Criminal prosecution of a director is impermissible without specific allegations of deception or entrustment of property.

The Petitioner, Managing Director of M/s Kashish Developers Private Limited, sought to quash Jagarnathpur (Pundag) P.S. Case No. 395 of 2022

The case originated from a private complaint referred to the police under Section 156(3) CrPC, alleging offences under Sections 354, 406, 420, 506, and 34 of the IPC

The complainant alleged that although land was transferred to his wife and associate via a registered sale deed—pursuant to a Supreme Court direction—certain "musclemen" were disturbing their possession

The Petitioner was impleaded solely in his capacity as Managing Director of the company, with no specific allegations of personal involvement or overt acts

1. Whether the allegations in the FIR, taken at face value, satisfy the essential ingredients of Sections 354, 406, 420, and 506 of the IPC against the Petitioner

2. Whether the criminal proceeding constitutes an abuse of the process of law by giving a civil dispute the cloak of a criminal offence

The Court primarily applied the standards for quashing under Section 482 of the CrPC to prevent the abuse of the process of law

It relied on Uma Shankar Gopalika v. State of Bihar, holding that Section 420 IPC (cheating) requires fraudulent deception at the very inception of the transaction

To constitute an offence under Section 406 IPC (criminal breach of trust), there must be entrustment followed by dishonest misappropriation or conversion

Further, citing Indian Oil Corporation v. NEPC India Ltd., the Court emphasised that purely civil/contractual disputes should not be converted into criminal cases to exert pressure

The Court observed that the FIR lacked any specific allegations against the Petitioner regarding the outraging of modesty (Section 354) or criminal intimidation (Section 506)

Regarding the economic offences, the Court found no evidence of entrustment or misappropriation to satisfy Section 406

Critically, regarding the charge of cheating under Section 420, the Court noted the absence of any allegation that the Petitioner played a deception from the beginning of the property transaction

The Court determined that the Petitioner was being prosecuted merely because of his corporate designation. Applying the principles of Indian Oil Corporation, the Court reasoned that the dispute was essentially civil in nature and that the continuation of criminal proceedings where no prima facie case was made out would result in a miscarriage of justice

The Court held that the criminal proceeding against the Petitioner was an abuse of the process of law. Consequently, the High Court allowed the petition and quashed the entire criminal proceeding in connection with Jagarnathpur (Pundag) P.S. Case No. 395 of 2022 specifically as against the Petitioner