- 1 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 23rd DAY OF JANUARY 2026 BEFORE THE HON'BLE MR. JUSTICE MOHAMMAD NAWAZ CRIMINAL PETITION NO. 9918 OF 2025 C/W CRIMINAL PETITION NO.9924 OF 2025 IN CRL.P No. 9918/2025 BETWEEN: SHRI SANDEEP SHETTY SON OF SEENA SHETTY, AGE: 52 YEARS, RESIDING AT 601, MANGAL BAUG ROAD, MANGAL SAVEAR, MAHARASHTRA, SANTACRUZ WEST, MUMBAI-400 054. …PETITIONER (BY SRI. PRABHULING K. NAVADGI, SENIOR COUNSEL FOR SRI. VISHWAS N., ADVOCATE) AND: 1. THE STATE OF KARNATAKA THROUGH HEBBAGODI POLICE STATION, NEAR HEBBAGODI BUS STOP, HEBBAGODI TOWN, ANEKAL TALUK, BENGALURU - 562 125. REPRESENTED BY STATE PUBLIC PROSECUTOR HIGH COURT OF KARNATAKA, BENGALURU - 560 001. 2. SHRI GULAM MUSTAFA SON OF LATE GULAM RASOOL, AGED ABOUT 56 YEARS, HAVING OFFICE AT CMD GULAM MUSTAFA ENTERPRISE PVT. LTD. NO.44/1, DICKENSON ROAD, BENGALURU – 560042. 3. THE POLICE INSPECTOR, SPECIAL ENQUIRY WING, CENTRAL CRIME BRANCH, BENGALURU-560053, VIJAYALAKSHMI M KANKUPPI Digitally signed by VIJAYALAKSHMI M KANKUPPI Date: 2026.02.07 11:05:41 +0530 - 2 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 REPRESENTED BY THE STATE PUBLIC PROSECUTOR, HIGH COURT OF KARNATAKA, BENGALURU-560001. …RESPONDENTS (BY SRI. RAHUL RAI K., HCGP FOR R1 AND R3; SRI. VIVEK S. REDDY, SENIOR COUNSEL FOR SRI. GOVARDHAN REDDY, ADVOCATE FOR R2) THIS CRL.P IS FILED UNDER SECTION 482 CR.PC, 1973 R/W SECTION 528 BNNS 2023, PRAYING TO A. QUASH THE FIR NO.0345/2025 DATED 03.07.2025 REGISTERED BY HEBBAGODI POLICE STATION, ANEKAL SUB DIVISION, BENGALURU RURAL DISTRICT FOR OFFENCES PUNISHABLE UNDER SECTIONS 120B, 405, 406, 415, 417, 420, 34 IPC (ANNEXURE-A) IN 2ND ADDL. CIVIL JUDGE (JR.DN.) AND J.M.F.C COURT ANEKAL, BENGALURU RURAL, BENGALURU. B. QUASH THE COMPLAINT DATED 03.07.2025 FILED BY RESPONDENT NO.2 BEFORE RESPONDENT-1 POLICE (ANNEXURE- B) C. QUASH THE NOTICE DATED 07.07.2025 (ANNEXURE-G) ISSUED BY RESPONDENT-NO.3 AND ETC. IN CRL.P NO. 9924/2025 BETWEEN: 1. SMT. KAVITHA SHIRVAIKAR WIFE OF SHRI SANJIV SHIRVAIKAR, AGE: 53 YEARS, MANAGING DIRECTOR PATEL ENGINEERING LIMITED, HAVING OFFICE AT PATEL ESTATES V ROAD, JOGESHWARI (WEST), MUMBAI-400102. 2. SHRI RAHUL AGARWAL SON OF SHRI. ARUN KUMAR AGARWAL AGE: 42 YEARS, SENIOR GENERAL MANAGER - FINANCE PATEL ENGINEERING LIMITED, HAVING OFFICE AT PATEL ESTATES V ROAD, JOGESHWARI (WEST), MUMBAI-400102. 3. SHRI AMOL WARKE SON OF SURESH WARKE, AGE: 44 YEARS, JOINT GENERAL MANAGER – FINANCE, PATEL ENGINEERING LIMITED, HAVING OFFICE AT PATEL ESTATES V ROAD, JOGESHWARI (WEST), MUMBAI-400102. ...PETITIONERS (BY SRI. MANU PRABHAKAR KULKARNI, ADVOCATE) - 3 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 AND: 1. THE STATE OF KARNATAKA THROUGH HEBBAGODI POLICE STATION, NEAR HEBBAGODI BUS STOP, HEBBAGODI TOWN, ANEKAL TALUK, BENGALURU-562 125, REPRESENTED BY PUBLIC PROSECUTOR, HIGH COURT OF KARNATAKA, BENGALURU-560 001. 2. SHRI GULAM MUSTAFA SON OF LATE GULAM RASOOL, AGED ABOUT 56 YEARS, HAVING OFFICE AT CMD GULAM MUSTAFA ENTERPRISE PVT. LTD. NO.44/1, DICKENSON ROAD, BENGALURU-560 042. 3. THE POLICE INSPECTOR SPECIAL ENQUIRY WING, CENTRAL CRIME BRANCH, BENGALURU-560053, REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KARNATAKA, BENGALURU-560001. ...RESPONDENTS (BY RAHUL RAI K, HCGP FOR R1 AND R3; SRI. GOVARDHAN REDDY J.S, ADVOCATE FOR R2) THIS CRL.P FILED UNDER SECTION 482 CR.PC (FILED UNDER SECTION 528 BNSS, 2023) PRAYING TO 1. QUASH THE FIR NO.0345/2025 DATED 03.07.2025 REGISTERED BY RESPONDENT NO.1 I.E HEBBAGODI P.S. ANEKAL, SUB DIVISION BENGALURU RURAL DISTRICT FOR THE OFFENCES PUNISHABLE UNDER SECTIONS 120B, 405, 406, 415, 417, 420, 34 OF IPC (ANNEXURE- A) 2. QUASH THE COMPLAINT DATED 03.07.2025 FILED BY RESPONDENT NO.2 BEFORE RESPONDENT NO.1 (ANNEXURE-B) 3. QUASH THE NOTICES DATED 07.07.2025 ISSUED BY RESPONDENT NO.3 (ANNEXURE G AND G1) AND ETC. THIS CRIMINAL PETITIONS HAVING BEEN HEARD AND RESERVED ON 21.11.2025, COMING ON FOR PRONOUNCEMENT OF JUDGMENT THIS DAY, COURT DELIVERED THE FOLLOWING: CORAM: HON'BLE MR. JUSTICE MOHAMMAD NAWAZ - 4 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 CAV ORDER 1. These two petitions are filed under Section 482 of the Code of Criminal Procedure, 1973/Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023 seeking to quash the FIR 0345/2025 registered by Hebbagodi Police Station for the offences punishable under Sections 120B, 405, 406, 415, 420 and 34 of the IPC, to quash the complaint dated 03.07.2025 lodged by respondent No.2 and also to quash the notices dated 07.07.2025 issued by respondent No.3. 2. Accused Nos.1, 2 and 4 have preferred Crl.P. No.9924/2025, whereas accused No.3 has preferred Crl.P. No.9918/2025. As both petitions arise out of the same FIR, they are heard together and are being disposed of by this common order. 3. Heard the learned senior counsel for petitioners, the learned High Court Government Pleader for respondent No.1/ State and respondent No.3/C.C.B, learned senior - 5 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 counsel for respondent No.2/defacto-complainant and perused the material on record. 4. Brief Facts of the case: The complaint is lodged on 03.07.2025 by one Gulam Mustafa, son of late Gulam Rasool, the Chairman and Managing Director of M/s Gulam Mustafa Enterprises Pvt. Ltd., stating that he has been engaged in the business of building development. During the years 2012–2013, while he was carrying out a building development project, the adjoining land was being developed by M/s Patel Engineering Limited. During this period, he came into acquaintance with the officials of Patel Engineering Limited, who proposed that both parties could jointly develop the property. On such representation, the complainant undertook joint development activities in respect of the land shown and offered by M/s Patel Engineering Limited. In the year 2016, when the complainant was undertaking land development work near Electronic City, Neo Town, the officials of M/s Patel Engineering Limited, i.e., accused - 6 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 No.1/Managing Director, accused No.2/CFO, accused No.3/Additional Director and accused No.4/ Vice-President, approached the complainant with a fraudulent intention and in furtherance of a criminal conspiracy. It is alleged that the said officials/accused persons induced him to invest funds in another company allegedly belonging to them, namely M/s Niche Infra Projects & Developers, by assuring him that he would receive high returns. Believing their representations to be true, the complainant asserts that he was persuaded to invest an amount of Rs.80 crores. It is alleged that, acting on the assurances of the accused persons, the complainant invested a total sum of ₹75,16,14,049/- from 2016 upto 21.03.2021, through his companies M/s Azeem Infinite Dwelling (India) Pvt. Ltd. and Allam Infinite India Pvt. Ltd., into the entity indicated by Patel Engineering Limited. It is further stated that although the accused persons maintained contact with the complainant for some time, when he sought information regarding the status of the investment and the expected - 7 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 returns, the accused not only failed to give any satisfactory response but allegedly abused him in filthy language and informed him that he had not paid any money to them and that they would not return any amount. It is alleged that the accused persons, with the intention to cheat, conspired amongst themselves, induced the complainant to invest large sums of money, misappropriated the same and dishonestly breached the trust reposed in them. 5. Contentions of the learned Senior counsel appearing for the petitioners are as under: a) The very registration of the impugned FIR is vitiated in law, as the crime has been registered by invoking provisions of a statute which is no longer in existence, thereby rendering the registration and investigation wholly without jurisdiction and reflective of total non-application of mind. A bare perusal of the complaint does not disclose the essential ingredients of the offences punishable under Sections 405, 406, 415 and 420 of the IPC, as there is - 8 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 neither any averment of inducement at the inception nor any entrustment of property to the petitioner. The allegations, even if accepted in entirety, disclose at best a civil dispute arising out of commercial transactions between corporate entities, which has been deliberately clothed with criminal colour. Vicarious liability is not automatic in criminal law and, in the absence of specific overt acts attributed, prosecution is impermissible. b) The alleged transactions pertain to the period between 2016 and 21.03.2021, whereas the impugned complaint has been lodged only on 03.07.2025, suffering from enormous, long, unexplained and inordinate delay and laches, which is fatal to the prosecution and investigation. Further, the offences of cheating and criminal breach of trust cannot co-exist on the same set of allegations, in the absence of mens rea at the inception. It is also urged that no preliminary enquiry was conducted as mandated under Section 173(3) of the BNSS, though the dispute is purely commercial in nature. The allegations are omnibus, the - 9 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 dispute is inter-corporate, and in the absence of any statutory basis for fastening vicarious liability, individuals cannot be prosecuted. A similar complaint against petitioners was quashed by a Co-ordinate Bench of this Court in Crl.P. No. 6513/2024 dated 06.08.2024, which has attained finality. Hence, FIR and consequential proceedings are illegal and unconstitutional. c) Even if the allegations are accepted in entirety, they disclose at best a civil or commercial dispute arising out of contractual and partnership arrangements, which has been deliberately given a criminal colour with malafide intent to harass the petitioners. The petitioners are in no manner connected with the firm in which the alleged investments were made, as is evident from the documents on record, and therefore their prosecution is wholly unwarranted. The complaint, therefore, is manifestly mala fide and amounts to an abuse of the process of law. - 10 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 d) The FIR itself discloses that the grievance arises out of an alleged failure to return money, which at best constitutes breach of promise and not cheating as defined under Section 415 IPC. The allegations against the petitioners, who are stated to be directors and officers of Patel Engineering Limited, are omnibus and collective, without attribution of specific overt acts, and that vicarious liability is not automatic in criminal law in the absence of a statutory provision. The Company itself not having been arrayed as an accused, the prosecution of the petitioners is impermissible. Reliance is also placed on the existence of multiple partnership deeds between the parties, containing an arbitration clause, which provides an efficacious civil remedy. On these grounds, it is contended that the impugned complaint, FIR and consequential proceedings are unconstitutional, illegal, malafide and liable to be quashed. 6. The learned High Court Government Pleader appearing for respondent No.1 and respondent no.3 would - 11 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 vehemently contend that the impugned FIR has been registered strictly in accordance with law on the basis of a complaint disclosing cognizable offences. It is contended that the allegations made in the complaint, if taken at face value and accepted in their entirety, prima facie disclose the commission of offences punishable under the provisions of the Indian Penal Code invoked therein. The learned HCGP would further contend that the scope of interference under Section 482 Cr.P.C./528 BNSS is limited and that this Court, at the stage of investigation, ought not to embark upon a meticulous examination of the factual matrix or adjudicate upon the disputed questions of fact, which are matters to be tested during investigation or trial. 7. It is also contended that the defence sought to be raised by the petitioners, including the nature of the transaction, alleged absence of mens rea, entrustment, delay in lodging the complaint, existence of civil remedies or contractual arrangements between the parties, are all mixed questions of fact and law, which cannot be gone into - 12 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 at this stage. The learned HCGP contends that the investigation is still in progress and the Investigating Officer must be permitted to place the final report before the jurisdictional Court. On these grounds, it is urged that the petitions do not warrant interference at this stage and are liable to be dismissed. 8. Learned senior counsel for Respondent No.2/de- facto complainant would contend that the impugned complaint and FIR clearly disclose the commission of cognizable offences, and therefore registration of the FIR was mandatory in law. It is submitted that the allegations pertain to serious financial fraud involving huge monetary transactions, wherein accused Nos.1 to 4, being individuals connected with M/s Patel Engineering Limited, personally induced the complainant (CW-1) to invest substantial amounts in M/s Niche Infra Projects & Developers, and thereafter cheated and threatened him. Learned counsel would contend that at this stage, the Court is only required to examine whether a prima facie case is made out, and not - 13 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 to adjudicate upon the correctness of the allegations. The issues raised by the petitioners, including the nature of the transaction, alleged absence of mens rea, and inter se partnership arrangements, are disputed questions of fact, which cannot be gone into under the inherent jurisdiction of this Court. It is further contended that when cognizable offences are disclosed, no preliminary enquiry is permissible and the contention to the contrary is misconceived. 9. It is further contended that the investigation is in progress, and the petitions seeking quashing at this stage are premature and liable to be rejected. Learned counsel contends that criminal proceedings ought not to be scuttled at the very threshold, particularly when allegations of financial fraud and tracing of money trail are involved. The mere availability of civil remedies or existence of partnership deeds cannot absolve the accused from criminal liability, as fraud vitiates all transactions, and even within a partnership, criminal liability is attracted in cases of cheating or breach of trust, as recognized under Section 10 - 14 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 of the Indian Partnership Act. It is urged that whether the allegations ultimately constitute cheating or criminal breach of trust cannot be conclusively determined at this stage, and the complaint clearly makes out a prima facie case warranting investigation. Reference is also made to the fact that multiple criminal cases are stated to be registered against Patel Engineering Limited, demonstrating a pattern of conduct. Hence, contended that the petitions are liable to be dismissed. 10. Having heard the arguments, the points that arise for consideration are as under: (i) Whether the allegations made in the impugned complaint and FIR, even if accepted at face value, disclose the essential ingredients of the offences punishable under Sections 120B, 405, 406, 415, 417 and 420 read with Section 34 of the IPC as against the petitioners? (ii) Whether the dispute, on the admitted facts, is predominantly civil/commercial in nature and has been impermissibly given a criminal colour? - 15 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 (iii) Whether the continuation of criminal proceedings against the petitioners warrants interference by this Court in exercise of its inherent powers under Section 482 Cr.P.C./Section 528 BNSS? 11. The gravamen of the complaint pertains to alleged investments made between 2016 and March 2021, arising out of business and partnership arrangements between corporate entities. The FIR itself discloses that the complainant’s grievance emanates from an alleged failure to return money or provide expected returns, which, on the face of it, flows from contractual and commercial dealings. 12. A bare reading of the complaint does not disclose any specific act of inducement attributable to any of the petitioners at the inception of the transaction, which is a sine qua non for attracting the offence of cheating under Section 415 IPC. Equally, there is no clear averment of entrustment of property to any of the petitioners so as to attract the ingredients of criminal breach of trust under Sections 405 and 406 IPC. The allegations are omnibus and - 16 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 collective, lacking particulars as to the individual role of each petitioner, which is impermissible in criminal law. 13. The material on record further reveals that the transactions are governed by multiple partnership deeds, including a deed dated 04.08.2022 containing an arbitration clause, and that the complainant’s entities had retired from the partnership owing to their own defaults. These admitted facts fortify the conclusion that the dispute is essentially civil in nature. It is well settled that every breach of contract or failure to honour a commercial obligation does not give rise to criminal liability, unless the necessary criminal intent is demonstrated at the inception, which is conspicuously absent in the present case. 14. This Court also finds considerable force in the submission regarding enormous and unexplained delay. The alleged cause of action pertains to transactions culminating in March 2021, whereas the complaint has been lodged only on 03.07.2025, after a lapse of nearly four years, without any satisfactory explanation. Such delay, particularly in - 17 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 commercial disputes, seriously dents the credibility of the prosecution and supports the inference of an afterthought aimed at exerting pressure. 15. At the outset, this Court finds that the simultaneous invocation of offences under Sections 415/420 IPC (cheating) and Sections 405/406 IPC (criminal breach of trust) on the same set of allegations is legally unsustainable. The essential ingredients of the two offences are conceptually distinct and operate in different factual fields. Cheating postulates a dishonest or fraudulent intention at the inception of the transaction, whereas criminal breach of trust presupposes lawful entrustment followed by subsequent dishonest misappropriation. The two offences, therefore, cannot ordinarily co-exist on identical factual assertions. 16. The Hon’ble Supreme Court in Delhi Race Club (1940) Ltd. v. State of U.P., reported in (2024) 10 SCC 690, has categorically reiterated this principle. In paragraph 38 which is extracted hereunder:- - 18 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 “38. In our view, the plain reading of the complaint fails to spell out any of the aforesaid ingredients noted above. We may only say, with a view to clear a serious misconception of law in the mind of the police as well as the courts below, that if it is a case of the complainant that offence of criminal breach of trust as defined 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 offence of cheating as defined and explained in Section 415 IPC, punishable under Section 420 IPC.” 17. Para 51 of the above judgment, extracted herein is also aptly applicable to the present case:- “ 51. If it is the case of the complainant that a particular amount is due and payable to him then he should have filed a civil suit for recovery of the amount against the appellants herein. But he could not have gone to the Court of the Additional Chief Judicial Magistrate by filing a complaint of cheating and criminal breach of trust. It appears that till this date, the complainant has not filed any civil suit for recovery of the amount which according to him is due and payable to him by the appellants. He seems to have prima facie lost the period of limitation for filing such a civil suit.” - 19 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 18. The Apex Court held that where the allegations disclose that the complainant had voluntarily parted with money pursuant to commercial arrangements, and the grievance essentially arises from an alleged failure to honour financial commitments, the offence of criminal breach of trust is not attracted in the absence of specific averments of entrustment, dominion over property, and subsequent misappropriation. The Court further cautioned against mechanically invoking both cheating and criminal breach of trust in commercial disputes, as such practice reflects non-application of mind. 19. Similarly, in Jayaramaiah and another v. State of Karnataka, 2025 SCC OnLine Kar 17448, this Court, relying upon settled Supreme Court jurisprudence, has held in paragraphs 4 and 6 that cheating and criminal breach of trust cannot be alleged in the same breath, unless the complaint clearly demonstrates (i) dishonest inducement at inception, and (ii) independent entrustment followed by misappropriation. It was further held that where the factual - 20 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 foundation is a business transaction and the dispute pertains to non-return of money or non-payment of dues, invocation of both offences amounts to abuse of the criminal process. 20. In the present case, “the plain reading of the complaint fails to spell out any of the aforesaid ingredients noted above”. The complaint conspicuously fails to satisfy either test. There is no pleading of dishonest intention at the inception of the alleged investments so as to attract Section 415 IPC. Equally, there is no specific averment of entrustment of property to the petitioners in a fiduciary capacity, nor any material indicating subsequent dishonest conversion so as to attract Sections 405 or 406 IPC. The allegations, at their highest, indicate a case of alleged breach of commercial assurances or failure to repay investments, which does not ipso facto constitute either offence. - 21 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 21. The Hon’ble Supreme Court in Sushil Sethi v. State of Arunachal Pradesh, (2020) 3 SCC 240, particularly in paragraphs 7.6 to 8 has observed as under : “7.6. In Joseph Salvaraj A. v. State of Gujarat [Joseph Salvaraj A. v. State of Gujarat, (2011) 7 SCC 59 : (2011) 3 SCC (Cri) 23] , it is observed and held by this Court that when dispute between the parties constitutes only a civil wrong and not a criminal wrong, the courts would not permit a person to be harassed although no case for taking cognizance of the offence has been made out. 7.7. In Inder Mohan Goswami v. State of Uttaranchal [Inder Mohan Goswami v. State of Uttaranchal, (2007) 12 SCC 1 : (2008) 1 SCC (Cri) 259] , it is observed and held by this Court that the Court must ensure that criminal prosecution is not used as an instrument of harassment or for seeking private vendetta or with an ulterior motive to pressurise the accused. It is further observed and held by this Court that it is neither possible nor desirable to lay down an inflexible rule that would govern the exercise of inherent jurisdiction. It is further observed and held that inherent jurisdiction of the High Courts under Section 482 CrPC though wide has to be exercised sparingly, carefully and with caution and only when it is justified by the tests specifically laid down in the statute itself. - 22 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 8. Applying the law laid down by this Court in the aforesaid decisions to the facts of the case on hand, we are of the opinion that this is a fit case to exercise powers under Section 482 CrPC and to quash the impugned criminal proceedings.” 22. Viewed thus, the invocation of both cheating and criminal breach of trust in the present FIR is not only legally impermissible but also demonstrative of an attempt to convert a purely civil dispute into a criminal prosecution with a view to exert pressure. 23. While it is true that criminal proceedings ought not to be interdicted lightly, it is equally settled that where the complaint does not disclose the commission of any offence and the proceedings are manifestly attended with mala fides, this Court is duty-bound to exercise its inherent jurisdiction to prevent abuse of process of law. 24. It is useful to refer to the principles laid down by the Hon’ble Supreme Court in State of Haryana v. Bhajan Lal (1992 Supp (1) SCC 335) : - 23 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 “ 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. - 24 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 (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. (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.” - 25 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 25. In above stated judgments Supra, the Hon’ble Supreme Court has categorically held that in the absence of mens rea at the inception, criminal prosecution arising out of commercial transactions amounts to abuse of process. The facts of the present case stand on an even stronger footing, as the FIR itself attributes the delay to an alleged promise to repay, thereby negating any initial dishonest intention. 26. This Court also finds support from the decision of the Co-ordinate Bench of this Court in Patel Engineering Limited v. State of Karnataka (Crl.P. No. 6513/2024 dated 06.08.2024), wherein, upon an elaborate consideration of several judgments of the Hon’ble Supreme Court, the criminal proceedings were quashed. The Co- ordinate Bench held that where the dispute between the parties arises out of a purely commercial transaction, involving alleged breach of contractual obligations, the same cannot be permitted to be camouflaged as a criminal - 26 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 offence. It was observed that invocation of criminal law in such circumstances amounts to abuse of the process of law and warrants interference under Section 482 Cr.P.C. The ratio laid down in the said decision squarely applies to the facts of the present case. 27. In Vijay Kumar Ghai v. State of W.B., reported in (2022) 7 SCC 124, it is observed by the Apex Court that :- “24. This Court in G. Sagar Suri v. State of U.P. [G. Sagar Suri v. State of U.P., (2000) 2 SCC 636 : 2000 SCC (Cri) 513] observed that it is the duty and obligation of the criminal court to exercise a great deal of caution in issuing the process, particularly when matters are essentially of civil nature. 25. This Court has time and again cautioned about converting purely civil disputes into criminal cases. This Court in Indian Oil Corpn. [Indian Oil Corpn. v. NEPC India Ltd., (2006) 6 SCC 736 : (2006) 3 SCC (Cri) 188] noticed the prevalent impression that civil law remedies are time consuming and do not adequately protect the interests of lenders/creditors. The Court further observed that : (Indian Oil Corpn. [Indian Oil Corpn. v. NEPC India Ltd., (2006) 6 SCC 736: (2006) 3 SCC (Cri) 188] , SCC p. 749, para 13) - 27 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 ‘13. … Any effort to settle civil disputes and claims, which do not involve any criminal offence, by applying pressure through criminal prosecution should be deprecated and discouraged.’ ” 28. The learned counsel for Respondent No.2 has placed reliance upon the decisions of the Hon’ble Supreme Court in Skoda Auto Volkswagen (India) Private Limited v. State of Uttar Pradesh reported in (2021) 5 SCC 795;, Neeharika Infrastructure Private Limited v. State of Maharashtra reported in (2021) 19 SCC 401; , Somjeet Mallick v. State of Jharkhand reported in (2024) 10 SCC 52; and Kathyayini v. Sidharth P.S. Reddy reported in 2025 SCC Online Sc 1428, to contend that criminal proceedings ought not to be interdicted at the threshold and that investigation must be permitted to run its course. There can be no quarrel with the broad legal propositions enunciated in the said judgments. However, a careful examination of the facts of the present case would demonstrate that the reliance placed on the aforesaid decisions is misconceived and misplaced. - 28 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 29. In Skoda Auto Volkswagen (India) Private Limited (SUPRA) and Neeharika Infrastructure Private Limited (SUPRA), the Hon’ble Supreme Court reiterated the settled principle that the power under Section 482 Cr.P.C. is to be exercised sparingly and that ordinarily investigation should not be stalled at the nascent stage. At the same time, the Apex Court has unequivocally recognized that where the allegations in the FIR, even if taken at face value, do not disclose the commission of any cognizable offence, or where the criminal process is manifestly attended with malafides or is used to settle civil disputes, interference is not only permissible but necessary. Therefore, the said judgments do not lay down an absolute bar against quashing; rather, they preserve the inherent power of the High Court to prevent abuse of process. 30. In the present case, the dispute between the parties undeniably emanates from a purely contractual/commercial transaction, and the allegations essentially relate to non-fulfillment of contractual - 29 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 obligations. The FIR, when read as a whole, does not disclose the essential ingredients of the alleged penal offences, particularly mens rea or dishonest intention at the inception of the transaction, which is a sine qua non for offences such as cheating or criminal breach of trust. Thus, the ratio of Neeharika Infrastructure (SUPRA), which cautions against premature interference where a prima facie cognizable offence is made out, cannot be mechanically applied to the facts at hand. 31. The reliance placed on Somjeet Mallick v. State of Jharkhand (SUPRA) is equally untenable. In the said case, the Hon’ble Supreme Court found specific allegations of dishonest conduct, continued false assurances, and retention/misappropriation of property, which necessitated investigation to ascertain criminal culpability. In contrast, the present case does not disclose any such factual foundation. There are no specific allegations demonstrating dishonest intention from the inception, nor any act amounting to entrustment followed by misappropriation. - 30 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 Mere failure to honour contractual terms or repay amounts, without more, does not ipso facto give rise to criminal liability. 32. Similarly, the judgment in Kathyayini v. Sidharth P.S. Reddy(SUPRA) reiterates the well-settled principle that pendency of civil proceedings is not a bar to criminal prosecution where a prima facie criminal offence is made out. The said decision was rendered in a fact situation involving systematic exclusion, fraudulent conduct, and intimidation, clearly attracting criminal elements independent of the civil dispute. The present case, however, stands on a wholly different footing. The allegations herein do not transcend the realm of civil law, and the attempt to invoke criminal machinery appears to be an arm-twisting tactic to exert pressure in a commercial dispute. 33. It is therefore evident that the judgments relied upon by Respondent No.2 are fact-specific and rendered in circumstances where clear criminal intent and overt - 31 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 criminal acts were discernible at the threshold. The same cannot be pressed into service to justify continuation of criminal proceedings in a case which, at its core, involves a commercial disagreement dressed up as a criminal offence. 34. Consequently, this Court is of the considered view that the judgments relied upon by Respondent No.2 do not advance the case of the prosecution and are clearly distinguishable on facts and in law, and hence, cannot be made the basis to deny relief to the petitioners. 35. On the other hand, the facts of the present case squarely attract the principles laid down by the Hon’ble Supreme Court and this Court in several decisions relied upon by the petitioners, which consistently held that criminal law cannot be permitted to be used as a tool for recovery of money or enforcement of contractual obligations, and that such misuse of the criminal process warrants interference under Section 482 Cr.P.C. The points raised are accordingly answered. - 32 - HC-KAR NC: 2026:KHC:6642 CRL.P No. 9918 of 2025 C/W CRL.P No. 9924 of 2025 36. For the foregoing reasons, the following:- ORDER Both the petitions are allowed. The FIR bearing Crime No. 345/2025 registered by Hebbagodi Police Station, Bengaluru, for the offences punishable under Sections 120B, 405, 406, 415, 417 and 420 read with Section 34 of the Indian Penal Code, the complaint dated 03.07.2025 lodged by respondent No.2, and the consequential notices dated 07.07.2025, insofar as they relate to the petitioners/Accused Nos.1 to 4, are hereby quashed. SD/- (MOHAMMAD NAWAZ) JUDGE kmv CT:PA List No.: 19 Sl No.: 1