1 2026:CGHC:523-DB NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR CRMP No. 3870 of 2025 1 - Hiralal Kuldeep S/o Naansai Kuldeep Aged About 61 Years R/o A B 1639-41 Block No. 3 Kaveri Vihar N.T.P.C. Jamnipalli Police Station Darri Distt. Korba (C.G.) 2 - Rakesh Sahu, S/o Babulal Sahu, Aged About 36 Years R/o 646/3 N.T.P.C. Balagi Road Laata, Jamnipalli Police Station Darri, Distt. Korba (C.G.) ... Petitioners versus 1 - State of Chhattisgarh Through Police Station Darri, Distt. Korba (C.G.) 2 - Rajan Prasad S/o R.K. Verma Aged About 39 Years R/o B/1379 Krishna Vihar N.T.P.C. Colony Jamnipalli Police Station Darri, Distt. Ko- rba (C.G.) ... Respondents (Cause-title taken from Case Information System) For Petitioners : Mr. Sanjay Patel, Advocate For Respondents-State : Mr. Praveen Das, Additional Advocate General Hon'ble Shri Ramesh Sinha, Chief Justice Hon'ble Shri Arvind Kumar Verma , Judge Order on Board Per Ramesh Sinha , Chief Justice 06.01.2026 1. Heard Mr. Sanjay Patel, learned counsel for the petitioners as well as Mr. Praveen Das, learned Additional Advocate General, appearing on behalf of the State/respondent No.1. ANURADHA TIWARI Digitally signed by ANURADHA TIWARI Date: 2026.01.07 10:22:26 +0530 2 2. The present petition has been filed by the petitioners with the following relief(s):- “I. Quash the Final Report bearing No. 3/2025, dated 09.01.2025, filed under Sections 406, 420, 120B, 34 of the IPC and Section 4, 5 of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978, arising out of FIR bearing Crime No. 164/2023, dated 23.06.2023, registered under Sections 406, 420, 34 of IPC and Section 4, 5 of the Prize, Chit and Money Circulation Schemes (Banning) Act, 1978. II. Quash the order dated 24.01.2025, whereby the Learned Judicial Magistrate First Class, Korba, has taken cognizance in Criminal Case No. 141/2025 and also all further proceedings arising therefrom, in the interest of justice. III. Pass any other appropriate order(s) or grant such further relief(s) as this Hon'ble Court may deem fit, just, and proper in the facts and circumstances of the case, in the interest of justice.” 3. Mr. Sanjay Patel, learned counsel for the petitioners submits that petitioner No.1 is a retired Engineer (Operation), SLPS, Employee No. 025539, Fuel Handling Department, Korba Super Thermal Power Corporation, Vikas Bhawan, Jamnipalli, District Korba, and has no connection with the management or control of any crypto company. Respondent No.2 lodged a written complaint at Police Station Darri, District Korba, alleging that on the basis of 3 information provided by one Santosh Yadav and an alleged presentation by the petitioners, he invested a sum of Rs.32,99,225/- in Hyperfund with an expectation of exorbitant returns, which did not materialize, leading to registration of the FIR. 4. Mr. Patel further submits that on the basis of the said complaint, FIR bearing Crime No. 164/2023 dated 23.06.2023 was registered for offences under Sections 420, 406, 34 IPC and Sections 4 and 5 of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978, pursuant to which the petitioners were arrested and later released on bail on 05.07.2023. After completion of investigation, a Final Report bearing No. 3/2025 dated 09.01.2025 was filed and cognizance was taken by the learned Chief Judicial Magistrate, Korba, on 24.01.2025, which is wholly illegal and unsustainable in law. 5. It is submitted by Mr. Patel that the petitioners are neither Directors nor Chief Directors of Hyperfund, and the allegation that Petitioner No.1 was holding such a position is patently false and unsupported by any material on record. It is contended that Hyperfund is a globally recognized fraudulent crypto-based Ponzi scheme, in respect of which proceedings including Civil Action No. 24-cv-00296 titled Securities and Exchange Commission vs. Xue Samuel Lee & Anr. are pending before the United States District Court, District of Maryland, and the petitioners themselves are 4 victims who have suffered substantial financial loss. The essential ingredient of “entrustment” required to constitute an offence under Section 406 IPC is conspicuously absent, as the transaction alleged is merely an investment, which does not amount to entrustment of property. 6. It is further submitted by Mr. Patel that an offence under Section 420 IPC requires dishonest intention at the inception of the transaction, which is neither pleaded nor borne out from a bare reading of the FIR, Final Report, or accompanying materials. The allegations disclose at best a civil dispute arising out of a failed investment, and criminal proceedings are being misused to coerce the petitioners. 7. Lastly, Mr. Patel has submitted that the definition of “money circulation scheme” under Section 2(c) of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 is not attracted, as there is no allegation of any systematic enrollment of members by the petitioners or any scheme devised or operated by them and even if the allegations in the FIR and charge-sheet are taken at their face value and accepted in entirety, no offence under Sections 420, 406 IPC or Sections 4 and 5 of the Act of 1978 is made out against the petitioners. 8. On the other hand, Mr. Praveen Das, learned Additional Advocate General, appearing on behalf of the State/respondent No.1, while opposing the submissions advanced by learned counsel for the 5 petitioner, submits that the FIR has been lodged on the basis of a detailed complaint disclosing commission of cognizable offences and, therefore, the registration of crime No. 164/2023 cannot be faulted. The materials collected during investigation prima facie establish that the petitioners actively induced the complainant to invest a substantial amount in Hyperfund by making false assurances of exorbitant returns, which has resulted in wrongful loss to the complainant. 9. Mr. Das further submits that the allegations clearly disclose dishonest inducement at the inception of the transaction as well as entrustment of money, thereby attracting offences under sections 420 and 406 IPC. The conduct of the petitioners in canvassing investments and making presentations falls within the ambit of Sections 4 and 5 of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978. 10. It is submitted by Mr. Das that the issues raised by the petitioners involve disputed questions of fact which cannot be examined in proceedings under Section 482 CrPC and require appreciation of evidence during trial. The final report has been filed after due investigation and cognizance has been taken following due application of mind, and no case for exercise of inherent jurisdiction is made out. 11. We have heard learned counsel for the parties at length, considered their rival submissions, and have carefully perused the 6 pleadings and the documents appended with the petition as well as the material available on record. 12. From perusal of the charge-sheet, it transpires that the complainant, Rajan Prasad Verma, father R.K. Verma, aged about 37 years, resident of Krishna Vihar, NTPC Jamnipali Colony, Police Station Darri, District Korba (Chhattisgarh), lodged a written complaint on 23.06.2023 at Police Station Darri, alleging that in September 2021 he came into contact with accused Hiralal Kuldeep, stated to be the main operator of Hyper Fund Crypto Currency Company, who induced him to invest money in the said company by promising to triple the invested amount within 300 days and by making representations regarding exponential growth of the investment through “rewatch”. The accused further lured the complainant by showing photographs of influential persons purportedly associated with the company, projecting a high-profile lifestyle, and by claiming visits to Dubai where he allegedly met key persons of the Hyper Fund Company. 13. It is further revealed that the accused made presentations through mobile phones, tablets, video calls and Zoom meetings, shared links of the Hyper Fund Crypto Currency Company, and organized counselling seminars, thereby inducing the complainant to believe in the authenticity of the scheme. Acting upon such inducement, the complainant invested substantial amounts and was also persuaded to obtain loans amounting to about Rs.20,00,000/- 7 from different banks for further investment. During the period from 24.10.2021 to 11.05.2022, a total amount of approximately Rs.19,31,255/- was transferred through online transactions and cheques from the complainant’s State Bank of India Account No. 30106769643, NTPC Branch, to the personal bank account of accused Hiralal Kuldeep as well as to the bank accounts of his relatives and acquaintances. Additionally, on various dates in February, March and April 2022, further amounts aggregating approximately Rs.19,31,255/- were taken from the complainant. Apart from this, an amount of Rs.13,68,000/- was received in cash by the accused in installments towards shop expenses, PF loan and housing savings. 14. On these allegations, it is stated that accused Hiralal Kuldeep, along with co-accused Rakesh Sahu, dishonestly and fraudulently induced the complainant to part with his money, failed to return the same and misappropriated the funds. Accordingly, Crime No. 164/2023 was registered at Police Station Darri for offences under Sections 406, 420 and 34 of the Indian Penal Code and Sections 4 and 5 of the Price Chits and Money Circulation Schemes (Banning) Act, 1978, and investigation was initiated. 15. During investigation, statements of prosecution witnesses were recorded and relevant bank statements were collected. On detection of criminal conspiracy, Section 120-B IPC was added. Both named accused, namely Hiralal Kuldeep and Rakesh Sahu, 8 were arrested and remanded to judicial custody by the learned Chief Judicial Magistrate, Korba, and were subsequently released on bail. For forensic examination of the seized electronic articles, a draft was prepared on 05.09.2023 and sent to the In-charge Cyber Cell, Bilaspur, and the exhibits were deposited on 12.09.2023, though the test report is still awaited. 16. It further transpires from the memorandum statements of the accused, bank records and investigation conducted so far that other persons, namely Amit Arora (resident of Delhi), Kapil Kamble (resident of Nagpur, Maharashtra), Kalpesh Patel (resident of London), and their associates were also involved in inducing investors, exchanging money and facilitating the transactions. These accused persons are stated to be absconding. The investigation against them is continuing. 17. Charge-sheet No. 03/2025 dated 09.01.2025 has been filed against arrested accused Hiralal Kuldeep and Rakesh Sahu. Since investigation against the remaining accused is still in progress, a separate charge-sheet is proposed to be filed under Section 193(9) of the Bharatiya Nagarik Suraksha Sanhita, 2023. 18. We have carefully considered the entire material placed on record in the backdrop of the settled legal position governing the exercise of inherent jurisdiction. The scope of interference under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023 is limited and circumscribed. Such extraordinary jurisdiction is not intended 9 to stifle legitimate prosecution at a nascent stage, nor can it be invoked to conduct a meticulous examination of evidence or to adjudicate upon the disputed facts, which squarely fall within the domain of the trial Court. 19. On a cumulative reading of the First Information Report, the statements recorded under Section 161 BNSS, the bank transaction details and the charge-sheet submitted, this Court finds that specific and direct allegations have been levelled against the petitioners attributing to them active roles in canvassing investments, making representations of assured and exponential financial returns and inducing the complainant to part with large sums of money. The materials collected during investigation, at this stage, cannot be brushed aside as wholly unreliable or inherently improbable. 20. The contention raised on behalf of the petitioners that there was no dishonest intention at the inception of the transaction or that the dispute is purely civil in nature cannot be accepted in the present proceedings. Whether the petitioners acted with mens rea from the inception, whether entrustment of money was made out, and whether the alleged acts constitute offences under Sections 406, 420 and 120-B of the Indian Penal Code and Sections 4 and 5 of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978, are matters requiring appreciation of evidence, examination of witnesses and determination of disputed facts, 10 which cannot be undertaken in proceedings under Section 528 BNSS. 21. It is well settled that while exercising inherent jurisdiction, the Court is only required to see whether the allegations, taken at their face value and accepted in their entirety, disclose the commission of any offence. In the present case, the allegations coupled with the material collected during investigation do prima facie disclose the ingredients of the offences alleged. The continuance of the criminal proceedings, therefore, cannot be said to amount to abuse of the process of law or to cause miscarriage of justice. 22. The submission that the petitioners themselves are victims of the alleged fraudulent scheme or that the main perpetrators are absconding, by itself, does not exonerate the petitioners at this stage. The degree of involvement of each accused and the defence sought to be raised are matters to be examined during trial, and this Court cannot, in exercise of its inherent jurisdiction, pre-empt such adjudication. 23. The order taking cognizance passed by the learned Judicial Magistrate First Class, Korba, also does not suffer from any jurisdictional infirmity or patent illegality. The learned Magistrate has taken cognizance upon due consideration of the final report and supporting material, and no case is made out to interfere with the said order in exercise of inherent powers. 11 24. In view of the foregoing discussion, this Court is of the considered opinion that no exceptional circumstances exist warranting interference under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023. The petition, being devoid of merit, is accordingly dismissed. 25. It is clarified that the observations made herein are confined strictly to the adjudication of the present petition and are not intended to express any opinion on the merits of the case. The trial Court shall proceed with the matter independently and uninfluenced by any observation contained in this order and shall decide the case strictly in accordance with law. Sd/- Sd/- (Arvind Kumar Verma) (Ramesh Sinha) Judge Chief Justice Anu