Vaishali W/O. Raya Manjrekar vs. The State Of Karnataka

Facts

The petitioners, accused Nos. 1, 2, and 3, sought to quash an FIR registered against them for offences under Section 420 read with Section 34 of the Indian Penal Code (IPC). The de-facto complainant alleged that accused No. 1 introduced accused No. 2, an in-charge/clerk at Kendriya Bhandar, Goa, who represented that orders for supply of materials could be obtained without tender, yielding good profit. The complainant became a member by depositing Rs. 50,000/- and received a work order for dustbin trolleys. Accused No. 2 allegedly directed the complainant to secure supplies through accused No. 3, the Director of Rushabdev Venture Private Limited. The complainant paid Rs. 3,14,26,348/- to Rushabdev Ventures for the supply of 7330 dustbin trolleys. Bills totaling Rs. 4,27,22,758/- were raised against Kendriya Bhandar. The complainant also paid GST of Rs. 12,41,850/- after being questioned by Commercial Tax officials. Despite non-supply of materials, the accused allegedly evaded payments, with only Rs. 75,00,000/- being returned. A substantial amount, Rs. 3,52,22,758/- along with Rs. 60,00,000/- interest, remained payable.

Held

The Court held that the petitions filed by accused Nos. 1 to 3 to quash the FIR are dismissed. The Court noted that the investigation is pending and, as per the FIR and complaint, there is a commercial transaction between the de-facto complainant and the accused. The complaint indicates a pending bill of Rs. 4,12,22,758/- including GST, and the accused are allegedly due to pay GST. The accused dispute the entire contents of the complaint and the liability to pay Rs. 3,14,26,348/-. Prima facie, accused No. 3 received a substantial sum through RTGS and handed it to accused No. 1, but neither supplied the material nor returned the amount. The Court found that there is a triable issue requiring a full-fledged investigation. It reiterated the principle that a criminal complaint cannot be quashed solely on the ground that the allegations appear to be of a civil nature, and the dishonest intention at the inception of the contract needs to be probed by the Investigating Officer. The Court distinguished the cited case of A.M. Mohan, stating that in that case, the investigation was complete, whereas here, it is ongoing. The Court also invoked the ratio in M/s Neeharika Infrastructure Pvt.Ltd. Vs. State of Maharashtra, holding that disputed questions of fact cannot be gone into under Section 482 of Cr.P.C.

Key Issues

1. Whether the FIR and subsequent proceedings in Crime No. 78/2023, registered for offences under Section 420 read with Section 34 of the IPC, are liable to be quashed on the grounds that the ingredients of Section 420 of IPC are not attracted and that the criminal law has been abused for recovery of money arising out of a contract? (Section 420 IPC, Section 34 IPC) The petitioners argued that the ingredients of Section 420 of the IPC are not attracted, and the registration of the FIR is illegal, arbitrary, and an abuse of the process of law. They contended that the de-facto complainant is using criminal law to recover money arising from a contractual dispute with Kendriya Bhandar, and the complaint does not disclose any offence against the accused. They also pointed out a delay of two years in lodging the complaint. They relied on decisions in A.M. Mohan Vs. State, Sri Amit Garg Vs. the State of Karnataka, State of Haryana & others Vs. Bhajan Lal, Indera Mohan Goswami Vs. State of Uttaranchal, Ramesh Rajagopal Vs. Devi Polymers (P) Limited, and Madhavrao Jiwajirao Scindia Vs. Sambhajirao Chandrojirao Angre. The respondents (de-facto complainant and State) argued that a huge amount is involved, and the accused persons have cheated the de-facto complainant. They asserted that from the inception, the accused had a malafide intention to cheat the complainant, and there is prima facie material against them, thus praying for dismissal of the petitions.