R/SCR.A/8574/2025 ORDER DATED: 13/08/2025 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CRIMINAL APPLICATION (QUASHING) NO. 8574 of 2025 ========================================================== CHIRAG @ CHIRAGBHAI VIVI SHAMBHULAL THAKKAR Versus STATE OF GUJARAT & ANR. ========================================================== Appearance: SIDDHANT R SHAH(8722) for the petitioner(s) No. 1 Ms DHWANI TRIPATHI, APP for the Respondent(s) No. 1 RULE SERVED for the Respondent(s) No. 2 ========================================================== CORAM:HONOURABLE MR. JUSTICE HASMUKH D. SUTHAR Date : 13/08/2025 ORAL ORDER 1. Though served, none appears for respondent No.2. Considering the facts and circumstances of the case and with assistance of learned APP appearing for the respondent State, matter is taken up for final disposal forthwith. 2. By way of this application under Section 482 of the Code of Criminal Procedure, 1973 (hereinafter referred to as “Cr.P.C.”), the petitioner has prayed to quash and set aside the complaint being FIR C.R. No.11215012210430 of 2021 registered with Khambhat City Police Station, Dist. Anand, for the offences punishable under Sections 406 & 120B of IPC as well as Section 23(f) of The Securities Contract (Regulation) Act, 1956 and all the consequential proceedings arising therefrom. 3. Heard learned advocates for the respective parties. 4. At the instance of first informant, FIR came to be filed on 09.09.2021 inter alia alleging that, he received a secret information with regard to unauthorized share trading being done by three accused persons. Pursuant to the same, raid was conducted at the house of accused No.3 Henal Chetanbhai Patel wherein the complainant found three other accused i.e. R/SCR.A/8574/2025 ORDER DATED: 13/08/2025 Keval Chandrakantbhai Shah, Rishabh Harshadbhai Patel and Henal Chetanbhai Patel. From the spot, the complainant recovered certain laptops and mobiles which were used for trading in stock market by accused Nos.1 to 3. All the laptops and mobile phones were seized by the police personnel from the spot. In this regard, FIR came to be filed. 5. Learned advocate for the petitioner submits that the petitioner has nothing to do with the offence and he is falsely implicated in it. It is submitted that there is a specific bar contained in Section 26 of the Act, and the Court could not have taken cognizance based on a police report in view of this bar. In the present case, in the absence of a complaint in writing filed before the appropriate court, the lower court took cognizance of the alleged offenses based on a police report, which is clearly in contravention of the provisions of Section 26. Therefore, the entire proceedings are illegal and liable to be quashed. It is further submitted that the allegations leveled against the present petitioner are far from the truth and do not constitute criminal breach of trust. In light of Section 26 of the Act, the lower court ought not to have taken cognizance of the offenses based on a police report. Therefore, the application may be allowed. Even otherwise, the allegations levelled in FIR are accepted as it is, then also, the allegation levelled qua the present petitioner is that, he has provided applications through which the accused persons allegedly trading of shares in stock market. Except this, no role is attributed to the petitioner. 6. Learned APP has strongly opposed the present application and submits that the accused persons were engaging in trading in securities without a license or permission and without entering into a contract with SEBI, in violation of the provisions of the Act. During the raid, the police found accused persons at the scene of the offense, along with materials such as laptop, mobile etc. as stated in the FIR. As a result, the petitioner has committed criminal breach of trust and other offences under the Securities Contract (Regulation) Act . He therefore, requested to dismiss the present R/SCR.A/8574/2025 ORDER DATED: 13/08/2025 application. 7. Having heard learned advocates on both the sides and considering the fact, it appears from the complainant that on 09.09.2021, respondent No.2, Police Constable based on information raided the house of accused No.3. The accused were trading in securities without a license or permission and without entering into a contract with SEBI, in violation of the provisions of the Act. It is further alleged that during the raid, the police found accused at the scene of the offense, along with materials such as laptop, mobile etc., as stated in the FIR. 8. In view of the above, there is no direct evidence or material to suggest that there was any entrustment of property. The allegations in the complaint accused the petitioner of engaging in fraud and misconduct, but nowhere it is alleged that he pocketed money by causing a loss to anyone or obtaining wrongful gain. Even otherwise, as per the allegations made, the petitioner was not involved in stock trading activities. Even if this fact is accepted, it constitutes merely a breach of the Securities Contract (Regulation) Act, which has been wrongly characterized as criminal breach of trust. Criminal breach of trust, as defined in Section 405 of the IPC, is as follows: "Whoever, being entrusted with property, or having dominion over property, dishonestly misappropriates or converts that property to their own use, 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 they have made concerning the discharge of such trust, or willfully allows any other person to do so, commits ‘criminal breach of trust.” 9. In view of the above, it is clear that the petitioner has neither caused any financial loss to anyone nor obtained any wrongful gain. The investigating agency has also failed to produce any concrete documents showing financial loss to anyone in support of his argument. Even when asked on what grounds the criminal breach of trust is alleged to have been committed by the petitioner, the respondent remained silent. Merely based R/SCR.A/8574/2025 ORDER DATED: 13/08/2025 on the complaint, a case under the provisions of criminal breach of trust was registered, but the investigating agency has not produced any evidence to support this assertion. Therefore, this does not constitute criminal breach of trust, and Section 406 of the IPC is not applicable. 10. Regarding the provisions under the Securities Contract (Regulation) Act, upon considering Section 26 of the Act, it is clear that the lower court ought not to have taken cognizance of the offenses based on a police report. Section 26 of the Act states: (1) No court shall take cognizance of any offense punishable under this Act, or any rules, regulations, or bye-laws made thereunder, except on a complaint made by the Central Government, the State Government, the Securities and Exchange Board of India, a recognized stock exchange, or any other authorized person. (2) No court inferior to that of a Court of Session shall try any offense punishable under this Act. 11. In view of the above, a plain reading of Section 26 of the Act suggests that no Court can take cognizance of any offense punishable under the Act except on a complaint made by the Central Government, the State Government, the Securities and Exchange Board of India, a recognized stock exchange, or any authorized person. Therefore, no case is made out under the provisions of the Securities Contract (Regulation) Act. 12. In the case of State of Haryana v. Bhajan Lal, reported in 1992 Supp (1) SCC 335, the Apex Court has set out the categories of cases in which the inherent power under Section 482 CrPC can be exercised and held in para 102 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 Art. 226 or the inherent powers under Section 482 of the Code which we have extracted and reproduced above, we give 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 R/SCR.A/8574/2025 ORDER DATED: 13/08/2025 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 noncognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under sec.155(2) of the Code. (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.” 13. In the result, the petition is allowed. The impugned FIR C.R. No.11215012210430 of 2021 registered with Khambhat City Police Station, Dist. Anand as well as all consequential proceedings initiated in pursuance thereof are hereby quashed and set aside qua the petitioner herein. Rule is made absolute. Direct service is permitted. (HASMUKH D. SUTHAR,J) SUCHIT Original copy of this order has been signed by the Hon'ble Judge. Digitally signed by: PATEL SUCHIT JAYESHBHAI(HC01083), Private Secretary, at High Court of Gujarat on 18/08/2025 15:47:33