Patna High Court
Arvind Sah and Anr.versusState Of Bihar and Anr
- Decided
- Disposal
- ALLOWED
- Bench
- SHAILENDRA SINGH
Holding
The order taking cognizance under Sections 406 and 417 IPC is set aside as the allegations do not amount to criminal breach of trust or cheating and the appropriate remedy is civil.
Summary
Arvind Sah and Anand Sah, senior officers of Arvind Remedies Ltd, filed an application under Section 482 of the CrPC to quash a Judicial Magistrate's order that had taken cognizance of offences under Sections 406 and 417 IPC based on a complaint by M/s K.B.M. Enterprises alleging non‑payment of interest, commission and other dues. The court observed that the dispute arose out of a business transaction and that the complainant had not pursued the appropriate civil remedy. It held that the alleged acts did not satisfy the essential ingredients of criminal breach of trust or cheating and that there was no dishonest intention on the part of the petitioners. Consequently, the magistrate's cognizance was deemed mechanical and unsustainable. The High Court set aside the order and allowed the petition to quash the criminal proceedings.
Issues considered
- The alleged non‑payment of interest, commission and expenses constitute an offence under Section 406 IPC?
- The alleged non‑payment constitute an offence under Section 417 IPC?
- Whether the Judicial Magistrate could validly take cognizance of the complaint in the present facts?
- Whether the civil remedy is the appropriate forum and the criminal proceeding should be quashed under Section 482 CrPC?
Legislation cited
- Code of Criminal Procedure, 1973 — s. 482
- Indian Penal Code — s. 406, 417
Subjects
- criminal breach of trust
- cheating
- Section 406 IPC
- Section 417 IPC
- Section 482 CrPC
- civil remedy
- business dispute
- quash criminal proceedings
Judgment
IN THE HIGH COURT OF JUDICATURE AT PATNA
CRIMINAL MISCELLANEOUS No.15505 of 2016
Arising Out of PS. Case No.-1159 Year-2015 Thana- PATNA COMPLAINT CASE District-
Patna
======================================================
1. Arvind Sah , Son of Late Bhabutmalji,
2. Anand Sah, Son of Shri Arvind Sah, Both resident of C/o Arbind Remedies
Ltd. No. 38, 39 and 40, STD Co. Industrial Estate, Kakkalur, Thiruvallu.
... ... Petitioner/s
Versus
1. State Of Bihar
2. M/S K.B.M. Enterprises Pvt. Ltd. Having its registered Office at Rahman
Commercial Complex, Computer zone campus Exhibition Road, P.S Gandhi
Maidan, Patna through its director Mr. Shyam sundar Maskara, S/o of Late
Hira Lal Maskara.
... ... Opposite Party/s
======================================================
Appearance :
For the Petitioner/s : Mr. Amrit Abhijat, Adv.
For the State : Mrs. Veena Rani Prasad, APP
======================================================
CORAM: HONOURABLE MR. JUSTICE SHAILENDRA SINGH
ORAL ORDER
7 16-02-2026 At the outset, learned counsel appearing for the
petitioners is permitted to make necessary correction in
paragraph no. 1 of the petition with regard to details of the
sections in which cognizance of the alleged offences has been
taken in course of the day.
2. The instant application has been preferred under
Section 482 of the Code of Criminal Procedure (in short
‘Cr.PC’) with a prayer to quash the order dated 28.08.2015
passed in complaint case no. 1159( C) of 2015 by the court of
learned Judicial Magistrate 1st Class, Patna whereby and
Patna High Court CR. MISC. No.15505 of 2016(7) dt.16-02-2026
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whereunder cognizance has been taken under Sections 406 &
417 of the Indian Penal Code (in short ‘IPC’) and the petitioners
have been summoned for the said offences.
3. While referring to the relevant paragraphs of the
complaint filed by the O.P. No. 2, Mr. Amrit Abhijat, learned
counsel appearing for the petitioners submits that no offence
under Sections 406 and 417 of the IPC is made out even prima
facie as in between the petitioners and O.P. No. 2, there was
business transaction.
4. Learned counsel further submits that the petitioner
no. 1 was the Managing Director of M/s Arvind Remedies
Limited (hereinafter referred to as the ‘Company’) and
petitioner no. 2 was the Vice President of the said Company
during the relevant period of time and as per the allegation, the
complainant/O.P. No. 2 was appointed by the petitioners as C&F
agent of their Company mainly for the purpose of selling
medicines of their Company and the dispute raised by the O.P.
No. 2 in his complaint mainly relates to non-payment of interest
amounting to Rs. 2, 47,166/- accrued on the security deposit of
Rs. 15,00000/- made by O.P. No. 2, with the Company of the
petitioners and further relates to non-payment of the
commission, reimbursable expenses, VAT and telephone
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charges, etc. For these issues raised by the O.P. No. 2, the best
remedy available to the O.P No. 2 is before the civil court by
way of civil litigation but the same has not been availed by him
till date and from the narration of the allegations, one thing is
quite clear that the petitioners had no dishonest intention from
the inception of the business transaction between the petitioners
and O.P. No. 2 as admittedly, considerable part of the interest
amount had already been paid by the petitioners’ Company to
the O.P. No. 2 and further, the petitioners were Managing
Director and Vice President of the Company and even if the
entire allegations made in the complaint by the O.P. No. 2 are
accepted even then no offence under Section 417 of the IPC is
made out and the main ingredients of Section 406 of the IPC are
also not even prima facie attracted in this matter and the learned
Judicial Magistrate has taken cognizance of alleged offences in
mechanical manner without applying judicial mind.
5. In support of the above submissions, learned
counsel for the petitioners has placed reliance upon the
following two judgments of the Hon’ble Apex Court:-
(i) Criminal Appeal No. 488 of 2013 (GHCL
Employees Stock Option Trust Vs. India Infoline Ltd.)
(ii) Criminal Appeal No. 317 of 2008 (S.K. Alagh Vs.
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State of U.P. and Ors.
6. No one appears on behalf of the O.P. No.2.
7. Learned APP appearing for the State though
opposes this application but fairly accepts that there was
business transaction in between the Company of the petitioners
and O.P. No.2.
8. Heard both the sides and perused the impugned
order as well as other relevant materials.
9. From the averments made in the complaint of the
O.P. No.2, it is an admitted position that there was a business
transaction in between the petitioners’ Company and the O.P.
No.2 during the relevant period of time and in respect of
security deposit of Rs. 15,00,000/- made by the O.P. No.2 in the
Company of the petitioners, considerable part of the interest had
already been paid to the O.P. No.2 which is not under dispute.
Though, the rest part of the interest was not paid and further,
commission and other reimbursable expenses were also not
paid by the petitioners’ Company but initial payment made by
the Company of the petitioners to the O.P. No.2 does not show
the dishonest intention on the part of the petitioners’ Company
from the very beginning of the dispute relating to the petitioners
and O.P. No.2 and further, non-payment of the alleged amount
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which is said to be due on the part of the petitioners’ Company,
the best remedy available to the O.P. No.2 is before Civil Court
by way of civil litigation and it appears that the O.P. No. 2 filed
the complaint with the sole purpose of settling the dispute with
the petitioners’ Company by initiating the criminal prosecution
which is not permissible in the eyes of law. As such, it appears
that the learned Magistrate has taken cognizance of the alleged
offences in mechanical manner without appreciating the
aforesaid relevant facts and the same is not sustainable in the
eyes of law, hence, the order impugned taking cognizance of the
alleged offences and subsequent criminal proceedings having
arisen against the petitioners in the light of the impugned order
are hereby set aside/quashed and the instant application stands
allowed.
(Shailendra Singh, J)
siddharthkr/BKS
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AFR
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