A commercial dispute does not warrant quashing an FIR where allegations prima facie disclose cognizable offences.

Respondent No. 2 alleged that his company and the petitioners’ company entered into an arrangement for sourcing materials and manufacturing garments for Benetton (UCB).

The complaint alleged that payments were to be credited to an escrow account, but petitioner No. 2 instead received the payment in her separate account and used it for her personal benefit.

On the complaint, police registered Crime No. 327/2022 for offences under Sections 406 and 420 read with Section 34 of the IPC.

The petitioners sought quashing under Section 482 of the CrPC, contending that the dispute was civil and the complaint did not disclose the alleged offences.

1. Whether the complaint and material on record prima facie disclosed offences under Sections 406 and 420 read with Section 34 of the IPC

2. Whether the FIR should be quashed under Section 482 of the CrPC because the dispute arose from a commercial transaction and was, in the petitioners’ submission, civil in nature

The petition invoked Section 482 of the CrPC, which empowers the High Court to prevent abuse of process and secure the ends of justice.

The alleged offences were under Sections 406 and 420 read with Section 34 of the IPC.

The Court applied the principle that a commercial character does not, by itself, warrant quashing where the complaint and available material prima facie disclose cognizable offences; nor should a matter be terminated at the threshold on the basis of an unsubstantiated defence while investigation remains at an early stage.

The petitioners cited Deepak Gaba v. State of Uttar Pradesh, Salib @ Shalu @ Salim v. State of Uttar Pradesh and Lalit Chaturvedi v. State of Uttar Pradesh; the order does not set out or separately apply propositions from those decisions.

The Court considered the purchase order, the parties’ correspondence and the petitioners’ admission that an escrow account had been opened for receiving Benetton’s payment.

It found that these materials prima facie supported the allegation that payment was received in petitioner No. 2’s separate account rather than the escrow account, contrary to the parties’ arrangement.

On that basis, the Court held that the allegations prima facie disclosed cheating under Section 420 IPC and that the serious allegations concerning the funds required investigation.

It declined to resolve the petitioners’ competing account of the transaction or assess their defence at the quashing stage.

dismissed the criminal petition for lack of merit.