Krushna Chandra Palai vs. Sriram Cashew - Orissa High Court, 07 November 2025

Cause title — parties, addresses and appearances

CRLMC No. 2388 of 2022 Page 1 of 6 IN THE HIGH COURT OF ORISSA AT CUTTACK CRLMC No.2388 of 2022 Krushna Chandra Palai …. Petitioner Mr. B. Panda, Advocate -versus- Sriram Cashew, Prop: Prasanta Kumar Sahoo …. Opp. Party Mr. G. M. Rath, Advocate CORAM: THE HON’BLE MR. JUSTICE CHITTARANJAN DASH Date of Judgment: 07.11.2025 Chittaranjan Dash, J. 1. By means of the present application, the Petitioner seeks to quash the order dated 03.06.2022 passed by the learned Sessions Judge, Puri in Criminal Revision No.5 of 2022, whereby the learned Sessions Judge set aside the order dated 04.01.2022 passed by the learned S.D.J.M., Puri in I.C.C. Case No.256 of 2021, taking cognizance of the offences under Sections 419/420/424 of the IPC against the Opposite Party pursuant to the Protest Petition filed by the Petitioner, being dissatisfied with the closure of investigation in connection with Kumbharpada P.S. Case No.333 of 2019. 2. The background facts of the case are that the Petitioner and the Opposite Party had entered into a business transaction for the supply of cashew nuts. As per the agreement between the parties, the Opposite Party was to supply 36 tons (36,000 kg) of cashew nuts to the Petitioner at the rate of ₹120/- per kg during the month of December, 2016. In pursuance of the said agreement, the AFR CRLMC No. 2388 of 2022 Page 2 of 6 Petitioner transferred a sum of ₹37,00,000/- to the bank account of the Opposite Party on different dates through RTGS between 26.08.2016 and 15.09.2016 for ensuring smooth supply of the ordered cashew nuts. The Opposite Party, after receiving the aforesaid amount, remained silent for about two months and, upon persistent persuasion by the Petitioner, delivered only 14 tons (14,000 kg) of cashew nuts valued at ₹17,93,400/- to the Petitioner’s factory. In that regard, the Opposite Party issued a tax invoice containing all requisite details in accordance with law and further assured the Petitioner that the balance quantity of the material would be delivered within fifteen days. However, despite waiting for a considerable period, the Petitioner did not receive any further supply. Consequently, the Petitioner requested the Opposite Party to cancel the contract and refund the remaining amount after deducting the cost of the material already supplied. Upon calculation, the Opposite Party agreed to return ₹19,06,600/- to the Petitioner but failed to do so within the agreed period. On 07.07.2017, the Petitioner approached the Opposite Party personally and requested him to refund the said amount. However, the Opposite Party not only refused but allegedly abused the Petitioner. Thereafter, the Petitioner approached the Police for redressal of his grievance, but as the Police did not register the complaint and advised an amicable settlement, the Petitioner moved the learned District Judge, Puri (though on a mistaken motion). Subsequently, a complaint was filed before the learned S.D.J.M., Puri, registered as I.C.C. Case No.399 of 2019, wherein the learned S.D.J.M. directed the concerned Police under Section 156(3) of the Cr.P.C. to register an FIR and investigate. CRLMC No. 2388 of 2022 Page 3 of 6 Pursuant thereto, Kumbharpada P.S. Case No.333 of 2019 was registered and investigated. Upon completion of investigation, the Police, having found no material against the Opposite Party, submitted a closure report before the learned S.D.J.M., Puri. Being aggrieved thereby, the Petitioner filed a Protest Petition, whereupon the learned Magistrate, in I.C.C. Case No.256 of 2021, after recording the initial statement of the complainant under Section 200 Cr.P.C. and conducting an inquiry under Section 202 Cr.P.C., took cognizance of the offences by order dated 04.01.2022. The Opposite Party, being aggrieved by the said order, preferred Criminal Revision No.5 of 2022 before the learned Sessions Judge, Puri, who, after hearing both parties, set aside the order of cognizance passed by the learned Magistrate vide the impugned order dated 03.06.2022 (Annexure-8). 3. Mr. Panda, learned counsel for the Petitioner, in the course of hearing, submitted that the impugned order passed by the learned Sessions Judge, being contrary to fact and law, is liable to be set aside. It was contended that the fraudulent and dishonest acts of the Opposite Party are evident from the documentary materials, particularly the tax invoice, which clearly reflects manipulation. The said invoice, which ought to have represented a transaction between a business establishment and a consumer, was deliberately shown as one between two business entities, in contravention of the provisions of the GST Act and Rules. Learned counsel further submitted that the Opposite Party, from the very inception, had a dishonest intention to cheat the Petitioner; he supplied only a part of the agreed quantity despite receiving substantial advance payment, CRLMC No. 2388 of 2022 Page 4 of 6 and unlawfully retained the remaining amount. The learned S.D.J.M., Puri, upon due consideration of the materials placed before him, had rightly taken cognizance of the offences against the Opposite Party. Hence, the learned Sessions Judge committed an

error of law in setting aside the said order.

Per contra, Mr. Rath, learned counsel for the Opposite Party, vehemently opposed the contentions raised by the Petitioner and submitted that the allegation regarding a “manipulated invoice” is purely a question of fact, which can only be established through evidence. He further contended that the dispute, in essence, arises out of a commercial transaction and falls within the domain of civil law. The Petitioner’s attempt to invoke criminal juri iction is nothing but an endeavour to malign the reputation of the Opposite Party, who had substantially complied with the terms of the contract but could not deliver the remaining quantity due to reasons attributable to the Petitioner himself. It was further argued that the conduct of the Opposite Party in effecting partial delivery of the goods demonstrates bona fide intent, and therefore, non-supply of the remaining goods cannot constitute an offence under Section 420 of the IPC. Accordingly, the order passed by the learned Sessions Judge in setting aside the cognizance order is just and proper and warrants no interference.

Having considered the submissions of learned counsel for the parties and perused the impugned order as well as the materials on record, it is apposite at this stage to revisit the settled position of law. The Hon’ble Supreme Court has time and again reiterated in a catena of decisions that criminal prosecution for cheating cannot be sustained in the absence of dishonest intention at the inception of the transaction. In Sarabjit Kaur vs. State of Punjab & Anr., reported in 2023 LiveLaw (SC) 157, it has been emphatically held that – “A mere breach of contract does not give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction. Merely on the allegation of failure to keep up promise will not be enough to initiate criminal proceedings.”

To attract Section 420 IPC, dishonest intention at the inception of the transaction must be clearly made out. In the present case, the admitted fact that the Opposite Party supplied 14 MT of cashew nuts under a duly issued invoice indicates part-performance of the contract and does not prima facie establish deception from the outset. The remaining allegations relating to non-supply and refund pertain to performance of a commercial arrangement and are essentially civil in nature. The allegation of a “manipulated invoice” also raises disputed factual issues which can only be established through evidence and does not, by itself, satisfy the ingredients of the offences alleged.

Applying the aforesaid principle to the present case, the admitted part-performance of the contract by the Opposite Party and the nature of the dispute unmistakably indicate that the ingredients of cheating or any other offence alleged are not made out. The learned Sessions Judge has rightly observed that the materials accompanying the Protest Petition do not disclose the requisite elements of cheating or fraudulent conduct so as to justify initiation of criminal proceedings. No perversity or illegality is found in the reasoning of the learned Sessions Judge warranting interference under Section 482 Cr.P.C since the dispute is predominantly civil in character.

In view of the above discussion, the order dated 03.06.2022 passed by the learned Sessions Judge, Puri is hereby affirmed. The CRLMC is accordingly disposed of.

(Chittaranjan Dash)

Judge

AKPradhan