Mr Rajesh Parekh vs. State Of Karnataka

Held

The Court held that the criminal proceedings initiated against the petitioners in C.C.29369/2019 on the file of IV A.C.M.M., Bengaluru, were liable to be quashed. The Court found that neither the FIR nor the charge sheet disclosed the essential requirements to constitute offences under Sections 406 and 420 of the IPC. It was undisputed that the gold was not sent and not received. The Court noted that while the second respondent alleged a dishonest intention to cheat by raising a false invoice, no party had gained or lost anything, and there was no entrustment of property. Consequently, the Court found it difficult to infer an offence of conspiracy under Section 120B IPC. The Court concluded that the investigation was unwarranted, especially given the pendency of civil suits between the parties. Therefore, the petitioners had made out a case for exercising jurisdiction under Section 482 Cr.P.C. The proceedings were quashed.

Facts

The petitioners, directors of Parekh Industries Limited, sought to quash criminal proceedings initiated by the State of Karnataka based on a complaint by Mr. Ketan S. Dhruv, director of Bangalore Refinery (P) Limited. The complaint alleged that Parekh Industries owed Bangalore Refinery Rs. 7,36,16,156/-. Parekh Industries sent a tax invoice for 22,000 grams of gold bars valued at Rs. 7,15,00,000/- plus tax, along with train tickets for two employees, stating it was per telephonic conversation. Bangalore Refinery denied placing any order and alleged a conspiracy to defraud them by raising a false invoice. The petitioners contended that the order was placed verbally by the second respondent's father, and the gold was not sent as train tickets were not confirmed. They also stated that no loss was suffered by either party as no payment was made against the invoice and that civil suits were pending between the companies.

Key Issues

1. Whether the criminal proceedings initiated under Sections 406, 409, 420, and 120B read with Section 34 of the Indian Penal Code (IPC) are liable to be quashed under Section 482 of the Criminal Procedure Code (Cr.P.C.)? Petitioner's arguments: The petitioners argued that the essential ingredients for offences under Sections 406 (criminal breach of trust) and 420 (cheating) of the IPC are absent. They contended that there was no entrustment of property for Section 406, and no cheating or dishonest inducement for Section 420, as no loss was suffered by the second respondent and no gain was made by the petitioners. They further argued that for Section 120B (conspiracy) to apply, the commission of the underlying offences must be prima facie made out, which they claimed was not the case. They asserted that the criminal proceedings were initiated to compel a settlement in pending civil litigations. Revenue/Respondent's arguments: The second respondent argued that the filing of a charge sheet meant the petitioners should seek discharge under Section 239 of the Cr.P.C. and not quash the proceedings under Section 482 Cr.P.C. They relied on the Supreme Court judgment in Kaptan Singh Vs. State of Uttar Pradesh and Others, asserting that the High Court should not delve into the merits of the case at this stage. They further contended that sending an invoice without an order indicated a dishonest intention to cheat.