Kerala High Court
Consilium Automation And Fire ... vs State Of Kerala on 10 April, 2026
CRL.MC NO.3809/2020 1
2026:KER:32206
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M.
FRIDAY, THE 10TH DAY OF APRIL 2026/20TH CHAITHRA, 1948
CRL.MC NO.3809 OF 2020
CRIME NO.790/2020 OF HILL PALACE POLICE STATION,
ERNAKULAM CITY
ARISING OUT OF THE JUDGMENT DATED 06.08.2020 IN
CR.M.C.NO.1517/2020 OF SESSIONS COURT, ERNAKULAM
PETITIONERS/ACCUSED 1 TO 5:
1 M/S.CONSILIUM AUTOMATION AND FIRE PROTECTION PVT.
LTD.
DOOR NO.TMC XII/260D, THAIKOOTTATHIL,
KODAMKULANGARA, THRIPUNITHURA-682 301
2 ATHULSASTHA RAJ E.K.
AGED 39 YEARS
S/O. (LATE) RAJASEKHARAN, 8D, ROYAL HEIGHTS,
NORTH FORT GATE, THRIPUNITHURA-682 301
3 PULIENKEEZHU VARGHESE,
AGED 70 YEARS
S/O.(LATE) CHERIYAN VARGHESE, A1/204,
VINI GARDENS, MANDAPASHWAR ROAD,
BORIVALI WEST, MUMBAI-400 103
4 BABURAJ KARUNAKARAN
AGED 47 YEARS
S/O.V.G.KARUNAKARAN, LOTUS PALAKKATIL,
FLAT NO.1D, KARINGACHIRA,
THRIPUNITHURA-682 301
5 PRIYA RAMESH
CONSILIUM MIDDLE EAST FZE, P.O. BOX 8018,
SAIF ZONE, SHARJAH, UNITED ARAB EMIRATES
BY ADV SRI.MILLU DANDAPANI
CRL.MC NO.3809/2020 2
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RESPONDENTS/STATE & COMPLAINANT:
1 STATE OF KERALA
REPRESENTED BY PUBLIC PROSECUTOR,
HIGH COURT OF KERALA, ERNAKULAM-682 031
2 TV SHARATH,
AGED 52 YEARS
S/O.MUTHUKRISHNA VARIER,
PBRA 23, VARANAT HOUSE, PERUMBAVOOR,
ERNAKULAM DISTRICT-683 542
BY ADVS.
SRI.MAYA M.N., PUBLIC PROSECUTOR, R1
SRI.PHILIP T.VARGHESE
SRI.THOMAS T.VARGHESE
SMT.V.T.LITHA
SMT.K.R.MONISHA
SMT.SHRUTHI SARA JACOB
SRI.SAIBY JOSE KIDANGOOR, R2
SRI.BENNY ANTONY PAREL
SRI.ANOOP SEBASTIAN
SMT.PRAMITHA AUGUSTINE
SMT.IRINE MATHEW
SRI.ADITHYA KIRAN V.E
SMT.ANJALI NAIR
SRI.SAJJU.S., SENIOR G.P.
THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON
10.04.2026, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:
CRL.MC NO.3809/2020 3
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ORDER
Dated this the 10th day of April, 2026 This Criminal Miscellaneous Case is filed by these petitioners seeking to quash Annexure J FIR in Crime No. 790 of 2020 on the files of Hill Palace Police Station, Ernakulam City and to quash all consequential proceedings arising from Crime No.790 of 2020.
2. The petitioners are the accused in Crime No.790 of 2020 on the files of Hill Palace Police Station, Ernakulam City registered by the SHO upon a private complaint lodged by the 2nd respondent before the Judicial First Class Magistrate Court, Tripunithura. The offences alleged against the petitioners are under Sections 406, 417, 418, 420, 424 and120 B of the Indian Penal Code.
3. The prosecution case is that the 1st petitioner Company, incorporated on 04.05.2016 at Mumbai, had the 2nd respondent as its Managing Director at the relevant time. The 1st petitioner Company borrowed Rs.2.50 Crores from the 2nd respondent for the purpose of meeting financial requirements of the CRL.MC NO.3809/2020 4 2026:KER:32206 Company. The said amount was agreed to be repaid within 6 months along with interest at 6.75%. Upon failure to repay the said amount, the petitioners have been accused of committing the above mentioned offences.
4. Heard Sri.Millu Dandapani, the learned counsel for the petitioners, Sri.Saiby Jose Kidangoor for the 2nd respondent/de- facto complainant and Smt.Maya M.N, the learned Public Prosecutor.
5. It is contended by the learned counsel for the petitioners that the FIR did not disclose prima facie case or any offence against the petitioners. It is to be noted that the 2nd respondent initially approached the police and preferred Annexure A complaint. On preliminary enquiry, police found that the dispute arose out of a civil transaction and therefore, did not register any crime. Thereafter, the 2nd respondent approached the Judicial First Class Magistrate Court, Tripunithura and filed a private complaint.
6. It is submitted that, to meet the financial requirements for executing a project, the Company borrowed Rs.2.50 Crores from the 2nd respondent, who himself procured five post-dated cheques for Rs.2 Crores and executed an agreement fastening liability on the CRL.MC NO.3809/2020 5 2026:KER:32206 1st petitioner Company. It is further submitted that the entire amount, except Rs.73,38,500/- has been repaid, which has been admitted by the 2nd respondent and is evident from the FIR itself. It is contended that no fraudulent or dishonest intention existed from the inception of transaction and, therefore, the essential ingredients of the offence of cheating under Section 420 IPC are not made out. Similarly, no amount borrowed from the 2nd respondent is fraudulently misappropriated, a small due in returning the amount does not constitute an offence under Section 406 IPC.
7. It is submitted that in Annexure A complaint, the 2nd respondent has alleged that he was induced by petitioner Nos.2 to 5. However, it is pertinent to note that the Annexure B agreement was executed on 02.03.2019, and Annexure A complaint itself states that the alleged inducement by petitioners No.2 to 5 occurred on or around 02.03.2019. In this regard, it is significant that the 2nd petitioner joined the 1st petitioner Company as a Director only on 16.12.2019, much after the execution of Annexure B agreement. Likewise, the 3rd and 5th petitioners are not signatories to Annexure B agreement and there is no board resolution passed on behalf of the petitioner Company. Thus, the petitioners 2,3 and 5 have no CRL.MC NO.3809/2020 6 2026:KER:32206 personal knowledge of the transaction alleged in the FIR. Though one Sri.Manoj Mangattuthodi was a signatory to Annexure B agreement, no case has been registered against him, as he was granted protection under Clause 9 of the said agreement, which specifically provides that Annexure B shall not constitute any personal guarantee or liability on the individuals signing on behalf of the 1st petitioner Company. However, such protection was not extended to the 4th petitioner, who was also a signatory to Annexure B, and a criminal prosecution has been initiated against him along with the other petitioners. Therefore, on a plain reading of the FIR itself made it clear that, no prima facie case is made out against petitioners 2 to 5, and consequently, the offence under Section 120B IPC is also not sustainable.
8. It is further submitted that the 2nd respondent has filed an application under Section 7 of the Insolvency and Bankruptcy Code 2016 before the National Company Law Tribunal, Mumbai, claiming repayment of the very same amount which forms the subject matter of Annexure J FIR. This clearly demonstrates that the 2nd respondent has initiated criminal proceedings solely with an intention to pressurize the petitioners for recovery of the alleged CRL.MC NO.3809/2020 7 2026:KER:32206 dues. It is further contended that this fact has been judicially noticed in the order passed in the anticipatory bail application filed by the petitioners before the Sessions Court, Ernakulam, wherein the learned Sessions Judge observed that there is nothing on record to indicate that, at the inception of the alleged borrowal, there was any intention to cheat. Therefore, the learned counsel for petitioners argued that the dispute, relating to a comparatively small outstanding amount, is purely civil in nature and does not warrant criminal prosecution. Hence, it is prayed that the continuation of proceedings against the petitioners pursuant to Annexure J FIR is wholly unsustainable in law and is liable to be quashed.
9. The learned counsel for the petitioners placed reliance on the dictum Lalit Chaturvedi and others v. State of Uttar Pradesh and another: [(2024) 12 SCC 483]; V.Y Jose and Another v. State of Gujarat and another : [(2009) 3 SCC 78] ; Rikhab Birani and Another v. State of Uttar Pradesh and another : [2025 SCC OnLine SC 823]; Ashok Kumar Jain v. State of Gujarat and another: [2025 SCC OnLine SC 998]; Anudeep Singh Chauhan v. State Government of NCT of Delhi and another: [2025:DHC:7322].
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10. The learned counsel for the 2nd respondent/defacto complainant opposed the contentions and submitted that the contents of the complaint, when read in their entirety, clearly disclose the ingredients of the alleged offences. It is submitted that the allegations in the FIR reveal that the petitioners, acting in concert, induced the 2nd respondent to part with a sum of ₹2.50 Crores on the promise of repayment within a stipulated period, knowing fully well that they would not honour the same. The petitioners' subsequent conduct, including failure to repay the agreed amount and the issuance of post-dated cheques, clearly establishes a dishonest intent from the inception of the transaction, it is submitted.
11. It is further contended that the mere existence of a civil remedy does not bar criminal prosecution when the ingredients of offences such as cheating, criminal breach of trust and conspiracy are prima facie made out. The role of each petitioner, including the directors and signatories to the agreement, requires detailed investigation, which cannot be scrutinised in the proceedings initiated under Section 482 Cr.P.C. It is submitted that merely on account of the fact that the complainant had a civil remedy, as also CRL.MC NO.3809/2020 9 2026:KER:32206 has availed that remedy, the initiation of criminal motion against the petitioners may not be quashed at the nascent stage of investigation. It is further contended that the question as to whether the criminal proceedings were initiated malafide, with an intention to exert pressure upon the petitioners or to wreak vengeance, can be examined and unearthed only upon completion of the investigation and a full appreciation of the entirety of facts relating to the present case.
12. The respondents further contended that the repayment of a portion of the amount does not absolve the petitioners of criminal liability, particularly when a substantial amount remains unpaid. The selective invocation of contractual clauses and defences raised by the petitioners is a matter of evidence to be adjudicated during trial. It is submitted that at this stage, the Court is only required to see whether the allegations, if taken at face value, disclose the commission of an offence, which they undoubtedly do.
13. It is submitted that the order passed in the anticipatory bail application cannot be relied upon in proceedings invoking jurisdiction under Section 482 of the Code of Criminal Procedure. It is further submitted that there is no legal bar to the continuation of CRL.MC NO.3809/2020 10 2026:KER:32206 civil or Bankruptcy Code proceedings and criminal proceedings simultaneously, even if they arise out of the same set of allegations. Accordingly, the proceedings initiated before this Hon'ble Court as well as before the National Company Law Tribunal are maintainable in law. Therefore, it is prayed on behalf of the 2nd respondent that this Hon'ble Court may be pleased to dismiss the Criminal Miscellaneous Case and permit the investigation and consequential proceedings to continue in accordance with law.
14. The learned counsel for the 2nd respondent placed reliance on the dictum K. Jagadish v. Udaya Kumar G.S and others (2020 KHC 6280); Durga Lal Verma v. State of Rajasthan:
(2024 KHC 5662) ; Somjeet Mallick v. State of Jharkhand and others : (2024 KHC 6558); Priti Saraf and Another v. State (NCT Delhi) and another : [(2021) 16 SCC 142] ; Dilip Kumar Puri and others v. State of Madhya Pradesh: (2023 SCC OnLine MP 649) ;
Shawn Anthony v. State of Kerala: [2025 (5) KHC 508[ ; Rajesh Parashar v. State of Himachal Pradesh: MANU/HP/0816/2025; Supriya Jain v. State of Haryana: (AIR 2023 SC 3287) ; Sadiq B. Hanchinmani v. State of Karnataka: (2025 KHC 6909) ; Om Prakash Ambadkar v. State of Maharashtra: (AIR 2025 SC 970) ; CRL.MC NO.3809/2020 11
2026:KER:32206 Sumit Bansal v. M/s.MGI Developers and Promoters: [2026 (2) KHC 77] ; Indian Oil Corporation v. NEPC India Ltd. : (AIR 2006 SC 2780).
15. I have heard both sides in detail and have considered the respective contentions put forth. The relied-on precedents were also studied. The question to be considered is whether a case has been made out for quashing Annexure J FIR wherein petitioners are alleged to have committed offences punishable under Sections 406, 417, 418, 420, 424 and 120 B of the IPC, by invoking the inherent powers vested in this Court under Section 482 Cr.P.C. Before proceeding to examine the said question, it is relevant to remind myself of the scope, nature and extent of the jurisdiction that is open to exercise by this court under Section 482 Cr.P.C. By now, it is settled through a catena of highly authoritative and binding precedents of the Hon'ble Supreme Court that quashing an FIR invoking inherent powers vested in this Court is to be done with great circumspection and care. The Hon'ble Supreme Court has in Pradeep Kumar Kesarwani v. State of Uttar Pradesh and another (2025 SCC OnLine SC 1947) pithily laid down the steps that should ordinarily determine the veracity of a prayer for CRL.MC NO.3809/2020 12 2026:KER:32206 quashing, raised by an accused by invoking the power vested in the High Court under Section 482 of Cr.P.C. The same are as follows:
"(i) Step one, whether the material relied upon by the accused is sound, reasonable, and indubitable, i.e., the material is of sterling and impeccable quality?
(ii) Step two, whether the material relied upon by the accused, would rule out the assertions contained in the charges levelled against the accused, i.e., the material is sufficient to reject and overrule the factual assertions contained in the complaint, i.e., the material is such, as would persuade a reasonable person to dismiss and condemn the factual basis of the accusations as false.
(iii) Step three, whether the material relied upon by the accused has not been refuted by the prosecution/complainant; and/or the material is such that it cannot be justifiably refuted by the prosecution/complainant?
(iv) Step four, whether proceeding with the trial would result in an abuse of process of the court, and would not serve the ends of justice?"
After thus laying down the steps to be followed in Section 482 matters, the Hon'ble Supreme Court has concluded that if the answer to all the steps is in the affirmative, the judicial conscience of the High Court should persuade it to quash such criminal proceedings, in exercise of power vested in it under Section 482 of Cr.P.C. It was reasoned that such exercise of power, besides doing justice to the accused, would also save precious court time, which would otherwise be wasted in holding such a trial (as well as CRL.MC NO.3809/2020 13 2026:KER:32206 proceedings arising therefrom), especially when it is clear that the same would not conclude in the conviction of the accused. Bearing in mind the above binding precedents, I proceed to consider the contentions put forth by both sides.
16. In Radheyshyam v. State of Rajasthan and another:
(2024 SCC OnLine SC 2311), the ingredients to constitute an offence under Section 406 IPC were elaborated by the Hon'ble Supreme Court as follows:
"11. For an offence punishable under Section 406 IPC the following ingredients must exist: i. The accused was entrusted with property, or entrusted with dominion over property;
ii. The accused had dishonestly misappropriated or converted to their own use that property, or dishonestly used or disposed of that property or wilfully suffer any other person to do so; and iii. Such misappropriation, conversion, use or disposal should be in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract which the person has made, touching the discharge of such trust."
Further in the dictum laid down in Delhi Race Club (1940) Ltd. v. State of Uttar Pradesh: (2024 SCC OnLine SC 2248), it was held that every act of breach of trust may not result in a penal offence of criminal breach of trust unless there is evidence of a manipulating act of fraudulent misappropriation. A similar view was taken by this Court in Antony K.O. v. State of Kerala (2023 KHC OnLine 9159), CRL.MC NO.3809/2020 14 2026:KER:32206 in which it was held that there is no criminal breach of trust under Section 406 IPC if property is only retained, not misappropriated. In the light of the above dictum, it is clear that the mere retention of property will not constitute the offence under 406 IPC, and here it is no case that the petitioners had fraudulently misappropriated the entrusted property. Therefore, the ingredients of criminal breach of trust are not made out.
17. In Mohan A.M. v. State Represented by SHO: (2024 KHC 6160), the ingredients to constitute an offence under Section 420 IPC were laid down.
"It could be thus seen for attracting the provision of Section 420 of IPC, the FIR/complaint must show that the ingredients of Section 415 of IPC are made out and the person cheated must have been dishonestly induced to deliver the property to any person; or to make, alter or destroy valuable security or anything signed or sealed and capable of being converted into valuable security. In other words, for attracting the provisions of Section 420 of IPC, it must be shown that the FIR/Complaint discloses
(i)the deception of any person;
(ii) fraudulently or dishonestly inducing that person to deliver any property to any person; and
(iii) dishonest intention of the accused at the time of making the inducement."
Similarly, in Hridaya Ranjan Prasad Verma and others v. State of Bihar and others : [(2000) 4 SCC 168], the Hon'ble Supreme Court CRL.MC NO.3809/2020 15 2026:KER:32206 held as follows:
" In determining the question it has to be kept in mind that the distinction between mere breach of contract and the offence of cheating is a fine one. It depends upon the intention of the accused at the time of inducement which may be judged by his subsequent conduct but for this subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, that is the time when the offence is said to have been committed. Therefore it is the intention which is the gist of the offence. To hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise. From his mere failure to keep up promise subsequently such a culpable intention right at the beginning, that is, when he made the promise cannot be presumed." (emphasis supplied) In the instant case, part of the amount has admittedly been repaid, and both parties have accepted it. This clearly indicates that the petitioners had no fraudulent intent at the time they made the promise or entered into the agreement. It is settled law that a mere failure to subsequently fulfill a promise does not attract the offence of cheating under Section 420 IPC, unless dishonest intention is shown to exist at the inception of the transaction. In view of the above dictum, no offence under Section 420 IPC is made out in the present case.
18. A perusal of Annexure J, the FIR, Annexure A complaint and Annexure B agreement, in the light of the contentions CRL.MC NO.3809/2020 16 2026:KER:32206 put forth, evidences that petitioners No.2, 3, and 5 had no personal knowledge of, or involvement in, the execution or performance of Annexure B agreement. Further, although petitioner No.4 is a signatory to Annexure B, he does not incur any personal liability thereunder, as he is expressly protected by Clause 9 of the said agreement. In the absence of any material to show a meeting of minds or prior concert, no prima facie case stands made out against the petitioners. Consequently, the essential ingredients of the offence under Section 120B of IPC are not satisfied and the charge cannot be sustained.
19. It is a settled principle of law that civil and criminal remedies can coexist, and a mere existence of a civil remedy does not ipso facto bar criminal proceedings when the allegations disclose the commission of a criminal offence. However, the facts of the instant case stand on a different footing. Taking note of the pending National Company Law Tribunal, Mumbai proceedings and while placing reliance on the dictum laid down in V.Y Jose (supra), the Hon'ble Apex Court held that "Section 482 serves a salutary purpose that a person should not undergo harassment of litigation even though no case has been made out against him. Therefore a CRL.MC NO.3809/2020 17 2026:KER:32206 matter which essentially involves dispute of civil nature should not be allowed to become the subject-matter of criminal proceedings which may be resorted to as a short cut to execution of a non- existent decree."
20. I note that the material relied upon by the petitioners are reliable, and most of them are not refuted or denied by the 2nd respondent, as he himself was in an integral relationship with the corporate entity which cannot be refuted. Similarly, the petitioners' reliance on the relevant documents is sound and reasonable and the materials relied on clearly reveal that they are sufficient to reject and overrule the factual assertions made in the complaint and the FIR. It is even more important to note that the 2nd respondent does not dispute that part of the amount has admittedly been repaid, and both parties have accepted it, and it is clear that the same cannot be justifiably refuted. There is no iota of material to show that petitioners No.2, 3, and 5 had personal knowledge of, or involvement in, the execution or performance of Annexure B agreement. The initiation of the proceedings before the National Company Law Tribunal, Mumbai, unequivocally points to the civil nature of the dispute, taking away all elements of Sections 406, 417, CRL.MC NO.3809/2020 18 2026:KER:32206 418, 420, 424 and 120 B of the IPC alleged against the petitioners. Though the observation of the Sessions Court in a bail application cannot have any relevance on the merits of this matter filed under Section 482, with the added benefit of hindsight, the materials before me reveal that the said observation was spot on. All these aspects, cumulatively, lead me to unhesitatingly conclude that any trial based on the allegations and the FIR would be an abuse of the process of the court and would not serve the ends of justice.
21. In view of the facts and circumstances discussed above and the settled principles of law, I conclude that no prima facie case is made out against the petitioners.
This Crl.M.C. is allowed, and the criminal proceedings initiated against the petitioners pursuant to the impugned FIR/complaint arising from Crime No.790 of 2020 of Hill Palace Police Station, Ernakulam City are hereby quashed.
Sd/-
SYAM KUMAR V.M. JUDGE csl CRL.MC NO.3809/2020 19 2026:KER:32206 APPENDIX OF CRL.MC NO. 3809 OF 2020 PETITIONER ANNEXURES ANNEXURE-A TRUE COPY OF THE COMPLAINT DTD 27.05.21020 LODGED BY THE 2ND RESPONDENT BEFORE THE SHO, HILL PALACE POLICE STATION ANNEXURE-B TRUE COPY OF THE AGREEMENT ENTERED INTO BETWEEN 2ND RESPONDENT AND PETITIONER DTD 2.3.2019 ANNEXURE-C TRUE COPY OF THE COMPANY MASTER DATA OF THE 1ST PETITIONER COMPANY ANNEXURE-D TRUE COPY OF THE MINUTES OF THE MEETING DTD 26.11.2019 ANNEXURE-E TRUE COPY OF THE LETTER OF RESIGNATION OF THE 2ND RESPONDENT DTD 27.11.2019 ANNEXURE-F TRUE COPY OF THE BOARD RESOLUTION DTD 16.12.2019 PASSED BY THE BOARD OF DIRECTORS OF THE 1ST PETITIONER COMPANY APPOINTING THE 2ND RESPONDENT AS A DIRECTOR REPLACING THE 2ND RESPONDENT ANNEXURE-G TRUE COPY OF THE COMPANY MASTER DATA OF THE 1ST PETITIONER COMPANY AS ON 09.01.2020, SHOWING APPOINTMENT OF THE 2ND PETITIONER AS DIRECTOR OF THE 1ST PETITIONER COMPANY ON 16.12.2019 ANNEXURE-H TRUE COPY OF THE COMPANY PETITION DTD 18.03.2020 FILED BY THE 2ND RESPONDENT BEFORE THE NCLT, MUMBAI ANNEXURE-I TRUE COPY OF THE ORDER DTD 06.08.2010 IN CRL.M.C. NO.1517/2020 PASSED BY THE HON'BLE SESSIONS COURT, ERNAKULAM DIVISION ANNEXURE-J TRUE COPY F THE FIR IN CRIME NO 790/2020 DTD 10.07.2020 ON THE FILES OF HILL PALACE POLICE STATION