Karnataka HC Refuses To Quash FIR Against Dealer Over Alleged ₹4-Crore Misappropriation, Says Probe Is Needed

The petitioner sought to quash the FIR in Crime No. 79/2026 of Mandya East Police Station, registered for alleged offences under Sections 316(2), 318(2) and 318(4) of the Bharatiya Nyaya Sanhita, 2023 (BNS).

The petitioner had acted as a dealer coordinating between respondent No. 2, an agricultural-equipment supplier, and sub-dealers.

The complaint alleged that the petitioner misappropriated approximately Rs. 4 crore, including subsidy-related funds, by diverting money into his accounts.

The petitioner argued that the dispute was civil in nature and that the complaint was delayed, asserting that respondent No. 2 knew of the alleged misappropriation in September 2024.

Respondent No. 2 disputed that account, contending that the alleged fraud came to light in 2025, after cheques issued by the petitioner were dishonoured.

The petition invoked the High Court’s inherent jurisdiction under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) (also described in the petition as filed under Section 482 CrPC).

The Court’s reasoning proceeded on the principle that where the complaint alleges misappropriation and the circumstances of the transfers and subsequent use of funds remain disputed, those matters may require police investigation rather than determination in a quashing petition.

The complaint alleged that funds were transferred to the petitioner’s accounts and misappropriated.

The petitioner accepted that business-related sums were transferred to his account, but the parties disputed whether the transfers were authorised and whether the funds were applied in accordance with respondent No. 2’s instructions.

Because resolving those questions required examination of the transactions and the parties’ instructions, the Court held that investigation was appropriate and declined to quash the FIR.

The Court also found no basis to quash on delay grounds, noting that the complaint did not state that respondent No. 2 learned of the alleged misappropriation on 18 September 2024.

It clarified that its observations were confined to the quashing petition and did not express an opinion on the merits of the complaint; all contentions were left open.