be released to them. These were ghost consultants existing only on paper to draw funds from the Company.
Between December 2024 and April 2025, A-1 unilaterally caused a sum of INR 5.69 lakhs to be paid to onес Krishna Bipin Vyas as consultancy expense. Krishna was, on her own LinkedIn profile, self-employee since November 2023 and was simultaneously posting jobs and conducting interviews for other companies during the same period. Tellingly, the first invoice raised by her was raised personally to A-1, and not to the Company, thereby indicating that the engagement was a private arrangement of A-1 dressed up as a Company expense.
Although Krishna Bipin Vyas was paid INR 5.69 lakhs as a consultant, she was deliberately omitted from the "People Cost" section of the monthly MIS submitted by A-1 to the investors. This constitutes concealment of a material fact from those entitled to receive it and is indicative of dishonest misrepresentation.
On detailed testing of 46 sample transactions aggregating INR 49.98 lakhs, the Forensic Report substantiated adverse findings in respect of 31 transactions of an aggregate value of INR 41.27 lakhs, including: (i) 25 transactions with no proof of service whatsoever; (ii) 21 transactions with no invoice, agreement or rate contract; (iii) 9
19 transactions supported by invoices whose metadata shows that the documents were created or modified in August 2025, long after the supposed invoice dates; and (iv) 5 transactions supported only by editable invoices.
Further, the Forensic Report records under- reporting of expenses by INR 2.02 lakhs in the "Financial Metrics" section and INR 1.53 lakhs in the "People Cost" section of the MIS submitted to investors, establishing a pattern of variance across nineteen consultant heads inconsistent with bookkeeping error and consistent with deliberate manipulation of figures reported to investors.
The Forensic Report further records that during the seven-month period covering April 2024 to June 2024 and February 2025 to June 2025, A-1 was physically present at the Company's office only on 14 dates. This is significant because, while physically absent for most of the relevant period, he continued to personally approve payments to his wife's entity, to ghost consultants and to connected persons, thereby demonstrating dishonest control of Company funds from a distance.
A-1 also short-paid and delayed payments to vendors while continuing to project the Company as solvent and operational to investors and shareholders. Against rent of INR 51.78 lakhs recorded in the books for the period April 2024 to May 2025, only INR 41.89 lakhs was paid to the landlord, leaving a shortfall/delay of INR 9.90 lakhs, inclusive of an unpaid March 2025 invoice of INR 3.69 lakhs. Sundry debtors of INR 8.40 lakhs remained outstanding for over 360 days as on 30.06.2025 with no collection efforts on record.
On 27.10.2025, a Default Event was formally recorded by the investors against the founders under the SHA, and thereafter in November 2025, the founders and investors agreed in principle to a structured wind-down of operations, return of investor capital and cessation of business. Engagement letters were accordingly issued to
20 M/s Aeka Advisors India LLP on 19.11.2025 and to M/s Ocellus Consulting Private Limited on 22.11.2025. A-1 personally signed the Aeka engagement letter on 28.11.2025 and directed the Company's Finance Consultant to process payment of Aeka's invoice, thereby evidencing his acceptance, as on that date, of the structured wind-down.
In flagrant defiance of the above understanding, A- 1 thereafter continued to onboard new customers, accept payments, suspend critical employees and assume unilateral control of the Company. This conduct was specifically taken exception to by investor Rockstud Capital Investment Fund-II by legal notice dated 30.03.2026, which also called upon the Company not to deal with shares or securities and to implement the investor-approved exit and value-preservation process.
The unilateral assumption of control by A-1, taken together with his conduct in or around April 2026 of making direct overtures to one of the institutional investors offering to acquire the entirety of its shareholding in the Company on terms unilaterally proposed by him, at a juncture when the Company's value had already been impaired and the structured wind- down was underway, discloses a coordinated design to procure investor shareholding for himself, or for entities acting through him, at stressed valuations brought about by his own acts and omissions.
On 21.11.2025, the Complainant communicated in writing to all investors, with A-1 expressly copied and without any objection or caveat from him, that with the departure of the entire technology team the Company would not be able to continue serving any customer beyond 20.12.2025. The same position was reiterated in the investor-directed wind-down action plan dated 26.11.2025. 27. On 08.01.2026, the Complainant formally informed Reliance Industries Limited, one of the Company's most material customers, that the Company was
21 shutting operations by end of January 2026 and proposed a transition plan. On 09.01.2026, A-1, without informing the Complainant and against the agreed wind-down, wrote directly to Reliance stating that the Company was not shutting down and that the relationship would be honoured. On 05.02.2026, after Reliance sought confirmation of continued support through 30.06.2026, A-1 further represented that the Company would do its best to support Reliance.
At the time the said representations were made, A-1 was fully aware that the entire technology team had exited the Company on or before 20.01.2026; that the Company had no approved business plan, board-approved budget, investor-approved framework or technical resources to support continued operations; and that the investors had directed and the founders had accepted a structured wind-down, which A-1 himself had signed off on through the Aeka engagement letter dated 28.11.2025. The said representations to Reliance were therefore false to the knowledge of A-1 when made, and were intended to induce Reliance to continue commercial reliance on the Company and to forbear from seeking refund or making alternative arrangements.
A-1, on 28.11.2025, personally signed the engagement letter for M/s Aeka Advisors India LLP, the very firm engaged by the investors to implement the structured wind-down of the Company, and personally directed the Finance Consultant to process payment once the invoice was received. Notwithstanding the same, A-1 thereafter obstructed every material step of the wind-down by withholding payment approvals, blocking full and final settlement of departed employees, and seeking unilateral access to the Company's intellectual property and customer relationships.
On 26.11.2025, the investors directed M/s Ocellus Consulting Private Limited to prepare a final view of notice-period expenses and outstanding liabilities and to
22 plan payouts. A-1 raised no objection at the time. On 02.02.2026, Ocellus issued full and final settlement intimation letters to departing employees in line with the investor direction. On 03.02.2026, A-1 wrote to Ocellus stating that the Company was receive assets and documents from these employees, thereby seeking to use the livelihood of departing employees as leverage to extract Company assets and information. On 05.02.2026, A-1 further characterised the investor-directed action as "an act of insubordination” which was a direct attempt to intimidate the investor-appointed oversight firm from carrying out its mandate.
As a direct consequence of A-1’s progressive obstruction of vendor payment approvals from November 2025 onwards, including non-payment of MongoDB cloud database services, on 28.04.2026 MongoDB suspended the Company's cloud database services, rendering the Expertia platform entirely inaccessible to all customers. This is a concrete and verifiable harm to the Company and its customers occasioned directly by A-1's acts and omissions.
The conduct of A-1, especially across the period October 2025 to April 2026, discloses a consistent and recurring pattern of accepting or appearing to accept a position when under formal pressure from the investors or the Complainant, and then reversing that position in subsequent unilateral conduct. The pattern is not coincidental: Each reversal occurred at a point when the corresponding formal pressure had been lifted, thereby evidencing dishonest intent and a deliberate design to control or exploit Company value.
The acts of A-1, individually and in conspiracy with the persons named above, attract, inter alia, the following cognizable offences under the Bharatiya Nyaya Sanhita, 2023: Section 316(-) BNS for criminal breach of trust by an agent; Section 318(4) BNS for cheating and dishonestly inducing delivery of property; Section 338 BNS for forgery of financial documents; Section 340(2)
23 BNS for using forged documents as genuine; Section 61(2) BNS for criminal conspiracy; and Section 3(5) BNS for acts done by several persons in furtherance of common intention. Insofar as part of the conduct relates to the period prior to 01.07.2024, the acts are pari materia punishable under the corresponding provisions of the Indian Penal Code, 1860, and form part of a single continuing transaction culminating in the post 01.07.2024 acts pleaded above.
This police station has juri iction to register and investigate the present complaint inasmuch as the registered office and entire operational set-up of the Company is at Bengaluru; A-1 ordinarily resides at Bengaluru; the Company's bank accounts used for the impugned outflows are operated from Bengaluru; the impugned subscription activations, ghost-consultant payments, vendor short-payments and falsified records were generated; processed and stored at the Company's Bengaluru office; and the unilateral acts of control by A-1 in defiance of the Default Event have all been and continue to be committed at Bengaluru.
In the premises aforesaid, the Complainant most respectfully prays that your good self may be pleased to register a First Information Report against Mr. Kanishk, Shukla and the other persons named hereinabove under but not restricted to Sections 61(2), 316(-), 318(4), 338, 340(2) and 3(5) of the Bharatiya Nyaya Sanhita, 2023, and such further provisions of law as may be attracted or such other measures as may be deemed necessary in the facts and circumstances of the case and in the interest of justice. COMPLAINANT Mr. Akshay Gugnani Co-founder, Director and Shareholder M/s. Expertia AI Technologies Private Limited.”
(Emphasis added)
24 The complaint results in a crime in Crime No.211 of 2026 for offences punishable under Sections 61(2), 316(5), 318(4), 336(3), 338, 340(2) r/w. 3(5) of the BNS. The relevant provisions read as follows:
“61. Criminal conspiracy.—(1) When two or more persons agree with the common object to do, or cause to be done—
(a) an illegal act; or (b) an act which is not illegal by illegal means, such an agreement is designated a criminal conspiracy:
Provided that no agreement except an agreement to commit an offence shall amount to a criminal conspiracy unless some act besides the agreement is done by one or more parties to such agreement in pursuance thereof.
Explanation.—It is immaterial whether the illegal act is the ultimate object of such agreement, or is merely incidental to that object.
(2) Whoever is a party to a criminal conspiracy,—
(a) to commit an offence punishable with death, imprisonment for life or rigorous imprisonment for a term of two years or upwards, shall, where no express provision is made in this Sanhita for the punishment of such a conspiracy, be punished in the same manner as if he had abetted such offence;
(b) other than a criminal conspiracy to commit an offence punishable as aforesaid shall be punished with imprisonment of either description for a term not exceeding six months, or with fine or with both. …
…
…
25
Criminal breach of trust.—(1) Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits criminal breach of trust.
Explanation 1.—A person, being an employer of an establishment whether exempted under Section 17 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952) or not who deducts the employee's contribution from the wages payable to the employee for credit to a Provident Fund or Family Pension Fund established by any law for the time being in force, shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said law, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid.
Explanation 2.—A person, being an employer, who deducts the employees' contribution from the wages payable to the employee for credit to the Employees' State Insurance Fund held and administered by the Employees' State Insurance Corporation established under the Employees' State Insurance Act, 1948 (34 of 1948) shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said Act, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid.
Illustrations
(a) A, being executor to the will of a deceased person, dishonestly disobeys the law which directs him to divide the effects according to the will, and appropriates them to his own use. A has committed criminal breach of trust.
26 (b) A is a warehouse-keeper Z going on a journey, entrusts his furniture to A, under a contract that it shall be returned on payment of a stipulated sum for warehouse room. A dishonestly sells the goods. A has committed criminal breach of trust.
(c) A, residing in Kolkata, is agent for Z, residing at Delhi. There is an express or implied contract between A and Z, that all sums remitted by Z to A shall be invested by A, according to Z's direction. Z remits one lakh of rupees to A, with directions to A to invest the same in company's paper. A dishonestly disobeys the directions and employs the money in his own business. A has committed criminal breach of trust.
(d) But if A, in illustration (c), not dishonestly but in good faith, believing that it will be more for Z's advantage to hold shares in the Bank of Bengal, disobeys Z's directions, and buys shares in the Bank of Bengal, for Z, instead of buying company's paper, here, though Z should suffer loss, and should be entitled to bring a civil action against A, on account of that loss, yet A, not having acted dishonestly, has not committed criminal breach of trust.
(e) A, a revenue officer, is entrusted with public money and is either directed by law, or bound by a contract, express or implied, with the Government, to pay into a certain treasury all the public money which he holds. A dishonestly appropriates the money. A has committed criminal breach of trust.
(f) A, a carrier, is entrusted by Z with property to be carried by land or by water. A dishonestly misappropriates the property. A has committed criminal breach of trust.
(2) Whoever commits criminal breach of trust shall be punished with imprisonment of either description for a term which may extend to five years, or with fine, or with both.
(3) Whoever, being entrusted with property as a carrier, wharfinger or warehouse-keeper, commits criminal breach of trust in respect of such property, shall be punished with
27 imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.
(4) Whoever, being a clerk or servant or employed as a clerk or servant, and being in any manner entrusted in such capacity with property, or with any dominion over property, commits criminal breach of trust in respect of that property, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.
(5) Whoever, being in any manner entrusted with property, or with any dominion over property in his capacity of a public servant or in the way of his business as a banker, merchant, factor, broker, attorney or agent commits criminal breach of trust in respect of that property, shall be punished with imprisonment for life, or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine. …
…
…
Cheating.—(1) Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to cheat.
Explanation.—A dishonest concealment of facts is a deception within the meaning of this section.
Illustrations
(a) A, by falsely pretending to be in the Civil Service, intentionally deceives Z, and thus dishonestly induces Z to let him have on credit goods for which he does not mean to pay. A cheats.
(b) A, by putting a counterfeit mark on an article, intentionally deceives Z into a belief that this article was
28 made by a certain celebrated manufacturer, and thus dishonestly induces Z to buy and pay for the article. A cheats.
(c) A, by exhibiting to Z a false sample of an article intentionally deceives Z into believing that the article corresponds with the sample, and thereby dishonestly induces Z to buy and pay for the article. A cheats.
(d) A, by tendering in payment for an article a bill on a house with which A keeps no money, and by which A expects that the bill will be dishonoured, intentionally deceives Z, and thereby dishonestly induces Z to deliver the article, intending not to pay for it. A cheats.
(e) A, by pledging as diamonds articles which he knows are not diamonds, intentionally deceives Z, and thereby dishonestly induces Z to lend money. A cheats.
(f) A intentionally deceives Z into a belief that A means to repay any money that Z may lend to him and thereby dishonestly induces Z to lend him money, A not intending to repay it. A cheats.
(g) A intentionally deceives Z into a belief that A means to deliver to Z a certain quantity of indigo plant which he does not intend to deliver, and thereby dishonestly induces Z to advance money upon the faith of such delivery. A cheats; but if A, at the time of obtaining the money, intends to deliver the indigo plant, and afterwards breaks his contract and does not deliver it, he does not cheat, but is liable only to a civil action for breach of contract.
(h) A intentionally deceives Z into a belief that A has performed A's part of a contract made with Z, which he has not performed, and thereby dishonestly induces Z to pay money. A cheats.
(i) A sells and conveys an estate to B. A, knowing that in consequence of such sale he has no right to the property, sells or mortgages the same to Z, without disclosing the fact of the previous sale and conveyance to B, and
29 receives the purchase or mortgage money from Z. A cheats.
(2) Whoever cheats shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both.
(3) Whoever cheats with the knowledge that he is likely thereby to cause wrongful loss to a person whose interest in the transaction to which the cheating relates, he was bound, either by law, or by a legal contract, to protect, shall be punished with imprisonment of either description for a term which may extend to five years, or with fine, or with both.
(4) Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine. …
…
…
Forgery.—(1) Whoever makes any false document or false electronic record or part of a document or electronic record, with intent to cause damage or injury, to the public or to any person, or to support any claim or title, or to cause any person to part with property, or to enter into any express or implied contract, or with intent to commit fraud or that fraud may be committed, commits forgery.
(2) Whoever commits forgery shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both.
(3) Whoever commits forgery, intending that the document or electronic record forged shall be used for the purpose of cheating, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.
30 (4) Whoever commits forgery, intending that the document or electronic record forged shall harm the reputation of any party, or knowing that it is likely to be used for that purpose, shall be punished with imprisonment of either description for a term which may extend to three years, and shall also be liable to fine. …
…
…
Forgery of valuable security, will, etc.— Whoever forges a document which purports to be a valuable security or a will, or an authority to adopt a son, or which purports to give authority to any person to make or transfer any valuable security, or to receive the principal, interest or dividends thereon, or to receive or deliver any money, movable property, or valuable security, or any document purporting to be an acquittance or receipt acknowledging the payment of money, or an acquittance or receipt for the delivery of any movable property or valuable security, shall be punished with imprisonment for life, or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine. …
…
…
Forged document or electronic record and using it as genuine.—(1) A false document or electronic record made wholly or in part by forgery is designated a forged document or electronic record.
(2) Whoever fraudulently or dishonestly uses as genuine any document or electronic record which he knows or has reason to believe to be a forged document or electronic record, shall be punished in the same manner as if he had forged such document or electronic record.”
(Emphasis supplied)
Section 316(5) of the BNS is the successor of Section 409 of the IPC, the earlier regime. Section 316(5) of the BNS holds that whoever, being in any manner entrusted with property or with any
31 dominion commits criminal breach of trust in respect of that property would become open for punishment. The next is Section 318(4) of the BNS. Section 318(4) of the BNS is the successor of Section 420 of the IPC, which deals with cheating and dishonestly inducing delivery of property. Section 336 of the BNS deals with forgery. Sub-section (3) of Section 336 of the BNS punishes a person who commits forgery, intending that the document would be used for the purpose of cheating. Section 338 of the BNS deals with forgery of valuable security and the other Section 340(2) of the BNS using of forged document as genuine, which is the successor of Section 471 of the IPC, the earlier regime.
If the ingredients of the offences are considered qua the allegations made in the complaint supra, in the considered view of this Court, they would clearly bring in the ingredients of the offences, prima facie. The allegation is, following a complaint, the investor in his present company engages M/s.Deloitte Touche Tohmatsu India LLP to undertake a forensic investigation into the affairs of the company. The said M/s.Deloitte company issued its forensic report titled “Project Circle – Draft Report” covering the
32 review period between 01-04-2022 and 15-06-2025. The report was based on company’s own books of account. The forensic report recorded multiple adverse findings on the conduct of dishonest, fraudulent and fabrication of records attributable to accused No.1 in collusion with his wife. M/s. RCPC Company under the sole proprietorship of Mrs.Ruchi Shukla, wife of accused No.1, which engages in the same line of business as the complainant diverts all the invoices into its name in several transactions. In about 7 out of 16 transactions, M/s. RCPC Company has charged substantially below the prevailing rates when similar subscriptions were sold to arm’s length customers causing loss to the company. This is the crux of the allegation.
The complaint is in great detail and the FIR is registered barely 10 and 15 days, respectively, prior to the filing of the petitions. In the first blush, it may seem like that it is a commercial transaction or a financial transaction between the office bearers of the Company. But, on prima facie deeper delving it narrates certain irregularities which require investigation in the least. It is no law
33 that a crime should be nipped in the bud merely because it projects financial irregularities within the company.
Jurisprudence is replete with the law laid down by the Apex Court considering whether civil and criminal proceedings can go hand in hand.
The Apex Court in the case of ROCKY v. STATE OF TELANGANA1 has held as follows: “….
….
….
The appellant's core contention, that the dispute is purely civil in nature, is untenable at this stage. Although courts must guard against giving criminal colour to civil disputes, it is equally well settled that the existence of civil remedies does not preclude criminal prosecution where the allegations disclose the essential ingredients of an offence. Civil and criminal proceedings may validly coexist if the factual matrix supports both.”
The Apex Court in the case of ANURAG BHATNAGAR v. STATE (NCT OF DELHI)2 has held as follows: “….
….
….
The allegations in the application moved under Section 156(3) CrPC and the material in support thereof reveals that SHL is contending breach of the conditions of MoU dated 11.03.1995 and that it has been induced and 1 2025 SCC OnLine SC 2713 2 2025 SCC OnLine SC 1514
34 deceived by VLS for entering into the aforesaid MoU. VLS has cheated SHL and its officers by making a false promise which was legally impossible to be carried out. The allegations of breach of conditions of the MoU or of making a false promise by itself may not give rise to any criminal action as no criminality is attached to it. However, there are elements of inducement, criminal conspiracy and cheating which are also borne out from the allegations made in the application and the complaint, which if proved, may amount to commission of an offence. Therefore, once such allegations are made out, it is difficult for the court in exercise of its inherent juri iction to interfere with the FIR, only for the reason that some of the disputes are of civil nature which may or may not be having any criminality attached to it.
It is well settled by a catena of decisions of this Court, especially in State of Haryana v. Ch. Bhajan Lal Singh, that the discretion to quash an FIR at a nascent stage has to be exercised with great caution and circumspection. In this connection, it would be beneficial to refer to an old case of Privy Council in King Emperor v. Nazir Ahmad Khwaja wherein the law was well settled that the courts would not thwart any investigation or that the courts should be very slow in interfering with the process of investigation. It is only in rare cases where no cognizable offence is disclosed in the FIR that the court may stop the investigation so as to avoid the harassment of the alleged accused. Even in such exercise of power, the court cannot embark upon an inquiry as to the genuineness or otherwise of the allegations made in the FIR or the complaint which have to be examined only after the evidence is collected.
The breach of conditions of the MoU or allegations of false promises in relation to the aforesaid MoU are undisputedly subject matter of the different FIRs lodged by VLS itself. Therefore, violation of those conditions for some reasons have been considered by VLS to be offensive. Therefore, the High Court rightly held that if breach of those conditions of the MoU itself has been considered to be of criminal nature by VLS, it cannot be permitted to turn around and allege that such breach of conditions would be of pure civil nature.
35
Thus, in the above facts and circumstances, we do not consider to go into detail as to the exact nature of disputes involved in the FIR and leave the same to be adjudicated upon by the appropriate court where the chargesheets have been submitted.”
In the case of KATHYAYINI v. SIDHARTH P.S. REDDY3, the Apex Court has held as follows: “….
….
….
We now come to the issue of bar against prosecution during the pendency of a civil suit. We hereby hold that no such bar exists against prosecution if the offences punishable under criminal law are made out against the parties to the civil suit. Learned senior counsel Dr.MenakaGuruswamy has rightly placed the relevant judicial precedents to support the above submission. In the case of K. Jagadish v. Udaya Kumar G.S.3, this Court has reviewed its precedents which clarify the position. The relevant paragraph from the above judgment is extracted below:
“8. It is thus well settled that in certain cases the very same set of facts may give rise to remedies in civil as well as in criminal proceedings and even if a civil remedy is availed by a party, he is not precluded from setting in motion the proceedings in criminal law.”
In Pratibha Rani v. Suraj Kumar4, this Court summed up the distinction between the two remedies as under:
“21. … There are a large number of cases where criminal law and civil law can run side by side. The two remedies are not mutually exclusive but clearly coextensive and essentially differ in their content and consequence. The object of the criminal law is to punish an offender who commits an offence against a person, property or the State for which the accused, on proof of the offence, is deprived of his
3 2025 SCC OnLine SC 1428
36 liberty and in some cases even his life. This does not, however, affect the civil remedies at all for suing the wrongdoer in cases like arson, accidents, etc. It is an anathema to suppose that when a civil remedy is available, a criminal prosecution is completely barred. The two types of actions are quite different in content, scope and import. It is not at all intelligible to us to take the stand that if the husband dishonestly misappropriates the stridhan property of his wife, though kept in his custody, that would bar prosecution under Section 406 IPC or render the ingredients of Section 405 IPC nugatory or abortive. To say that because the stridhan of a married woman is kept in the custody of her husband, no action against him can be taken as no offence is committed is to override and distort the real intent of the law.”
The aforesaid view was reiterated in Kamaladevi Agarwal v. State of W.B.,
“17. In view of the preponderance of authorities to the contrary, we are satisfied that the High Court was not justified in quashing the proceedings initiated by the appellant against the respondents. We are also not impressed by the argument that as the civil suit was pending in the High Court, the Magistrate was not justified to proceed with the criminal case either in law or on the basis of propriety. Criminal cases have to be proceeded with in accordance with the procedure as prescribed under the Code of Criminal Procedure and the pendency of a civil action in a different court even though higher in status and authority, cannot be made a basis for quashing of the proceedings.”
After surveying the abovementioned cases, this Court in K. Jagadish (supra) set aside the holding of High Court to quash the criminal proceedings and held that criminal proceedings shall continue to its logical end.
The above precedents set by this Court make it crystal clear that pendency of civil proceedings on the same subject matter, involving the same parties is no justification to quash the criminal proceedings if a prima facie case exists against the accused persons. In present case certainly such prima facie case exists against the respondents. Considering the long chain of events from
37 creation of family tree excluding the daughters of K.G. Yellappa Reddy, partition deed among only the sons and grandsons of K.G. Yellappa Reddy, distribution of compensation award among the respondents is sufficient to conclude that there was active effort by respondents to reap off the benefits from the land in question. Further, the alleged threat to appellant and her sisters on revelation of the above chain of events further affirms the motive of respondents. All the above factors suggest that a criminal trial is necessary to ensure justice to the appellant.”
In the case of PUNIT BERIWALA v. STATE (NCT OF DELHI)4, the Apex Court holds as follows: “….
….
….
MERE INSTITUTION OF CIVIL PROCEEDINGS CANNOT ACT AS A BAR TO INVESTIGATION OF COGNIZABLE OFFENCES
It is trite law that mere institution of civil proceedings is not a ground for quashing the FIR or to hold that the dispute is merely a civil dispute. This Court in various judgments, has held that simply because there is a remedy provided for breach of contract, that does not by itself clothe the Court to conclude that civil remedy is the only remedy, and the initiation of criminal proceedings, in any manner, will be an abuse of the process of the court. This Court is of the view that because the offence was committed during a commercial transaction, it would not be sufficient to hold that the complaint did not warrant a further investigation and if necessary, a trial. [See: Syed Aksari Hadi Ali Augustine Imam v. State (Delhi Admin.), (2009) 5 SCC 528, Lee Kun Hee v. State of UP, (2012) 3 SCC 132 and Trisuns Chemicals v. Rajesh Aggarwal, (1999) 8 SCC 686]”.
4 2025 SCC OnLine SC 983
38
The Apex Court in the case of C.S. PRASAD v. C. SATYAKUMAR5, has held as follows: “…. …. ….
The juri iction under Section 482 of the Cr. P.C. is extraordinary in nature and is to be exercised with great caution. This Court in catena of judgments has emphasised that the High Court must avoid usurping the function of a trial court or conducting a mini- trial when disputed factual questions attend the maintainability of a complaint. The only requirement is to examine whether the uncontroverted allegations, as contained in the FIR, taken at their face value, disclose the commission of any cognizable offence. In State of Haryana v. Bhajan Lal5, a Division Bench of this Court had discussed about the scope of Section 482 of the Cr. P.C. as follows:
“102. In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under Section 482 of the Code which we have extracted and reproduced above, we have given the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised.
(1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused.
(2) Where the allegations in the first information report and other materials, if any, accompanying the FIR
52026 SCC OnLine SC 50
39 do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code.
(3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused.
(4) Where, the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code.
(5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused.
(6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party.
(7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge.”
(emphasis supplied)
Furthermore, in Neeharika Infrastructure Private Limited v. State of Maharashtra6, a three-Judge Bench of this Court had held that the power to quash criminal proceedings must be exercised sparingly, and only where the complaint, even if accepted in full, discloses no offence or continuation would amount to abuse of process. This Court had issued the following
40 directions to the High Courts to be kept in mind while exercising the power under Section 482 of the Cr. P.C.:
“Conclusions
In view of the above and for the reasons stated above, our final conclusions on the principal/core issue, whether the High Court would be justified in passing an interim order of stay of investigation and/or “no coercive steps to be adopted”, during the pendency of the quashing petition under Section 482CrPC and/or under Article 226 of the Constitution of India and in what circumstances and whether the High Court would be justified in passing the order of not to arrest the accused or “no coercive steps to be adopted” during the investigation or till the final report/charge-sheet is filed under Section 173CrPC, while dismissing/disposing of/not entertaining/not quashing the criminal proceedings/complaint/FIR in exercise of powers under Section 482CrPC and/or under Article 226 of the Constitution of India, our final conclusions are as under:
1….
Courts would not thwart any investigation into the cognizable offences.
It is only in cases where no cognizable offence or offence of any kind is disclosed in the first information report that the Court will not permit an investigation to go on.
The power of quashing should be exercised sparingly with circumspection, as it has been observed, in the “rarest of rare cases” (not to be confused with the formation in the context of death penalty).
While examining an FIR/complaint, quashing of which is sought, the court cannot embark upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR/complaint.
Criminal proceedings ought not to be scuttled at the initial stage.
41
Quashing of a complaint/FIR should be an exception rather than an ordinary rule.
8 to 33.11….
The first information report is not an encyclopedia which must disclose all facts and details relating to the offence reported. Therefore, when the investigation by the police is in progress, the court should not go into the merits of the allegations in the FIR. Police must be permitted to complete the investigation. It would be premature to pronounce the conclusion based on hazy facts that the complaint/FIR does not deserve to be investigated or that it amounts to abuse of process of law. After investigation, if the investigating officer finds that there is no substance in the application made by the complainant, the investigating officer may file an appropriate report/summary before the learned Magistrate which may be considered by the learned Magistrate in accordance with the known procedure.
13 and 33.14….
When a prayer for quashing the FIR is made by the alleged accused and the court when it exercises the power under Section 482CrPC, only has to consider whether the allegations in the FIR disclose commission of a cognizable offence or not. The court is not required to consider on merits whether or not the merits of the allegations make out a cognizable offence and the court has to permit the investigating agency/police to investigate the allegations in the FIR. …..” (emphasis supplied)
On these lines, it is apt clear that even though the powers under Section 482 of the Cr. P.C. are very wide, its conferment requires the High Courts to be more cautious and diligent. While examining any FIR, the High Court exercising its power under this provision cannot go embarking upon the genuineness of the allegations made. The High Court must only consider whether there exists any sufficient material to proceed against the
42 accused or not and must not be concerned with the reliability, sufficiency, or acceptability of the evidence.
Testing on the aforesaid parameters, we find that the complaint dated 08.01.2020 made by the appellant contains categorical allegations that respondent Nos. 1 to 3, by abusing the advanced age and medical vulnerability of the executants, caused the execution and registration of the three settlement deeds to their unlawful advantage, and thereafter used such documents as genuine for the purpose of deriving proprietary benefits. The allegations in the complaint also disclose dishonest intention at the inception of the transaction as well as fabrication and wrongful use of documents. At this stage, we must note that the High Court in its juri iction under Section 482 of the Cr. P.C. is bound to take the allegations on its face value. Whether these allegations can ultimately be proved is a matter strictly within the province of the Trial Court.
In the impugned order, the High Court has quashed the proceedings primarily on the ground that the validity of the settlement deeds has been upheld in the proceedings before the Civil Court. We are of the view that this approach adopted by the High Court is not correct. It is a settled principle of criminal jurisprudence that civil liability and criminal liability may arise from the same set of facts and that the pendency or conclusion of civil proceedings does not bar prosecution where the ingredients of a criminal offence are disclosed. In Kathyayini v. Sidharth P.S. Reddy7, this Court had made it crystal clear that “pendency of civil proceedings on the same subject matter, involving the same parties is no justification to quash the criminal proceedings if a prima facie case exists against the accused persons.”
Adjudication in civil matters and criminal prosecution proceed on different principles. The decree passed by the Civil Court neither records findings on criminal intent nor on the existence of offences such as forgery, cheating, or use of forged documents. Therefore, civil adjudication cannot always be treated as determinative of criminal culpability at the stage of
43 quashment. Moreover, in the case at hand, the civil proceedings have not attained finality.
Adjudication of forgery, cheating or use of forged documents in relation to a settlement deed will always carry a civil element. Therefore, there cannot be any general proposition that whenever dispute involves a civil element, a criminal proceeding cannot go on. Criminal liability must be examined independently. Respondent Nos. 1 to 3 were entitled to acquittal only upon failure of proof in the trial and not at the threshold juri iction under Section 482 of the Cr. P.C. To permit quashing on the sole ground of a civil suit would encourage unscrupulous litigants to defeat criminal prosecution by instituting civil proceedings.
A further perusal of the impugned order would show that the High Court has also attached significance to the conduct of the appellant and the delay of almost 6 years on his part in initiation of criminal proceedings without any plausible explanation. The High Court had noted that the appellant remained ex parte instead of participating in the civil proceedings in O.S. No. 2190 of 2014 of which he was already a party. Instead, the appellant had preferred a private complaint suppressing the fact that the settlement deeds are already a subject matter of the said suit. The High Court had found this conduct of the appellant to be in favour of respondent Nos. 1 to 3 and had proceeded to quash the proceedings against them. Before we express our opinion on this, it is apposite to reproduce the relevant observations of the High Court on this aspect:
“8. ……. In the said suit O.S. No. 2190 of 2014, the defacto complainant C.S. Prasad was arrayed as 2nd defendant. He had entered appearance through a counsel, but had not contested the suit neither he filed statement or adduced evidence challenging the validity of the registered documents. He remained exparte. If really he had any material to establish that he was cheated by his elder brother by making false documents and forgery, he should have participated in the suit proceedings or atleast filed complaint immediately. He had filed a complaint to the Commissioner of Police only on 08.01.2020 and the same after enquiry was closed
44 on 17.03.2020 as civil dispute. When his complaint was closed as dispute is civil in nature, the suit O.S. No. 2190 of 2014 was pending. Hence, he had all opportunities to file application to set aside the exparte order passed against him on 08.06.2015 and participate in the suit where the validity of the 3 settlements deeds were one of the issues under consideration.
Instead of participating in the civil proceeding, the private complaint filed on 12.10.2021 under Section 156(3) of Cr. P.C., suppressing the fact that settlement deeds are subject matter in the pending suit. In this regard it can be safely presumed that the 2nd respondent herein had knowledge about the settlement deeds if not earlier at least on the date of receipt of suit summons in O.S. No. 2190 of 2014. Whereas no plausible explanation placed by him in his complaint for delay of 6 years in filing the complaint.”
(emphasis supplied)
We are not impressed with the above findings reached by the High Court. In Neeharika Infrastructure Private Limited (supra), this Court had made it clear that while exercising the powers under Section 482 of the Cr. P.C., the High Court cannot undertake a roving inquiry into the disputed questions of fact or record findings on the merits of the allegations. On perusal of the above observations of the High Court, we find that the High Court has erred in law by embarking upon an inquiry with regard to the conduct of the appellant and credibility or otherwise of the allegations in the complaint and the FIR. Delay in filing a complaint, by itself, is never a ground for quashing criminal proceedings at the threshold. Whether the delay stands satisfactorily explained or whether it impacts the credibility of the prosecution, is a matter of appreciation of evidence before the Trial Court and not for summary determination by the High Court under Section 482 of the Cr. P.C.
It is a settled proposition that when a factual foundation for prosecution exists, criminal law cannot be short-circuited by invoking inherent juri iction under Section 482 of the Cr. P.C. Where allegations require
45 adjudication on evidence, the proper course is to permit the trial to proceed in accordance with law. In the present case, the issues relating to the state of mind of the executants at the time of execution of the settlement deeds, the role of respondent Nos. 1 to 3 in the execution and the use of the settlement deeds, the existence of fraudulent intent, and the manner in which proprietary advantage was obtained by them, all require a full-fledged trial on evidence.”
The Apex Court in ROCKY's case supra reaffirmed the settled principle, that a mere availability of a civil remedy does not by itself eclipse the juri iction of the criminal law, where the allegations on their face disclose essential ingredients of a recognizable offence. In the said matter, the allegations levelled were invoking Sections 406, 420, 344 and 506 of the IPC. Upon a careful and nuanced examination of the factual matrix, the Apex Court deemed it appropriate to interdict the prosecution, only insofar as the offence under Section 406 of the IPC was concerned, while allowing the remaining charges to stand and the criminal trial to proceed. This course was adopted upon Court's satisfaction, that notwithstanding the presence of civil elements, the controversy could not be characterized as one of a purely civil complexion.
46 In ANURAG BHATNAGAR's case supra, the Apex Court once again declined to exercise its juri iction to quash the criminal proceedings, noting that the memorandum of understanding between the parties was not a mere commercial arrangement simpliciter, but one imbued with allegations of inducement and criminal breach of trust, as borne out from the averments contained in the complaint. The Court held that the allegations, if taken to its face value, were sufficient to constitute the commission of a criminal offence and therefore, warranted adjudication through the rigours of a criminal trial. In KATHYAYINI's case supra, where civil suits involving identical parties arising out of the same transaction were admittedly pending, the Apex Court held that pendency of civil proceedings cannot be employed as a shield to thwart criminal prosecution. The Court underscored that where the allegations disclose a prima facie case against the accused, the continuance of criminal proceedings is neither impermissible nor an abuse of the process, notwithstanding the existence of parallel civil litigation between the same parties.
47 Echoing this well entrenched jurisprudence, the Apex Court in PUNIT BERIWALA supra categorically held that mere institution of civil proceedings does not operate as a legal embargo upon the investigation or prosecution of a cognizable criminal offence. The Court, thus, reinforced the salutary principle that civil and criminal remedies though they may arise from the same set of facts, operate in distinct spheres and pursue fundamentally different objectives, a caveat, it would depend on facts obtaining in each of the cases. In C.S. PRASAD supra, the Apex Court holds that civil liability and criminal liability may arise from the same set of facts and that the pendency or conclusion of civil proceedings does not bar prosecution where the ingredients of a criminal offence are disclosed. The Apex Court was considering a case pertaining to a fraudulent settlement deed and observed that adjudication of forgery, cheating or use of forged documents in relation to a settlement deed will always carry a civil element. Therefore, there cannot be any general proposition that whenever a dispute involves a civil element, a criminal
48 proceeding cannot go on. Further, the Apex Court reiterates the principle that juri iction under Section 482 of the Cr.P.C. cannot be exercised in cases where disputed questions of fact exist.
It is trite law that FIR is not an encyclopaedia of the offences. The Apex Court in the case of NEEHARIKA INFRASTRUCTURE (P) LTD. v. STATE OF MAHARASHTRA6 has held as follows: “…. …. ….
The first information report is not an encyclopaedia which must disclose all facts and details relating to the offence reported. Therefore, when the investigation by the police is in progress, the court should not go into the merits of the allegations in the FIR. Police must be permitted to complete the investigation. It would be premature to pronounce the conclusion based on hazy facts that the complaint/FIR does not deserve to be investigated or that it amounts to abuse of process of law. After investigation, if the investigating officer finds that there is no substance in the application made by the complainant, the investigating officer may file an appropriate report/summary before the learned Magistrate which may be considered by the learned Magistrate in accordance with the known procedure.”
6 (2021) 19 SCC 401
49 13. 1. Again, the Apex Court in the case of SOMJEET MALLICK v. STATE OF JHARKHAND,7 has held as follows: “…. …. ….
Before we proceed to test the correctness of the impugned order, we must bear in mind that at the stage of deciding whether a criminal proceeding or FIR, as the case may be, is to be quashed at the threshold or not, the allegations in the FIR or the police report or the complaint, including the materials collected during investigation or inquiry, as the case may be, are to be taken at their face value so as to determine whether a prima facie case for investigation or proceeding against the accused, as the case may be, is made out. The correctness of the allegations is not to be tested at this stage.
To commit an offence, unless the penal statute provides otherwise, mens rea is one of the essential ingredients. Existence of mens rea is a question of fact which may be inferred from the act in question as well as the surrounding circumstances and conduct of the accused. As a sequitur, when a party alleges that the accused, despite taking possession of the truck on hire, has failed to pay hire charges for months together, while making false promises for its payment, a prima facie case, reflective of dishonest intention on the part of the accused, is made out which may require investigation. In such circumstances, if the FIR is quashed at the very inception, it would be nothing short of an act which thwarts a legitimate investigation.
It is trite law that FIR is not an encyclopaedia of all imputations. Therefore, to test whether an FIR discloses commission of a cognizable offence what is to be looked at is not any omission in the accusations but 7 (2024) 10 SCC 527
50 the gravamen of the accusations contained therein to find out whether, prima facie, some cognizable offence has been committed or not. At this stage, the court is not required to ascertain as to which specific offence has been committed.
It is only after investigation, at the time of framing charge, when materials collected during investigation are before the court, the court has to draw an opinion as to for commission of which offence the accused should be tried. Prior to that, if satisfied, the court may even discharge the accused. Thus, when the FIR alleges a dishonest conduct on the part of the accused which, if supported by materials, would disclose commission of a cognizable offence, investigation should not be thwarted by quashing the FIR.
No doubt, a petition to quash the FIR does not become infructuous on submission of a police report under Section 173(2)CrPC, but when a police report has been submitted, particularly when there is no stay on the investigation, the court must apply its mind to the materials submitted in support of the police report before taking a call whether the FIR and consequential proceedings should be quashed or not. More so, when the FIR alleges an act which is reflective of a dishonest conduct of the accused.”
The Apex Court in terms of the afore-quoted judgments holds that investigation cannot be interdicted when a cognizable offence is made out in the FIR.
If final report would be filed after investigation and the final report did contain all these allegations of financial
51 irregularities, which could be urged even under the Act, it would have been an altogether different circumstance. The investigation has hardly commenced. In such circumstances, there can be no warrant of interference in the case at hand that too, on the submissions of the learned senior counsel Sri Sandesh J. Chouta, that the complainant ought to have knocked at the doors of the
Reproduced from the public record of the Karnataka High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.