IN THE HIGH COURT OF PUNJAB & HARYANA 290 Rajesh and another State of Punjab and a CORAM : HON'BLE MR. Present :- Ms. for the petitioner Mr. Saurav Verma, Addl. AG, Punjab. Ms for respondent No. VINOD S. BHARDWAJ Prayer in the present petition is for quashing of FIR bearing No.298 dated 15.11.2023 Indian Penal Code, 1860 at Police Station Phillaur, Jalandhar, along with all subsequent proceedings arising therefrom on the basis of agreement/compromise dated 31.05.2024 (Annexure P 2. Briefly summari statement of Nikhil Bhuchchar, Limited, Phillaur, District Jalandhar under:- To the Senior Superintendent of Police Jalandhar (Rural). Punjab. Sub: Complaint of cheating, Fraud, Misrepresentation & Criminal Breach of trust under sections 403, 405, 406, 409, 420 of the Indian Penal Code by and on behalf of Cremica food Industries Li provisions of the Companies Act, 1956 having its office at IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH CRM-M-61191 Date of decision: and another VERSUS and another HON'BLE MR. JUSTICE VINOD Ms. Shivya Sehgal, Advocate, for the petitioners. Mr. Saurav Verma, Addl. AG, Punjab. s. Rajinder Kaur, Advocate, for respondent No.2. VINOD S. BHARDWAJ, J. (Oral) Prayer in the present petition is for quashing of FIR bearing No.298 dated 15.11.2023, registered under Sections 420 and 120 Indian Penal Code, 1860 at Police Station Phillaur, Jalandhar, along with all subsequent proceedings arising therefrom on the basis of agreement/compromise dated 31.05.2024 (Annexure P Briefly summarized, the aforesaid FIR was registered on the Nikhil Bhuchchar, Director of Cremica Food Industries Limited, Phillaur, District Jalandhar, relevant part of To the Senior Superintendent of Police Jalandhar (Rural). Punjab. Sub: Complaint of cheating, Fraud, Misrepresentation & Criminal Breach of trust under sections 403, 405, 406, 409, 420 of the Indian Penal Code by and on behalf of Cremica food Industries Limited a Company duly incorporated under the provisions of the Companies Act, 1956 having its office at IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH 61191-2025(O&M) Date of decision: 22.01.2026 ...Petitioner(s) ...Respondent(s) JUSTICE VINOD S. BHARDWAJ Mr. Saurav Verma, Addl. AG, Punjab. Prayer in the present petition is for quashing of FIR bearing registered under Sections 420 and 120-B of the Indian Penal Code, 1860 at Police Station Phillaur, Jalandhar, along with all subsequent proceedings arising therefrom on the basis of the settlement agreement/compromise dated 31.05.2024 (Annexure P-2). aforesaid FIR was registered on the of Cremica Food Industries relevant part of which is extracted as To the Senior Superintendent of Police Jalandhar (Rural). Punjab. Sub: Complaint of cheating, Fraud, Misrepresentation & Criminal Breach of trust under sections 403, 405, 406, 409, 420 of the Indian Penal Code by and on behalf of Cremica food mited a Company duly incorporated under the provisions of the Companies Act, 1956 having its office at SUMIT SINGH GUSAIN 2026.02.03 13:08 I attest to the accuracy and integrity of this document 290 CRM-M-61191-2025(O&M) -2- Theing Rd, Phillaur, Punjab 144410 (hereinafter referred to as "Complainant Company") against the following accused persons: 1. M/s avni foods having its office at Plot No.FP 2 & 3 MIDC, Butibori Nagpur ("Accused No.1"), 2 Mr. Rajesh Rathi, Partner/Proprietor of M/s Avni foods having its office at Plot No. FP 2 & 3 MIDC, Butibori, Nagpur("Accused No.02'), 3. Mr. Sanjay Rathi, Partner/Proprietor of M/s Avni foods having its office at Plot No. FP 2 & 3 MIDC, Butibori, Nagpur ("AccusedNo.03') (Hereinafter jointly referred to as "Accused Persons"), who with an ulterior motive and dishonest intention defrauded, induced and cheated the complainant company and committed the offence of cheating fraud, misrepresentations & Criminal breach of trust to the tune of Rs. 1,89,20,989/- (Rupees One Crore Eighty nine Lakhs Twenty Thousand Nine Hundred and Eighty Nine only) with the complainant company, Respected Sir, The grievance which leads to the filing of the present complaint is as under: 1. That the above named Accused No.1 is a proprietorship/partnership firm of Accused No.2 to 3. Accused No.2 and 3 being the proprietor/partners of the Accused No.1, are in-charge of the day-to-day affairs of the Accused No.1, 2. That Accused No.1 to 3 in collusion and connivance with each other had targeted the Complainant, with the malafide intent to cheat and defraud the Complainant for a sum of Rs.1,89,20,989/-(Rupees One Crore Eighty Nine Lakhs Twenty Thousand Nine Hundred and Eighty Nine only). The detailed sequence of events is enumerated as follows: (A) In the month of November, 2021 the above named Accused No.1to 3 has approached and induced the complainant Company to purchase spray cheese powder being manufactured by them. The Complainant was induced to believe that the food products being manufactured and sold by Accused persons was upto the Standards and as per the required specification of the Complainant Company. Copy of the documents exhibiting agreed standards and specifications are annexed herewith as SUMIT SINGH GUSAIN 2026.02.03 13:08 I attest to the accuracy and integrity of this document 290 CRM-M-61191-2025(O&M) -3- ANNEXURE-A(B). Based on the representation and assurances given by the Accused Persons and without being aware of the malafide intentions of Accused No.1 to 3, the Complainant Company has agreed to place an order with the Accused Persons. It is pertinent to mention here that the Accused No.1 to 3 have jointly persuaded the Complainant Company to purchase bulk quantities and represented that their products would be superior quality and based on such repeated assurances, the Complainant Company placed a bulk order of 8000 KG with the Accused persons. Copy of the relevant PO's are annexed herewith as ANNEXURE-B. (C). That the material supplied by the Accused Persons was utilized by the Complainant company for making the food products and the said food products were supplied by the Complainant Company to its various distributors across the country, however, to the utter shock and surprise of the Complainant using the materials supplied by the Accused Persons were returned by the Distributors of the Complainant company on account of poor quality which has caused huge financial losses to the tune of Rs.1,89,20,989/- (Rupees One Crore Eighty Nine Lakhs Twenty thousand Nine Hundred and Eighty Nine only) to the Complainant Company. (D). That upon using the aforesaid products, the Complainant Company immediately got tested the material supplied by the Accused Person. To the utter shock and surprise of the Complainant Company, the result of such test carried out by an accredited Lab exhibited that the material supplied by the Accused No.1 to 3 to the Complainant was different from what was agreed to be provided by the Accused Persons to the Complainant Company. The products supplied by the Accused Persons were of sub-standard quality and grade and even did not match with the specifications as were confirmed by the Accused No.1 to 3. Copy of the test report dated October, 29, 2022 is annexed herewith as ANNEXURE- C(E). That the Accused Persons have deliberately induced the SUMIT SINGH GUSAIN 2026.02.03 13:08 I attest to the accuracy and integrity of this document 290 CRM-M-61191-2025(O&M) -4- Complainant Company by falsely representing to deliver superior quality products as per agreed specifications and secured a bulk order. Thereafter, as a part of a pre-planned conspiracy, provided the Complainant with sub-standard and low-quality material with the malafide intention to cheat and cause grave financial distress and losses to the Complainant Company. 3. That the Accused Persons upon receipt of the order from the Complainant, supplied them with sub-standard and low grade material. The accused persons were entrusted to supply the raw materials as per agreed standards and specifications, which they have deliberately failed to provide. The Accused persons has knowingly and with criminal intent breached the trust of complainant company and cheated the complainant company by providing substandard and low grade products. 4. It is submitted that the Complainant Company through its officials made numerous reminders and made its best endeavours and efforts to contact Accused No.1 to 3 for realization of the losses suffered by it to the tune of Rs.1,89,20,989/- (Rupees One Crore Eighty Nine Lakhs Twenty Thousand Nine Hundred and Eighty Nine only) however, Accused No.1 to 3 out-rightly refused to make the payment of the aforementioned amount. 5. It is also submitted that all the accused No.1 to 3 with common intention and motive have together conspired to commit the act of cheating and criminally breaching the trust of the complainant company and have now been misappropriating their funds for their own gain and benefits. The said actions of Accused No.1 to 3 are a part of conspiracy which has been hatched by them to dupe the complainant company. 6. That all the material supplied by the Accused Persons was received by the Complainant Company at its office/plant at Theing Rd., Phillaur, Punjab 144410. Therefore, your good office has the jurisdiction to investigate the present matter. You are therefore requested to register FIR against the aforesaid persons.” SUMIT SINGH GUSAIN 2026.02.03 13:08 I attest to the accuracy and integrity of this document 290 CRM-M-61191-2025(O&M) -5- 3. However, with the intervention of the respectables, the parties have decided to compromise the matter. Hence, the present petition. The parties were thus directed to appear before the learned trial Court/Illaqa Magistrate vide order dated 03.11.2025 of this Court, to get their statements recorded regarding the compromise arrived at between the parties and a report in this regard was called for. 4. Pursuant to the said order, a report has been received from the Sub-Divisional Judicial Magistrate, Phillaur, vide Memo No.5626 dated 15.12.2025. The relevant extract of the report is reproduced as under:- “After having considered the statements of the parties i.e. statement of accused persons, complainant and Investigating Officer ASI Sanjiv Kumar No.417/JR, P.S. Phillaur, the point wise report is submitted as under:- 1. As per the statement of Investigating Officer ASI Sanjiv Kumar No. 417/JR, P.S. Phillaur, there are two persons namely, Rajesh and Sanjay found involved as accused in this case/FIR. 2. As per statement of Investigating Officer ASI Sanjiv Kumar No. 417/JR, P.S. Phillaur, only Nikhil Bhuchchaur is complainant/victim is involved in this case. 3. As per statement of Investigating Officer ASI Sanjiv Kumar No.417/JR, P.S. Phillaur, all the accused and complainant/victim are party to the compromise and signed the same. 4. As per statement of Investigating Officer ASI Sanjiv Kumar No.417/JR, P.S. Phillaur, neither any accused nor affected person is left out or not arrayed as party in the present case. SUMIT SINGH GUSAIN 2026.02.03 13:08 I attest to the accuracy and integrity of this document 290 CRM-M-61191-2025(O&M) -6- 5. As per statement of Investigating Officer ASI Sanjiv Kumar No.417/JR, P.S. Phillaur, no accused has been declared as Proclaimed Offender/person or any such proceedings against accused initiated or pending adjudication against the accused. 6. In view of statements of the parties, compromise arrived between them appears to be bonafide and is not result of any pressure or coercion and the same is the result of free will of the parties. The compromise effected between the parties appears to be genuine and valid.” 5. Learned State Counsel does not dispute the factum of the compromise amongst the parties and does not have any serious objection to the resolution of the dispute amongst the parties. 6. Learned counsel for respondent No.2 reiterates the settlement and her concurrence to the FIR and all the other consequential proceedings being quashed. 7. Hon'ble Supreme Court in the matter of 'CBI, ACB Mumbai v. Narendra Lal Jain and others’, reported as (2014) 5 SCC 364, held as under: “13. In the present case, as already seen, the offence with which the respondent-accused had been charged are under Sections 120-B/420 of the Penal Code. The civil liability of the respondents to pay the amount to the Bank has already been settled amicably. The terms of such settlement have been extracted above (see para 3). No subsisting grievance of the Bank in this regard has been brought to the notice of the Court. While the offence under Section 420 IPC is compoundable the offence under Section 120-B IPC is not. To the latter offence the ratio laid down in B.S. Joshi [(2003) 4 SCC 675] and Nikhil SUMIT SINGH GUSAIN 2026.02.03 13:08 I attest to the accuracy and integrity of this document 290 CRM-M-61191-2025(O&M) -7- Merchant [(2008) 9 SCC 677] would apply if the facts of the given case would so justify. The observation in Gian Singh[(2012) 10 SCC 303] (para 61) will not be attracted in the present case in view of the offences alleged i.e. under Sections 420/120-B IPC. 14. In the present case, having regard to the fact that the liability to make good the monetary loss suffered by the Bank had been mutually settled between the parties and the accused had accepted the liability in this regard, the High Court had thought it fit to invoke its power under Section 482 CrPC. We do not see how such exercise of power can be faulted or held to be erroneous. Section 482 of the Code inheres in the High Court the power to make such order as may be considered necessary to, inter alia, prevent the abuse of the process of law or to serve the ends of justice. While it will be wholly unnecessary to revert or refer to the settled position in law with regard to the contours of the power available under Section 482 CrPC it must be remembered that continuance of a criminal proceeding which is likely to become oppressive or may partake the character of a lame prosecution would be good ground to invoke the extraordinary power under Section 482 CrPC.” 8. On consideration of the above, the following relevant factors emerge for supplementing a case for invocation of the powers under Section 528 of BNSS, 2023:- (i) A monetary dispute arose between the petitioners and the respondent-complainant on account of the supply of sub- standard spray cheese powder by the former to the latter. (ii) The petitioners are brothers aged 53 years and 61 years respectively, and continuation of criminal proceedings would hamper their career prospects and the discharge of their social obligations; SUMIT SINGH GUSAIN 2026.02.03 13:08 I attest to the accuracy and integrity of this document 290 CRM-M-61191-2025(O&M) -8- (iii) The offence in question cannot be said to be heinous or as an offence that would be shocking to the conscience of the society or public at large. It can also not be termed as one shocking to the conscience of the Court; 9. In view of the report of the Sub-Divisional Judicial Magistrate, Phillaur and having regard to the settled principles laid down by the Hon’ble Supreme Court on the subject, the instant petition is allowed.The FIR bearing No.298 dated 15.11.2023, registered under Sections 420 and 120-B of the Indian Penal Code, 1860 at Police Station Phillaur, Jalandhar, along with all subsequent proceedings arising therefrom is hereby quashed in view of the settlement agreement/compromise dated 31.05.2024 (Annexure P-2). 10. Petition is allowed in the above terms. 22.01.2026 (VINOD S. BHARDWAJ) Sumit Gusain JUDGE Whether speaking/reasoned : Yes/No Whether reportable : Yes/No SUMIT SINGH GUSAIN 2026.02.03 13:08 I attest to the accuracy and integrity of this document