Fraud proceedings cannot continue absent specific allegations linking the accused to the investment scheme.

The complainant alleged that he and his family invested ₹1,09,50,000 in a scheme promoted by Aala Ventures Ltd. and that the promoters initially paid profits but later failed to repay the investments

The police charge-sheeted the petitioners as accused Nos. 8 and 9, alleging that they threatened investors who visited the office seeking repayment; the petitioners sought quashing under Section 482 of the Cr.P.C.

They relied on the quashing of proceedings against accused No. 10, whom they said was similarly placed

The State opposed the petition, contending that witness statements disclosed the petitioners’ involvement

1. Whether the complaint and charge-sheet materials disclosed a sufficient basis to continue proceedings against the petitioners for the alleged offences, given that the allegations against them concerned threats to investors seeking repayment

2. Whether the proceedings against the petitioners should be quashed on the ground of parity with accused No. 10, whose petition had been allowed

The petition was brought under Section 482 of the Cr.P.C., which the Court invoked to quash proceedings where their continuation, in the absence of specific material disclosing the petitioners’ involvement, would amount to an abuse of the process of law

The alleged offences were under Sections 420, 406, 506 and 120B read with Section 34 of the IPC, Sections 3, 4 and 5 of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978, and Section 9 of the Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004

The Court also applied parity, reasoning that substantially similar allegations and material against accused No. 10, whose proceedings had been quashed by a co-ordinate Bench, supported the same relief for the petitioners

The Court found that the complaint principally attributed the establishment and promotion of the scheme, collection of funds, and failure to repay investors to accused Nos. 1–7. It disclosed no specific role for the petitioners in inducing investments, receiving funds, or committing cheating or criminal breach of trust

The charge-sheet’s allegation that the petitioners threatened investors seeking repayment did not, by itself, connect them to the alleged investment fraud

Since the allegations and material against accused No. 10 were substantially similar and his proceedings had been quashed, the Court found no basis to reach a different conclusion for the petitioners

It quashed the proceedings against accused Nos. 8 and 9 in Spl.C.C. No. 1443/2019, arising out of Crime No. 594/2018, for the offences charged