Karnataka High Court
Karthik Prabu S/O Santosh Prabhu vs State Of Karnataka on 6 March, 2026
Author: Hanchate Sanjeevkumar
Bench: Hanchate Sanjeevkumar
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CRL.P No. 104744 of 2025
HC-KAR
IN THE HIGH COURT OF KARNATAKA, AT DHARWAD
DATED THIS THE 6TH DAY OF MARCH, 2026
BEFORE
THE HON'BLE MR. JUSTICE HANCHATE SANJEEVKUMAR
CRIMINAL PETITION NO. 104744 OF 2025
(482 Cr.PC/528 OF BNSS)
BETWEEN:
1. KARTHIK PRABU
S/O. SANTOSH PRABHU,
AGE: 23 YEARS,
1ST MAIN ROAD, SILVER TOWN,
NEHARU NAGAR, HUBBALLI,
HUBBALLI-580020,
DHARWAD CITY, KARNATAKA.
2. SANTOSH PRABU
S/O. VENKATESH PRABHU,
AGED 50 YEARS,
Digitally signed
by MALLIKARJUN 1ST MAIN ROAD, SILVER TOWN,
RUDRAYYA
KALMATH
Location: High
Court of
NEHARU NAGAR, HUBBALLI,
Karnataka,
Dharwad Bench
DHARWAD CITY, KARNATAKA,
PINCODE: 580020.
...PETITIONERS
(BY SRI SHRIDHAR PRABHU, ADVOCATE)
AND:
1. STATE OF KARNATAKA,
BY GOKUL ROAD POLICE STATION,
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CRL.P No. 104744 of 2025
HC-KAR
HUBLI NORTH SUB DIVISION,
(REPRESENTED BY POLICE SUB INSPECTOR),
REP. BY SPP, HCK, DHARWAD.
2. KESHAV KAREKAR
S/O. HARISH KAREKAR,
AGE: 22 YEARS,
H. NO.23/7, RAGHAVENDRA COLONY,
UNAKAL CROSS, HUBBALLI,
HUBBALLI, DHARWAD CITY,
KARNATAKA-580023.
...RESPONDENTS
(BY SRI ABHISHEK MALIPATIL, HCGP FOR R1;
NOTICE TO R2 SERVED)
THIS CRIMINAL PETITION IS FILED UNDER SECTION 528
OF THE BHARATIYA NAGARIK SURAKSHA SANHITA, 2023,
PRAYING TO QUASH THE PRIVATE COMPLAINT PRIVATE FILED
BY THE RESPONDENT/COMPLAINANT IN PCR NO.222/2025, ON
THE FILE OF THE COURT OF JMFC-III, HUBBALLI DATED 4TH
OCTOBER 2025 TO THE EXTENT OF PETITIONER-1/ACCUSED-1
AND PETITIONER-2/ACCUSED-2 AND QUASH THE IMPUGNED
ORDER DATED 28TH OCTOBER 2025 PASSED BY THE COURT OF
JMFC-III, HUBBALLI TO THE EXTENT OF PETITIONER-1/
ACCUSED-1 AND PETITIONER-2/ACCUSED-2 AND QUASH THE
FIR IN CRIME NO.0158/2025 REGISTERED BY THE GOKUL ROAD
POLICE STATION, HUBBALLI DATED 10TH NOVEMBER 2025 THE
EXTENT OF PETITIONER-1/ACCUSED-1 AND PETITIONER-2/
ACCUSED-2 FOR OFFENCE PUNISHABLE UNDER SECTIONS 406,
420, 504, 506 READ WITH SECTION 34 OF IPC AND ETC.
THIS PETITION COMING ON FOR ADMISSION, THIS DAY
ORDER WAS MADE THEREIN AS UNDER:
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CRL.P No. 104744 of 2025
HC-KAR
ORAL ORDER
(PER: THE HON'BLE MR. JUSTICE HANCHATE SANJEEVKUMAR) This petition is filed under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (for short, 'BNSS') /under Section 482 of Cr.P.C. for seeking for reliefs of quashing the criminal proceedings initiated against the petitioners as per following prayers made in the petition:
a) Quash the private complaint filed by the Respondent/Complainant in PCR No.222/2025, on the file of the Court of JMFC-III, Hubballi dated 4th October 2025 to the extent of Petitioner-1/Accused-1 and Petitioner-
2/Accused-2.
b) Quash the impugned order dated 28th October, 2025 passed by the court of JMFC-III, Hubballi to the extent of Petitioner-1/ Accused-1 and Petitioner-2/Accused-2.
c) Quash the FIR in Crime No.0158/2025 registered by the Gokul Road Police Station, Hubballi dated 10th November, 2025 the extent of Petitioner-1/Accused-1 and Petitioner- 2/Accused-2 for offence punishable under sections 406, 420, 504 and 506 Read With section 34 of IPC.
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2. The respondent No.2 herein is the complainant. He has filed complaint in PCR No.222/2025 against the petitioners and other accused with the allegation that the accused have made belief the complainant to invest some amount with the petitioners and other accused. Thereby, the complainant has invested some amount by forwarding same to various persons. But the accused have not paid the amount invested by the complainant. Thus, committed offence of criminal breach of trust and cheating. When the complainant had asked his money to the petitioners, the petitioners have criminally intimidated. Thus, with all the allegations as indicated in the complaint filed private complaint before the learned Magistrate. The learned Magistrate has referring the case to the Police for registering FIR and investigation. Accordingly, the police have registered a crime for the offences punishable under Sections 406, 420, 504 and 506 read with Section 34 of IPC.
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3. The learned counsel for the petitioners submitted that the entire complaint and its FIR is abuse of process of Court. Upon bare perusal of the complaint, at the most, it is disclosed that there is a money transaction between the complainant and the accused and just because, there is some variations in giving and taking money that does not amount to offence of cheating and criminal breach of trust. If at all the accused are still having balance to pay to the complainant, then the remedy for complainant is to file civil suit for recovery of money. But without doing so, filing of complaint and setting criminal law into motion is nothing but an abuse of process of law. Therefore, the method adopted by the complainant is nothing but an act of arm- twisting the petitioners, putting pressure and taking coercive action against the petitioners by criminal law. Therefore, he further submitted that as per the complaint averments and FIR, complaint was lodged on 25.02.2024. But, the FIR registered on 10.11.2025, i.e, after a period of 01 year 09 months. Further, in these types of money -6- NC: 2026:KHC-D:3605 CRL.P No. 104744 of 2025 HC-KAR transactions, whether the allegation is made that the petitioners have committed offence of criminal breach of trust and cheating, both cannot go hand to hand. For that to attract offence under Section 406 of IPC, there must be entrustment of property. But in the present case, there is no such entrustment of property to attract the offence under Section 406 of the IPC. Therefore, upon bare perusal of the complaint itself, it goes to reveal that the entire transaction is revolving around the business and the very transaction which does not attract offence alleged and there is nothing but harassing the petitioners by adopting method of arm-twisting. Therefore, prays to quash the proceedings initiated by the complainant.
4. He places reliance on the decisions of the Hon'ble Supreme Court in the case of Arshad Neyaz Khan vs. State of Jharkhand and Another, reported in 2025 SCC OnLine SC 2058 and in the case of Delhi Race Club -7- NC: 2026:KHC-D:3605 CRL.P No. 104744 of 2025 HC-KAR (1940) Limited and Others vs. State of Uttar Pradesh and Another, reported in (2024) 10 SCC 690.
5. Notice issued to respondent No.2-complainant is served, but there is no representation from the 2nd respondent.
6. On the other hand, Sri Abhishek Malipatil, learned HCGP submitted that the complaint averments are matter for trial and prima facie evidence is made out. Therefore, opposed the petition and hence prays to dismiss the petition.
7. The principal offences alleged in the complaint are Sections 406 and 420 of IPC (corresponding to Sections 313 and 318 of BNS, 2023 retrospectively).
8. Section 406 of IPC reads as follows:
"406. Punishment for criminal breach of trust.- Whoever commits criminal breach of trust shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both."-8-
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9. Section 420 of IPC reads as under:
"420. Cheating and dishonestly inducing delivery of property.- Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine."
10. Upon considering the complaint averments, which runs nearly 17 pages, the complaint goes to prima facie shows that the allegations in the complaint as if made in the plaint to be filed in the civil suit. The averments of complaint are revolving around investment of the amount in stock, in a real estate and in other business. Also upon considering the complaint averments, the complainant himself has said that he has paid various amounts to various persons and one among the entry is that he has paid the amount of ₹1,07,400/- to the petitioner No.1/accused No.1. Further, in the same complaint, the -9- NC: 2026:KHC-D:3605 CRL.P No. 104744 of 2025 HC-KAR complainant has made a tabular column that accused No.1 has paid and sent a sum of ₹14,18,637/- to the complainant. Therefore, upon considering these two entries in the tabular column in the complaint, the complainant himself has stated that he has received more money from accused No.1 than what the complainant has shown that he has paid amount to accused No.1. Therefore, upon considering the averments made in the complaint, there is no ingredients that property is entrusted and there is breach of trust.
11. Further to establish an offence of cheating, prima- facie there shall be averment the complaint that since inception point of time, before making the first transaction, the petitioners had animus in their mind of element of cheating, but this is lacking in the complaint. Therefore, whether the ingredients are there so as to proceed with the trial is to be considered in the light of the interpretation of law laid down by the Hon'ble Supreme Court.
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12. The Hon'ble Supreme Court in the case of Delhi Race Club (supra), has pleased to make interpretation of Section 420 of IPC and Section 406 of IPC, it has observed as follows:
"Difference between criminal breach of trust and cheating
35. This Court in its decision in S.W. Palanitkar v. State of Bihar reported in (2002) 1 SCC 241 :
2002 SCC (Cri) 129 expounded the difference in the ingredients required for constituting an of offence of criminal breach of trust (Section 406 IPC) viz-a-viz the offence of cheating (Section
420). The relevant observations read as under:
"9. The ingredients in order to constitute a criminal breach of trust are: (i) entrusting a person with property or with any dominion over property, (ii) that person entrusted (a) dishonestly misappropriating or converting that property to his own use; or (b) dishonestly using or disposing of that property or wilfully suffering any other person so to do in violation (i) of any direction of law prescribing the mode in which such trust is to be discharged, (ii) of any legal contract made, touching the discharge of such trust.
10. The ingredients of an offence of cheating are: (i) there should be fraudulent or dishonest inducement of a person by deceiving him, (ii)(a) the person so deceived should be induced to deliver any property to any person, or to consent that any person shall retain any property; or (b) the person so deceived should be intentionally induced to do
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NC: 2026:KHC-D:3605 CRL.P No. 104744 of 2025 HC-KAR or omit to do anything which he would not do or omit if he were not so deceived; and (iii) in cases covered by (ii)(b), the act of omission should be one which causes or is likely to cause damage or harm to the person induced in body, mind, reputation or property."
36. What can be discerned from the above is that the offences of criminal breach of trust (Section 406 IPC) and cheating (Section 420 IPC) have specific ingredients.
In order to constitute a criminal breach of trust (Section 406 IPC): -
1) There must be entrustment with person for property or dominion over the property, and
2) The person entrusted: -
a) Dishonestly misappropriated or converted property to his own use, or
b) Dishonestly used or disposed of the property or willfully suffers any other person so to do in violation of:
i) Any direction of law prescribing the
method in which the trust is
discharged; or
ii) Legal contract touching the
discharge of trust (see: S.W.P.
Palanitkar (supra) reported in S. W. Palanitkar Vs. State of Bihar, (2002) 1 SCC 241: 2002 SCC (Cri) 129.
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NC: 2026:KHC-D:3605 CRL.P No. 104744 of 2025 HC-KAR Similarly, in respect of an offence under Section 420 IPC, the essential ingredients are: -
1) Deception of any person, either by making a false or misleading representation or by other action or by omission;
2) Fraudulently or dishonestly inducing any person to deliver any property, or
3) The consent that any persons shall retain any property and finally intentionally inducing that person to do or omit to do anything which he would not do or omit (see:
Harmanpreet Singh Ahluwalia v. State of Punjab reported in (2009) 7 SCC 712 : (2009) 3 SCC (Cri) 620.
37. Further, in both the aforesaid sections, mens rea i.e. intention to defraud or the dishonest intention must be present, and in the case of cheating it must be there from the very beginning or inception.
42. Whereas, for the criminal breach of trust, the property must have been entrusted to the accused or he must have dominion over it. The property in respect of which the offence of breach of trust has been committed must be either the property of some person other than the accused or the beneficial interest in or ownership' of it must be of some other person. The accused must hold that property on trust of such other person. Although the offence, i.e. the offence of breach of trust and cheating involve dishonest intention, yet they are mutually exclusive and different in basic concept.
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43. There is a distinction between criminal breach of trust and cheating. For cheating, criminal intention is necessary at the time of making a false or misleading representation i.e., since inception. In criminal breach of trust, mere proof of entrustment is sufficient. Thus, in case of criminal breach of trust, the offender is lawfully entrusted with the property, and he dishonestly misappropriated the same. Whereas, in case of cheating, the offender fraudulently or dishonestly induces a person by deceiving him to deliver any property. In such a situation, both the offences cannot co-exist simultaneously.
44. At the most, the court of the Additional Chief Judicial Magistrate could have issued process for the offence punishable under Section 420 of the IPC i.e. cheating but in any circumstances no case of criminal breach of trust is made out. The reason being that indisputably there is no entrustment of any property in the case at hand. It is not even the case of the complainant that any property was lawfully entrusted to the appellants and that the same has been dishonestly misappropriated. The case of the complainant is plain and simple. He says that the price of the goods sold by him has not been paid. Once there is a sale, Section 406 of the IPC goes out of picture. According to the complainant, the invoices raised by him were not cleared. No case worth the name of cheating is also made out.
48. The aforesaid exposition of law makes it clear that there should be some entrustment of property to the accused wherein the ownership is not transferred to the accused. In case of sale of movable property, although the payment may be deferred yet the property in the goods passes on delivery as per Sections 20 and 24 respectively of
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NC: 2026:KHC-D:3605 CRL.P No. 104744 of 2025 HC-KAR the Sale of Goods Act, 1930.
"20. Specific goods in a deliverable state. -- Where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made and it is immaterial whether the time of payment of the price or the time of delivery of goods, or both, is postponed.
xxx xxx xxx
24. Goods sent on approval or "on sale or return". -- When goods are delivered to the buyer on approval or "on sale or return" or other similar terms, the property therein passes to the buyer--
a) when he signifies his approval or acceptance to the seller or does any other act adopting the transaction;
b) if he does not signify his approval or acceptance to the seller but retains the goods without giving notice of rejection, then, if a time has been fixed for the return of the goods on the expiration of such time, and, if no time has been fixed, on the expiration of a reasonable time."
49. From the aforesaid, there is no manner of any doubt whatsoever that in case of sale of goods, the property passes to the purchaser from the seller when the goods are delivered. Once the property in the goods passes to the purchaser, it cannot be said that the purchaser was entrusted with the property of the seller. Without entrustment of property, there cannot be any criminal breach of trust. Thus, prosecution of
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NC: 2026:KHC-D:3605 CRL.P No. 104744 of 2025 HC-KAR cases on charge of criminal breach of trust, for failure to pay the consideration amount in case of sale of goods is flawed to the core. There can be civil remedy for the non-payment of the consideration amount, but no criminal case will be maintainable for it. [See : Lalit Chaturvedi and Others v. State of Uttar Pradesh reported in 2024 12 SCC 483: 2024 SCC Online SC 171 and Mideast Integrated Steels Ltd. v. State of Jharkhand reported in 2023 SCC Online Jhar 301."
13. Therefore, in order to attract the offences of Sections 406 and 420 of IPC, mens rea i.e., the intention to defraud or the dishonest intention must be present and in the case of cheating, it must be there from the very beginning or inception.
14. But considering the complaint averments, there are various financial transactions between the complainant and the accused and the complaint is not only against the accused, but also with other accused has made several financial transactions. Even according to the complaint averments as stated by the complainant himself, the amount of transaction reciprocally between the parties is
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NC: 2026:KHC-D:3605 CRL.P No. 104744 of 2025 HC-KAR invested in stock trading and real estate etc. Therefore, at some point of time, due to difficulties in running business there might be some lapses in making prompt payment of the amount. This certainly does not show that the petitioners have dishonest intention of to defraud at very inception point of time. Therefore, the complaint averments revolve regarding financial transactions in a routine course of business attracting civil dispute.
15. Further, I placed reliance on the judgment of the Hon'ble Supreme Court in the case of Arashad Neyaz Khan (supra), which has observed as under:
16. The contents of the complaint as well as the FIR would have to be read in light of the ingredients of Sections 406 and 420 IPC and the law settled by this Court through various judicial dicta. On perusal of the complaint dated 29.01.2021, it is noted that the complainant/respondent No.2 has filed the said complaint invoking Sections 406, 420 and 120B IPC. For ease of reference, the aforesaid Sections are extracted as under:
"406. Punishment for criminal breach of trust.-- Whoever commits criminal breach of trust shall be punished with
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NC: 2026:KHC-D:3605 CRL.P No. 104744 of 2025 HC-KAR imprisonment of either description for a term which may extend to three years, or with fine, or with both.
xxx
420. Cheating and dishonestly inducing delivery of property.- Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.
xxx
120B. Punishment of criminal
conspiracy.-(1) Whoever is a party to a criminal conspiracy to commit an offence punishable with death, imprisonment for life or rigorous imprisonment for a term of two years or upwards, shall, where no express provision is made in this Code for the punishment of such a conspiracy, be punished in the same manner as if he had abetted such offence.
(2) Whoever is a party to a criminal conspiracy other than a criminal conspiracy to commit an offence punishable as aforesaid shall be punished with imprisonment of either description for a term not exceeding six months, or with fine or with both."
17. In Inder Mohan Goswami vs. State of Uttaranchal, (2007) 12 SCC 1 ("Inder Mohan Goswami"), while dealing with Section 420 IPC, this Court observed thus:
"42. On a reading of the aforesaid section, it is manifest that in the definition there are
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NC: 2026:KHC-D:3605 CRL.P No. 104744 of 2025 HC-KAR two separate classes of acts which the person deceived may be induced to do. In the first class of acts he may be induced fraudulently or dishonestly to deliver property to any person. The second class of acts is the doing or omitting to do anything which the person deceived would not do or omit to do if he were not so deceived. In the first class of cases, the inducement must be fraudulent or dishonest. In the second class of acts, the inducing must be intentional but need not be fraudulent or dishonest. 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 a fraudulent or dishonest intention at the time of making the promise. From his mere failure to subsequently keep a promise, one cannot presume that he all along had a culpable intention to break the promise from the beginning."
19. It is settled law that for establishing the offence of cheating, the complainant/ respondent No.2 was required to show that the appellant had a fraudulent or dishonest intention at the time of making a promise or representation of not fulfilling the agreement for sale of the said property. Such a culpable intention right at the beginning when the promise was made cannot be presumed but has to be made out with cogent facts. In the facts of the present case, there is a clear absence of dishonest and fraudulent intention on the part of the appellant during the agreement for sale. We must hasten to add that there is no allegation in the FIR or the complaint indicating either expressly or impliedly any intentional deception or fraudulent/dishonest intention on the part of the appellant right from the time of making the promise or misrepresentation. Nothing has been said on what the misrepresentations were and how the appellant intentionally deceived the
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NC: 2026:KHC-D:3605 CRL.P No. 104744 of 2025 HC-KAR complainant/ respondent No.2. Mere allegations by the complainant/ respondent No.2 that the appellant failed to execute the agreement for sale and failed to refund the money paid by the complainant/respondent No.2 does not satisfy the test of dishonest inducement to deliver a property or part with a valuable security as enshrined under Section 420 IPC."
16. Upon keeping the principle of law laid down by the Hon'ble Supreme Court and upon bare perusal of the complaint, apparently there is a laxity in making out ingredient of offences alleged in the complaint as alleged for offences under Section 406 and Section 420 of the IPC. The entire complaint averments prima facie goes to reveal that the petitioners may be owing some amount to the complainant and this is a purely a case of recovery of money which can be adjudicated in civil proceedings. But certainly do not attract the ingredients of Sections 406 and 420 of IPC. Therefore, upon considering the principle of law laid down by the Hon'ble Supreme Court, the complainant fails to refer the case for trial for trying the offences alleged. The trial for alleged offence in prosecution in a
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NC: 2026:KHC-D:3605 CRL.P No. 104744 of 2025 HC-KAR criminal case is different from a trial of prosecuting a civil case for recovery of money. For recovery of money, prosecution of a criminal case is nothing but abuse of process of Court. What the complainant has remedy to recover the amount in the civil law, but without doing so, launching criminal case is not permissible. Therefore, when this is the abuse of process of Court is made out by the counsel for the petitioners, then certainly, an inherent power can be involved under Section 482 of Cr.P.C./under Section 528 of the BNSS, so as to quash the proceedings initiated against the petitioners. Therefore, the Court is of the opinion that the complainant by lodging a private complaint before the learned Magistrate has committed an abuse of process of Court for the reasons that were explained, therefore the criminal proceedings initiated against the petitioners is liable to be quashed. Accordingly, it is quashed. Therefore, the appeal is allowed.
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NC: 2026:KHC-D:3605 CRL.P No. 104744 of 2025 HC-KAR The complainant is at liberty to initiate civil proceedings if he has any grievances.
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(HANCHATE SANJEEVKUMAR) JUDGE CKK /CT-AN List No.: 1 Sl No.: 68