Full Judgment Text
2026:BHC-AS:18947-DB
apl168-2013-.doc
Sayali
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPLICATION NO.168 OF 2013
Kiran Chandrakant Kulkarni,
Ae 61 years, Occu.: Business,
presently R/at: 8200,
Churchville Road, Brampton,
Ontario Canada
… Applicant
SAYALI
DEEPAK
UPASANI
Digitally signed by
SAYALI DEEPAK
UPASANI
Date: 2026.04.22
13:19:51 +0530
Vs.
1. The State of Maharashtra,
at the instance of Jejuri Police Station.
2. Nitin Madhukar Gore,
Age 47 years, Occu.: Business,
R/at: Plot No.C/3, 321 Unit Complex,
Shaniwar Peth, Pune
… Respondents
Ms. Sonal V. Parab with Ms. Esha Rane i/by Rajesh
Sawant & Associates for the applicant.
MS. Megha Bajoria, APP for respondent No.1-State.
Mr. Parth Deshpande i/by Mr. Vilas B. Tapkir for
respondent No.2.
CORAM : AMIT BORKAR, J.
RESERVED ON : APRIL 18, 2026.
PRONOUNCED ON : APRIL 22, 2026
JUDGMENT:
1. The present application has been instituted by the applicant
under Section 482 of the Code of Criminal Procedure, 1973,
1
::: Uploaded on - 22/04/2026 ::: Downloaded on - 22/04/2026 13:31:42 :::
apl168-2013-.doc
invoking the inherent jurisdiction of this Court and seeking
quashing of C.R. No. 111 of 2012 registered with Jejuri Police
Station for the offences punishable under Sections 406 and 420 of
the Indian Penal Code, 1860.
2. Respondent No. 2 lodged the aforesaid First Information
Report bearing No. 111 of 2012 with Jejuri Police Station alleging,
inter alia, that he had commenced supply of plastic cans of 20
litres capacity from his concern to Eshaditi Chem Pvt. Ltd. with
effect from 20 November 2006 and continued such supplies till 23
July 2009. It is alleged that during the said course of dealings,
from 20 November 2006 to 31 December 2006, a total of 2,083
plastic cans of 20 litres capacity were supplied for a consideration
of Rs. 3,37,131/-. In the year 2007, 3,615 cans of 20 litres capacity
were supplied for an amount of Rs. 6,14,266/-. In the year 2008,
6,123 cans of 20 litres capacity and 3 cans of 50 litres capacity,
aggregating to 6,126 cans, were supplied for Rs. 11,40,448/-. In
the year 2009, 782 cans of 20 litres capacity and 172 cans of 35
litres capacity, aggregating to 954 cans, were supplied for Rs.
1,75,699/-.
3. It is further alleged that during the period from 20
November 2006 to 23 July 2009, respondent No. 2 had supplied in
all 12,603 plastic cans of 20 litres capacity, 3 cans of 50 litres
capacity and 172 cans of 35 litres capacity, thus totaling 12,778
plastic cans valued at Rs. 22,67,544/- to Eshaditi Chem Pvt. Ltd.
According to the complaint, against the said amount, a sum of Rs.
14,98,421/- came to be paid, leaving an outstanding balance of Rs.
7,69,123/- together with interest. It is alleged that whenever
2
::: Uploaded on - 22/04/2026 ::: Downloaded on - 22/04/2026 13:31:42 :::
apl168-2013-.doc
respondent No. 2 demanded payment of the outstanding dues,
Ajay Potdar and Kiran Kulkarni repeatedly assured him not to
worry and represented that the entire amount would be paid, but
thereafter avoided payment. It is the case of respondent No. 2 that
by such conduct the said persons dishonestly duped him,
compelling him to incur liability towards bank interest and dues
payable to his own suppliers, thereby causing severe financial loss
and resulting in losses to his business concern.
4. The complaint further states that respondent No. 2, through
his proprietary concern Gore Plastic and Carbide situated at Jejuri
MIDC, supplied plastic cans of 20 litres, 35 litres and 50 litres
capacity, totaling 12,778 cans valued at Rs. 22,67,544/-, to
Eshaditi Chem Pvt. Ltd., Sangli Kupwad, during the period from 20
November 2006 to 23 July 2009. Out of the said amount, Rs.
14,98,421/- is stated to have been paid, while Rs. 7,69,123/-
together with interest remained unpaid. It is alleged that the
Directors of the said company, namely Ajay Pandurang Potdar of
Rajwada, Sangli, Kiran Chandrakant Kulkarni of Pune, and servant
Mandar Acharya of Pune, purchased the said goods from time to
time and, without making payment thereof, committed criminal
breach of trust and cheated respondent No. 2, leading to the filing
of the complaint.
5. Ms. Sonali Parab, learned Advocate appearing for the
applicant, submitted that a plain reading of the First Information
Report itself demonstrates that no cognizable offence is disclosed
even if the allegations therein are accepted at their face value.
According to her, the dispute arises purely out of commercial
3
::: Uploaded on - 22/04/2026 ::: Downloaded on - 22/04/2026 13:31:42 :::
apl168-2013-.doc
transactions and pertains to recovery of alleged outstanding dues,
thereby being essentially civil in character without any criminal
ingredients. She submitted that respondent No. 2 had supplied
material to Eshaditi Chemical Company on credit on the financial
strength of his father, whereas the present applicant was merely a
nominee Director along with the father of respondent No. 2 by
virtue of investment made by another company in which the
applicant was one of the three Directors.
6. Learned counsel further submitted that the alleged supplies
made by respondent No. 2 to Eshaditi Chemical Company were
subsequent to the resignation of the applicant from the post of
Director and that the financial affairs of Eshaditi Chemical
Company were in fact being monitored by the father of respondent
No. 2. She submitted that respondent No. 2 has admittedly
received substantial part payment towards the supplies made, and
merely because the balance amount has remained unpaid, the
present FIR has been lodged. It was urged that the complaint does
not contain any specific or sufficient averment indicating dishonest
intention on the part of the applicant at the inception of the
transaction. Consequently, the essential ingredients of the offence
of cheating punishable under Section 420 of the Indian Penal Code
are absent. According to her, the dispute on the face of the record
is civil in nature arising out of a commercial contract for supply of
goods and no criminal offence is made out.
7. In support of the aforesaid submissions, reliance was placed
on the judgment of the Supreme Court in Delhi Race Club 1940
Ltd. vs. State of Uttar Pradesh, (2024) 10 SCC 690. It was
4
::: Uploaded on - 22/04/2026 ::: Downloaded on - 22/04/2026 13:31:42 :::
apl168-2013-.doc
submitted that every breach of trust does not ipso facto amount to
a criminal offence of breach of trust unless the necessary
ingredients of dishonest misappropriation or fraudulent conduct
are established. A mere breach of contractual obligation may
furnish a civil remedy for damages, but does not automatically
attract criminal liability. It was further submitted that where the
complaint alleges commission of an offence under Section 406 of
the Indian Penal Code, the same set of allegations cannot
mechanically be treated as constituting an offence of cheating
under Section 420 in the absence of fraudulent inducement from
the inception. On these grounds, it was prayed that the FIR
deserves to be quashed.
8. Per contra, Mr. Vilas Tapkir, learned Advocate appearing for
respondent No. 2, opposed the application and contended that no
unimpeachable or incontrovertible material has been placed on
record by the applicant to establish that he had resigned from the
Directorship of Eshaditi Chemical Company. According to him, the
First Information Report contains specific factual averments
disclosing the commission of offences punishable under Sections
406 and 420 of the Indian Penal Code. He further submitted that
the applicant had indulged in similar acts with other concerns
including Potdar Chemicals. It was argued that respondent No. 2
had supplied goods worth Rs. 22,67,544/- to Eshaditi Chemical
Company during the period 2006 to 2009, out of which only Rs.
14,98,421/- was paid and an amount of Rs. 7,69,123/- remained
outstanding. On that basis, it was contended that the applicant has
committed criminal breach of trust and cheating. He, therefore,
5
::: Uploaded on - 22/04/2026 ::: Downloaded on - 22/04/2026 13:31:42 :::
apl168-2013-.doc
prayed for dismissal of the present application.
REASONS AND ANALYSIS:
9. I have considered the rival submissions advanced by learned
counsel appearing for both sides. I have also carefully gone
through the First Information Report, the record, the assertions
made in the application, and the precedents placed for
consideration.
10. The applicant has approached this Court by invoking
inherent jurisdiction under Section 482 of the Code of Criminal
Procedure for quashing of the FIR registered for offences
punishable under Sections 406 and 420 of the Indian Penal Code.
Such power is no doubt to be exercised with caution, but equally it
exists to prevent misuse of criminal machinery where allegations,
even if accepted as they stand, do not disclose commission of
offence. The prosecution case, in short, is that the complainant had
supplied plastic cans to Eshaditi Chem Pvt. Ltd. from time to time
and certain balance amount remained unpaid. On that basis, the
complainant has attempted to describe the transaction as criminal
breach of trust and cheating. The applicant, on the other hand, has
contended that the matter is regarding commercial dues arising
from business dealing and that the criminal ingredients are absent.
After careful reading of the complaint and surrounding
circumstances, I find force in the stand canvassed by the applicant.
11. The FIR itself makes the factual position clear. It records that
the complainant had supplied plastic cans of various capacities
over a period extending from 20 November 2006 till 23 July 2009.
6
::: Uploaded on - 22/04/2026 ::: Downloaded on - 22/04/2026 13:31:42 :::
apl168-2013-.doc
Thus, the dealings continued transactions spread over several
years. This circumstance assumes importance because repeated
business transactions over a long period indicate ongoing
confidence between parties. The complainant has also admitted
that substantial payments were received by him from time to time.
Therefore, this is not a case where goods were taken and no
payment was made. The grievance of the complainant is confined
only to the outstanding amount.
12. In business, disputes arise regarding delayed payments,
unsettled accounts, disputed balances, cash flow problems, or
inability to discharge liabilities. Every such dispute cannot enter
the field of criminal law. Where goods are supplied, price is partly
paid, and some amount remains due, the Court must examine
whether the ingredients of sections invoked are disclosed. For
Section 406, there must be entrustment of property and dishonest
misappropriation. For Section 420, there must be deception and
dishonest inducement from the very beginning. Unless these
ingredients exist, criminal prosecution cannot be permitted to
become a instrument for recovery of money.
13. The complainant has stated that whenever he demanded the
balance amount, he was assured by the concerned persons that
payment would be made later and that he should not worry. Even
if these allegations are accepted, they indicate that after business
supplies were completed or during continuance thereof, demands
for payment were made and assurances were given. Such conduct
may amount to failure to honour promise. But by itself it does not
establish that when the goods were ordered or when the goods
7
::: Uploaded on - 22/04/2026 ::: Downloaded on - 22/04/2026 13:31:42 :::
apl168-2013-.doc
were received, the accused persons had dishonest intention to
cheat the complainant. In law of cheating, intention at inception is
the main requirement. Failure to pay cannot by inference convert
every unpaid transaction into cheating. The Supreme Court in
Delhi Race Club (1940) Ltd has reiterated that mere non payment
is not enough. There must be material showing fraudulent
inducement at the commencement of transaction. In the present
complaint, there is no allegation that the applicant made any false
statement at the beginning, nor that he knowingly made a
representation which was false, nor that the complainant was
induced by deceit to part with goods. The allegations revolve
around non clearing of bills and dues. Such averments may found
a civil claim for money recovery. However, on their plain reading,
they do not satisfy the ingredients necessary for constituting
offence of cheating.
14. The allegation under Section 406 also does not stand. To
constitute criminal breach of trust, law requires that property must
be entrusted to the accused, or the accused must have dominion
over property belonging to another. Thereafter, such property must
be dishonestly misappropriated, converted, used, or disposed of
contrary to law or contract. In the present matter, the transaction
disclosed from the FIR is one of sale of goods. Plastic cans were
supplied for price. Once goods were delivered against agreed
consideration, the property in the goods passes to the purchaser
under the principles governing sale of goods. After such transfer, it
cannot be said that the purchaser was holding the seller’s property
in trust. The complainant has nowhere shown that any goods were
8
::: Uploaded on - 22/04/2026 ::: Downloaded on - 22/04/2026 13:31:42 :::
apl168-2013-.doc
handed over for custody, safe keeping or any fiduciary object. Nor
is there any case that property continued to belong to complainant
and was later misused. What is alleged is simply that sale
consideration remained unpaid. Non payment of price may create
debt. It may entitle the seller to sue for money, interest, damages,
or other remedies. But without elements of entrustment and
dishonest conversion, it does not amount to criminal breach of
trust. The law explained in Delhi Race Club does not permit that
every unpaid invoice should be dressed as criminal prosecution.
15. Much emphasis was laid by learned counsel for respondent
No. 2 on the contention that the applicant has not produced
unimpeachable material to show that he had resigned as Director
of Eshaditi Chem Pvt. Ltd. It was urged that therefore he continued
to be responsible for affairs of company. In my view, even if this
contention is assumed for argument sake, it does not advance the
complainant’s case. Mere continuance as Director does not
complete the offences alleged. Criminal liability cannot be
attached only because a person held office or designation in a
company. Penal law requires specific role and mens rea. There is
no narration of any act showing dishonest design attributable to
him. The complaint remains silent on these facts. Therefore, mere
reference to his position as Director cannot substitute the
necessary allegations required in criminal law.
16. The complainant has also alleged that the applicant had
similarly cheated other concerns such as Potdar Chemicals. In
proceedings for quashing, the Court is required to see whether the
FIR discloses ingredients of the offence complained of. There must
9
::: Uploaded on - 22/04/2026 ::: Downloaded on - 22/04/2026 13:31:42 :::
apl168-2013-.doc
be material indicating dishonest intention, entrustment, deception,
or misuse relatable to the present transaction. In the present case,
such material is absent. Broad allegations of having cheated others
cannot cure defects in the FIR.
17. The principle stated in Delhi Race Club clarifies that where
the substance of complaint is regarding price of goods sold and
unpaid invoices, invocation of Section 406 becomes unsustainable.
Unless the facts disclose criminal intention independent of default,
the Court must prevent misuse of penal process. On the present
record, I do not find such criminal element.
18. Having considered the entire matter in totality, I am of the
opinion that the FIR does not disclose the ingredients of offences
punishable under Sections 406 and 420 of the Indian Penal Code
against the present applicant. The dispute is civil in nature arising
from supply of goods and alleged non payment of balance
consideration. If criminal proceedings are permitted to continue
on such allegations, the same would amount to abuse of the
process of law. The inherent jurisdiction of this Court exists to
prevent such misuse and to secure the ends of justice. Therefore,
interference is warranted.
19. In view of the foregoing discussion and for the reasons
recorded hereinabove, the following order is passed:
(i) The Criminal Application is allowed;
(ii) C.R. No. 111 of 2012 registered with Jejuri Police
Station for the offences punishable under Sections 406 and
420 of the Indian Penal Code, 1860, and all consequential
10
::: Uploaded on - 22/04/2026 ::: Downloaded on - 22/04/2026 13:31:42 :::
apl168-2013-.doc
proceedings arising therefrom, are quashed and set aside
insofar as the present applicant is concerned;
(iii) Rule is made absolute in the above terms;
(iv) There shall be no order as to costs.
(v) Pending interim applications, if any, do not survive and
stand disposed of.
(AMIT BORKAR, J.)
11
::: Uploaded on - 22/04/2026 ::: Downloaded on - 22/04/2026 13:31:42 :::