Gujarat HC Quashes FIR Against Company Executive Over ₹1.33-Crore Maize Dues, Citing Years Of Trade And No Specific Role

The complainant, a maize trader, alleged that Anil Limited and associated entities owed him ₹1,33,93,560 for goods supplied on credit.

He alleged that 30 post-dated cheques were issued and that the accused asked him not to present them; after their validity expired, the dates were allegedly altered without proper validation.

The complainant lodged an FIR at Mansa Police Station on 12 April 2018, alleging offences under Sections 406, 420 and 114 IPC.

The applicant, described as a company employee/director, sought quashing under Section 482 CrPC, contending that the FIR disclosed no specific role or criminal offence against him.

Section 406 IPC requires entrustment of property and its dishonest misappropriation; an ordinary sale of goods, in which ownership passes to the buyer, creates a debtor-creditor relationship rather than entrustment.

Section 420 IPC requires dishonest or fraudulent intention at the time of inducement; subsequent failure to perform a promise, without such initial intention, is insufficient (Hridaya Ranjan Prasad Verma v. State of Bihar, (2000) 4 SCC 168).

The Court relied on Delhi Race Club (1940) Ltd. v. State of Uttar Pradesh, (2024) 10 SCC 690, regarding the absence of entrustment in ordinary buyer-seller transactions, and reiterated that the IPC does not impose vicarious criminal liability on a director or employee merely by virtue of that position.

Under Section 482 CrPC and the categories in State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335, proceedings may be quashed where the allegations do not disclose an offence or are manifestly mala fide.

The Court also invoked the caution in Indian Oil Corpn. v. NEPC India Ltd., (2006) 6 SCC 736, against using criminal proceedings as a means of debt recovery.

The Court treated the alleged supply of maize as a straightforward sale: the FIR described unpaid invoices, not property entrusted to the applicant, so the ingredients of Section 406 IPC were absent.

It found no pleaded facts showing that the company or applicant had a dishonest intention when the goods were ordered; the history of prior business dealings and the later request to defer cheque presentation did not, without more, establish cheating from inception.

The FIR also did not attribute a specific act of inducement or other culpable conduct to the applicant, and corporate employment alone could not create IPC liability.

The complainant’s reliance on other pending cases and warrants did not supply missing facts in this FIR.

The Court therefore considered the allegations insufficient to disclose an offence against the applicant and within the grounds for quashing under Bhajan Lal.

Rule was made absolute in those terms.