Hardware Buyer Allegedly Resold Goods To Hospital, Got Paid Yet Owed Supplier; Karnataka HC Keeps Cheating Probe Alive

Respondent No. 2 alleged that the petitioner purchased hardware materials for ₹51,57,903, issued three post-dated cheques towards payment, and induced the supply by representing that payment would be made.

The first cheque was dishonoured for insufficiency of funds; the petitioner allegedly paid ₹8,00,000, leaving ₹41,07,146 outstanding according to the complaint.

The petitioner sought to quash the FIR registered under Section 318(4) of the Bharatiya Nyaya Sanhita, 2023 (“BNS”), arguing that the dispute was contractual and civil in nature.

Respondent No. 2 maintained that the petitioner had supplied the goods to Aster Hospital, received payment, and failed to pay the outstanding amount.

The petition invoked the High Court’s inherent jurisdiction under Section 482 of the Code of Criminal Procedure, 1973, as corresponding to Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, to seek quashing of the FIR.

The Court applied Section 318(4) of the BNS, which criminalises cheating in the circumstances specified by that provision.

A subsequent failure to perform a contractual obligation, or dishonour of a cheque by itself, does not establish cheating; the allegations must support consideration of dishonest intention at the inception of the transaction.

A civil remedy does not, by itself, bar criminal proceedings where the same facts prima facie disclose a criminal offence.

The Court accepted that the transaction arose from the purchase and supply of goods, but considered the allegations in their entirety: the petitioner allegedly obtained the goods, supplied them to Aster Hospital, received payment, and nevertheless failed to discharge the agreed liability apart from a partial payment.

While cheque dishonour alone was insufficient to establish cheating, these additional allegations were relevant to whether the petitioner had dishonest intent when inducing the supply.

That question could not be conclusively determined at the quashing stage.

The commercial character of the transaction and the availability of civil recovery proceedings therefore did not negate the prima facie case.

The criminal petition was dismissed, and the respondents were directed to complete the investigation and file the investigation report at the earliest.

Respondent No. 2 remained at liberty to pursue civil recovery proceedings, subject to law.