Alleged fraudulent inducement and threats in a supply transaction can sustain criminal proceedings beyond civil breach.

Respondents 2 and 3, proprietors of Mehta Traders, alleged that the petitioner and five others, described as directors or persons responsible for the affairs of M/s Vardhman Solvent Extraction Industries Ltd., induced them to supply soyabean on a promise of payment within ten days.

After delivery and some initial payments, a substantial amount allegedly remained unpaid; the complainants further alleged that they were threatened when they sought payment.

An FIR was registered against the accused, including the petitioner, under Sections 61(2), 316(2), 316(5), 318(4) and 3(5) of the Bharatiya Nyaya Sanhita, 2023 (BNS).

The petitioner sought to quash the FIR and consequential proceedings under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, contending that he was only a salaried employee, had no specific role, and that the dispute was contractual and civil in nature.

1. Whether the FIR and allegations against the petitioner disclosed a prima facie criminal case warranting continuation of the proceedings, or instead revealed only a civil dispute suitable for quashing.

2. Whether the petitioner’s assertion that he was merely an employee, rather than a director or authorised signatory, justified quashing the FIR against him.

3. Whether the asserted overlap between the offences of criminal breach of trust and cheating under the BNS was a ground to quash the FIR.

Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, corresponding to Section 482 of the Code of Criminal Procedure, 1973, preserves the High Court’s inherent power to prevent abuse of process and secure the ends of justice.

Applying State of Haryana v. Bhajan Lal, the Court noted that quashing may be appropriate in the identified categories of cases, including where allegations taken at face value disclose no offence, are inherently improbable, or the proceedings are manifestly mala fide.

The FIR invoked Sections 3(5), 61(2), 316(2), 316(5) and 318(4) of the BNS.

The Court also held that an asserted overlap between Sections 316 and 318 did not itself require quashing, since the trial court could frame charges under the applicable provision in accordance with law.

The Court assessed the allegations at face value and found that they went beyond a mere failure to perform a contractual obligation: the complainants alleged that the accused, including the petitioner, represented themselves as responsible for the company’s affairs, induced delivery of soyabean through assurances of prompt payment, made some initial payments, and then failed to pay the balance; threats were also alleged when payment was demanded.

The petitioner’s claim that he was only an employee did not warrant quashing because the FIR alleged that he had represented himself as responsible for the company’s day-to-day affairs.

Nor did the asserted overlap between criminal breach of trust and cheating justify terminating the proceedings at the FIR stage; the trial court could determine the applicable charge.

The Court therefore found that the Bhajan Lal grounds for quashing were not made out.

The petition was dismissed, leaving the FIR and consequential proceedings to continue.