Doctor’s ₹2.15-Crore Diagnostic-Centre Investment: Karnataka HC Refuses To Quash FIR, Says Complaint Shows Prima Facie Cheating

In brief

The question

Whether the complaint and FIR disclosed a prima facie case under the alleged IPC provisions, or instead concerned a purely civil dispute over investment and non-payment

The court held

The Court held that the petitioners had not established grounds to quash the complaint or FIR and dismissed the writ petition.

It also directed

It left the petitioners at liberty to challenge any adverse report in accordance with law.

01Facts

Respondent No. 2 complained that, after being induced to invest in Saptagiri Digital Imaging Centre Pvt. Ltd., he invested ₹1.75 crore and later a further ₹40 lakh following a request by petitioner No. 2. He alleged that the company did not pay returns and that the Memorandum of Understanding was not renewed, leaving his investment with the company

pp. 3–5, 12–14

The police registered Crime No. 32/2021 against the petitioners and others for offences under Sections 406, 420 and 120B read with Section 34 of the IPC. The petitioners sought to quash the complaint and FIR, contending that the dispute was civil in nature and that the complaint was an abuse of process

pp. 2, 5–11

02Issues

i.Whether the complaint and FIR disclosed a prima facie case under the alleged IPC provisions, or instead concerned a purely civil dispute over investment and non-payment

pp. 11–15

ii.Whether the FIR should be quashed in the exercise of the High Court’s jurisdiction under Articles 226 and 227 of the Constitution read with Section 482 of the CrPC

pp. 2, 10–11

03Law Applied

The petition invoked Articles 226 and 227 of the Constitution and Section 482 of the CrPC, under which the High Court was asked to quash the complaint and FIR

p. 2

The alleged offences were Sections 406, 420 and 120B read with Section 34 of the IPC

p. 3, 11

The Court applied the principle that the fact a transaction has a civil aspect does not, by itself, warrant quashing where the complaint discloses prima facie elements of criminality; it cited no precedents in its reasoning

pp. 14–15

Provisions in the judgment · 4 · Linked ones open on LawLens

Code of Criminal Procedure, 1973 Section 482

Indian Penal Code, 1860 Section 406 Section 420 Section 34

04Reasoning

The Court treated the initial investment of ₹1.75 crore as undisputed and noted the allegation that petitioner No. 2 sought a further ₹40 lakh when the complainant raised the absence of profits

pp. 12–13

It also noted that the investment remained with the company, that the Memorandum of Understanding had not been renewed, and that the petitioners were among the company’s directors

p. 14

Whether the niece and her fiancé, or the petitioners, were responsible for the company’s losses was a matter for investigation. On the complaint’s allegations, the Court found a prima facie element of cheating and rejected the contention that the dispute was purely civil

pp. 14–15