Criminal Breach of Trust and Cheating Over the Same Facts Cannot Simultaneously Co-exist.

The Applicants, directors and employees of Keleone Trading Company Pvt. Ltd., were accused by Opposite Party No. 2 (Director of Kashvi Designs Pvt. Ltd.) of fraudulently posing as representatives of a French brand "Leon and Harper" (L&H).

The informant alleged that the Applicants induced him to supply garments worth €80,349.40, out of which €32,478.60 remained unpaid.

The informant claimed the Applicants blackmailed him for discounts and physically assaulted him.

After investigation, a charge-sheet was filed under Sections 323, 406, 409, 420, 504, 506 IPC, and the Magistrate took cognizance.

The Applicants contended the dispute was purely commercial, involving a commission agreement and a contract directly between Kashvi Ltd. and L&H France, currently subject to a commercial suit.

1. Whether a predominantly commercial dispute involving breach of contract for payment can be prosecuted as a criminal offense under Sections 406 and 420 IPC.

2. Whether criminal proceedings can be quashed where the Magistrate takes cognizance under Sections 406 and 420 IPC simultaneously without assigning specific reasons for their co-existence on the same facts.

3. Whether the continuation of the criminal proceedings constitutes an abuse of the process of law.

The Court applied Section 528 of the Bhartiya Nagarik Suraksha Sanhita (BNSS), 2023.

While cheating (Sec 420) and criminal breach of trust (Sec 406) involve dishonest intent, they are mutually exclusive and cannot co-exist on the same facts.

Where a dispute is predominantly civil with no element of criminality, the High Court is justified in quashing the charge.

Purely civil disputes should not be given a criminal color to wreak vengeance.

The Court observed that the crux of the matter was a commercial disagreement regarding the full and final payment for garments and the deduction of commissions/penalties between three business entities.

The Court found no "element of criminality" or "dishonest intent ab initio," characterizing the case as a mere breach of contract.

The Court found that cognizance was taken under both Sections 406 and 420 IPC mechanically, without explaining how these distinct offenses could run simultaneously on the same set of facts, rendering the order cryptic.

The allegations of assault were found to be vague "well-grafted" pleadings lacking any medical corroboration, suggesting the FIR was designed to exert pressure for a civil recovery.

The Court allowed the application and quashed the charge-sheet dated 14.03.2022, the summoning order dated 23.03.2022, and the entire proceedings of Criminal Case No. 582 of 2022 under Sections 323, 406, 409, 420, 504, 506 IPC.