- 1 - HC-KAR NC: 2026:KHC:6205 CRL.P No. 2320 of 2025 C/W CRL.P No. 2213 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 3RD DAY OF FEBRUARY, 2026 BEFORE THE HON'BLE MR. JUSTICE M.NAGAPRASANNA CRIMINAL PETITION NO. 2320 OF 2025 C/W CRIMINAL PETITION NO. 2213 OF 2025 IN CRL.P No. 2320/2025 BETWEEN: 1. MR. KHUSHNUD KHAN S/O. LATE SADRUDDIN KHAN, AGED ABOUT 42 YEARS, R/O. UKN ESPERENZA G 903, WHITE FIELD, THUBRAHALLI EXTENSION ROAD, BENGALURU – 560 066. 2. MR. RISHIRAJ SINGH RATHORE S/O MR. DIGVIJAY SINGH RATHORE, AGED ABOUT 32 YEARS, R/O. NO. 102, SILIC REST SERVICE APTS, 80 FEET ROAD, 4TH BLOCK, KORAMANGALA, BENGALURU SOUTH, BENGALURU, KARNATAKA-560 034. …PETITIONERS (BY SRI. PRADEEP GUNDAPPA BATTUR, ADVOCATE) Digitally signed by SANJEEVINI J KARISHETTY Location: High Court of Karnataka - 2 - HC-KAR NC: 2026:KHC:6205 CRL.P No. 2320 of 2025 C/W CRL.P No. 2213 of 2025 AND: 1. STATE OF KARNATAKA THROUGH STATION HOUSE OFFICER, HSR LAYOUT POLICE STATION, BENGALURU, REPRESENTED BY THE STATE PUBLIC PROSECUTOR, HIGH COURT OF KARNATAKA, DR. AMBEDKAR VEEDHI, BENGALURU – 560 001. 2. MR. MANISH BHARADWAJ S/O SRI NARENDRA BHARADWAJ, AGED ABOUT 45 YEARS, DIRECTOR, M/S. FOXSKY ELECTRONICS LTD., NO. 49/26, 4, SHAHIDABAD INDUSTRIAL AREA, GHAZIABAD, UTTAR PRADESH. …RESPONDENTS (BY SRI B.N.JAGADEESHA, ADDL.SPP FOR R-1; SRI DILIP KUMAR I.S., ADVOCATE FOR R-2) THIS CRL.P IS FILED U/S 528 OF BNSS PRAYING TO QUASH THE FIR BEARING NO.476/2024 REGISTERED WITH THE RESPONDENT NO.1 HSR LAYOUT P.S., ANNEXURE-A WHEREIN THE PETITIONERS HEREIN ARE ARRAIGNED AS ACCUSED NO.1 AND 2 RESPECTIVELY, FOR THE OFFENCE P/U/S 316(2), 318(4), 3(5) OF THE BNS, PENDING ON THE FILE OF HONBLE XXXIX ACMM, BENGALURU. (CURRENTLY RENAMED AS HON’BLE XXXIX ACJM, BENGALURU). - 3 - HC-KAR NC: 2026:KHC:6205 CRL.P No. 2320 of 2025 C/W CRL.P No. 2213 of 2025 IN CRL.P NO. 2213/2025 BETWEEN: 1. MR.RISHIRAJ SINGH RATHORE S/O MR. DIGVIJAY SINGH RATHORE AGED ABOUT 32 YEARS, R/O NO.102, SILIC REST SERVICE APTS, 80FT ROAD, 4TH BLOCK KORAMANGALA, BENGALURU SOUTH, BENGALURU, KARNATAKA – 560 034. 2. MR. KHUSHNUD KHAN, S/O LATE SADRUDDIN KHAN AGED ABOUT 42 YEARS R/O UKN ESPERENZA G 903, WHITE FIELD, THUBRAHALLI EXTENSION ROAD, BENGALURU – 560 066. ...PETITIONERS (BY SRI BHARATH KUMAR V., ADVOCATE) AND: 1. STATE OF KARNATAKA THROUGH STATION HOUSE OFFICER, AMRUTHALLI POLICE STATION, BENGALURU. REPRESENTED BY STATE PUBLIC PROSECUTOR HIGH COURT OF KARNATAKA BENGALURU – 560 001. - 4 - HC-KAR NC: 2026:KHC:6205 CRL.P No. 2320 of 2025 C/W CRL.P No. 2213 of 2025 2. MR. BIPIN KUMAR SINGH S/O LATE RAJESHWAR SINGH, AGED ABOUT 52 YEARS, R/O NO. 51/3, 1ST A CROSS, 5TH B MAIN ROAD, NRI LAYOUT, RAMMURTHY NAGAR, BENGALURU – 560 016. ...RESPONDENTS (BY SRI B.N.JAGADEESHA, ADDL.SPP FOR R-1; SRI ASHOK KUMAR SHETTY K., ADVOCATE FOR R-2) THIS CRL.P IS FILED U/S 482 CR.PC (FILED U/S 528 BNSS) PRAYING TO QUASH THE FIR BEARING NO.227/2024 REGISTERED WITH THE AMRUTHAHALLY POLICE STATION (ANNEXURE-A); WHEREIN, THE PETITIONERS HEREIN ARE ARRAIGNED AS ACCUSED NO.2 AND 3 RESPECTIVELY FOR THE ALLEGED OFFENCE U/S 420 OF IPC, PENDING BEFORE 41ST ACJM COURT, BANGALORE CITY. THESE PETITIONS, COMING ON FOR ADMISSION, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE M.NAGAPRASANNA ORAL ORDER IN CRL.P.NO.2320 OF 2025: The petitioners who are accused Nos.1 and 2 stand at the doors of this Court calling in question registration of a crime in Crime No. 476 of 2024 for offence punishable under Sections - 5 - HC-KAR NC: 2026:KHC:6205 CRL.P No. 2320 of 2025 C/W CRL.P No. 2213 of 2025 316(2) and 318(4) and 3(5) of the BNS which are Sections 406, 420 and 34 of the IPC, the earlier regime. 2. Shorn of unnecessary details, facts in brief germane, are as follows: 2.1. The petitioners and the 2nd respondent have a transaction. The transaction is a distribution agreement between the two. The petitioners are Directors of one M/s Sterne India Pvt. Ltd., a Company involved in the business to business commerce venture that helps physical stores by using technology to offer 10 times larger product selection and better prices on over 10,000 products from more than 100 brands. The Company runs a platform in the name and style of “Arzooo”. The Company enters into a distribution agreement with the complainant for sale of products that the 2nd respondent would manufacture through the platform “Arzooo”. After dealing with the complainant for about 3 years, the business goes wrong for the reason that the stock of ₹ 8.3 crores taken from the hands of the 2nd respondent, for sale in the platform Arzooo, though were sold, the proceeds of sale of - 6 - HC-KAR NC: 2026:KHC:6205 CRL.P No. 2320 of 2025 C/W CRL.P No. 2213 of 2025 the products never reached the petitioners. But the allegation is that, the petitioners have purchased properties from the sale proceeds of the products of the complainant. Based upon the said Act of the petitioners, a complaint comes to be filed by the complainant which becomes a crime in Crime No. 476 of 2024 for the aforesaid offences. 2.2. The moment the crime is registered, the petitioners knock at the doors of this Court on 24-02-2025 and the co- ordinate bench of this Court has granted an interim order of stay. Therefore, the investigation has not taken place in the case at hand. The matter is thus heard at this stage. 3. Heard Sri Pradeep Gundappa Battur, learned counsel appearing for petitioners, Sri B.N.Jagadeesha, learned Additional State Public Prosecutor appearing for respondent No.1 and Sri Dilip Kumar I.S., learned counsel appearing for respondent No.2. 4. The learned counsel appearing for the petitioners would vehemently contend that the ingredients of Section 316(2) or 318(4) of the BNS is ostensibly absent in the case at - 7 - HC-KAR NC: 2026:KHC:6205 CRL.P No. 2320 of 2025 C/W CRL.P No. 2213 of 2025 hand, as it was a business transaction between the petitioners and the 2nd respondent. If the petitioners had intention to defraud or cheat the complainant, they would not have transacted with the respondent/complainant for over 3 years and to the tune of ₹40 crores. The learned counsel submits that it is purely a matter which is arising out of a financial transaction and has been dressed with a colour of crime. This must not be permitted to be continued, as it would become an abuse of the process of the law. 5. The learned counsel appearing for the 2nd respondent, complainant submits that generally if the transaction would go wrong, it would undoubtedly become a case of financial transaction having gone wrong. In the case at hand, it is the case of the complainant that accused wanting to defraud the complainant has misappropriated the fund, though it may not be since inception, but in a particular transaction and submits that these petitioners are facing proceedings all over the Nation on identical acts of hoodwinking the agreement holders through the distribution agreement and selling goods through the platform Arzooo. In that light, both the learned Additional State - 8 - HC-KAR NC: 2026:KHC:6205 CRL.P No. 2320 of 2025 C/W CRL.P No. 2213 of 2025 Public Prosecutor and the learned counsel for the complainant would seek dismissal of the petition. 6. I have given my anxious consideration to the submissions made by the respective learned counsel and have perused the material on record. 7. The afore-narrated facts are a matter of record. The position of the petitioners having an online platform for sale of goods in the name and style of Aarzooo is a matter of record. The distribution agreement between the two entered into in the year 2022 is also a matter of record. A particular transaction that happens in the year 2025 goes wrong, therefore, the complainant registers a complaint with all the material available with him. Since the entire issue has now triggered from the complaint, I deem it appropriate to notice the complaint. The complaint reads as follows: “To, The Police Commissioner Bengaluru Karnataka – 560001. - 9 - HC-KAR NC: 2026:KHC:6205 CRL.P No. 2320 of 2025 C/W CRL.P No. 2213 of 2025 From Manish Bhardwaj S/o Shri Narendra Bhardwaj Director M/s. Foxsky Electronics India Pvt. Ltd., address 49/26, Site-4, Sahibabad Industrial Area, Ghaziabad (UP) 201010 Mob: 8000600098 Caste - Hindu, Brahmin Subject:- for registering FIR against Mr. Khushnud Khan Director M/s. Sterne India Pvt. Limited and Rishiraj Singh Rathore, Palepu Sudhir Rao, Lavanya Ashok, Ratan Lal Chaudhary, Sagar Yogesh Ramteke, Hussam Munir elias Khoury, Pallab Kumar Chatterjee, Tomoyunki Nill, Subhalrata Ghosh other members of management who has upsurbed about 11 crores rupees of complainant Manish Bhardwaj Director of M/s. Foxsky Electronics India Pvt. Ltd., at address 49/26, Site -4, Sahibabad Industrial Area, Ghaziabad, U.P.-201010 through Malicious & cheatfull acts. Respected Police Commissioner Sir, I, Manish Bhardwaj S/o Shri Narendra Bhardwaj is the Director of M/s. Foxsky Electronics India Pvt. Ltd., at address 49/26, Site-4, Sahibabad Industrial Area, Ghaziabad (UP) 201010. We are manufacturer and supplier of electronic home appliances and Ultra HD Smart T.V. That in the course of its business our firm. M/s. Foxsky Electronic India Private Ltd., entered into a distribution agreement dated 31.01.2022 with M/s. Sterne India Private Limited whose head office address is 249, 19th Main Road, 4th Sector, H.S.R. Layout, Benguluru, Karnataka whose director's Mr. Khushnud Khan and eight others mentioned above and Mobile No. 9620069149. That through distribution agreement it was fully agreed that M/s. Sterne India Private Limited will clear every invoice within a period of thirty days from the date of the invoice. That - 10 - HC-KAR NC: 2026:KHC:6205 CRL.P No. 2320 of 2025 C/W CRL.P No. 2213 of 2025 the business with M/S Sterne India Private Limited started from 31/01/2022 and the fraudfull delaying tactics started from 05/10/2023. That the accused and their company M/S Sterne India Pvt Ltd, started delaying the payment condition as per the agreement of 30 days and huge amount got submitted and took benefit of faith created by accused company M/S Sterne India Pvt Ltd through their directors on regular basis. All the directors cheated the complainant in a planned manner. All the accused intentionally took and upsurbed huge amount of complainant of which statement is as under. - 11 - HC-KAR NC: 2026:KHC:6205 CRL.P No. 2320 of 2025 C/W CRL.P No. 2213 of 2025 That the director and his other associates mentioned above in a cheatfull and cunning manner always paid excuses for delayed payments and till date an huge & hefty amount of Rs.10,76,86,769.32 (Rupees ten crore Seventy Six Lacs Eighty Six thousand seven hundred sixty nine and thirty two paisa) is pending on M/s.Sterne Electronics India Pvt. Ltd. The director and other mentioned above have sold all our goods and diverted the huge funds to buy huge properties in names of their family members. The illegal act comes under serious criminal breach of trust and cheating and thereby dishonestly inducing delivery of property and the making alternation or destruction of a valuable security. That all the accused jointly in a planned manner through false acts and commitments have upsurbed the huge amount of complainant and his firm.” The illegal act of accused comes U/s. 316(2), have 318(4), 3(5), of B.N.S. As all the culprits through common ill intention and planned manner have betrayed the complainant hence humbly requested that FIR against all the accused be registered U/s. 316(2), 318(4), 3(5), of BNS and strict legal action be taken against all the accused as per law of land.” A perusal at the complaint, in the first blush, would prima facie indicate that it is registered for recovery of money. On a deeper delving into the complaint would reveal that it is not. Even looking at the offence on the periphery, it would indicate that there has been dishonest intention on the part of the petitioners for having taken away goods of the complainant and not returned it with the money. Merely because transaction has happened between them for 3 years and close to ₹40 crores, - 12 - HC-KAR NC: 2026:KHC:6205 CRL.P No. 2320 of 2025 C/W CRL.P No. 2213 of 2025 would not mean that the petitioners cannot commit any offence. 8. The complaint narrates several instances of transfer of goods, its sale on Arzooo platform and purchase of property by the petitioners by diverting the money that had to be paid to the complainant. The matter is at the stage of investigation. Crime was registered in December 2024 and is interdicted by the order of the co-ordinate Bench in the year on in the month of February 2025. It is trite law that a crime and a civil proceeding or a financial transaction can go hand in hand, if the crime so registered would project a cognizable offence. In this regard, it would be apposite to refer to the judgments of the Apex Court rendered on the issue. 9.1. The Apex Court in ROCKY v. STATE OF TELANGANA1 has held as follows: “…. ….. …. 24. The appellant's core contention, that the dispute is purely civil in nature, is untenable at this stage. Although courts must guard against giving criminal colour to civil disputes, it is equally well settled that the existence of civil remedies does not 1 2025 SCC OnLine SC 2713 - 13 - HC-KAR NC: 2026:KHC:6205 CRL.P No. 2320 of 2025 C/W CRL.P No. 2213 of 2025 preclude criminal prosecution where the allegations disclose the essential ingredients of an offence. Civil and criminal proceedings may validly coexist if the factual matrix supports both.” 9.2. The Apex Court in ANURAG BHATNAGAR v. STATE (NCT OF DELHI)2 has held as follows: “…. ….. …. 45. The allegations in the application moved under Section 156(3) CrPC and the material in support thereof reveals that SHL is contending breach of the conditions of MoU dated 11.03.1995 and that it has been induced and deceived by VLS for entering into the aforesaid MoU. VLS has cheated SHL and its officers by making a false promise which was legally impossible to be carried out. The allegations of breach of conditions of the MoU or of making a false promise by itself may not give rise to any criminal action as no criminality is attached to it. However, there are elements of inducement, criminal conspiracy and cheating which are also borne out from the allegations made in the application and the complaint, which if proved, may amount to commission of an offence. Therefore, once such allegations are made out, it is difficult for the court in exercise of its inherent jurisdiction to interfere with the FIR, only for the reason that some of the disputes are of civil nature which may or may not be having any criminality attached to it. 46. It is well settled by a catena of decisions of this Court, especially in State of Haryana v. Ch. Bhajan Lal Singh, that the discretion to quash an FIR at a nascent stage has to be exercised with great caution and circumspection. In this connection, it would be beneficial to refer to an old case of Privy Council in King Emperor v. Nazir Ahmad Khwaja wherein the law was well 2 2025 SCC OnLine SC 1514 - 14 - HC-KAR NC: 2026:KHC:6205 CRL.P No. 2320 of 2025 C/W CRL.P No. 2213 of 2025 settled that the courts would not thwart any investigation or that the courts should be very slow in interfering with the process of investigation. It is only in rare cases where no cognizable offence is disclosed in the FIR that the court may stop the investigation so as to avoid the harassment of the alleged accused. Even in such exercise of power, the court cannot embark upon an inquiry as to the genuineness or otherwise of the allegations made in the FIR or the complaint which have to be examined only after the evidence is collected. 47. The breach of conditions of the MoU or allegations of false promises in relation to the aforesaid MoU are undisputedly subject matter of the different FIRs lodged by VLS itself. Therefore, violation of those conditions for some reasons have been considered by VLS to be offensive. Therefore, the High Court rightly held that if breach of those conditions of the MoU itself has been considered to be of criminal nature by VLS, it cannot be permitted to turn around and allege that such breach of conditions would be of pure civil nature. 48. Thus, in the above facts and circumstances, we do not consider to go into detail as to the exact nature of disputes involved in the FIR and leave the same to be adjudicated upon by the appropriate court where the chargesheets have been submitted.” 9.3. In KATHYAYINI v. SIDHARTH P.S. REDDY3 the Apex Court has held as follows: “…. …. …. 19. We now come to the issue of bar against prosecution during the pendency of a civil suit. We hereby hold that no such bar exists against prosecution if the offences punishable under criminal law are made out against the parties to the civil suit. Learned senior counsel Dr.MenakaGuruswamy has rightly 3 2025 SCC OnLine SC 1428 - 15 - HC-KAR NC: 2026:KHC:6205 CRL.P No. 2320 of 2025 C/W CRL.P No. 2213 of 2025 placed the relevant judicial precedents to support the above submission. In the case of K. Jagadish v. Udaya Kumar G.S.3, this Court has reviewed its precedents which clarify the position. The relevant paragraph from the above judgment is extracted below: “8. It is thus well settled that in certain cases the very same set of facts may give rise to remedies in civil as well as in criminal proceedings and even if a civil remedy is availed by a party, he is not precluded from setting in motion the proceedings in criminal law.” 20. In Pratibha Rani v. Suraj Kumar4, this Court summed up the distinction between the two remedies as under: “21. … There are a large number of cases where criminal law and civil law can run side by side. The two remedies are not mutually exclusive but clearly coextensive and essentially differ in their content and consequence. The object of the criminal law is to punish an offender who commits an offence against a person, property or the State for which the accused, on proof of the offence, is deprived of his liberty and in some cases even his life. This does not, however, affect the civil remedies at all for suing the wrongdoer in cases like arson, accidents, etc. It is an anathema to suppose that when a civil remedy is available, a criminal prosecution is completely barred. The two types of actions are quite different in content, scope and import. It is not at all intelligible to us to take the stand that if the husband dishonestly misappropriates the stridhan property of his wife, though kept in his custody, that would bar prosecution under Section 406 IPC or render the ingredients of Section 405 IPC nugatory or abortive. To say that because the stridhan of a married woman is kept in the custody of her husband, no action against him can be taken as no offence is committed is to override and distort the real intent of the law.” 21. The aforesaid view was reiterated in Kamaladevi Agarwal v. State of W.B., - 16 - HC-KAR NC: 2026:KHC:6205 CRL.P No. 2320 of 2025 C/W CRL.P No. 2213 of 2025 “17. In view of the preponderance of authorities to the contrary, we are satisfied that the High Court was not justified in quashing the proceedings initiated by the appellant against the respondents. We are also not impressed by the argument that as the civil suit was pending in the High Court, the Magistrate was not justified to proceed with the criminal case either in law or on the basis of propriety. Criminal cases have to be proceeded with in accordance with the procedure as prescribed under the Code of Criminal Procedure and the pendency of a civil action in a different court even though higher in status and authority, cannot be made a basis for quashing of the proceedings.” 22. After surveying the abovementioned cases, this Court in K. Jagadish (supra) set aside the holding of High Court to quash the criminal proceedings and held that criminal proceedings shall continue to its logical end. 23. The above precedents set by this Court make it crystal clear that pendency of civil proceedings on the same subject matter, involving the same parties is no justification to quash the criminal proceedings if a prima facie case exists against the accused persons. In present case certainly such prima facie case exists against the respondents. Considering the long chain of events from creation of family tree excluding the daughters of K.G. Yellappa Reddy, partition deed among only the sons and grandsons of K.G. Yellappa Reddy, distribution of compensation award among the respondents is sufficient to conclude that there was active effort by respondents to reap off the benefits from the land in question. Further, the alleged threat to appellant and her sisters on revelation of the above chain of events further affirms the motive of respondents. All the above factors suggest that a criminal trial is necessary to ensure justice to the appellant.” - 17 - HC-KAR NC: 2026:KHC:6205 CRL.P No. 2320 of 2025 C/W CRL.P No. 2213 of 2025 9.4. In PUNIT BERIWALA v. STATE (NCT OF DELHI)4 the Apex Court holds as follows: “… …. …. MERE INSTITUTION OF CIVIL PROCEEDINGS CANNOT ACT AS A BAR TO INVESTIGATION OF COGNIZABLE OFFENCES 28. It is trite law that mere institution of civil proceedings is not a ground for quashing the FIR or to hold that the dispute is merely a civil dispute. This Court in various judgments, has held that simply because there is a remedy provided for breach of contract, that does not by itself clothe the Court to conclude that civil remedy is the only remedy, and the initiation of criminal proceedings, in any manner, will be an abuse of the process of the court. This Court is of the view that because the offence was committed during a commercial transaction, it would not be sufficient to hold that the complaint did not warrant a further investigation and if necessary, a trial. [See: Syed Aksari Hadi Ali Augustine Imam v. State (Delhi Admin.), (2009) 5 SCC 528, Lee Kun Hee v. State of UP, (2012) 3 SCC 132 and Trisuns Chemicals v. Rajesh Aggarwal, (1999) 8 SCC 686]”. (Emphasis supplied at each instance) 10. In view of the judgments rendered by the Apex Court as afore-quoted and also since the matter is still at the stage of investigation, I deem it appropriate to permit investigation into the matter, as a deeper delving into the complaint would clearly indicate a calculated ploy on the part of the petitioners, prima facie, to hoodwink the complainant. The added circumstance is, 4 2025 SCC OnLine SC 983 - 18 - HC-KAR NC: 2026:KHC:6205 CRL.P No. 2320 of 2025 C/W CRL.P No. 2213 of 2025 the product of investigation that these petitioners are facing proceedings in several parts of the State for identical offences. Therefore investigation in such cases is a must and least. 11. Petition wanting in merit, stands rejected, reserving liberty to the petitioners to knock at the doors of the appropriate fora at the appropriate time. IN CRL.P.NO.2213 OF 2025: 12. Heard Sri Bharath Kumar V., learned counsel appearing for petitioners, Sri B.N.Jagadeesha, learned Additional State Public Prosecutor appearing for respondent No.1 and Sri Ashok Kumar Shetty K, learned counsel appearing for respondent No.2. 13. In the case at hand, the accused are the same and the acts alleged are identical, except the fact that complainant is different and transaction is different. - 19 - HC-KAR NC: 2026:KHC:6205 CRL.P No. 2320 of 2025 C/W CRL.P No. 2213 of 2025 14. For the very same reasons indicated in companion Criminal Petition No.2320 of 2025, Criminal Petition 2213 of 2025 also stands rejected. Interim order of any kind operating, shall stand dissolved. Sd/- (M.NAGAPRASANNA) JUDGE BKP List No.: 2 Sl No.: 10