[2025:RJ-JP:41980] HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR S.B. Criminal Miscellaneous (Petition) No. 2089/2018 Arun Kumar, CEO Apps Daily, D-3137-3139, Oberoy Estate Garden, Chandwali, Andheri (East) Mumbai-400072. ----Petitioner Versus 1. State of Rajasthan through PP 2. Vikas Agarwal Proprietor Radhey Trade Link, 175 Indra Colony, Bani Park, Jaipur. ----Respondents For Petitioner(s) : Mr. Anand Singh Rajawat Mr. Madho Prapan Swami with Ms. Priyanka Barupal & Mr. Lakshya Dadhich For Respondent(s) : Mr. Vivek Sharma, PP HON'BLE MR. JUSTICE ANAND SHARMA Order REPORTABLE 14/10/2025 1. The instant criminal misc. petition was filed by the petitioner for seeking a prayer to quash and set aside the entire proceedings pursuant to Criminal Complaint No.33/17 pending before the Court of Metropolitan Magistrate No.17, Jaipur Metropolitan, Jaipur. 2. It is submitted by learned counsel for the petitioner that the petitioner is Chief Executive Officer of Apps Daily, which is a company incorporated under the provisions of Companies Act and has been indulged in the retail business for mobile handsets through distributors and retailers. It is further submitted that Radhey Trade Link through his proprietor Vikas Agarwal was [2025:RJ-JP:41980] (2 of 13) [CRLMP-2089/2018] appointed distributor in furtherance of the business transactions. One complaint was filed by complainant- Vikas Agarwal Proprietor of Radhey Trade Link alleging therein that in December 2015, Radhey Trade Link was appointed as distributor of Apps Delhi and it was promised that whenever the complainant would withdraw from distributorship of Apps Daily, the remaining mobile sets/goods shall be taken back by the Apps Daily or it would get the goods transferred to any of his partner, and would also grant sufficient time to complainant for making recovery of the goods sold on credit in the market. 3. It was further alleged in the complaint that believing upon the promise made by Arun Kumar, CEO Apps Daily, the complainant started its business, however, after some months one more distributor was appointed by Apps Daily, which was objected by the complainant and on such objections the petitioner directed the complainant to transfer all the remaining goods to super stockist of Apps Daily, namely Rudrani Telelink through Naveen Kumar Maheshwari. It was also promised that payment of the returned goods shall also be made to the complainant. However, despite transferring the remaining goods, payment was not received by complainant which shows that the complainant has been cheated by the petitioner as well as its super stockist. 4. On such complaint, statements under Section 200 & 202 Cr.P.C. were recorded on behalf of the complainant and vide order dated 23.08.2017 and in quite mechanical manner cognizance has been taken by the Court of Metropolitan Magistrate No.17, Jaipur Metropolitan, Jaipur against the petitioner for [2025:RJ-JP:41980] (3 of 13) [CRLMP-2089/2018] offences under Section 420 & 406 of IPC. The petitioner has challenged the proceedings on following grounds:- (i) Bare perusal of the contents of complaints would not make out any cognizable offence whatsoever against the petitioner. (ii) Even cursory examination of the contents of the complaints would make it clear that the dispute between the petitioner and complainant is with regard to civil/commercial transactions and there is no criminal element whatsoever. (iii) The complainant was more aggrieved by appointment of another distributor for selling the goods in the market and aggrieved by such action of the petitioner, in order to exert undue pressure upon the petitioner, the complaint has been filed maliciously. (iv) It is submitted that the complaint is silent with respect of necessary ingredients of cheating defined under Section 415 of IPC as well as in respect of criminal breach of trust as contemplated under Section 406 IPC. (v) The Court below has utterly failed to appreciate that the offences under Section 420 & 406 IPC cannot run simultaneously for the reason that where there is inducement (essential ingredient of Section 415 IPC), there cannot be any entrustment which is necessary for making out offence under Section 406. (vi) In the aforesaid circumstances, cognizance taken by the Court below on such frivolous and vexatious complaints would cause miscarriage of justice to the petitioner. [2025:RJ-JP:41980] (4 of 13) [CRLMP-2089/2018] (vii) The petitioner being Chief Executive Officer of Apps Daily, which is a company incorporated under the provisions of Companies Act, cannot be held criminally liable for the daily business of the company. Learned counsel relied upon the judgment of Hon'ble Supreme Court in the case of Anita Malhotra Vs. Apparel Export Promotion Council & Anr. reported in (2012) 1 SCC 520. 5. In the light of aforesaid grounds learned counsel for the petitioner prays for quashing the proceedings relating to the aforesaid criminal complaint. 6. No one has put in appearance on behalf of the complainant. 7. Learned Public Prosecutor has opposed the petitioner and submitted that the scope of criminal misc. petition under Section 482 Cr.P.C. is extremely limited and it can be exercised sparingly more particularly when the trial Court after recording the statements of the complainant under Section 200 & 202 Cr.P.C. as well as after examining the material on record has taken cognizance against the petitioner. It is further submitted that at the stage of cognizance, defence of the accused cannot be looked into and the concerned Court is required to simply examine the contents of the complaint as well as the documents enclosed along with the complaint. Hence, the Court below has committed no mistake whatsoever in passing order of cognizance dated 23.08.2017. 8. Heard learned counsel for the petitioner as well as learned Public Prosecutor and perused the record. [2025:RJ-JP:41980] (5 of 13) [CRLMP-2089/2018] 9. Bare perusal of the contents of complaints would make it clear that there is no specific averment reflecting any inducement by the petitioner or causing of any undue gain or loss on account of such inducement, which is the basic requirement of implicating any person for an offence under Section 420 IPC. Even otherwise, nothing has come out from the perusal of complaint to support that the intention of the petitioner right from the beginning was to cheat the complainant. Instead thereof, the complaint itself reveals that there is apparent dispute with regard to appointment of any other distributor in the business jurisdiction of the complainant, which was earlier assigned to him at the time of appointing the complainant as distributor and second dispute is with regard to alleged payment of goods returned by the complainant at the time of surrendering distributation. 10. Thus, quite clearly the commercial dispute has been given a criminal colour. It also appears that the sole intention to lodge a complaint was to exert undue pressure upon the petitioner to again appoint the complainant as sole distributor of its company thus, in order to have civil gains, criminal jurisdiction has been invoked which prima facie appears to be malicious on the part of complainant. 11. In the case of Sachin Garg Vs. State of U.P. reported in 2024 (2) Supreme 73, the Hon'ble Supreme Court has deprecated the practice of invoking criminal jurisdiction for settling the commercial disputes. Para 14 of the above judgment lays down as under:- "14.Past commercial relationship between the appellant’s employer and the respondent no.2 is admitted. It would also be evident from the petition of complaint the dispute between the parties [2025:RJ-JP:41980] (6 of 13) [CRLMP-2089/2018] centered around the rate at which the assigned work was to be done. Neither in the petition of complainant nor in the initial deposition of the two witnesses (that includes the complainant) the ingredients of the offence under Section 405 of the 1860 Code surfaced. Such commercial disputes over variation of rate cannot per se give rise to an offence under Section 405 of the 1860 Code without presence of any aggravating factor leading to the substantiation of its ingredients. We do not find any material to come to a prima facie finding that there was dishonest misappropriation or conversion of any material for the personal use of the appellant in relation to gas supplying work done by the respondent no.2. The said work was done in course of regular commercial transactions. It cannot be said that there was misappropriation or conversion of the subject property, being dissolved acetylene gas which was supplied to the factory for the purpose of battery manufacturing at EIL. The dispute pertains to the revision of rate per unit in an ongoing commercial transaction. What has emerged from the petition of complaint and the initial deposition made in support thereof that the accused-appellant wanted a rate variation and the entire dispute arose out of such stand of the appellant. On the basis of these materials, it cannot be said that there was evidence for commission of offence under Section 405/406. The High Court also did not apply the test formulated in the case of Dalip Kaur (supra). We have narrated the relevant passage from that decision earlier." 12. In the case of Paramjeet Batra v. State of Uttarakhand reported in 2013 (11) SCC 673, the Hon'ble Supreme Court has held as under:- "7. While exercising its jurisdiction under Section 482 of the Code the High Court has to be cautious. This power is to be used sparingly and only for the purpose of preventing abuse of the process of any court or otherwise to secure ends of justice. Whether a complaint discloses a criminal offence or not depends upon the nature of facts alleged therein. Whether essential ingredients of criminal offence are present or not has to be judged by the High Court. A complaint disclosing civil transactions may also have a criminal texture. But the High Court must see whether a dispute which is essentially of a civil nature is given a cloak of criminal offence. In such a situation, if a civil remedy is available and is, in fact, adopted as has [2025:RJ-JP:41980] (7 of 13) [CRLMP-2089/2018] happened in this case, the High Court should not hesitate to quash criminal proceedings to prevent abuse of process of court." 13. The Co-ordinate Bench of this Court in the case of Simara Foods Pvt. Ltd. Vs. State of Rajasthan & Anr., has held as under:- "20. India differentiates between criminal law and civil law by different statutes, different remedies and different punishments. There are multiple reasons as to why criminalisation of commercial disputes can be harmful to the legal system. Commercial disputes are often complex matters involving contractual agreements, business practices, and interpretations of trade laws and regulations. Resolving such disputes through criminal prosecution could lead to overly harsh punishments that may not fit the circumstances. Maintaining a clear separation between criminal law (designed to punish conduct that threatens public safety and welfare) and commercial law (designed to govern the fair conduct of business dealings) helps preserve the legitimacy and proper scope of each legal domain. 22. Even cases where rendition of accounts is an important factor, there should be a strict bar to criminal remedy. It is a process that is quite common in businesses, criminalising such commercial offence will not only burden the courts but also halt several businesses. Section 482 Cr.P.C plays a vital role in ensuring no civil cases are turned into criminal cases. Inherent power of the High Courts allow them to quash any such cases which have been initiated due to malafide incidents. The Hon'ble Supreme Court in the famous case of State of Haryana & Ors. v. Bhajan Lal &Anr., 1992 Supp (1) SCC 335, stated that the case should be quashed “where a criminal proceeding is manifestly attended with malafide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge. 26. Simultaneously, Courts should not hesitate in quashing the criminal proceedings which are essentially arising out of civil or commercial disputes between the two parties as held by the Hon’ble Apex Court in case of Paramjeet Batra (supra) and Dalip Kaur (supra). Police stations [2025:RJ-JP:41980] (8 of 13) [CRLMP-2089/2018] can/should not be allowed to work as recovery agent or to make pressure upon one party of the litigation in the garb of criminal investigation to settle the civil disputes." 14. In the case of State of Haryana Vs. Bhajan Lal 1992 Supp(1) SCC 335, the Hon'ble Supreme Court has held as under:- "(102). In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under Section 482 of the Code which we have extracted and reproduced above, we have given the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised. (1) Where the allegations made in the first information report or the complaint, even if they are 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. (2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code. (3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused. (4) Where, the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code. [2025:RJ-JP:41980] (9 of 13) [CRLMP-2089/2018] (5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused. (6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party. (7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge." 15. Learned counsel for the petitioner has raised one ground that the offences under Section 406 & 420 IPC cannot co- exist simultaneously as the necessary ingredients for commission of such offences are diagnostic opposite. 16. I have examined the provisions of Section 405 IPC and 415 IPC, which are reproduced as under:- "405. Criminal breach of trust.—Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits “criminal breach of trust”. [Explanation 1].—A person, being an employer 3 [of an establishment whether exempted under section 17 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952) or not] who deducts the employee’s contribution from the wages payable to the employee for credit to a Provident Fund or Family Pension Fund established by any law for the time being in force, shall be deemed to have been entrusted with the amount of [2025:RJ-JP:41980] (10 of 13) [CRLMP-2089/2018] the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said law, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid.] [Explanation 2.—A person, being an employer, who deducts the employees’ contribution from the wages payable to the employee for credit to the Employees' State Insurance Fund held and administered by the Employees' State Insurance Corporation established under the Employees’ State Insurance Act, 1948 (34 of 1948), shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said Act, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid.] 415. Cheating.—Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to “cheat”. Explanation.—A dishonest concealment of facts is a deception within the meaning of this section." 17. The Hon'ble Supreme Court in the case of Arshad Neyaz Khan Vs. State of Jharkhand & Anr. reported in 2025 SCC OnLine SC 2058 has dealt with the similar contention and ingredients of cheating and criminal breach of trust have been meticulously examined. The Hon'ble Supreme Court has held as under:- "18. In light of the facts and circumstances of the present case, we find that the complainant/respondent No. 2 has failed to make out case that satisfes the basic ingredients of the ofence under Section 420 IPC. We fail to understand as to how the allegations against the appellant herein could be brought within the scope and ambit of the aforesaid section. On a bare perusal of the FIR as well [2025:RJ-JP:41980] (11 of 13) [CRLMP-2089/2018] as the complaint, we do not fnd that the ofence of cheating as defned under Section 420 IPC is made out and we do not fnd that there is any cheating and dishonest inducement to deliver any property or a valuable security involved in the instant case. 19. It is settled law that for establishing the ofence of cheating, the complainant/respondent No. 2 was required to show that the appellant had a fraudulent or dishonest intention at the time of making a promise or representation of not fulflling the agreement for sale of the said property. Such a culpable intention right at the beginning when the promise was made cannot be presumed but has to be made out with cogent facts. In the facts of the present case, there is a clear absence of dishonest and fraudulent intention on the part of the appellant during the agreement for sale. We must hasten to add that there is no allegation in the FIR or the complaint indicating either expressly or impliedly any intentional deception or fraudulent/dishonest intention on the part of the appellant right from the time of making the promise or misrepresentation. Nothing has been said on what the misrepresentations were and how the appellant intentionally deceived the complainant/respondent No. 2. Mere allegations by the complainant/respondent No. 2 that the appellant failed to execute the agreement for sale and failed to refund the money paid by the complainant/respondent No. 2 does not satisfy the test of dishonest inducement to deliver a property or part with a valuable security as enshrined under Section 420 IPC. 20. On perusal of the allegations contained in the complaint, in light of the ingredients of Section 406 IPC, read in the context of Section 405 IPC, do not fnd that any ofence of criminal breach of trust has been made out. It is trite law that every act of breach of trust may not result in a penal ofence unless there is evidence of a manipulating act of fraudulent misappropriation of property entrusted to him. In the case of criminal breach of trust, if a person comes into possession of the property and receives it legally, but illegally retains it or converts it to its own use [2025:RJ-JP:41980] (12 of 13) [CRLMP-2089/2018] against the terms of contract, then the question whether such retention is with dishonest intention or not and whether such retention involves criminal breach of trust or only a civil liability would depend upon the facts and circumstances of the case. In the present case, the complainant/respondent No. 2 has failed to establish the ingredients essential to constitute an ofence under Section 406 IPC. The complainant/respondent No. 2 has failed to place any material on record to show us as to how he had entrusted property to the appellant. Furthermore, the complaint also omits to aver as to how the property, so entrusted to the appellant, was dishonestly misappropriated or converted for his own use, thereby committing a breach of trust. 21. Furthermore, it is pertinent to mention that if it is the case of the complainant/respondent No. 2 that the ofence of criminal breach of trust as defned under Section 405 IPC, punishable under Section 406 IPC, is committed by the accused, then in the same breath it cannot be said that the accused has also committed the ofence of cheating as defned in Section 415, punishable under Section 420 IPC. This Court in Delhi Race Club (1940) Limited v. State of Uttar Pradesh, (2024) 10 SCC 690 observed that there is a distinction between criminal breach of trust and cheating. For cheating, criminal intention is necessary at the time of making false or misleading representation i.e. since inception. In criminal breach of trust, mere proof of entrustment is sufcient. Thus, in case of criminal breach of trust, the ofender is lawfully entrusted with the property, and he dishonestly misappropriates the same. Whereas, in case of cheating, the ofender fraudulently or dishonestly induces a person by deceiving him to deliver a property. In such a situation, both ofences cannot co-exist simultaneously. Consequently, the complaint cannot contain both the ofences that are independent and distinct. The said ofences cannot co-exist simultaneously in the same set of facts as they are antithetical to each other." 18. Thus, the aforesaid judgment would make it clear that there is a distinction between criminal breach of trust and [2025:RJ-JP:41980] (13 of 13) [CRLMP-2089/2018] cheating. For cheating mens rea is necessary while making false or misleading representation right from the date of inception. In criminal breach of trust, mere proof of entrustment is sufficient and for proving such offence, which is to be proved by the complainant it should be established that the property was lawfully entrusted to the accused, who has later on dishonestly misappropriated the same, whereas in the exercise of cheating, even it is required to be proved that the offender has fradulently or dishonestly induced the complainant by deceiving him to deliver a property. Thus, the necessary ingredients of both the aforesaid offences would make it clear that the offence of cheating as well as criminal breach of trust cannot co-exist simultaneously and hence, cognizance could not have been taken by the Court below for offence of cheating and criminal breach of trust by one and the same order. 19. For the reasons mentioned hereinabove and in the light of guidelines given by the Hon'ble Supreme Court, this Court deems it just and proper to invoke its inherent jurisdiction in the instant matter and the Criminal Complaint No.33/17 pending before the Court of Metropolitan Magistrate No.17, Jaipur Metropolitan, Jaipur along with all subsequent proceedings is hereby quashed and set aside. 20. The instant criminal misc. petition is allowed, accordingly. (ANAND SHARMA),J DIVYA /39