High Courts cannot quash cheating proceedings under inherent jurisdiction where disputed facts require evidentiary appreciation.

The petitioners sought quashing of FIR No. 196/2017 registered at Police Station Chhawni, Durg, charge-sheet No. 414/2023, and the order dated 22 January 2026 framing charges under Sections 420 read with 34 IPC in RCC No. 5161/2024.

The prosecution arose from an Agency Agreement dated 13 October 2014 between the complainant, M/s Shree Enterprises, and Arise India Limited. The petitioners were allegedly associated with the company in different capacities.

The petitioners contended that the dispute concerned defective or returned goods, refund of purchase and security amounts, and other contractual obligations. They argued that there was no dishonest intention at the inception of the transaction, that ₹20,00,000 towards security had been refunded, and that the company later suffered financial difficulties and entered liquidation.

They further relied on the agreement’s Delhi jurisdiction clause, the complainant’s claim before the Official Liquidator, and the alleged absence of specific roles attributed to certain petitioners.

The State opposed quashing, maintaining that the FIR, investigation material, charge-sheet, and framing of charges disclosed a cognizable offence and that the petitioners’ contentions raised disputed questions of fact appropriate for trial.

1. Whether the FIR, charge-sheet, and criminal proceedings under Sections 420/34 IPC disclosed the basic ingredients of cheating against the petitioners so as to justify continuation of the prosecution?

2. Whether the High Court should exercise its inherent jurisdiction under Section 528 of the BNSS to quash the proceedings on the grounds that the dispute was contractual/commercial, there was no dishonest intention at inception, certain amounts were refunded, and the petitioners had no specific role?

3. Whether the contractual Delhi jurisdiction clause, the alleged absence of acts within Durg, and the petitioners’ assertion that some had left the company before the transaction warranted quashing of the proceedings?

The Court applied Section 420 read with Section 34 of the IPC, requiring the prosecution to establish cheating accompanied by dishonest or fraudulent intention and the existence of common intention where Section 34 is invoked.

It exercised its inherent jurisdiction under Section 528 of the BNSS, corresponding to Section 482 CrPC, which is to be used sparingly and only to prevent abuse of process or secure the ends of justice.

Relying on Rupan Deol Bajaj v. K.P.S. Gill, Rajesh Bajaj v. State of NCT of Delhi, and Medchl Chemicals & Pharma (P) Ltd. v. Biological E Ltd., the Court held that proceedings should not be quashed where the allegations, taken at face value, disclose a prima facie offence; however, patently absurd allegations may be quashed.

Under Neeharika Infrastructure Pvt. Ltd. v. State of Maharashtra, the High Court cannot assess the reliability of allegations, appreciate evidence, or conduct a mini-trial at the quashing stage.

Applying Pradeep Kumar Kesharwani v. State of Uttar Pradesh, the Court further held that quashing on the basis of defence material is permissible only where material of sterling and impeccable quality completely demolishes the prosecution case and cannot be refuted by the prosecution.

The Court held that the FIR and investigation material required consideration against the petitioners and that the Investigating Officer had filed a charge-sheet after collecting supporting material; cognizance had also been taken and charges had been framed.

The petitioners’ reliance on the commercial character of the transaction, contractual terms, partial refund, company liquidation, and the claim before the Official Liquidator did not conclusively negate dishonest intention or establish that no offence was made out.

Whether the petitioners possessed dishonest intention, whether they participated in the alleged acts, and what role each played involved appreciation of evidence and could not be determined in proceedings under Section 528 BNSS.

The Delhi jurisdiction clause did not, by itself, exclude the possibility that part of the alleged offence occurred within Durg, while the assertions concerning territorial jurisdiction and the petitioners’ prior departure from the company involved disputed factual questions.

Since the defence material did not completely demolish the prosecution case, the matter was required to proceed before the trial court.

The petition seeking quashing of FIR No. 196/2017, charge-sheet No. 414/2023, and the order dated 22 January 2026 framing charges under Sections 420/34 IPC was dismissed.

The trial court was directed to proceed expeditiously and make every endeavour to conclude RCC No. 5161/2024 at the earliest, while ensuring a fair trial and remaining uninfluenced by the observations made in the quashing proceedings.