Cheating prosecution against a company officer quashed absent any direct transaction or inducement.

The complainant alleged that he paid ₹1 lakh through a pay order in favour of HPCL, through its distributor, Ravi Raj, for lubricant products that were not supplied.

He also alleged that, after he sought redress from the petitioner, an HPCL regional manager, the petitioner failed to resolve the grievance and later sent a legal notice.

The Magistrate took cognizance against the petitioner under Section 420 IPC by order dated 28 October 2009.

The petitioner sought quashing, contending that the transaction was between the complainant and the distributor, that no direct transaction or inducement involved him, and that he joined the relevant office years after the events.

1. Whether the complaint and supporting material disclosed a prima facie case of cheating under Section 420 IPC against the petitioner, given that the alleged transaction was conducted through the distributor

2. Whether continuation of the criminal proceedings against the petitioner, and the cognizance order against him, amounted to an abuse of process

Section 420 of the Indian Penal Code was the offence for which cognizance had been taken.

The Court referred to State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335, for the categories in which criminal proceedings may be quashed.

It also relied on Pepsi Foods Ltd. v. Special Judicial Magistrate, (1998) 5 SCC 749, for the principle that summoning an accused is a serious matter and must follow judicial application of mind, rather than being mechanical.

The Court also referred to a coordinate Bench decision concerning the proper identification of an official accused.

The Court found that the alleged payment and transaction were between the complainant and the co-accused distributor; there was no agreement or direct transaction between the complainant and HPCL, and no allegation of direct payment to the petitioner or the company.

In that context, the petitioner’s position as a company official, without allegations connecting him personally to the alleged transaction, did not support continuation of the prosecution against him.

The Court concluded that he had been made an accused to pressure the distributor to recover the complainant’s money, rendering the prosecution against him malicious and vexatious under the principles cited.

The application was allowed.