DISHANT JAYESHKUMAR BHATT vs STATE OF GUJARAT

R/CR.MA/3291/2020 JUDGMENT DATED: 27/07/2026
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION (FOR QUASHING & SET ASIDE
FIR/ORDER) NO. 3291 of 2020

FOR APPROVAL AND SIGNATURE:


HONOURABLE MR.JUSTICE P. M. RAVAL

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Approved for Reporting Yes No
✔
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DISHANT JAYESHKUMAR BHATT
Versus
STATE OF GUJARAT & ANR.
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Appearance:
MR B U MODI(6069) for the Applicant(s) No. 1
MR SAVAN N PANDYA(5600) for the Applicant(s) No. 1
NISHIDHKUMAR M PATEL(8335) for the Applicant(s) No. 1
NOTICE SERVED BY DS for the Respondent(s) No. 2
MR. KANVA ANTANI, APP for the Respondent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE P. M. RAVAL

Date : 27/07/2026

ORAL JUDGMENT
1. Though served, none appears for the respondent No.2.
2. By way of the application under Section 482 of the Code of
Criminal Procedure, 1973 (hereinafter referred to as “Cr.P.C.”), the
applicant has prayed to quash and set aside FIR being C.R.No.I-126
of 2019, registered with Satellite Police Station, Ahmedabad City for
the offences punishable under Sections 406, 420 and 120B of the
IPC and Section 23(1) of the Securities Contracts (Regulation) Act,
1956, and all the consequential proceedings arising therefrom.
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3. As per the allegations levelled in the FIR are to the effect that,
on 265.12.2019 police officers were present at police station and at
that time they received private information that one person namely
Jay S/o Nareshbhai Brahmbhatt on his way of Bageshri Society and
is having an application namely META TRADER-5 in his mobile
for online gambling trading and he is present at that place and
thereafter they have reached the place and took the mobile phone of
him and while searching the mobile they have found said application
in his mobile and in the application they have found transaction of
gambling activities in above mentioned application and therefore the
police authority have ceased the mobile and have registered FIR and
have arrested the Jay Brahmbhatt. It is also alleged that during the
course of investigation name of present applicant has come into light
as the person who provided the ID and password of this META
TRADER application to co accused.
4. Learned advocate for the applicant would submit that the
applicant has nothing to do with the offence and he is falsely
implicated in it. It is submitted that there is a specific bar contained
in Section 26 of the Act, and the Court could not have taken
cognizance of any offence punishable under the except on a
complaint made by Central Government or State Government or
Security and Exchange Board of India or a recognized stock
exchange or a person. Therefore, the entire proceedings are illegal
and liable to be quashed. It would further submit that the allegations
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R/CR.MA/3291/2020 JUDGMENT DATED: 27/07/2026
leveled against the present applicant are far from the truth and do not
constitute criminal breach of trust. In light of Section 26 of the Act,
the lower court ought not to have taken cognizance of the offenses
based on a police report. Therefore, the application may be allowed.
5. Learned Additional Public Prosecutor for the State would
submit that this Court may pass appropriate order, however, may
keep open the right to the competent authority to take appropriate
steps in accordance with law.
6. Having heard learned advocates on both the sides and
considering the fact, it appears that the name of the present applicant
came to be surfaced on record based on the statement of the original
accused during the investigation alleging that the present applicant
has provided his ID and password of this META TRADER
application to the original accused who alleged to have commit the
Dabba trading.
7. In view of the above, there is no direct evidence or material to
suggest that there was any entrustment of property. The allegations
in the complaint original accuse of engaging in fraud and
misconduct, but nowhere is it alleged that present applicant pocketed
money by causing a loss to anyone or obtaining wrongful gain. Even
if this fact is accepted, it constitutes merely a breach of the Securities
Contract (Regulation) Act, which has been wrongly characterized as
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R/CR.MA/3291/2020 JUDGMENT DATED: 27/07/2026
criminal breach of trust. Criminal breach of trust, as defined in
Section 405 of the IPC, is as follows:
"Whoever, being entrusted with property, or having dominion
over property, dishonestly misappropriates or converts that
property to their own use, 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 they have made
concerning the discharge of such trust, or willfully allows any
other person to do so, commits ‘criminal breach of trust.”
8. In view of the above, it is clear that the applicant has neither
caused any financial loss to anyone nor obtained any wrongful gain.
The investigating agency has also failed to produce any concrete
documents showing financial loss to anyone in support of his
argument. Even when asked on what grounds the criminal breach of
trust is alleged to have been committed by the applicant, the
respondent remained silent. Merely based on the complaint, a case
under the provisions of criminal breach of trust was registered, but
the investigating agency has not produced any evidence to support
this assertion. Therefore, this does not constitute criminal breach of
trust, and Section 406 of the IPC is not applicable.
9. Regarding the provisions under the Securities Contract
(Regulation) Act, upon considering Section 26 of the Act, it is clear
that the lower court ought not to have taken cognizance of the
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offenses based on a police report. Section 26 of the Act states: (1)
No court shall take cognizance of any offense punishable under this
Act, or any rules, regulations, or bye-laws made thereunder, except
on a complaint made by the Central Government, the State
Government, the Securities and Exchange Board of India, a
recognized stock exchange, or any other authorized person. (2) No
court inferior to that of a Court of Session shall try any offense
punishable under this Act.
10. In view of the above, a plain reading of Section 26 of the Act
suggests that no court can take cognizance of any offense punishable
under the Act except on a complaint made by the Central
Government, the State Government, the Securities and Exchange
Board of India, a recognized stock exchange, or any authorized
person. Therefore, no case is made out under the provisions of the
Securities Contract (Regulation) Act.
11. So far as Sections 406 and 420 of the IPC are concerned, both
the Sections cannot be run together, in this regard this Court deems it
proper to refer to the judgment passed by the Hon’ble Apex Court in
the case of Delhi Race Club (1940) Ltd. vs State of Uttar
Pradesh , passed in Criminal Appeal No. 3114 Of 2024, wherein
the Supreme Court of India advised that criminal breach of trust
under Section 406 of the Indian Penal Code (IPC) and cheating
under Section 420 of the IPC are distinct offenses and cannot be
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used together. The Court also advised that if the complainant had a
claim for a specific amount, they should have filed a civil suit
instead of filing a criminal complaint.
12. So far as offence under Section 420 of the IPC is concerned, it
is appropriate to refer to the decision of the Hon’ble Apex Court in
the case of Rekha Jain vs. The State of Karnataka & Anr.
reported in 2022 LiveLaw (SC) 468 , wherein the Hon’ble
Supreme Court held that, to make out a case against a person for the
offence under Section 420 of IPC, there must be a dishonest
inducement to deceive a person to deliver any property to any other
person. Further, in the case of Sarabjit Kaur vs. State of Punjab
& Anr. reported in (2023)5 SCC 360 has held in paragraph No.13
as follows:
“13. A 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. From the facts
available on record, it is evident that the respondent No.2 had
improved his case ever since the first complaint was filed in
which there were no allegations against the appellant rather it
was only against the property dealers which was in subsequent
complaints that the name of the appellant was mentioned. On
the first complaint, the only request was for return of the
amount paid by the respondent No.2. When the offence was
made out on the basis of the first complaint, the second
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complaint was filed with improved version making allegations
against the appellant as well which was not there in the earlier
complaint. The entire idea seems to be to convert a civil
dispute into criminal and put pressure on the appellant for
return of the amount allegedly paid. The criminal Courts are
not meant to be used for settling scores or pressurise parties to
settle civil disputes. Wherever ingredients of criminal offences
are made out, criminal courts have to take cognizance. The
complaint in question on the basis of which F.I.R. was
registered was filed nearly three years after the last date fixed
for registration of the sale deed. Allowing the proceedings to
continue would be an abuse of process of the Court.”
13. In the case of State of Haryana v. Bhajan Lal , reported in
1992 Supp (1) SCC 335, the Apex Court has set out the categories of
cases in which the inherent power under Section 482 CrPC can be
exercised and held in para 102 as under:
“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 Art. 226 or the inherent
powers under Section 482 of the Code which we have
extracted and reproduced above, we give 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
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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 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 noncognizable
offence, no investigation is permitted by a police officer
without an order of a Magistrate as contemplated under
sec. 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
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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.”
14. In the result, the application is allowed. The impugned FIR
being C.R.No.I-126 of 2019, registered with Satellite Police Station,
Ahmedabad City, as well as all consequential proceedings initiated
in pursuance thereof are hereby quashed and set aside qua the
applicant herein. Rule is made absolute. Direct service is permitted.
15. However, it is made clear that by quashing of the abovesaid
FIR, the rights to take appropriate steps in accordance with law by
the competent authority will be open.
(P. M. RAVAL, J)
NITIN MAKWANA
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