- 1 - NC: 2025:KHC-K:2587 CRL.P No. 200081 of 2025 IN THE HIGH COURT OF KARNATAKA, KALABURAGI BENCH DATED THIS THE 2ND DAY OF MAY, 2025 BEFORE THE HON'BLE MR. JUSTICE S RACHAIAH CRIMINAL PETITION NO.200081 OF 2025 (482(Cr.PC)/528(BNSS)) BETWEEN: 1. HITESH PATEL S/O MANILAL PATEL AGE 46 YEARS, OCC: BUSINESS, R/O NITHYANAND SOCIETY -1, NEAR GATRAL VIDHYALAY MORVI, MORVI, PPW, MORVI RAJKOT, GUJARAT 363642 2. GIRISH S/O K N SHIVASHANAKARAN PILLAI, AGE 48 YEARS, OCC: BUSINESS, R/O SHIVA NIVAS, ALAPPUZHA MUNCIPALITY, ALAPPUZHA, KERALA 688009 …PETITIONERS (BY SRI. RAJESH MAHALE, SENIOR COUNSEL FOR SRI PRAKASH YELI, ADVOCATE) AND: 1. THE STATE OF KARNATAKA BY BRAHMAPUR POLICE, REPTD. BY ADDL. STATE PUBLIC PROSECUTOR, Digitally signed by RENUKA Location: HIGH COURT OF KARNATAKA - 2 - NC: 2025:KHC-K:2587 CRL.P No. 200081 of 2025 HIGH COURT BUILDING, KALABURAGI 585103 2. SHARANABASAPPA S/O CHANNAPPA RAJESHWAR AGE 45 YEARS, OCC: BUSINESS, R/O NEAR RAGHAVENDRA TEMPLE, M. B. NAGAR, KALABURAGI-585105 …RESPONDENTS (BY SRI. SIDDALING P. PATIL, ADDL. SPP FOR R1; SRI VARUN PATIL AND SRI SHIVAKUMAR S SEERI, ADVOCATES FOR R2) THIS CRL.P IS FILED U/S.482 OF CR.P.C.(OLD), U/S 528 OF BNSS (NEW) PRAYING TO ALLOW THIS CRIMINAL PETITION AND QUASH THE ENTIRE CRIMINAL PROCEEDINGS PENDING IN CRIME NO. 0102/2024 ON THE FILE OF BRAHMAPUR POLICE STATION, KALABURAGI, REGISTERED FOR THE OFFENCES PUNISHABLE U/S 406 AND 420 IPC AS AGAINST THE PETITIONERS HEREIN, IN THE INTEREST OF JUSTICE AND EQUITY.I.A 1/2025 FOR STAYI.A 1/2025 FILED U/S 528 OF BNSS, PRAYING TO STAY ALL FURTHER PROCEEDINGS PENDING IN CRIME NO. 0102/2024 ON THE FILE OF BRAHMAPUR POLICE STATION, KALABURAGI REGISTERED FOR THE OFFENCES PUNISHABLE U/S 406 AND 420 IPC AS AGAINST THE PETITIONERS HEREIN, PENDING DISPOSAL OF THE ABOVE CRIMINAL PETITION, IN THE INTEREST OF JUSTICE AND EQUITY. THIS PETITION HAVING BEEN HEARD AND RESERVED ON 26.04.2025, AND COMING ON FOR PRONOUNCEMENT OF ORDERS THIS DAY, THE COURT MADE THE FOLLOWING: - 3 - NC: 2025:KHC-K:2587 CRL.P No. 200081 of 2025 CORAM: HON'BLE MR. JUSTICE S RACHAIAH CAV ORDER (PER: HON'BLE MR. JUSTICE S RACHAIAH) Accused Nos.1 and 2 have approached this Court seeking to quash the entire criminal proceedings pending in Crime No.102/2024 of Brahmapur police station, Kalaburagi, registered for the offences punishable under Sections 406 and 420 of IPC. Factual matrix of the case are that: 2. It is the case of the prosecution that, respondent No.2 – Sharanabasappa lodged a complaint on 11.08.2024 at about 6.00 p.m. before the respondent – police stating that, he was dealing with tiles business in Kalaburagi and he is well acquainted with one Giriraj Yelameli, Swaraj Nagari and Sayeed Ahmad. The complainant even acquainted with the accused persons. On 14.03.2023 accused Nos.1 and 2 made a proposal that they would give 25% partnership in Florence Company and also assured him to supply tiles as well as the returns - 4 - NC: 2025:KHC-K:2587 CRL.P No. 200081 of 2025 on the amount. Accordingly, he stated to have advanced of Rs.15,00,000/- through RTGS. 3. It is further submitted that on 24.02.2023, accused Nos.1 and 2 also approached other persons namely, Giriraj Yelameli, Swaraj Nagari and Sayeed Ahmad and requested them to invest the amount in the company by assuring that they would give 25% partnership each. Believing their offer, it is stated in the complaint that, said Giriraj Yelameli had invested Rs.11,00,000/- through RTGS and again, on 01.03.2023 deposited an amount Rs.25,00,000/- and also on 02.03.2023, he invested an amount of Rs.25,00,000/-. In all, he has invested an amount of Rs.61,00,000/- in the said company. 4. Further, another person namely Swaraj Nagari had invested an amount of Rs.25,00,000/- through RTGS for the purpose of having 25% partnership in the company of accused Nos.1 and 2. Similarly, another person - 5 - NC: 2025:KHC-K:2587 CRL.P No. 200081 of 2025 namely, Sayeed Ahmad had also paid a sum of Rs.55,00,000/- by way of cash. In all, it is stated that all the investors have invested Rs.1,56,00,000/- to the Company of the accused. After having received the said amount, they did not keep their promise of which they have assured to the complainant. Therefore, all the persons who have invested the amount to the Company of accused Nos.1 and 2 were demanding money from them and also complaint was lodged before the respondent – police. 5. Heard learned Senior counsel for the petitioners Sri Rajesh Mahale, learned Additional SPP Sri Siddaling P. Patil for the respondent No.1 and learned counsel for the respondent No.2 Sri Varun Patil. 6. It is the submission of learned counsel for the petitioners that the petitioners have admitted that they have received the amount from the complainant and others for the purpose of distributing the partnership in their company. However, due to some technical reasons, it - 6 - NC: 2025:KHC-K:2587 CRL.P No. 200081 of 2025 was delayed. The petitioners had no intention to commit any fraud or deceive, the persons who have invested the amount through RTGS. It is further submitted that in fact the amount of the petitioners were seized during the investigation and the learned Magistrate vide his order dated 05.12.2024 passed an order de-freezing the amount and also releasing the amount of Rs.1,01,00,000/- to the petitioners therein. 7. It is further submitted that though in the complaint, it is stated that the friend of the complainant namely, Sayeed Ahmad had paid an amount of Rs.55,00,000/- in cash, the fact remains that he has not lodged any complaint against the petitioners herein regarding cheating or misappropriation. 8. It is further submitted that the complainant has no locus-standi to lodge a complaint with regard to the amount alleged to have paid by Sayeed Ahmad to the petitioners. It is also submitted that the dispute between - 7 - NC: 2025:KHC-K:2587 CRL.P No. 200081 of 2025 the parties is civil in nature and criminal law would not survive for consideration. Making such submissions, he prays to allow the petition. 9. Per contra, learned High Court Government Pleader for respondent No.1 and learned counsel for the respondent No.2 would contend that though the allegations appear to be civil in nature, the fact remains that, the petitioners had an intention to deceive the investors and also did not return the amount till the respondent No.2/complainant approached the police to take suitable action against them. The matter is still under investigation. At this stage, it is not appropriate to quash the proceedings against the petitioners. Making such submissions, they pray to dismiss the petition. 10. Having heard the learned counsel for the respective parties and also perused the averments of the complaint, it is relevant to refer the judgment of the Hon'ble Supreme Court in the case of Mitesh Kumar J. - 8 - NC: 2025:KHC-K:2587 CRL.P No. 200081 of 2025 Sha vs. State of Karnataka reported in (2022) 14 SCC 572, wherein at paragraph No.36, it is held as follows: “36. This Court in Hridaya Ranjan Prasad Verma v. State of Bihar [Hridaya Ranjan Prasad Verma v. State of Bihar, (2000) 4 SCC 168 : 2000 SCC (Cri) 786] , has observed : (SCC p. 177, para 15) “15. … that the distinction between mere breach of contract and the offence of cheating is a fine one. It depends upon the intention of the accused at the time to inducement which may be judged by his subsequent conduct but for this subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, that is the time when the offence is said to have been committed. Therefore it is the intention which is the gist of the offence. To hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise.” - 9 - NC: 2025:KHC-K:2587 CRL.P No. 200081 of 2025 11. On careful reading of the above said judgment of the Hon'ble Supreme Court, it can be inferred that it is necessary to take notice of a growing tendency in business circles to convert purely civil disputes into criminal cases. This is obviously on account of a prevalent impression that civil law remedies are time consuming and do not adequately protect the interests of lenders/creditors. There is also an impression that if a person could somehow be entangled in a criminal prosecution, there is a likelihood of imminent settlement. Any effort to settle civil disputes and claims, which do not involve any criminal offence, by applying pressure though criminal prosecution should be deprecated and discouraged. 12. In the present case, respondent No.2 and his friends though stated to have transferred the amount through RTGS to the petitioners for the purpose of getting 25% partnership in the company, one of the investor namely, the complainant herein had approached the police to pressurize them to return the amount or to give the - 10 - NC: 2025:KHC-K:2587 CRL.P No. 200081 of 2025 partnership, which indicates that he had applied the tactics in order to entangle the petitioners in a criminal case. 13. As regard the allegations in respect of advancing the amount of Rs.55,00,000/- by way of cash is concerned, I am of the considered opinion that the said allegation does not survive for consideration especially on the complaint of the complainant. 14. Having considered the dictum of the Hon'ble Supreme Court and also the facts and circumstances of the case, I am of the considered opinion that it is a fit case to quash the proceedings against the petitioners. 15. Hence, I proceed to pass the following: ORDER (i) The Criminal Petition is allowed. (ii) The entire criminal proceedings pending in Crime No.102/2024 of Brahmapur police station, Kalaburagi, registered for the - 11 - NC: 2025:KHC-K:2587 CRL.P No. 200081 of 2025 offences punishable under Sections 406 and 420 of IPC, as against the petitioners/accused Nos.1 and 2 stands quashed. Sd/- (S RACHAIAH) JUDGE SRT List No.: 1 Sl No.: 2 CT:PK