Karnataka High Court
Mr Ritesh Agarwal vs State By Police Inspector on 9 September, 2025
Author: M.Nagaprasanna
Bench: M.Nagaprasanna
1
Reserved on : 08.07.2025
Pronounced on : 09.09.2025
R
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 09TH DAY OF SEPTEMBER, 2025
BEFORE
THE HON'BLE MR. JUSTICE M. NAGAPRASANNA
CRIMINAL PETITION No.4606 OF 2023
BETWEEN:
1. MR.RITESH AGARWAL
FOUNDER, OYO
S/O LATE SHRI RAMESH AGARWAL
AGED ABOUT 30 YEARS
ADDRESS-4TH FLOOR, SPAZE PALAZO
SECTOR-69
GURUGRAM - 122 002
HARYANA.
2. MR.ANIKETH JAIN
S/O DR.N.K.JAIN
AGED ABOUT 36 YEARS
ADDRESS-J 142, SJR PALAZZA CITY
DODDAKANNELI
BENGALURU - 560 035
KARNATAKA.
3. MR.ANUJ TEJPAL
DIRECTOR, OYO HOTELS AND HOMES PVT. LTD.,
S/O MR.SUDESH PAL
AGED ABOUT 35 YEARS
ADDRESS AT 4TH FLOOR, SPAZE PALAZO
SECTOR-69
2
GURUGRAM - 122 002
HARYANA.
4. MR.PRASUN CHOUDHARY
EMPLOYEE OF OYO
S/O MR LAKSHMIKANT CHOUDHARY
AGED ABOUT 42 YEARS
ADDRESS AT 4TH FLOOR, SPAZE PALAZO
SECTOR-69
GURUGRAM - 122 002
HARYANA.
5. OYO HOTELS AND HOMES PRIVATE LIMITED
(FORMERLY ALCOTT TOWN PLANNERS PVT. LTD.,)
ADDRESS AT 4TH FLOOR, SPAZE PALAZO
SECTOR-69
GURUGRAM - 122 002
HARYANA.
6. MYPREFERRED TRANSFORMATION AND
HOSPITALITY PVT. LTD.,
ADDRESS AT-3RD FLOOR, ORCHID CENTRE
SECTOR-53
GOLF COURSE ROAD
VILLAGE HAIDERPUR VIRAN
GURUGRAM - 122 002
HARYANA.
... PETITIONERS
(BY SRI SANDESH J.CHOUTA, SR.ADVOCATE A/W
SRI SAMARTHA S., ADVOCATE )
AND:
1 . STATE BY- POLICE INSPECTOR
JAYANAGAR POLICE STATION
REPRESENTED BY SPP
HIGH COURT BUILDING
BENGALURU - 560 001.
3
2 . MR.RAKESH PADACHORI
S/O MR.P.JAGADISH
AGED ABOUT 40 YEARS
PARTNER OF M/S. JAGADISH
NO.695, 10TH A MAIN
34 CROSS, 4TH BLOCK
JAYANAGAR
BENGALURU CITY - 560 011
KARNATAKA.
... RESPONDENTS
(BY SRI B.N.JAGADEESHA, ADDL.SPP FOR R-1;
SRI PRABHULING K.NAVADGI, SR.ADVOCATE A/W
MS.SANJEEVINI NAVADGI, ADVOCATE FOR
SRI BASAVARAJ PATIL AND SRI ANEESH A.SHANADE,
ADVOCATES FOR R-2)
THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 OF
CR.P.C., PRAYING TO QUASH THE ENTIRE PROCEEDINGS BEFORE
HON'BLE IV ADDITIONAL CHIEF METROPOLITAN MAGISTRATE IN
C.C.NO.10486/2023 PURSUANT TO THE FIRST INFORMATION
REPORT FILED BY THE RESPONDENT NO.1 - SHO, JAYANAGAR
POLICE STATION AGAINST THE PETITIONERS FOR OFFENCES P/U/S
34, 120-B, 406, 409, 417, 420, 427 AND 506 OF IPC, 1860.
THIS CRIMINAL PETITION HAVING BEEN HEARD AND
RESERVED FOR ORDERS ON 08.07.2025, COMING ON FOR
PRONOUNCEMENT THIS DAY, THE COURT MADE THE FOLLOWING:-
4
CORAM: THE HON'BLE MR JUSTICE M.NAGAPRASANNA
CAV ORDER
The petitioners/accused 1 to 5 and 7 are at the doors of this
Court calling in question entire proceedings in C.C.No.10486 of
2023 registered for offences punishable under Sections 120B, 406,
409, 417, 420, 427, 506 and 34 of the Indian Penal Code and
pending before the IV Additional Chief Metropolitan Magistrate,
Bengaluru.
2. Sans details, facts germane are as follows: -
2.1. The petitioners/accused and the 2nd respondent/
complainant entered into three separate Master Service Agreements
('the Agreement' for short) on 12-07-2019. The 5th petitioner/Oyo
Hotels and Homes Private Limited was earlier known as Alcott Town
Planners Private limited. The agreement was entered into between
Alcott Town Planners Private limited and the 2nd respondent
concerning three hotels. One of the hotels was M/s Jagadish hotel
on Brigade Road. On 23-12-2018 a fire tragedy happens at the
hotel. On 02-04-2019 a notice is issued by the Alcott Town Planners
5
Private limited to the 2nd respondent to provide requisite safety
certificate and licences pertaining to the hotel at Brigade Road.
Another notice was followed to cure the breach and let unhindered
access to the kitchen and other small areas of the premises in
terms of the agreement. On 01-06-2019, it appears certain internal
restructuring and transfer of business happen in the Alcott Town
Planners Private limited. Rights and obligations of the three
agreements were transferred to Mypreferred Transformation and
Hospitality Private Limited. The new entity comes into effect from
1-06-2019.
2.2. After the new entity comes over, a crime in Crime
No.131 of 2019 comes to be registered by Oyo Hotels and Homes
Private Limited against Jagadish and other partners alleging
offences punishable under Sections 341, 342, 504, 506 and 34 of
the IPC. Alcott Town Planners Private limited which was the earlier
agreement holder files a petition under Section 9 of the Arbitration
and Conciliation Act before the concerned Court against the
complainant for causing constant obstruction in the business,
notwithstanding the agreements between the parties. On
6
04-08-2019, a notice is issued invoking arbitration by the Alcott
Town Planners Private limited and Justice A.V. Chandrashekar is
appointed as an Arbitrator insofar as it concerns one of the hotels in
the agreements. Likewise, several proceedings are instituted by the
petitioners against the complainant or the complainant against the
petitioners including a proceeding under the Insolvency and
Bankruptcy Code, 2016 in relation to Jagadish Hotel.
2.3. During the pendency of these proceedings, the 2nd
respondent/complainant registers the subject complaint on
17-01-2023 for the aforementioned offences. The Police, after
investigation, file a charge sheet before the concerned Court and
the concerned Court registers C.C.No.10486 of 2023. After
registration of crime, the subject petition comes to be preferred.
During subsistence of the subject petition, identical complaints
instituted by several persons against the petitioners, all arising out
of certain agreements, come to be quashed. Those crimes being
quashed have become final. The petitioners are before this Court
now seeking quashment of entire criminal proceedings on the score
that they are an abuse of the process of law.
7
3. Heard Sri Sandesh J. Chouta, learned senior counsel
appearing for the petitioners, Sri B.N. Jagadeesha, learned
Additional State Public Prosecutor appearing for respondent No.1
and Sri Prabhuling K. Navadgi, learned senior counsel appearing for
respondent No.2.
4. The learned senior counsel Sri Sandesh J.Chouta appearing
for the petitioners would vehemently contend that the case at hand
is a classic illustration of a civil dispute being given a cloak of crime.
The complaint is cleverly drafted with an ulterior motive. Therefore,
it is his submission that this Court should go beyond the complaint
and look into the conduct of the complainant. Similar cases
instituted against these petitioners have been quashed by the
coordinate Benches of this Court. Even if the complaint and the
charge sheet are taken note of, they would not amount to offences
under Section 406 or Section 420 of the IPC, as the entire issue has
cropped up on a dispute with regard to three agreements.
Arbitration dispute dealing with similar claims, as alleged in the
complaint, is pending. The complainant has nothing to do with the
present petitioners. They are dragged into the web of crime on the
8
ground that they are vicariously liable. There cannot be vicarious
liability on personnel or Directors of a Company in criminal law. He
would above all contend that summoning of the accused is a serious
matter and should not be taken lightly at the asking. In all, he
would seek quashment of entire proceedings.
5. Per contra, the learned senior counsel Sri Prabhuling
K.Navadgi appearing for the 2nd respondent/complainant would
contend that, prima facie case is made out against the petitioners.
It is no law that merely because arbitration is pending or civil cases
are pending, criminal law must not be set into motion. The list of
discrepancies with regard to ledger books and sales entries was
found as is observed in the summary of the charge sheet. The
accused/petitioners abandoned the three hotels, notwithstanding
the agreements in order to maximize profits. OYO has been
consistently engaging in unfair trade practices, particularly in its
dealings with partner hotels. This also causes revenue loss to the
Government due to lowered GST remittances, despite the fact that
booking rates are inclusive of taxes. On all these grounds, the
9
learned senior counsel submits that the proceedings must be
permitted to be continued.
6. Both the respective learned senior counsel have relied on
plethora of judgments of the Apex Court or this Court; all of which
would bear consideration qua their relevance in the course of the
order.
7.The afore-narrated facts, link in the chain of events and
dates are all a matter of record. Execution of three separate
agreements between erstwhile company of OYO Hotels and Homes
Private Limited and the 2nd respondent is a matter of record. The
dispute arose when a notice was issued to the owner of Jagadish
Hotel who was a party to the agreement on 02-4-2019. This forms
the trigger point for all the dispute. The legal notice caused was
complaining breach of management services under the agreements
entered into on 12-07-2017. The crux of the notice lies in the
following paragraphs:
10
".... .... ....
14. In view of the above, our client wishes to inform
you that the above mentioned unfortunate acts by
you amount to a severe breach of the terms of the
Agreement and which has resulted in continuing
business losses as well as loss of reputation and
brand of our client.
In view thereof, we call upon you the addressee to immediately
rectify all of the breaches on your part in the following manner:
a. Provide required completion certificate, occupation
certificate and the fire safety no objections certificate
for the Property so as to ensure the complete
structural safety of the Property, at your cost.
b. Cease and desist from raising any unreasonable and
unlawful demand for cost of repair / renovation of the
Property, which is completely your responsibility under
the Agreement.
C. Cease and desist from raising any unlawfull demands
for Benchmark revenue under the Agreement, without
first providing the required completion and occupation
certificates and also the fire safety certificates for the
Property.
We will look forward to hearing from you and
compliance of above demands within 7 days of receipt of
this notice, failing which our client will be constrained to
take all appropriate actions against you, including and
not limited to terminating the Agreement and claim/set
off damages as per the mutually accepted terms of the
Agreement and initiating appropriate proceedings for
damages for loss of business, breach of Agreement by
you, without any further notice to you."
(Emphasis added)
11
Again, on 04-09-2019 a breach and cure notice is caused by the 6th
respondent/Mypreferred Transformation and Hospitality Private
Limited. Gist of the breach and cure notice is as follows:
".... .... ....
In light of the foregoing, We serve You this Notice to cure
breaches in accordance with clause 9.1.3 of the MSA within 30
days from the date of this Notice, failing which the termination
of MSA shall become effective upon the expiry of
aforementioned 30 days.
Upon termination becoming effective as aforesaid, You
will immediately refund any and all amounts payable to
Us (both currently or in the future) under the MSA
without any delay or demur, including but not limited to
the amounts under lock-in pay-outs, outstanding
business advance & interest free security deposit paid to
You, without any deductions therefrom, in accordance
with the statement of account (hereinafter referred to as
"Statement of Account") that will be shared with you.
Simultaneously upon the payment of all the amounts due
and payable by You as per the Statement of Account, OYO
will hand-over the Property.
Additionally, upon termination, You would be required to
allow access to personnel of OYO to remove all their
wares, accessories, equipment, fixtures etc., from the
Property, including and not limited to bedding material,
mattresses, TV, bathroom robes/ towels, linen etc. and
all such other and additional material, as is installed by
Us."
(Emphasis added)
A second breach and cure notice is issued in respect of hotel in
Jayanagar. OYO replies to the said notice on 30-09-2019 by way of
counter allegations. The reply reads as follows:
12
".... .... ....
We are surprised to receive this email. Firstly, we would
like to point out that though the email is claimed to have been
sent by 'TEAM OYO' (which we do not recognise), the attached
letter is issued on the letterhead of Mypreferred Transformation
and Hospitality Pvt. Ltd. ('Mypreferred'), with whom we have no
contract or agreement. We had entered into a Management
Services Agreement dated 12th July 2017 ('MSA') with Alcott
Town Planners Private Limited ("Alcott") not Mypreferred
Transformation and Hospitality Pvt. Ltd. Your letter is clearly
therefore, misconceived, misleading and mala fide. We are
therefore not obliged to enter into any correspondence with you
much less reply to your baseless and misconceived email. This
email is being sent only to set the record straight and without
prejudice to our rights and claims under the aforesaid
agreement and the law.
Be that as it may, the MSA being solely between us
and Alcott, the question of there being any commercial
arrangement/understanding between Mypreferred and us
does not arise. Further, in your email/letter you also
make reference to Clause 9.1.3 of the MSA, which does
not exist in our MSA with Alcott, which further shows that
your letter/email is baseless misconceived and vexatious.
Without prejudice to the foregoing, we vehemently deny
the allegations and claims made in the above email that in the
alleged absence of fulfillment of obligations from our side,
continuance of operations is getting hampered. These are
baseless and misconceived claims and allegations. Again,
without prejudice, we deny that Alcott's operations in the
Premises were ever hampered much less on account of
alleged lack of any approvals/licenses. We deny any
insinuation or allegation that we have ever breached our
obligations under the MSA or that we are in violation of
applicable law or that we have been asked us to comply
with the same on several occasions. These allegations
and claims are got up and Mypreferred or 'Team OYO'
which is a unrecognised entity does not have the right to
make them. We have not received any business advance
or interest free security deposit, so the question of us
13
refunding such amounts does not arise. We also find it
strange that you have mentioned that 'OYO' will
handover the property to us upon termination and once
all these amounts are paid without deduction, as OYO is
not a separate entity as far as we are aware, in any case,
as stated, our MSA is with Alcott which has vacated and
abandoned the Hotel Premises abruptly for which it has
exposed itself to substantial claims for damages, besides
the benchmark revenue for the balance of the lock-in
period.
We reserve our right to claim all these and other amounts
due and owing from Alcott, due to the acts of omission and
commission of Alcott.
Please finally note that our MSA being with Alcott, the
question of our addressing or curing your 'breach and cure'
notice does not arise, more so as Alcott has abandoned our
Hotel Premises and the performance of the MSA with us."
(Emphasis added)
Therefore, it is not in dispute that the issue between the two
cropped up on breach of management service agreements or
Master Service Agreements. The Master Service Agreements were
three in number.
8. A crime is registered by the 5th petitioner / OYO Hotels and
Homes Private Limited, against Jagadish, the present complainant
and other partners on 22-06-2019 in Crime No.131 of 2019. After
registration of the crime, certain civil disputes by way of arbitration
cropped up between the two. On 25-06-2019, the 5th petitioner files
14
a petition under Section 9 of the Arbitration and Conciliation Act
before the City Civil Court complaining of constant obstruction to its
business. Later, it invokes the arbitration clause in the agreement
and seeks to appoint Justice A.V. Chandrashekar as the sole
Arbitrator. This was not accepted. But, Jagadish Hotel preferred
Justice Ajit Gunjal to be appointed as an Arbitrator. The
proceedings were taken up even under the Insolvency and
Bankruptcy Code and several civil proceedings; arbitration
proceedings were all instituted and pending at the relevant points in
time. On 01-10-2024, a Civil Miscellaneous Petition filed by OYO
Hotels comes to be allowed by appointing Justice
C.R.Kumaraswamy as the sole Arbitrator, pursuant to which,
arbitration proceedings have commenced and are pending.
9. In the teeth of these arbitration disputes pending, the
complainant registers the impugned complaint on 17-01-2023.
Since the entire issue now triggered from the complaint, I deem it
appropriate to notice the complaint. It reads as follows:
"ರವ ೆ,
ೕ ಇ ೆಕ
ಜಯನಗರ ೕ ಾ ೆ
15
ೆಂಗಳ ರುನಗರ,
ಇಂದ,
ಾ ೇ! ಪಡಚೂ & ಜಗ'ೕ! ಪಡಚೂ , 40 ವಷ)
*ಾಸ ನಂ-695, 10,ೇ ಎ .ೖ , 34 ಾ0 , 4,ೇ ಾ12
ಜಯನಗರ, ೆಂಗಳ ರು-560011.
ªÉÆ-9880048804.
3ಾನ4 ೇ,
5ಷಯ:-" OYO ಕಂಪ6ಯ 3ಾ ೕಕರು 7ಾಗೂ CEO ಆದ 9ೇ! ಅಗ *ಾ;
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ದೂರು.
*****
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18
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19
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The narration in the complaint is only with regard to agreements,
their breach and alleged loss caused to the complainant, on account
of certain breaches of clauses of the agreement. But, the colour
given was criminal breach of trust and cheating. The Police conduct
investigation and the result of investigation is filing of the charge
sheet. The summary of the charge sheet so filed reads as follows:
20
"17. PÉù£À ಸಂ›ಪg Hಾ ಾಂಶ
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Hೇ*ೆಯನುU 6ೕಡುವ ವ4ವ7ಾರವನುU 3ಾ[ ೊಂ[ರು9ಾg ೆ.
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ಉQೆRೕ•< 2017,ೇ Hಾ ನ 1, Hಾ›-1 ರವರು ೋ[ಂ)d ಅಂe fಾrÓAd ವ4ವ7ಾರವನುU
3ಾ[ ೊಂ[ದR 7ೋYೆ; ಗಳ @ೊ9ೆ ೆ ಒಪZಂದವನುU 3ಾ[ ೊಂಡು ಆ ೋVಗcೇ OYO Rooms
7ೆಸ ನ 1, ವ4ವ7ಾರವನುU ಮುಂದುವ ೆಸುವ ಇJೆŽಯನುU 7ೊಂ'ರುವlQಾ^ ಎ-2 ಆ ೋVಯು ',ಾಂಕ-
28/07/2017 ಂದ ಪQೇ ಪQೇ Hಾ›-1 ರವ ೆ ಈ .ೕ; ಗಳನುU ಕಳhs< ಒ9ಾgಯವನುU
3ಾ[ರು9ಾg,ೆ. 7ಾಗೂ ',ಾಂಕ-21/03/2017 ರಂದು ಇ.ೕ; ಅನುU 3ಾ[ ಅವರ ಕಂಪ6ಯ @ೊ9ೆ ೆ
ವ4ವ7ಾರವನುU 3ಾ[ ೊಂಡ ೆ Hಾ›-1 ರವರ 3ಾ ಕತXದ 3 7ೋYೆ; ಗಳ .ೕfೆ 4 ಂದ 4.5 ೋo
ಹಣವನುU ಹೂ[ ೆ 3ಾಡುವlQಾ^ 7ಾಗೂ ಒcೆ\ಯ ವ4ವ7ಾರವನುU 3ಾ[ ೊಡುವ ಆ'ಾXಸ,ೆಯನುU
6ೕ[ರು9ಾg,ೆ. ಎ-2 ಆ ೋVಯ ಪ0Hಾgಪ ೆb Hಾ›-1 ರವರು ಒVZ ೊಂಡ ನಂತರ ಎ-2 ಆ ೋVಯು
MSA ಅ^0.ಂ= ಅನುU 3ಾ[ ೊಳh\ವlದ ೆb ಮುಂJೆŠೕ ',ಾಂಕ-16/06/2017 ರಂದು
ವ4ವ7ಾರವನುU ಮುಂದುವ ೆಸಲು jಾವ jಾವ Qಾಖfೆಗಳh ೇ ೆಂದು ಪo ಯನುU 3ಾ[ Hಾ›-1
ರವ ೆ ಇ-.ೕ; ಮೂಲಕ ಕಳhs<ದುR, ಅದರಂ9ೆ Hಾ›-1 ರವರು ',ಾಂಕ-19/06/2017 ರಂದು ಎ-2
ಆ ೋVಯು ೇNದ ಎfಾ1 QಾಖfೆಗಳನುU ಸಂಗ0s< ಎ-2 ಆ ೋV ೆ ಇ.ೕ; ಮೂಲಕ
ಕಳhs<ರು9ಾg ೆ. ಈ ಎfಾ1 QಾಖfೆಗಳನುU 6ೕ[ದ ನಂತರ Hಾ›-1 ರವರು ಅವರ 3ಾ4,ೇಜ ಮೂಲಕ
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ಇ.ೕ; ಗಳ 1 ನಮೂದು 3ಾ[ದR Qಾಖfೆಗಳ ಪo ಯ 1 --ೈ ಎ .ಓ.< 7ಾಗೂ & Ÿಂd ಆPÀÆå ೆ6
ಸo)F ೇ= ನಮೂದು ಇರುವl'ಲ1.
21
Hಾ›-1
Hಾ› ರವರು ಕಳhs<ದ ಎfಾ1 Qಾಖfೆಗಳ ಆ ಾರದ .ೕ ೆ ೆ ಎ-2, ಎ-3 7ಾಗೂ ಎ-4
ಆ ೋVಗಳh ',ಾಂಕ-12/07/2017
',ಾಂಕ ರಂದು Hಾ›-1
Hಾ› ರವರು ೆಂಗಳ ನ ಜಯನಗರದ 7ೋYೆ; ೆ
ಬಂದು Hಾ›-1
Hಾ› ರವರ @ೊ9ೆ ೆ 3ಾತುಕ9ೆಯನುU 3ಾ[ 1)ನಂ
ನಂ-51,
ನಂ ,ೇ ಮುಖ4 ರHೆg, 4,ೇ
11,ೇ ,ೇ o -¨Áè2
ಜಯನಗರ ರ ಜಗ'ೕ! 7ೋYೆ; , ೆ ಪ0r rಂಗಳh 14,50,000/- ರೂಗಳ ೆಂi 3ಾ2) ೆ*ೆನೂ4
ಅ£ÀÄß 6ೕಡುವlQಾ^,
6ೕಡುವlQಾ^ 2) ನಂ-124,
ನಂ &0 ೆe ಟವ ) ಎದುರು,
ಎದುರು 'ೆ¡ೕfೆ ಸಕ); ಹrgರ, &0 ೆe ರHೆgಯ
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6ೕಡುವlQಾ^ 7ಾಗೂ ನಂ-1428,
ನಂ ,ೇ ಾ0 , 4,ೇ
21,ೇ ,ೇ ಮುಖ4 ರHೆg, 7ೆi.ಎ
7ೆi ಎ .ಆ
ಆ fೇಔ= Hೆಕ -07
ನ ಜಗ'ೕ! 7ೋYೆ; ೆ ಪ0r rಂಗಳh 7,00,000/- ರೂಗಳ ೆಂi 3ಾ2) ೆ*ೆನೂ4 ಅನುU
6ೕಡುವlQಾ^ 9 ವಷ)ಗಳ ಅವˆ ೆ 3 ವಷ)ಗಳ ಅವˆಯ fಾ‚ಂd V ಯe ಅನುU ನಮೂದು
3ಾ[ರು9ಾg ೆ.ೆ ಎ-6 ಆ ೋVತ ಕಂಪ6jಾದ Alcott Town Planners Pvt Ltd ಎಂಬ
ಕಂಪ6ಯ 7ೆಸj£À°è 3ಾ4,ೇG .ಂ= ಸ5ೕ) ಅ^0.ಂ= (MSA) ಅನುU 3ಾ[ ೊಂಡು ಎ-4
ಆ ೋVಯು ಸsಯನುU 3ಾ[ರು9ಾg ೆ.ೆ ಈ ಸಮಯದ°èAiÉÄÃ ಆ ೋVಗಳh ಇತ ೆ jಾವlQೇ
QಾಖfೆಗಳನುU 6ೕಡಲು ಸೂA<ರುವl'ಲ1.
ಆದ ೆ ಎ-1 ಂದ ಎ-4 ಆ ೋVಗಳh Hೇ ೊಂಡು Hಾ›-1
Hಾ› ರವರ 7ೋYೆ; ಗಳ 1
ವ4ವ7ಾರವನುU 3ಾ[ ೊಂಡು Hಾ›-1
Hಾ› ರವ ೆ OೕಸವನುU 3ಾಡುವ ಉQೆRೕಶ'ಂದ 3ಾ4,ೇG .ಂ=
ಸ5) ಆ^0.ಂ= (MSA) ನ ,1 ನಮೂದು 3ಾ[ದಂ9ೆ ೆಂi 3ಾ2) ` ೆ*ೆನೂ4 ಹಣವನುU 6ೕಡQೆ
7ಾಗೂ jಾವlQೇ 3ಾsrಯನುU Hಾ›-1
Hಾ› ರವ ೆ 6ೕಡQೆ ೆಂi 3ಾ2) ಹಣದ 1 ಪ0r rಂಗಳh
ಲ•ಾಂತರ ರೂ ಹಣವನುU ಕ= 3ಾ[ ೊಂಡು ೋYಾ4ಂತರ ರೂ ಅಕ0ಮ fಾಭವನುU
3ಾ[ ೊಂ[gÀÄvÁÛgÉ ೆಂi 3ಾ2) ಹಣದ 1 ಲ•ಾಂತರ ರೂ ಹಣವನುU ಕ= 3ಾ[ದ ಬ ೆ`
QಾಖfೆಗಳನುU 6ೕಡುವಂ9ೆ Hಾ›-1
Hಾ› ರವರ EªÉÄÃ¯ï ªÀÄÆ®PÀ ಆ ೋVಗ½UÉ ªÀÄ£À«AiÀÄ£ÀÄß ªÀiÁqÀ¯ÁV
DgÉÆæUÀ¼ÀÄ jಾವlQೇ QಾಖfೆಗಳನುU 6ೕ[ರುವl'ಲ1. 7ಾಗೂ ಒಪZAzÀPÉÌ ªÀÄÄAZÉ ¤ÃrzÀ
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Hಾ› ರವ ೆ ನಂ& ೆ Qೊ0ೕಹವನುU ಎಸ^ರು9ಾg ೆ.ೆ
sೕ ೆ ವ4ವ7ಾರವನುU 3ಾಡು*ಾUÉÎ, ',ಾಂಕ-09/09/2019 ರಂದು ಜಯನಗರ ನ ಜಗ'ೕ!
7ೋYೆ; ಗN ೆ ಸಂಬಂˆ<ದ --ೈ ಎ .ಓ.<. Yೆ0ೕe fೈHೆ , 7ಾಗೂ 'ಾE & ಎHಾ ©è• .ಂ=
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',ಾಂಕ-11/09/2019 ರಂದು ಜಯನಗರ 7ಾಗೂ 7ೆi.ಎ .ಆ fೇಔ= ನ 7ೋYೆ; ಗಳನುU ‹ಾ°
3ಾ[ ೊಂಡು 7ೋ^ರು9ಾg ೆ. ಆದR ಂದ Hಾ›-1 ರವರು ',ಾಂಕ-01/10/2019 ರಂದು ಆ ೋVಗN ೆ
fೇಗ; ,ೋoೕ ಅನುU ಕಳhs< jಾವlQೇ ಪžವ) 3ಾsrಯನುU 6ೕ[ದ 7ೋYೆ; ಗಳನುU ‹ಾ
3ಾ[ರುವ ಬ ೆ` ಪ0'ೆUಯನುU 3ಾಡfಾ^ ಆ ೋVಗಳh jಾವlQೇ ಉತgರವನುU 6ೕ[ರುವl'ಲ1.
22
',ಾಂಕ-23/12/2018 ರಂದು &0 ೆe ರHೆgಯ 1 ಅ^U ಅವಘಡ ಸಂಭ5<ದ ನಂತರ Hಾ›-1 ರವರು
7ೋYೆ; ಅನುU ,ೋ*ೇಷ 3ಾ[ ಮ9ೆg ವ4ವ7ಾರವನುU 3ಾಡುವಂ9ೆ ಹಲ*ಾರು ಾ ಇ.ೕ;
ಅನುU ಆ ೋVಗN ೆ ಕಳhs<ದRರೂ ಆ ೋVಗಳh ವ4ವ7ಾರವನುU ಮುಂದುವ ೆ<ರುವl'ಲ1 7ಾಗೂ Hಾ›-
1 ರವ ೆ 6ೕಡ ೇ ಾ^ದR ಾ‚ ೆಂi 3ಾ2) ಹಣವನುU 6ೕಡQೆ OೕಸವನುU 3ಾ[ರು9ಾg ೆ. ಎ -6
ಆ ೋVತ ಕಂಪ6ಯ 7ೆಸ ನ 1 ಆ ೋVಗಳh ವ4ವ7ಾರವನುU 3ಾಡು*ಾಗ ನ>ೆಸುrgದR ಅಸ°Ã
ವ4ವ7ಾರವನುU ಮAxಟು Hಾ›-1 ರವ ೆ ಈ .ೕ; ಮೂಲಕ ಸ 1ಸುrgದR Monthly Accupancy
& Sales ವರ'ಯ 1 ತಪlZ fೆ ಾbJಾರಗಳನುU ಸ 1<ರು9ಾg ೆ. ಈ ಬ ೆ`, Hಾ›-1 ರವರು ಜಯನಗರದ
7ೋYೆ; ನ 1, ಜೂ rಂಗಳ 1 ನ>ೆದ ವ4ವ7ಾರಗಳನುU 7ೋYೆ; ನ 1 ಇo ¤ದ fೆqÀÓ ಪlಸgಕವನುU
ಪ •ೕಲ,ೆ 3ಾಡfಾ^ ',ಾಂಕ-21/06/2019 ರಂದು 7ೋYೆ; ನ fೆqÀÓ ನ 1 58 Hೇ; ಆ^ರುತgQೆ,
ಆದ ೆ ಆ ೋVಗಳh Hಾ›-1 ರವ ೆ ಇ.ೕ; ಮೂಲಕ ಸ 1<ದ Qಾಖfೆಗಳ 1 18 Hೇ; ಗcಾ^ರುತg*ೆ
ಎಂದು ನಮೂದು 3ಾ[ರು9ಾg ೆ. sೕ ೆ ',ಾಂಕ-23/06/2019 ರಂದು fೆqÀÓ ನ 1.. 35 Hೇ; ಗNದR ೆ
ಆ ೋVಗಳh ಸ 1<ದR ಇ.ೕ; ನ 1, 20 Hೇ; ಗಳh, ',ಾಂಕ-25/06/2019 ರಂದು fೆqÀÓ ನ 1 38
Hೇ; ಗNದR ೆ ಆ ೋVಗಳh ಸ 1<ದR, ಇ.ೕ; ನ 1. 30 Hೇ; ಗಳh 7ಾಗೂ ',ಾಂಕ-26/06/2019
ರಂದು fೆqÀÓ ನ 1, 52 Hೇ; ಗNದR ೆ ಆ ೋVಗಳh ಸ 1<¤ದ ಇ.ೕ; ನ .1 . 29 Hೇ; ಗಳನುU
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7ೋYೆ; ಗಳ ಬN ೆ ಬಂದ ೆ ೌನ ಗಳನುU &ಟು ೊfೆ 3ಾ[ಸು9ೆgೕ,ೆಂದು ಾ0ಣ ೆದ ೆಯನುU
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ಅಕ0ಮ ಹಣವನುU 3ಾಡುವ ದುgÀÄQೆRೕಶ'ಂದ Hಾ›-1 ರವ ೆ jಾವlQೇ 3ಾsrಯನುU
6ೕಡQೆ ',ಾಂಕ-23/12/2018 ರಂದು &0 ೆe ರHೆgಯ, ',ಾಂಕ-11/09/2019 ರಂದು ಜಯನಗರ 7ಾಗೂ
7ೆi.ಎ .ಆ fೇಔ= ನ ಜಗ'ೕ! 7ೋYೆ; ಗಳನುU ‹ಾ 3ಾ[, 2017 ಂದ 2019,ೇ Hಾ ನ
ವ ೆ ೆ 7ೋYೆ; ಅನುU ನ>ೆಸು*ಾಗ Hಾ›-1 ರವರು 7ೋYೆ; ಗಳ 1 ಅಳವ[<ದR ೋYಾ4ಂತರ ರೂ
3ೌಲ4ದ Vೕ ೋಪಕರಣಗಳh, ಇಂoೕ ಯ [@ೈ6ಂd 7ಾಗೂ Hಾ46ಟ ವಸುgಗಳನುU >ಾ.G
3ಾ[ Hಾ›-1 ರವ ೆ ಅಕ0ಮ ನಷ ವನುU ಉಂಟು3ಾ[ರು9ಾg ೆ. ಆದR ಂದ Hಾ›-1 ರವರು
ಆ ೋVಗN ೆ ಹಲವl ಾ ಕ ೆಗಳನುU 3ಾ[, ಇ-.ೕ; ಗಳ ಮು‹ಾಂತರ ಸಂಪ‚)ಸಲು
ಪ0ಯrU<Qಾಗ ಆ ೋVಗಳh jಾವlQೇ ಉತgರವನುU 6ೕಡQೆ ತfೆಮ ೆ< ೊಂ[ರು9ಾg ೆ.
ಆ ೋVಗಳh Hಾ›-1 ರವರ 7ೋYೆ; ಗಳನುU ‹ಾ 3ಾ[ದ ನಂತರ ',ಾಂಕ-11/11/2019
ರಂದು ಒಂದು ಇ-.ೕ; ಅನುU ಕಳhs< Hಾ›-1 ರವರ @ೊ9ೆ ೆ 3ಾ4,ೇG .ಂ= ಸ5ೕ) ಅ^0.ಂ=
(MSA) ಅನುU 3ಾ[ ೊಂ[ದR Alcott Town Planners Pvt Ltd ಕಂಪ6ಯ 7ೆಸ ನ 1ದR .ೕ||
ಜಗ'ೕ! 7ೋYೆ¯ïì ನ 3 7ೋYೆ; ಗಳ J¯Áè ಹಕುbಗಳನುU Mypreffered Transformation
23
and Hospitality Pvt Ltd ಕಂಪ6ಯ 7ೆಸ ೆ ವ ಾ)ವ ೆ 3ಾ[ ೊಂ[ರುವlQಾ^, ಈ ಬ ೆ`,
',ಾಂಕ-30/04/2019 ರಂದು Hಾ›-1 ರವ ೆ ಇ-.ೕ; ಮೂಲಕ 3ಾsrಯನುU 6ೕ[ರುವlQಾ^
rN<ದುR, ಈ ಬ ೆ`, Hಾ›-1 ರವರು ಆ ೋVಗN ೆ ',ಾಂಕ-21/11/2019 ರಂದು ಇ- .ೕ; C£ÀÄß
PÀ¼ÀÄ»¹ Alcott Town Planners Pvt Ltd ಕಂಪ6¬ÄAzÀ Mypreffered
Transformation and Hospitality Pvt Ltd ಕಂಪ6 ೆ ಹಕುbಗಳನುU ವ ಾ)ವ ೆ
3ಾ[ರುವlದು ಅಕ0ಮ, Hಾ›-1 ರವ ಂದ jಾವlQೇ ಅನುಮrಯನುU ಪ>ೆದು ೊಂ[ರುವl'ಲ1ªÉAzÀÄ
rN<, ಈ ಬ ೆ` QಾಖfೆಗಳನುU 6ೕಡುವಂ9ೆ ೋರfಾ^ ಆ ೋVಗಳh jಾವlQೇ GvÀÛgÀªÀ£ÄÀ ß
¤ÃrgÀĪÀÅ¢®è.
DgÉÆæUÀ¼ÀÄ ¸ÁQë-1 gÀªÀgÀ ªÀiÁ°PÀvÀézÀ ªÀÄÆgÀÄ ºÉÆÃmɯïUÀ¼À£ÀÄß £ÀqɹPÉÆAqÀÄ
7,85,87,250/- gÀÆ ¨ÉAZï ªÀiÁPïð gɪɣÀÆå ಹಣವನುU, 3,89,20511/- ರೂ 3ೌಲ4ದ >ಾ4.ೕG
ಗಳh 7ಾಗೂ 32,39,390/-ರೂ 'ಾ=) ೇ.ಂ= / ಾಂಡ§ [ಡ‰ ಗಳh 7ಾಗೂ ಇತ ೆ PÉèöʧ
ಗಳನುU 6ೕಡQೆ ತfೆಮ ೆ< ೊಂಡು 7ೋ^ ಕೃತ4ವನುU ಎಸ^ರುವlದು ತ6‹ಾ ಾಲದ 1 ಲಭ4*ಾದ
Hಾ•ಾ ಾರಗNಂದ ದೃಢಪo ರುತgQೆ.
ಆದR ಂದ ಆ ೋVಗಳ 5ರುದ˜ ಈ .ೕಲbಂಡ ಕಲಂಗಳ ಅನXಯ 3ಾನ4 ,ಾ4jಾಲಯ ೆb
QೋŒಾ ೋಪ ೆ ಪo ಯನುU ಸ 1ಸfಾ^Qೆ.
6*ೇದ,ೆ:-
ಪ0ಕರಣದ 1 ತ6‹ೆಯನುU ಮುಂದುವ ೆ<ದುR, ತ6‹ಾ ಸಮಯದ 1 ಲಭ4*ಾಗುವ 7ೆಚುxವ
Hಾ•ಾ ಾರಗಳನುU ಕಲಂ 173(8) <.ಆ .V.< ೕvÁå 3ಾನ4 ,ಾ4jಾಲಯ ೆb ಸ 1ಸfಾಗುವlದು, ಸದ
Hಾ•ಾ ಾರಗಳನುU 3ಾನ4 ,ಾ4jಾಲಯವl ಅಂ^ೕಕ ಸಲು ೋ Qೆ."
(Emphasis added)
The finding in the summary of the charge sheet quoted supra is
that acts of the accused have resulted in loss/damage of
₹3,89,20,511/- and ₹32,39,390/- as short payments/random
deduction ware made and several other claims are projected both in
the complaint and in the summary of charge sheet. But the crux of
24
the case is that, it arises out of breach of agreement, loss of
revenue and damages which claim is unpaid.
10. It is not in dispute that these very claims are put forth
before the Arbitrator and arbitration is still pending. The claim in
terms of the notice issued seeking arbitration on 16-07-2021 is as
follows:
".... .... ....
4. In case you believe that the debt has been repaid before
the receipt of this letter, please demonstrate such
repayment by sending to us, within ten days of receipt of
this letter, the following:
a) an attested copy of the record of electronic
transfer of the unpaid amount from the bank
account of the corporate debtor; or
b) an attested copy of any record that [name of
the operational creditor] has received the
payment.
5. The undersigned calls upon you to unconditionally repay
the unpaid operational debt (in default) of the amount of
Rs. 5,52,46,871.40 (Rupees Five Crores Fifty-Two
Lakhs Forty-Six Thousand Eight Hundred and
Seventy-One and Forty Paisa Only) including interest
till 15th July 2021 and continuing interest thereafter at the
rate of 24% per annum thereafter till date of payment in
full within TEN DAYS from the receipt of this Form 3 and
accompanying Demand Notice failing which we shall
initiate a corporate insolvency resolution process in
respect of OYO Hotels and Homes Private Limited.
25
Yours sincerely
Sd/-
Mr. P Rakesh,
Partner,
M/s Jagadish,
No. 51, Old No. 664,
11th Main Road, 4th Block,
Jayanagar, Bangalore -560011"
What is sought is repayment of the amount to the tune of
₹5,52,46,871.40. On the aforesaid claim, arbitration has now
commenced by a claim petition being filed in Arbitration Case No.12
of 2025. The notice issued by the Arbitration and Conciliation
Centre and the claims so made are as follows:
26
If the claim before the Arbitrator and the complaint are read in
tandem, what would unmistakably emerge is, that the claim is
registered for the purpose of recovery of money or alleging breach
of agreements between the parties. In the teeth of the aforesaid
facts, whether further proceedings should be permitted to be
continued or otherwise is required to be considered.
11. The preceding narratives unmistakably depict that the
complaint registered, is on a seemingly civil dispute, giving it a
cloak of criminality. The offences alleged against the petitioners'
spring from two provisions of law - one Section 406 of the IPC,
criminal breach of trust and the other Section 420 of the IPC,
cheating. The provisions read 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."
"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."
27
For an offence under Section 406, the ingredients are found in
Section 405 and for an offence under Section 420, the ingredients
are found in Section 415. They read as follows:
"405. Criminal breach of trust.--Whoever, being in any
manner entrusted with property, or with any dominion over
property, dishonestly misappropriates or converts to his own
use that property, or dishonestly uses or disposes of that
property in violation of any direction of law prescribing the mode
in which such trust is to be discharged, or of any legal contract,
express or implied, which he has made touching the discharge
of such trust, or wilfully suffers any other person so to do,
commits "criminal breach of trust".
Explanation 1.--A person, being an employer of an
establishment whether exempted under Section 17 of
the Employees' Provident Funds and Miscellaneous Provisions
Act, 1952 (19 of 1952), or not] who deducts the employee's
contribution from the wages payable to the employee for credit
to a Provident Fund or Family Pension Fund established by any
law for the time being in force, shall be deemed to have been
entrusted with the amount of the contribution so deducted by
him and if he makes default in the payment of such contribution
to the said fund in violation of the said law, shall be deemed to
have dishonestly used the amount of the said contribution in
violation of a direction of law as aforesaid.
Explanation 2.--A person, being an employer, who
deducts the employees' contribution from the wages payable to
the employee for credit to the Employees' State Insurance Fund
held and administered by the Employees' State Insurance
Corporation established under the Employees' State Insurance
Act, 1948 (34 of 1948), shall be deemed to have been entrusted
with the amount of the contribution so deducted by him and if
he makes default in the payment of such contribution to the said
Fund in violation of the said Act, shall be deemed to have
28
dishonestly used the amount of the said contribution in violation
of a direction of law as aforesaid.
Illustrations
(a) A, being executor to the will of a deceased person,
dishonestly disobeys the law which directs him to divide the
effects according to the will, and appropriates them to his own
use. A has committed criminal breach of trust.
(b) A is a warehouse-keeper. Z, going on a journey,
entrusts his furniture to A, under a contract that it shall be
returned on payment of a stipulated sum for warehouse
room. A dishonestly sells the goods. A has committed criminal
breach of trust.
(c) A, residing in Calcutta, is agent for Z, residing at
Delhi. There is an express or implied contract between A and Z,
that all sums remitted by Z to A shall be invested by A,
according to Z's direction. Z remits a lakh of rupees to A, with
directions to A to invest the same in Company's
paper. A dishonestly disobeys the directions and employs the
money in his own business. A has committed criminal breach of
trust.
(d) But if A, in the last illustration, not dishonestly but in
good faith, believing that it will be more for Z's advantage to
hold shares in the Bank of Bengal, disobeys Z's directions, and
buys shares in the Bank of Bengal, for Z, instead of buying
Company's paper, here, though Z should suffer loss, and should
be entitled to bring a civil action against A, on account of that
loss, yet A, not having acted dishonestly, has not committed
criminal breach of trust.
(e) A, a revenue officer, is entrusted with public money
and is either directed by law, or bound by a contract, express or
implied, with the Government, to pay into a certain treasury all
the public money which he holds. A dishonestly appropriates the
money. A has committed criminal breach of trust.
(f) A, a carrier, is entrusted by Z with property to be
carried by land or by water. A dishonestly misappropriates the
property. A has committed criminal breach of trust."
29
"415. Cheating.--Whoever, by deceiving any person,
fraudulently or dishonestly induces the person so deceived to
deliver any property to any person, or to consent that any
person shall retain any property, or intentionally induces the
person so deceived to do or omit to do anything which he would
not do or omit if he were not so deceived, and which act or
omission causes or is likely to cause damage or harm to that
person in body, mind, reputation or property, is said to "cheat".
Explanation.--A dishonest concealment of facts is a
deception within the meaning of this section.
Illustrations
(a) A, by falsely pretending to be in the Civil Service,
intentionally deceives Z, and thus dishonestly induces Z to let
him have on credit goods for which he does not mean to
pay. A cheats.
(b) A, by putting a counterfeit mark on an article,
intentionally deceives Z into a belief that this article was made
by a certain celebrated manufacturer, and thus dishonestly
induces Z to buy and pay for the article. A cheats.
(c) A, by exhibiting to Z a false sample of an article,
intentionally deceives Z into believing that the article
corresponds with the sample, and thereby dishonestly
induces Z to buy and pay for the article. A cheats.
(d) A, by tendering in payment for an article a bill on a
house with which A keeps no money, and by which A expects
that the bill will be dishonoured, intentionally deceives Z, and
thereby dishonestly induces Z to deliver the article, intending
not to pay for it. A cheats.
(e) A, by pledging as diamonds articles which he knows
are not diamonds, intentionally deceives Z, and thereby
dishonestly induces Z to lend money. A cheats.
(f) A intentionally deceives Z into a belief that A means to
repay any money that Z may lend to him and thereby
30
dishonestly induces Z to lend him money, A not intending to
repay it. A cheats.
(g) A intentionally deceives Z into a belief that A means
to deliver to Z a certain quantity of indigo plant which he does
not intend to deliver, and thereby dishonestly induces Z to
advance money upon the faith of such delivery, A cheats; but
if A, at the time of obtaining the money, intends to deliver the
indigo plant, and afterwards breaks his contract and does not
deliver it, he does not cheat, but is liable only to a civil action
for breach of contract.
(h) A intentionally deceives Z into a belief that A has
performed A's part of a contract made with Z, which he has not
performed, and thereby dishonestly induces Z to pay
money. A cheats.
(i) A sells and conveys an estate to B. A, knowing that in
consequence of such sale he has no right to the property, sells
or mortgages the same to Z, without disclosing the fact of the
previous sale and conveyance to B, and receives the purchase
or mortgage money from Z. A cheats."
Section 405 mandates that the accused should have
misappropriated with dishonest intention of a property entrusted to
him. There is no property entrusted in the case at hand. All the
disputes sprung from agreements between the parties. Section 415
mandates that the accused must have lured the victim into the
transaction with a dishonest intention right from the inception.
There is no luring in the case at hand, as it was a Master Service
Agreement between the parties. Therefore, the ingredients of
31
Section 406 and 420 of the IPC are on their face, lacking in the
case at hand.
12. It becomes apposite to refer to certain judgments of the
Apex Court, which considers the issue of civil disputes given a cloak
of crime.
12.1. The Apex Court in the case of PARAMJEET BATRA v.
STATE OF UTTARAKHAND1, has held as follows:
".... .... ....
12. While exercising its jurisdiction under Section
482 of the Code the High Court has to be cautious. This
power is to be used sparingly and only for the purpose of
preventing abuse of the process of any court or otherwise
to secure ends of justice. Whether a complaint discloses a
criminal offence or not depends upon the nature of facts
alleged therein. Whether essential ingredients of criminal
offence are present or not has to be judged by the High
Court. A complaint disclosing civil transactions may also
have a criminal texture. But the High Court must see
whether a dispute which is essentially of a civil nature is
given a cloak of criminal offence. In such a situation, if a
civil remedy is available and is, in fact, adopted as has
happened in this case, the High Court should not hesitate
to quash the criminal proceedings to prevent abuse of
process of the court.
13. As we have already noted, here the dispute is
essentially about the profit of the hotel business and its
ownership. The pending civil suit will take care of all those
issues. The allegation that forged and fabricated documents are
1
(2013) 11 SCC 673
32
used by the appellant can also be dealt with in the said suit.
Respondent 2's attempt to file similar complaint against the
appellant having failed, he has filed the present complaint. The
appellant has been acquitted in another case filed by
Respondent 2 against him alleging offence under Section 406
IPC. Possession of the shop in question has also been handed
over by the appellant to Respondent 2. In such a situation, in
our opinion, continuation of the pending criminal
proceedings would be abuse of the process of law. The
High Court was wrong in holding otherwise.
(Emphasis supplied)
12.2. In the case of SARABJIT KAUR v. STATE OF
PUNJAB2, the Apex Court holds as follows:
".... .... ....
13. A breach of contract does not give rise to
criminal prosecution for cheating unless fraudulent or
dishonest intention is shown right at the beginning of the
transaction. Merely on the allegation of failure to keep up
promise will not be enough to initiate criminal proceedings.
From the facts available on record, it is evident that Respondent
2 had improved his case ever since the first complaint was filed
in which there were no allegations against the appellant rather it
was only against the property dealers which was in subsequent
complaints that the name of the appellant was mentioned. On
the first complaint, the only request was for return of the
amount paid by Respondent 2. When the offence was made out
on the basis of the first complaint, the second complaint was
filed with improved version making allegations against the
appellant as well which was not there in the earlier complaint.
The entire idea seems to be to convert a civil dispute into
criminal and put pressure on the appellant for return of
the amount allegedly paid. The criminal courts are not
meant to be used for settling scores or pressurise parties
2
(2023) 5 SCC 360
33
to settle civil disputes. Wherever ingredients of criminal
offences are made out, criminal courts have to take
cognizance. The complaint in question on the basis of
which FIR was registered was filed nearly three years
after the last date fixed for registration of the sale deed.
Allowing the proceedings to continue would be an abuse
of process of the court."
(Emphasis supplied)
12.3. In the case of NARESH KUMAR v. STATE OF
KARNATAKA3, the Apex Court holds as follows:
".... .... ....
7. Relying upon the decision in Paramjeet Batra (supra),
this Court in Randheer Singh v. State of U.P., (2021) 14 SCC
626, observed that criminal proceedings cannot be taken
recourse to as a weapon of harassment. In Usha
Chakraborty v. State of West Bengal, 2023 SCC OnLine SC 90,
relying upon Paramjeet Batra (supra) it was again held that
where a dispute which is essentially of a civil nature, is
given a cloak of a criminal offence, then such disputes
can be quashed, by exercising the inherent powers under
Section 482 of the Code of Criminal Procedure.
8. Essentially, the present dispute between the
parties relates to a breach of contract. A mere breach of
contract, by one of the parties, would not attract
prosecution for criminal offence in every case, as held by
this Court in Sarabjit Kaur v. State of Punjab, (2023) 5 SCC
360. Similarly, dealing with the distinction between the offence
of cheating and a mere breach of contractual obligations, this
Court, in Vesa Holdings (P) Ltd. v. State of Kerala, (2015) 8 SCC
293, has held that every breach of contract would not give rise
to the offence of cheating, and it is required to be shown that
3
2024 SCC OnLine SC 268
34
the accused had fraudulent or dishonest intention at the time of
making the promise.
9. In the case at hand, the dispute between the
parties was not only essentially of a civil nature but in
this case the dispute itself stood settled later as we have
already discussed above. We see no criminal element
here and consequently the case here is nothing but an
abuse of the process. We therefore allow the appeal and
set aside the order of the High Court dated 02.12.2020.
The criminal proceedings arising out of FIR No. 113 of
2017 will hereby stand quashed."
(Emphasis supplied)
12.4. In the case of MANISH v. STATE OF
MAHARASHTRA4, the Apex Court holds as follows:
".... .... ....
16. Materials collected during investigation do not
show the present case falls in the category of commercial
disputes which would attract penal consequences.
Investigating officer had recorded statements of two bankers
and a builder. The bankers disclosed the appellant and his
relations had substantial landed properties which had been
mortgaged to them in 2014. The appellant had repaid the loan
regularly till 2016 thereafter defaulted. Notwithstanding default,
in 2018 an additional loan was also sanctioned to him."
(Emphasis supplied)
12.5. In the case of RIKHAB BIRANI v. STATE OF UTTAR
PRADESH5, the Apex Court holds as follows:
4
2025 SCC OnLine SC 707
5
2025 SCC OnLine SC 823
35
".... .... ....
20. In yet another case, again arising from criminal
proceedings initiated in the State of Uttar Pradesh, this
Court was constrained to note recurring cases being
encountered wherein parties repeatedly attempted to
invoke the jurisdiction of criminal courts by filing
vexatious complaints, camouflaging allegations that
are ex facie outrageous or are pure civil claims. These
attempts must not be entertained and should be dismissed at
the threshold. Reference was made to a judgment of this Court
in Thermax Limited v. K.M. Johny, which held that courts should
be watchful of the difference between civil and criminal wrongs,
though there can be situations where the allegation may
constitute both civil and criminal wrongs. Further, there has
to be a conscious application of mind on these aspects by
the Magistrate, as a summoning order has grave
consequences of setting criminal proceedings in motion.
Though the Magistrate is not required to record detailed
reasons, there should be adequate evidence on record to
set criminal proceedings into motion. The Magistrate
should carefully scrutinize the evidence on record and
may even put questions to the complainant/investigating
officer etc. to elicit answers to find out the truth about
the allegations. The summoning order has to be passed
when the complaint or chargesheet discloses an offence
and when there is material that supports and constitutes
essential ingredients of the offence. The summoning
order should not be passed lightly or as a matter of
course.
(Emphasis supplied)
12.6. In the case of S.N.VIJAYALAKSHMI v. STATE OF
KARNATAKA6, the Apex Court holds as follows:
6
2025 SCC OnLine SC 1575
36
".... .... ....
ANALYSIS, REASONING & CONCLUSION:
... ... ...
35. In this background, the Court needs to consider as to
whether the accusations of criminal nature levelled in the FIR
are sustainable to permit the continuance of the criminal
proceedings or not. Cognizance has finally been taken under
Sections 120B, 406 and 420 of the IPC. For convenience, the
said provisions are reproduced hereinbelow:
xxx
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.
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.'
36. It would be useful, in addition, to set out the relevant
definitional Sections from the IPC:
xxx
405. Criminal breach of trust.--Whoever, being in
any manner entrusted with property, or with any dominion
over property, dishonestly misappropriates or converts to
his own use that property, or dishonestly uses or disposes
of that property in violation of any direction of law
prescribing the mode in which such trust is to be
discharged, or of any legal contract, express or implied,
which he has made touching the discharge of such trust, or
37
wilfully suffers any other person so to do, commits "criminal
breach of trust".
xxx
415. Cheating.--Whoever, by deceiving any person,
fraudulently or dishonestly induces the person so deceived
to deliver any property to any person, or to consent that
any person shall retain any property, or intentionally
induces the person so deceived to do or omit to do anything
which he would not do or omit if he were not so deceived,
and which act or omission causes or is likely to cause
damage or harm to that person in body, mind, reputation or
property, is said to "cheat".
... ... ...
37. Purely from a legal lens, it is now settled that
the same person cannot be simultaneously charged for
offences punishable under Sections 406 and 420 of
the IPC with regard to one particular transaction, as per
the decision rendered in Delhi Race Club (1940)
Limited (supra). In this regard, reference may also be
made to a subsequent decision by us in V D
Raveesha v. State of Karnataka, 2024 INSC 1060 (penned
by Ahsanuddin Amanullah, J.), which noticed the
exposition in Delhi Race Club (1940) Limited (supra).
In V D Raveesha (supra), the distinction between
Sections406 and 420 of the IPC was duly taken note of,
but charges under Sections 406 and 420 of
the IPC against the same person were upheld, not being
part of a single transaction and committed against
different persons. The relevant passage from V D
Raveesha (supra) reads thus:
'21. Though, having regard to the afore-enumerated
position of law, on an overall conspectus of the factual
aspects juxtaposed with the evidence on record, as regards
fulfilment of the ingredients of Sections 406 and 420 of
the IPC, at first sight, it may appear that the petitioner
cannot be convicted both under Sections 406 and 420 of
the IPC, but, in the present case, on a proper consideration
of the issue in its entirety, there is a fine distinction
inasmuch as, there are two different persons against whom
the petitioner has committed the respective offences under
38
the Sections supra : first, the Company and second,
Mallikarjuna (PW4 and husband of purchaser Savithramma).
Thus, in the facts and circumstances of the present case,
evidently the petitioner is guilty of offence committed
against the Company punishable under Section 406 of
the IPC and also, of offence committed against Mallikarjuna
(PW4 and husband of purchaser Savithramma) punishable
under Section 420 of the IPC.'
(emphasis supplied)
38. Section 406 deals with punishment for criminal
breach of trust, which itself has been defined under
Section 405 of the IPC. Section 420 of the IPC deals with
cheating and dishonestly inducing delivery of property, the
substantive offence of cheating has been defined in
Section 415 of the IPC. We now apply the ingredients to the
factual position.
39. From a bare reading of Section 405 of the IPC,
criminal breach of trust would arise only in a situation
where the accused in any manner has been entrusted
with property, or with any dominion over property and
dishonestly misappropriates or converts the same to his
own use, or dishonestly uses or disposes of that property.
Here, it is not a case where the accused were entrusted
with the subject property. The subject property belongs
to them and they had rights over it as owners with title.
Thus, the very foundation for invoking Section 406 of
the IPC falls to the ground.
40. Coming to Section 415 of the IPC, it is required that
the person charged, by deceiving any person, fraudulently or
dishonestly induces him to deliver any property to any person,
or to consent that any person shall retain any property, or
intentionally induces the person so deceived to do or not to do
anything which he would not do or omit if he were not so
deceived, and which act or omission causes or is likely to cause
damage or harm to that person in body, mind, reputation or
property. In the present case, we do not find that by deceiving
the complainant, the appellants had fraudulently or dishonestly
induced him to deliver the property to them or to any other
person or to consent that any person shall retain any property
or intentionally induced the person so deceived to do or omit to
39
do anything which he would not do or omit if he were not so
deceived. From the case set up by the complainant himself, as
averred, the ATS was entered into between the appellants and
the complainant on 30.11.2015. However, the subject property
is said to have been handed over to Ravishankara Shetty on
06.09.1996. Thus, if the same was correct, then there is no
explanation as to why possession of the subject property, being
prime land, would be handed over to any other person without
any other agreement or safeguard, for if the version of the
complainant is to be taken as correct, then it appears that
Ravishankara Shetty got possession of the subject property way
back on 06.09.1996, but the ATS with the complainant, albeit as
a nominee of Ravishankara Shetty, was only executed much
later on 30.11.2015. However, on a reading of the recitals in the
ATS, it is seen that possession was with the appellants and in
fact, Clause 6 of the ATS concerning possession, it has been
postulated that possession of the subject property would be
handed over in ready condition upon execution of the Sale Deed
by the vendors. This version of events, put forth by the
complainant, falsifies the claim of Ravishankara Shetty to have
taken over possession of the subject property on 06.09.1996,
for the simple reason that he himself is a witness cited in the
FIR filed at the instance of the complainant. Thus, when from
the own pleadings of the complainant, it emerges that
possession of the subject property was never given to the
complainant and rather, stipulation was made for such
possession being handed over after execution of Sale Deed,
Section 420 of the IPC would not be attracted, regard being had
to the definition in Section 415 of the IPC.
41. Thus, we do not find any criminal aspect in the
allegations ex-facie. Moreover, be it noted, the
complainant has filed a civil suit for reliefs already
enumerated above.
42. Coming to the second question i.e., whether
civil and criminal proceedings both can be maintained on
the very same set of allegations qua the same person(s),
the answer strictosensu, is that there is no bar to
simultaneous civil and criminal proceedings. If the
element of criminality is there, a civil case can co-exist
with a criminal case on the same facts. The fact that a
civil remedy has already been availed of by a
40
complainant, ipso facto, is not sufficient ground to quash
an FIR, as pointed out, inter alia, in P Swaroopa Rani v. M
Hari Narayana, (2008) 5 SCC 765 and Syed AksariHadi Ali
Augustine Imam v. State (Delhi Admn.), (2009) 5 SCC
528. The obvious caveat being that the allegations, even
if having a civil flavour to them, must prima facie disclose
an overwhelming element of criminality. In the absence
of the element of criminality, if both civil and criminal
cases are allowed to continue, it will definitely amount to
abuse of the process of the Court, which the Courts have
always tried to prevent by putting a stop to any such
criminal proceeding, where civil proceedings have already
been instituted with regard to the same issue, and the
element of criminality is absent. If such element is
absent, the prosecution in question would have to be
quashed. In this connection, Paramjeet Batra v. State of
Uttarakhand,(2013) 11 SCC 673 can be referred to:
'12. ... Whether a complaint discloses a criminal
offence or not depends upon the nature of facts alleged
therein. Whether essential ingredients of criminal offence
are present or not has to be judged by the High Court. A
complaint disclosing civil transactions may also have
a criminal texture. But the High Court must see
whether a dispute which is essentially of a civil
nature is given a cloak of criminal offence. In such a
situation, if a civil remedy is available and is, in fact,
adopted as has happened in this case, the High Court
should not hesitate to quash the criminal proceedings
to prevent abuse of process of the court.'
(emphasis supplied)
43. In Usha Chakraborty v. State of West Bengal, (2023)
15 SCC 135, while quashing the FIR therein and further
proceedings based thereon, it was observed '...the factual
position thus would reveal that the genesis as also the
purpose of criminal proceedings are nothing but the
aforesaid incident and further that the dispute involved is
essentially of civil nature.'"
(Emphasis supplied)
41
13. The Apex Court, time and again, has sounded
caution against the invocation of criminal law in purely civil
disputes. In PARAMJEET BATRA supra, the Apex Court holds
that when a quarrel of civil complexion is dressed with
crime, the High court should not hesitate to intercede under
Section 482 of the Cr.P.C. to prevent the abuse of the
process; in SARABJIT KAUR supra, the Apex Court
underscored that a breach of contract would not become
cheating, unless dishonest intent is present at the very
threshold of the transaction; likewise, in NARESH KUMAR AND
MANISH supra, the Apex Court reiterates that criminal
process must not be wielded as a weapon of harassment or
recovery of debts; more pertinently, in RIKHAB BIRANI
supra, the Apex Court laments the flood of vexatious
complaints where civil wrongs are camaflouged as crimes,
cautioning Magistrates to exercise circumspection while
issuing summons, as issuance of summons is a serious
matter. In the light of what the Apex Court holds, this Court
cannot remain a mute spectator, when litigants dissatisfied
with civil remedies resort to the criminal forum as an
42
instrument of arm-twisting. All the ingredients of what the Apex
Court has afore-held are present in the case at hand. It is
therefore, exercise of jurisdiction under Section 482 of the Cr.P.C.
becomes imperative.
14. The learned senior counsel for the 2nd respondent has
contended that the complaint and the summary of the charge sheet
clearly make out an offence and, therefore, this Court should not
interfere. The complaint is quoted hereinabove. A close reading
of the complaint, together with the charge sheet, reveals
that the gravamen of the allegations concerns losses said to
have been suffered owing to alleged breaches of agreements
- the claims that are already projected before the Arbitrator
and pending before the Arbitral Tribunal. Indeed, the very
reliefs sought in the arbitration mirror the monetary claims
urged in the complaint. Thus, what the complainant seeks by
way of the criminal process, is but a "second bite at the cherry"
- an endeavour to transmute civil liability into criminal
culpability. Such endeavours must be deprecated and
nipped in the bud.
43
15.1. The Apex Court in the case of MAHMOOD ALI v.
STATE OF UTTAR PRADESH7, has held as follows:
".... .... ....
12. We say so because once the complainant decides
to proceed against the accused with an ulterior motive
for wreaking personal vengeance etc. then he would
ensure that the FIR/complaint is very well drafted with
all the necessary pleadings. The complainant would
ensure that the averments made in the FIR/complaint are
such that they disclose the necessary ingredients to
constitute the alleged offence. Therefore, it will not be
just enough for the Court to look into the averments
made in the FIR/complaint alone for the purpose of
ascertaining whether the necessary ingredients to
constitute the alleged offence are disclosed or not."
(Emphasis supplied)
15.2. In the case of SALIB v. STATE OF UTTAR PRADESH8,
the Apex Court has held as follows:
".... .... ....
26. At this stage, we would like to observe something
important. Whenever an accused comes before the Court
invoking either the inherent powers under Section 482 of the
Code of Criminal Procedure (CrPC) or extraordinary jurisdiction
under Article 226 of the Constitution to get the FIR or the
criminal proceedings quashed essentially on the ground that
such proceedings are manifestly frivolous or vexatious or
instituted with the ulterior motive for wreaking vengeance, then
7
(2023) 15 SCC 488
8
(2023) 20 SCC 194
44
in such circumstances the Court owes a duty to look into the FIR
with care and a little more closely. We say so because once the
complainant decides to proceed against the accused with an
ulterior motive for wreaking personal vengeance, etc. then he
would ensure that the FIR/complaint is very well drafted with all
the necessary pleadings. The complainant would ensure that the
averments made in the FIR/complaint are such that they
disclose the necessary ingredients to constitute the alleged
offence. Therefore, it will not be just enough for the Court to
look into the averments made in the FIR/complaint alone for the
purpose of ascertaining whether the necessary ingredients to
constitute the alleged offence are disclosed or not. In frivolous
or vexatious proceedings, the Court owes a duty to look into
many other attending circumstances emerging from the record
of the case over and above the averments and, if need be, with
due care and circumspection try to read in between the lines.
The Court while exercising its jurisdiction under Section
482CrPC or Article 226 of the Constitution need not restrict itself
only to the stage of a case but is empowered to take into
account the overall circumstances leading to the
initiation/registration of the case as well as the materials
collected in the course of investigation. Take for instance the
case on hand. Multiple FIRs have been registered over a period
of time. It is in the background of such circumstances the
registration of multiple FIRs assumes importance, thereby
attracting the issue of wreaking vengeance out of private or
personal grudge as alleged."
15.3. In the case of MOHD. WAJID v. STATE OF UTTAR
PRADESH9, the Apex Court has held as follows:
".... .... ....
37. We say so because once the complainant decides to
proceed against the accused with an ulterior motive for
wreaking personal vengeance, etc. then he would ensure that
the FIR/complaint is very well drafted with all the necessary
9
(2023) 20 SCC 219
45
pleadings. The complainant would ensure that the averments
made in the FIR/complaint are such that they disclose the
necessary ingredients to constitute the alleged offence.
Therefore, it will not be just enough for the Court to look into
the averments made in the FIR/complaint alone for the purpose
of ascertaining whether the necessary ingredients to constitute
the alleged offence are disclosed or not.
38. In frivolous or vexatious proceedings, the Court owes
a duty to look into many other attending circumstances
emerging from the record of the case over and above the
averments and, if need be, with due care and circumspection try
to read in between the lines. The Court while exercising its
jurisdiction under Section 482CrPC or Article 226 of the
Constitution need not restrict itself only to the stage of a case
but is empowered to take into account the overall circumstances
leading to the initiation/registration of the case as well as the
materials collected in the course of investigation. Take for
instance the case on hand. Multiple FIRs have been registered
over a period of time. It is in the background of such
circumstances the registration of multiple FIRs assumes
importance, thereby attracting the issue of wreaking vengeance
out of private or personal grudge as alleged."
The Apex Court in MAHMOOD ALI holds that complainants bent
on vengeance often ensure their pleadings are meticulously
crafted to mimic the essential ingredients of penal provision.
Therefore, the gaze of this Court must not hault at the
periphery, but it is necessary to look deeper, read between
the lines and evaluate the surrounding circumstances that
has lead to registration of the complaint. In SALIB supra, the
Apex Court again holds that, proceedings instituted which are
46
manifestly frivolous or vexatious, the Court has a duty to
interfere, by delving deep into the matter. The same is
reiterated in MOHD. WAJID supra.
16. Therefore, it is a settled axiom that Courts when
confronted with complaints of this genre, must pierce the
veil of clever drafting and discern the true animated intent.
The complaint may, on its face, appear to recite ingredients
of penal provisions, yet, if its substratum is no more than a
claim for money or damages arising from contractual
breaches, it would fall squarely within the province of civil
adjudication.
17. As contended by the learned senior counsel for the 2nd
respondent that, a given case may give rise to two proceedings -
one under the civil law and the other for criminal culpability, that
would depend on the facts of each case. The facts obtaining in the
case at hand do not brook any such doubt. The issue is pure and
simple. Breach of agreements; recovery of money; and to arm
twist the accused.
47
18. The learned senior counsel for the 2nd respondent has also
sought to place reliance upon certain judgments of the Apex Court
and that of this Court. There can be no qualm about the principles
so laid down by this Court or the Apex Court in the case of PUNIT
BERIWALA v. THE STATE OF NCT OF DELHI, in Criminal Appeal
No.1834 of 2025 decided on 29-04-2025. The factual matrix of the
said case is of a wholly different hue. There, misrepresentation and
multiple transactions over the same property portray a fraudulent
design at the inception. In contra distinction, the case at hand
reveals no such malafides at the threshold, it is, in its essence, a
pure contractual dispute. Therefore, reliance on such precedents, is
misplaced and would not result in tilting the scales.
19. In the case at hand, the complaint is nothing but an
echo of claims already ventilated before the Arbitral forum.
The allegations when considered in isolation of what is projected in
the complaint, would clearly reveal that the allegations relate to
demands for repayment of money and redressal of contractual
grievances. Criminal law, however, is invoked only as a
48
cudgel to intimidate, to arm-twist and to bring the
petitioners to their knees. The jurisprudence of the subject, as
narrated hereinabove, has made it abundantly clear, when
criminal proceedings are launched not to punish true crime,
but to settle civil scores, such proceedings are an abuse of
the process of the law, a masquerade that this Court is duty
bound to unravel, and to stop it from resulting in miscarriage
of justice.
20. For the aforesaid reasons, the following: -
ORDER
(i) Criminal Petition is allowed.
(ii) The proceedings in C.C.No.10486 of 2023 pending before IV Additional Chief Metropolitan Magistrate, Bengaluru City stand quashed.
(iii) It is made clear that the observations made in the course of the order are only for the purpose of consideration of the case of petitioners under Section 482 of Cr.P.C. and the same shall not bind or influence 49 the proceedings against any other accused pending before any other fora.
Consequently, I.A.No.1 of 2025 also stands disposed.
Sd/-
(M.NAGAPRASANNA) JUDGE Bkp CT:MJ