Dambarudhar Agrawal v. State of Chhattisgarh

Mr. Sunil Otwani, Sr. Advocate along with Mr. Amit Soni, Advocate 2 Hon'ble Shri Ramesh Sinha, Chief Justice Hon'ble Shri Ravindra Kumar Agrawal, Judge Order on Board Per Ramesh Sinha, Chief Justice 25/08/2026

Heard Mr. Prafull Bharat, Sr. Advocate along with Mr. Anuroop Panda, learned counsel for the petitioners. Also heard Mr. Somya Rai, Dy. Advocate General, for the State/Respondent No.1 and Mr. Sunil Otwani, Sr. Advocate along with Mr. Amit Soni, learned counsel for the Respondent No. 2.

The petitioners have filed the present petition with the following prayer: "a) That, this Hon'ble Court may kindly be pleased to call for the records pertaining to the case of the Petitioners. b) That, this Hon'ble Court may kindly be pleased to pass an appropriate order for quashing impugned F.I.R. dated 05.01.2023 bearing Crime No. 004/2023 registered with Police Station Tumgaon Thana, Mahasamundh, Chhattisgarh (Respondent No.1) against the present Petitioners, in the interest of justice. c) That, any other relief which this Hon'ble Court may deem fit in the interest of justice, may kindly be awarded. "

The brief facts of the case are that the Petitioners, namely Damrudhar Agrawal and Saraswati Agrawal, are Directors of Raj Rajeshwari Infra Project Pvt. Ltd., whereas Petitioner No.3 is its authorised signatory. The Petitioners issued a work order dated 27.09.2019 to Starx Minerals Pvt. Ltd. for drilling, blasting, loading, transportation and manpower supply for crushing operations at Acholi, District Mahasamund, for the period from October, 2019 to June, 2021. It is alleged by the complainant that adequate work was not 3 allotted to it despite the terms of the work order requiring production of six lakh metric tonnes of boulders within eighteen months, resulting in financial loss, and that the Petitioners thereafter agreed to pay Rs.60,00,000/- towards idle charges and issued a fresh work order dated 14.10.2021. According to the complainant, even after completion of the work, the Petitioners refused to pay the alleged outstanding amount and extended threats. On the basis of the complaint, Crime No.004/2023 was registered at Police Station Tumgaon, District Mahasamund, for offences punishable under Sections 406 and 420 read with Section 34 of the IPC. The petitioners contend that the dispute is purely contractual and commercial in nature, that the allegations do not disclose the ingredients of the alleged offences, and that the impugned FIR has been lodged on false and omnibus allegations, hence, the present petition has been filed seeking quashing of the FIR.

Learned Senior Advocate, appearing for the petitioners submits that the impugned FIR has been lodged arising out of a purely contractual and commercial dispute between the parties in respect of the work orders dated

27.09.2019 and 14.10.2021. Respondent No.2 was engaged for drilling, blasting, loading, transportation and manpower supply at the Acholi site, and the Petitioners have already paid an amount of Rs.3,04,94,614/- towards the work actually executed. The dispute arose only with regard to the alleged claim of Rs.60,00,000/- towards idle charges, which was never agreed to by the Petitioners and was not part of the work orders. The correspondence exchanged between the parties also makes it clear that the dispute was confined to the claim of idle charges and the payment thereof. It is therefore submitted that there was no dishonest or fraudulent intention on the part of the Petitioners from the inception of the transaction and no entrustment or 4 misappropriation of property, and hence the essential ingredients of Sections 406 and 420 of the IPC are not made out.

He further submits that even if the allegations contained in the FIR are taken at their face value and accepted in their entirety, they do not disclose commission of any criminal offence by the Petitioners. The dispute is essentially regarding the entitlement and payment of an alleged contractual amount, which cannot be given a criminal colour merely to exert pressure upon the Petitioners for recovery of money. The allegations are vague and unsupported by any material indicating dishonest inducement, criminal breach of trust or misappropriation. It is thus submitted that continuation of the investigation and criminal proceedings against the Petitioners would amount to an abuse of the process of law and cause undue harassment to them. Accordingly, learned counsel prays that the impugned FIR dated

05.01.2023 bearing Crime No.004/2023 registered at Police Station Tumgaon, District Mahasamund, under Sections 406 and 420 read with Section 34 of the IPC, be quashed.

Per contra, learned counsel appearing for Respondent No.1/State opposes the petition and submits that the impugned FIR has been registered on the basis of a written complaint containing specific allegations of fraud, cheating and misappropriation against the Petitioners in connection with the work undertaken by Respondent No.2 pursuant to the work order. It is submitted that, according to the complaint, Respondent No.2 had deployed machines and manpower at the site, but was allegedly not provided the requisite quantum of work, resulting in financial loss, and thereafter the Petitioners allegedly agreed to pay an amount of Rs.60,00,000/- towards idle charges but failed to make the payment. On the basis of the aforesaid 5 allegations, Crime No.004/2023 was registered for offences punishable under Sections 406 and 420 read with Section 34 of the IPC and the matter is still under investigation. Learned counsel submits that the allegations in the FIR, if taken at their face value, prima facie disclose commission of cognizable offences and require detailed investigation. At this stage, the defence of the Petitioners, the documents relied upon by them and their claim regarding payment of dues cannot be examined or appreciated, as the same are matters of evidence. Since the investigation is at its initial stage and the Investigating Agency is in the process of collecting the relevant evidence, interference by this Court would be premature. It is, therefore, submitted that no exceptional ground for exercise of inherent jurisdiction for quashing of the FIR is made out and the petition, being devoid of merit, deserves to be dismissed.

Learned Senior Counsel appearing for Respondent No.2 submits that the impugned FIR has been registered on the basis of specific allegations disclosing commission of cognizable offences under Sections 406 and 420 read with Section 34 of the IPC, and that the Petitioners had dishonest intention from the inception of the transaction to deceive the Respondent No.2. It is submitted that the FIR cannot be quashed at this stage merely on the ground that the dispute arises out of a contractual transaction, particularly when the allegations prima facie disclose the ingredients of the alleged offences. The investigation could not be completed on account of the interim order passed by this Court staying the effect and operation of the FIR, and therefore the actual role and intention of the Petitioners could be ascertained only after a fair and complete investigation. Learned Senior Counsel further submits that the defence of the Petitioners and the documents relied upon by them cannot be appreciated while exercising jurisdiction for quashing of the 6 FIR, as such disputed questions are matters to be examined during investigation and, if necessary, at the stage of trial. It is, therefore, submitted that the impugned FIR does not suffer from any illegality or abuse of process of law and the petition, being devoid of merit, deserves to be dismissed.

We have heard learned counsel for the parties and perused the documents appended with this petition.

The question which arises for consideration is whether, on the allegations contained in the impugned FIR, the essential ingredients of the offences punishable under Sections 406 and 420 read with Section 34 of the IPC are prima facie disclosed against the petitioners so as to justify continuation of the criminal proceedings. It is well settled that while exercising jurisdiction under Section 482 of the Cr.P.C., this Court ordinarily does not embark upon an appreciation of evidence or adjudicate disputed questions of fact. However, where the allegations in the FIR, even if taken at their face value and accepted in their entirety, do not disclose the commission of any offence, or where the criminal proceedings are manifestly attended with mala fide or have been instituted with an ulterior motive, interference is warranted to prevent abuse of the process of law and to secure the ends of justice.

In the present case, the undisputed background of the matter is that Respondent No.2 was engaged by the petitioners pursuant to the work orders for carrying out drilling, blasting, loading, transportation and manpower supply at the Acholi site. The grievance of Respondent No.2 essentially relates to non-allotment of the alleged requisite quantity of work and its consequent claim for payment of Rs.60,00,000/- towards idle charges. The material placed on record, including the correspondence exchanged between the parties, indicates that the dispute between them arose with regard to the 7 entitlement and payment of the alleged idle charges. The petitioners have also placed on record that an amount of Rs.3,04,94,614/- was paid towards the work actually executed. Thus, the entire transaction commenced pursuant to contractual work orders and continued for a considerable period, and there is no allegation that, at the inception of the transaction, the petitioners had made any false representation or dishonest inducement with an intention to deceive Respondent No.2.

So far as the offence under Section 420 of the IPC is concerned, the essential requirement is the existence of dishonest or fraudulent intention at the very inception of the transaction, coupled with inducement and delivery of property pursuant thereto. Mere subsequent failure to make payment of a disputed contractual claim, by itself, does not constitute the offence of cheating. In the present case, the FIR does not disclose any specific representation made by the petitioners at the inception of the contractual relationship which was false to their knowledge, nor does it disclose that Respondent No.2 was induced to part with any property on account of such fraudulent representation. The allegation regarding non-payment of idle charges, even if accepted as true, essentially gives rise to a dispute regarding contractual liability and the quantum of amount payable.

Likewise, the ingredients of Section 406 of the IPC are also not prima facie made out. For constituting criminal breach of trust, there must be entrustment of property or dominion over property followed by dishonest misappropriation or conversion thereof. The allegations contained in the FIR do not disclose any such entrustment of property to the petitioners or subsequent dishonest misappropriation thereof. The dispute essentially concerns payment of money allegedly due under the contractual arrangement. Mere non-payment of a disputed amount cannot, without the 8 necessary element of entrustment and dishonest misappropriation, constitute an offence of criminal breach of trust.

The contention of learned counsel for Respondent No.2 that the petitioners had dishonest intention from the inception is not supported by any specific factual allegation in the FIR. The mere use of expressions such as fraud, cheating or misappropriation in the complaint cannot, by itself, constitute the offences alleged when the foundational facts necessary to constitute such offences are absent. The Supreme Court has consistently held that criminal proceedings cannot be permitted to continue merely to exert pressure in a dispute which is essentially civil or commercial in nature, particularly where the basic ingredients of the alleged criminal offences are not disclosed.

In State of Haryana & Ors. v. Bhajan Lal & Ors., 1992 Supp. (1) SCC 335, the Supreme Court has illustrated the categories of cases in which the extraordinary power of the High Court may be exercised, including where the allegations made in the FIR, even if taken at their face value and accepted in their entirety, do not prima facie constitute any offence or make out a case against the accused, and where the criminal proceeding is manifestly attended with mala fide or has been instituted with an ulterior motive. The present case, in our considered opinion, falls within the aforesaid parameters, as the allegations, even if accepted in their entirety, disclose at best a contractual dispute concerning the alleged idle charges and do not satisfy the essential ingredients of Sections 406 and 420 of the IPC.

It is true that ordinarily an FIR disclosing commission of a cognizable offence should not be interdicted at the threshold and that disputed questions of fact are not to be examined in proceedings under Section 482 of the 9 Cr.P.C. However, the rule of non-interference is not absolute. Where the admitted and undisputed circumstances, coupled with the allegations in the FIR, demonstrate that continuation of the criminal proceedings would amount to permitting the criminal process to be used for enforcement of a disputed civil or commercial claim, this Court would be justified in exercising its inherent jurisdiction. The pendency of investigation, in such circumstances, cannot by itself be a ground to refuse relief where the allegations fail to disclose the commission of the offences alleged.

In view of the aforesaid discussion, we are of the considered opinion that the allegations contained in the impugned FIR do not disclose the essential ingredients of Sections 406 and 420 read with Section 34 of the IPC against the petitioners. The dispute between the parties is essentially contractual and commercial in nature and relates to the alleged liability towards idle charges. Continuation of the criminal proceedings in the facts of the present case would amount to an abuse of the process of law. Accordingly, the present petition deserves to be allowed.

Consequently, the petition is allowed. The impugned FIR dated

05.01.2023 bearing Crime No.004/2023 registered at Police Station Tumgaon, District Mahasamund, for offences punishable under Sections 406 and 420 read with Section 34 of the Indian Penal Code, 1860, and all consequential proceedings arising therefrom, are hereby quashed qua the present petitioners. Sd/- Sd/- (Ravindra Kumar Agrawal) (Ramesh Sinha) Judge Chief Justice sagrika