Commercial nature and civil remedy do not bar prosecution where FIR discloses prima facie cheating.

The petitioners sought quashing under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (“BNSS”) of FIR No. 0142 dated 14 February 2019, registered at Police Station City Karnal under Sections 406, 420 and 120-B IPC, together with the final report/charge-sheet, the order rejecting their discharge application, and the order framing charges.

The complainant, proprietor of M/s Tirupati Enterprises, alleged that the petitioners represented M/s Royal Star Agro Foods and M/s Mam Raj Chunni Lal Exim as their own/interconnected firms, induced him to supply rice to their godowns, initially made payments to gain his confidence, and thereafter caused rice to be supplied without making the outstanding payment of approximately ₹15,34,359.50.

After investigation, the police presented a challan on 17 September 2019. The petitioners were granted anticipatory bail and subsequently faced trial.

Their application for discharge under Section 239 Cr.P.C. was dismissed on 17 July 2026, following which charges were framed on 23 July 2026.

Whether the allegations in the FIR, taken at face value, disclosed the prima facie ingredients of offences under Sections 406, 420 and 120-B IPC, or merely reflected a civil/commercial dispute concerning non-payment of money

Whether the High Court should exercise its inherent jurisdiction under Section 528 BNSS to quash the FIR, charge-sheet, order refusing discharge and order framing charges in view of the petitioners’ defence and the earlier Economic Offences Wing inquiry

Whether the decision in Delhi Race Club (1940) Ltd. v. State of Uttar Pradesh, 2024 INSC 626, required quashing of the criminal proceedings

The Court applied Section 528 BNSS, which is pari materia with Section 482 Cr.P.C., conferring inherent power upon the High Court to prevent abuse of the process of court, secure the ends of justice and give effect to court orders.

It relied on State of Haryana v. Bhajan Lal, 1992 Supp. (1) SCC 335, particularly the categories permitting quashing where the allegations do not disclose an offence, are inherently improbable, or constitute mala fide proceedings.

Paramjeet Batra v. State of Uttarakhand, (2013) 11 SCC 673, establishes that criminal proceedings may be quashed where the essential ingredients of the alleged offence are absent, while Randheer Singh v. State of Uttar Pradesh, (2021) 14 SCC 626, holds that criminal proceedings cannot be used as a weapon of harassment.

Under Gian Singh v. State of Punjab, (2012) 10 SCC 303, the inherent jurisdiction to quash is distinct from statutory compounding and must be exercised to secure justice or prevent abuse; Narinder Singh v. State of Punjab, (2014) 6 SCC 466, permits consideration of whether the possibility of conviction is remote and continuation would cause oppression or injustice.

Dhruvaram Murlidhar Sonar v. State of Maharashtra, (2019) 18 SCC 191, and Neeharika Infrastructure v. State of Maharashtra, 2021 SCC OnLine SC 315, caution that the High Court should not undertake a meticulous appreciation of evidence or enter into the merits where the FIR discloses a cognizable offence.

The Court also relied on Ajay Malik v. State of Uttarakhand, 2025 SCC OnLine SC 185, reiterating that quashing is appropriate in cases of mala fides, abuse of process, absence of a prima facie offence, vague allegations, or a purely civil dispute.

The Court held that the FIR did not allege mere non-payment arising from a commercial transaction. It contained specific allegations that the petitioners falsely represented the ownership or interconnection of two firms, induced the complainant to supply rice, initially made payments to establish confidence, and thereafter used the two firms to route transactions and conceal liability.

These allegations, if accepted at face value, disclosed elements of deception, dishonest inducement and an alleged concerted arrangement, and were not inherently improbable.

The petitioners’ reliance on the Economic Offences Wing inquiry, their assertion that they had no direct dealings with the complainant, and their account-based explanations raised disputed factual and evidentiary questions that could not be adjudicated in inherent jurisdiction.

The fact that the transactions were commercial or that the complainant possessed a civil remedy did not exclude criminal liability where the allegations prima facie disclosed cheating and conspiracy.

Since investigation was complete, the charge-sheet had been filed, discharge had been refused and charges had been framed, the Court found no exceptional circumstance warranting interference.

Delhi Race Club was distinguished because it concerned a case essentially limited to non-payment, whereas the present FIR contained allegations of false representation, dishonest inducement, initial payments to gain confidence and an arrangement to avoid liability.

The petition under Section 528 BNSS was accordingly dismissed, and the Court declined to quash the FIR, final report/charge-sheet, order dated 17 July 2026 rejecting discharge, or order dated 23 July 2026 framing charges.

The Court clarified that its observations were confined to deciding the quashing petition and would not affect the merits of the trial.