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Code of Criminal Procedure, 1973 – Issuance of summons, duty of Magistrate – Penal Code, 1860 – ss.406, 504 and 506 – Commercial dispute given criminal colour – Dispute between the parties related to the rate at which the assigned work was to be done – Respondent no.2 filed complaint case – Summons issued by Magistrate for trial u/ss.406, 504 and 506, IPC – Application filed by the appellant for quashing the summons and the complaint case, dismissed by High Court – Propriety:

* Author

[2024] 1 S.C.R. 1134 : 2024 INSC 72

Sachin Garg

v.

State of U.P & Anr.

(Criminal Appeal No. 497 of 2024)

30 January 2024

[Aniruddha Bose* and Sanjay Kumar, JJ.]

Issue for Consideration

In a case wherein the dispute was commercial in nature having

no element of criminality, whether the Magistrate was justified in

issuing summons for trial u/ss.406, 504 and 506, Penal Code,

1860 and the High Court in dismissing the application filed by the

appellant for quashing said summons and the complaint case.

Headnotes

Code of Criminal Procedure, 1973 – Issuance of summons,

duty of Magistrate – Penal Code, 1860 – ss.406, 504 and 506 –

Commercial dispute given criminal colour – Dispute between

the parties related to the rate at which the assigned work was

to be done – Respondent no.2 filed complaint case – Summons

issued by Magistrate for trial u/ss.406, 504 and 506, IPC –

Application filed by the appellant for quashing the summons

and the complaint case, dismissed by High Court – Propriety:

Held: Past commercial relationship between the appellant’s

employer and the respondent no.2 was admitted – Dispute between

the parties centred around the rate at which the assigned work

was to be done – Neither in the complaint petition nor in the initial

deposition of the two witnesses (including the complainant), the

ingredients of the offence u/s.405, IPC surfaced – Such commercial

disputes over variation of rate cannot per se give rise to an offence

u/s.405, IPC without presence of any aggravating factor leading

to the substantiation of its ingredients – No material to come to a

prima facie finding that there was dishonest misappropriation or

conversion of any material for the personal use of the appellant in

relation to gas supplying work done by the respondent no.2 – The

said work was done in course of regular commercial transactions –

There was no misappropriation or conversion of the subject property, 

[2024] 1 S.C.R. 1135

Sachin Garg v. State of U.P. and Anr.

being Dissolved Acetylene Gas which was supplied to the factory

for the purpose of battery manufacturing at EIL – No evidence

for commission of offence u/s.405/406, IPC – Further, as regards

criminal intimidation also there was a mere bald allegation, short

of any particulars as regards to the manner in which threat was

conveyed – While it is true that at the stage of issuing summons

a magistrate only needs to be satisfied with a prima facie case for

taking cognizance, the duty of the magistrate is also to be satisfied

whether there is sufficient ground for proceeding – Magistrate’s

order issuing summons reflects his satisfaction in a cryptic manner

– At the stage of issue of summons, though detailed reasoning as

to why a Magistrate is issuing summons is not necessary but in

the present case, the allegations made by the complainant do not

give rise to the offences for which the appellant was summoned for

trial – A commercial dispute, which ought to have been resolved

through the forum of Civil Court was given criminal colour by lifting

certain words or phrases from the penal code and implanting

them in a criminal complaint – Magistrate failed to apply his mind

in issuing summons and the High Court failed to exercise its

jurisdiction u/s.482, 1973 Code – Impugned judgment set aside,

complaint and summoning order quashed. [Paras 14, 17 and 18]

Code of Criminal Procedure, 1973 – s.482 – Jurisdiction –

Discussed.

Code of Criminal Procedure, 1973 – Summons issued by

Magistrate for trial u/ss.406, 504 and 506, IPC in the complaint

case filed by Respondent no.2 – Appellant sought dismissal

of the complaint on the ground that the complaint should

not have been entertained without arraigning the principal

company as an accused:

Held: The perceived wrongdoing was attributed to the appellant,

though the complaint petition acknowledges that the job-work was

being done for EIL (appellant’s employer) – Moreover, the allegation

of criminal intimidation was against the appellant directly, whatever

be the value or quality of such allegations – Thus, for that reason

the complaint case cannot be rejected at the nascent stage on the

sole ground of not implicating the company – However, the complaint

and the summons quashed for the reasons given. [Para 20]

1136 [2024] 1 S.C.R.

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Case Law Cited

Sharad Kumar Sanghi vs Sangita Rane [2015] 2 SCR

145 : (2015) 12 SCC 781 – held inapplicable.

Jagdish Ram vs State of Rajasthan and Another [2004]

2 SCR 846 : (2004) 4 SCC 432 – relied on.

Neeharika Infrastructure Pvt. Ltd. vs State of Maharashtra

and Ors., [2021] 4 SCR 1044 : (2021) 19 SCC 401;

R.P. Kapur vs State of Punjab, [1960] 3 SCR 388 : AIR

(1960) SC 866; State of Haryana and Ors. vs Bhajan

Lal and Ors., [1992] Supp. (3) SCR 735 : (1992) SCC

(Cr.) 426; State of Bihar and Anr. vs P. P. Sharma, IAS

and Anr., [1991] 2 SCR 1 : (1992) SCC (Cr.) 192; Zandu

Pharmaceutical Works Ltd. and Ors. vs Mohd. Sharaful

Haque and Another [2004] Supp. (5) S.C.R. 790 : (2005)

SCC (Cr.) 283; Deepak Gaba and Ors. vs State of Uttar

Pradesh and Another (2023) 3 SCC 423; Prof. R.K.

Vijayasarathy and Anr. vs Sudha Seetharam and Anr.

[2019] 2 SCR 185 : (2019) 16 SCC 739; Vijay Kumar

Ghai and Ors. vs State of West Bengal and Ors. [2022]

1 SCR 884 : (2022) 7 SCC 124; Dalip Kaur and Ors. vs

Jagnar Singh and Anr., [2009] 10 SCR 264 : (2009) 14

SCC 696; Birla Corporation Ltd. vs Adventz Investments

and Holdings Ltd. and Ors., [2019] 7 SCR 655 : (2019)

16 SCC 610; Smt Nagawwa vs Veeranna Shivalingappa

Konjalgi and Others [1976] 1 Suppl. SCR 123 : (1976) 3

SCC 736; Fiona Shrikhande vs State of Maharashtra and

Another, [2013] 9 SCR 240 : (2013) 14 SCC 44; Binod

Kumar and Ors. vs State of Bihar and Another, [2014]

11 SCR 85 : (2014) 10 SCC 663; Pepsi Foods Ltd. and

Anr. vs Special Judicial Magistrate and Ors., [1997] 5

Suppl. SCR 12 : (1998) 5 SCC 749 – referred to.

List of Acts

Code of Criminal Procedure, 1973; Penal Code, 1860.

List of Keywords

Commercial dispute; Criminal colour; Stage of issuing summons;

Duty of Magistrate; Quashing; Quashing of summons; Dishonest

misappropriation/conversion of material for personal use; Criminal

intimidation; Non-application of mind; Principal company not implicated.

[2024] 1 S.C.R. 1137

Sachin Garg v. State of U.P. and Anr.

Case Arising From

CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No.497

of 2024.

From the Judgment and Order dated 23.03.2023 of the High Court

of Judicature at Allahabad in A482 No.18603 of 2021.

Appearances for Parties

Mukul Rohatgi, Guru Krishna Kumar, Sr. Advs., Ms. Misha Rohatgi,

Sushil Shukla, Nakul Mohta, Ms. Alina Merin Mathew, Muthu

Thangathurai, Advs. for the Appellant.

Sarvesh Singh Baghel, Aviral Saxena, Arun Pratap Singh Rajawat,

Ms. Vanshaja Shukla, Ms. Divya Jyoti Singh, Ms. Ankeeta Appanna,

Manish Gupta, Advs. for the Respondents.

Judgment / Order of the Supreme Court

Judgment

Aniruddha Bose, J.

Leave granted.

2. The appellant, at the material point of time, stood posted as the

Head of factory of Exide Industries Limited (“EIL”), a corporate entity,

situated at Bawal, District Rewari, Haryana. The respondent no.2,

ran a proprietary concern, Ambika Gases. He was the supplier of

Dissolved Acetylene Gas (“DA Gas”), which is used for manufacturing

battery in the said factory. So far as the present appeal is concerned,

the dispute is over a purchase order issued for the supply of the said

item. The original purchase order dated 01.04.2019 was amended

twice on the basis of representations made by the respondent no.2.

The first amendment was made on 18.07.2019 by which the rate was

increased from Rs.1.55 per unit to Rs.1.65 per unit and the second

amendment was made on 20.12.2019 through which the rate per unit

was brought down to Rs.1.48 from Rs.1.65. An invoice was raised

by the respondent no.2 with the aforesaid rates for a total sum of

Rs.9,36,693.18/-. The dispute revolves around non-payment of the

said sum. However, it has been contended by the appellant that EIL,

after ascertaining the market price of DA Gas from other vendors,

by a letter dated 29.06.2020, reconciled the accounts by informing

respondent no.2 of what it claimed was foul play with respect to 

1138 [2024] 1 S.C.R.

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revision of rates and appropriated the alleged illegal amounts claimed

by the vendor (respondent no.2) from the invoice.

3. The respondent no.2 instituted a complaint case in the Court of

the Chief Judicial Magistrate, Ghaziabad and the substance of the

complaint would be revealed from the following passages of the

petition of complaint (registered as Misc. Application No.317/2020):-

“….The Applicant through his aboenamed work do the job

work of D.A. Gas. Opposite Party Sachin Garg is posted

as Material Head of Exide Industries Ltd. situated at Plot

No. 179, Sector-3, Bawal, District- Rewari, Haryana and

Opposite Party Sachin Garg also used to issue Purchase

Order to the Applicant’s company on behalf of the Exide

Company and only the Opposite Party Sachin Garg used

to make payment of Job Work to the Applicant. Previously,

the Transaction of Opposite Party was normal with the

Applicant’s company and no problem was ever persisted

in the payment, due to which, the Applicant started trusting

on the Opposite Party and Company. Sachin Garg through

the aforesaid company in the capacity of Purchase Head,

issued Purchase Order to the Applicant’s Company, in

which, it was agreed between the Opposite Party and

Applicant to do job work @ Rs.1.65/- per piece w.e.f.

18.02.2019, which remained continued on the same rates

till December, 2019 and the Opposite Party was regularly

making the payment of job work to the Applicant on the

same rates. In the month of December, in pursuance of the

Purchase Order of Opposite Party, According to Purchase

No. 4800253593 dated 01.04.2019, done the job work of

Filled DA Gases HSN Code 290129910 quantity 3,07,114/-

pieces @ Rs.165 to the tune of Rs.5,06,738.10/-, and Filled

DA Gases H{SN Code 29012910 quantity 1,93,966/- pieces

@ Rs.1.48 per piece to the tune of Rs. 2,87,069.68/- and

18% GST to the tune of Rs.1,42,885.40/-0, in this manner

did the job work of total amount Rs.9,36,693.18/-. The

material Head of Opposite Company namely Sachin

Garg by admitting the job work done by the Applicant

vide Purchaser Order No. 4800253593 dated 01.04.2019,

and got done the job work according to the piece rate

quoted by the Applicant. On 03.07.2020, Applicant sent 

[2024] 1 S.C.R. 1139

Sachin Garg v. State of U.P. and Anr.

Bill/Invoice No. AG.SR/20-21/01 dated 02.07.2020 of

Rs.9,36,693.18/- to the Material Head of Opposite Party

Company namely Sachin Garg through registered post

and also sent the aforesaid invoice through email on

14.07.2020, which were received by Opposite Party Sachin

Garg. Applicant repeatedly requested the Opposite Party

for payment through email, but, the Opposite Party did not

make payment of Rs.9,36,693.18/- of job work done by the

Applicant Company in the month of December, 2019 and

he by keeping the Applicant in dark, kept giving assurances

of making full payment. When, the Applicant put more

pressure on the Opposite Party for payment, then, Opposite

Party stopped to get done the job work from the Applicant

Company, and on 29.06.2020, sent a letter with quotation

to the Applicant Company, in which, the Opposite Party has

fixed the rate of job work done by the Applicant company

@ Rs.1.40/- per piece w.e.f. April, 2019, whereas, the job

work of Opposite Party was completed by the Applicant

Company in the month of December, 2019, in which,

Opposite Party on 20.12.2019, requested to change the

rate of job work at the rate of Rs.1.48/- per piece, which

was accepted by the Applicant w.e.f. 20.12.2019. In this

manner, after 20.12.2019, Rs.1.48/- per piece and prior

to that the rate of Rs.1.65/- per piece was payable by the

Opposite Party, but, the Opposite Party with intention to

cheat the Applicant in deliberate manner, and with intention

to cause financial loss to him and not to pay the money,

has committed criminal breach of trust with the Applicant,

which is a cognizable offence. On demanding money by

the Applicant, the Opposite Party is abusing him with filthy

language and threatening him to kill…..”

(quoted verbatim from the paperbook)

4. The learned Magistrate upon recording initial deposition of Saurabh

Sharma, the proprietor of the supplier firm and his father Padam

Kant Sharma issued summons for trial under Sections 406, 504 and

506 of the Indian Penal Code, 1860 (“1860 Code”) on 18.08.2021.

5. The appellant had approached the High Court at Allahabad under

Section 482 of Code of Criminal Procedure, 1973 (“the 1973 Code”) 

1140 [2024] 1 S.C.R.

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by filing, Criminal Miscellaneous Application No.18603/2021, for

quashing the said summons and also the complaint case itself. The

judgment of the High Court was delivered dismissing the application

filed by the appellant on 23.03.2023 and it is this judgment which

is under appeal before us. The main reason for dismissal of the

appellant’s quashing plea was that the subject-complaint involved

adjudication of disputed questions of fact. Referring to the judgments

of this Court in the cases of Neeharika Infrastructure Pvt. Ltd.

-vs- State of Maharashtra and Ors. [(2021) 19 SCC 401], R.P.

Kapur -vs- State of Punjab [AIR 1960 SC 866], State of Haryana

and Ors. -vs- Bhajan Lal and Ors. [1992 SCC (Cr.) 426], State of

Bihar and Anr. -vs- P. P. Sharma, IAS and Anr. [1992 SCC (Cr.)

192] and lastly Zandu Pharmaceutical Works Ltd. and Ors. -vsMohd. Sharaful Haque and Another [2005 SCC (Cr.) 283], the

High Court refrained from considering the defence of the accused.

6. In the case of Neeharika Infrastructure Ltd (supra), a three-judge

Bench of this Court examined the factors which were to be considered

by the High Court for quashing an F.I.R. at the threshold, relating to

factors which would apply to a proceeding which forms the subjectmatter of the present case. Referring to the judgment in the case

of R.P. Kapur (supra), principles for quashing were set down as:-

“10.1 The first case on the point which is required to be noticed

is the decision of this Court in the case ofc8R.P. Kapur (supra).

While dealing with the inherent powers of the High Court under

Section 561-A of the earlier Code (which is pari materia with

Section 482 of the Code), it is observed and held that the inherent

powers of the High Court under Section 561 of the earlier Code

cannot be exercised in regard to the matters specifically covered

by the other provisions of the Code; the inherent jurisdiction

of the High Court can be exercised to quash proceedings in

a proper case either to prevent the abuse of the process of

any court or otherwise to secure the ends of justice; ordinarily

criminal proceedings instituted against an accused person must

be tried under the provisions of the Code, and the High Court

would be reluctant to interfere with the said proceedings at an

interlocutory stage. After observing this, thereafter this Court

then carved out some exceptions to the above-stated rule,

which are as under:

[2024] 1 S.C.R. 1141

Sachin Garg v. State of U.P. and Anr.

“(i) Where it manifestly appears that there is a legal bar

against the institution or continuance of the criminal

proceeding in respect of the offence alleged. Absence

of the requisite sanction may, for instance, furnish

cases under this category.

(ii) Where the allegations in the first information report

or the complaint, even if they are taken at their face

value and accepted in their entirety, do not constitute

the offence alleged; in such cases no question of

appreciating evidence arises; it is a matter merely of

looking at the complaint or the first information report

to decide whether the offence alleged is disclosed

or not.

(iii) Where the allegations made against the accused

person do constitute an offence alleged but there is

either no legal evidence adduced in support of the

case or the evidence adduced clearly or manifestly

fails to prove the charge. In dealing with this class of

cases it is important to bear in mind the distinction

between a case where there is no legal evidence

or where there is evidence which is manifestly and

clearly inconsistent with the accusation made and

cases where there is legal evidence which on its

appreciation may or may not support the accusation

in question. In exercising its jurisdiction under Section

561-A the High Court would not embark upon an

enquiry as to whether the evidence in question

is reliable or not. That is the function of the trial

Magistrate, and ordinarily it would not be open to any

party to invoke the High Court’s inherent jurisdiction

and contend that on a reasonable appreciation of the

evidence the accusation made against the accused

would not be sustained.””

7. In the same decision (i.e. Neeharika Infrastructure Ltd.) (supra),

the seven-point edict laid down in the case of Bhajan Lal (supra)

was also referred to. These are:-

“102.(1) Where the allegations made in the first information

report or the complaint, even if they are taken at their 

1142 [2024] 1 S.C.R.

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face value and accepted in their entirety do not prima

facie constitute any offence or make out a case against

the accused.

(2) Where the allegations in the first information report

and other materials, if any, accompanying the FIR do not

disclose a cognizable offence, justifying an investigation

by police officers under Section 156(1) of the Code except

under an order of a Magistrate within the purview of Section

155(2) of the Code.

(3) Where the uncontroverted allegations made in the FIR

or complaint and the evidence collected in support of the

same do not disclose the commission of any offence and

make out a case against the accused.

(4) Where the allegations in the FIR do not constitute a

cognizable offence but constitute only a non-cognizable

offence, no investigation is permitted by a police officer

without an order of a Magistrate as contemplated under

Section 155(2) of the Code.

(5) Where the allegations made in the FIR or complaint

are so absurd and inherently improbable on the basis of

which no prudent person can ever reach a just conclusion

that there is sufficient ground for proceeding against the

accused.

(6) Where there is an express legal bar engrafted in any

of the provisions of the Code or the Act concerned (under

which a criminal proceeding is instituted) to the institution

and continuance of the proceedings and/or where there

is a specific provision in the Code or the Act concerned,

providing efficacious redress for the grievance of the

aggrieved party.

(7) Where a criminal proceeding is manifestly attended

with mala fide and/or where the proceeding is maliciously

instituted with an ulterior motive for wreaking vengeance

on the accused and with a view to spite him due to private

and personal grudge.”

[2024] 1 S.C.R. 1143

Sachin Garg v. State of U.P. and Anr.

8. It was observed in the judgment under appeal that the applicant

has got the right of discharge which could be freely taken up by him

before the Trial Court. Mr. Mukul Rohatgi, learned senior counsel

has appeared in this matter on behalf of the appellant along with Mr.

Guru Krishna Kumar, while the case of respondent no.2 has been

argued by Ms. Divya Jyoti Singh. State was represented before

us by Mr. Sarvesh Singh Baghel. The main contentions urged by

Mr. Rohatgi is that the complaint made against the appellant does

not disclose any criminal offence and at best, it is a commercial

dispute, which ought to be determined by a Civil Court. In so far as

the allegations of commission of offence under Sections 405 and

406 are concerned, he has relied on a judgment of this Court in the

case of Deepak Gaba and Ors. -vs- State of Uttar Pradesh and

Another [(2023) 3 SCC 423]. This decision deals with the basic

ingredients of a complaint under Sections 405 and 406 of the 1860

Code and it has been held in this judgment:-

“15. For Section 405 IPC to be attracted, the following

have to be established:

(a) the accused was entrusted with property, or entrusted

with dominion over property;

(b) 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

(c) 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.”

9. The judgment in Deepak Gaba (supra) was delivered in a case

in which there was subsisting commercial relationship between

the parties and the complainant had made allegations of a forged

demand, for a sum of around rupees six and a half lakhs. On that

basis a summoning order was issued for trial under Section 406 of

the 1860 Code. A coordinate Bench of this Court held:-

“17. However, in the instant case, materials on record fail

to satisfy the ingredients of Section 405 IPC. The complaint

does not directly refer to the ingredients of Section 405IPC 

1144 [2024] 1 S.C.R.

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and does not state how and in what manner, on facts, the

requirements are satisfied. Pre-summoning evidence is

also lacking and suffers on this account. On these aspects,

the summoning order is equally quiet, albeit, it states that

“a forged demand of Rs 6,37,252.16p had been raised by

JIPL, which demand is not due in terms of statements by

Shubhankar P. Tomar and Sakshi Tilak Chand”. A mere

wrong demand or claim would not meet the conditions

specified by Section 405IPC in the absence of evidence

to establish entrustment, dishonest misappropriation,

conversion, use or disposal, which action should be in

violation of any direction of law, or legal contract touching

the discharge of trust. Hence, even if Respondent 2

complainant is of the opinion that the monetary demand

or claim is incorrect and not payable, given the failure to

prove the requirements of Section 405 IPC, an offence

under the same section is not constituted. In the absence

of factual allegations which satisfy the ingredients of the

offence under Section 405IPC, a mere dispute on monetary

demand of Rs 6,37,252.16p, does not attract criminal

prosecution under Section 406IPC.”

10. The same view was expressed by this Court in the cases of Prof.

R.K. Vijayasarathy and Anr. -vs- Sudha Seetharam and Anr.

[(2019) 16 SCC 739] and Vijay Kumar Ghai and Ors. -vs- State

of West Bengal and Ors. [(2022) 7 SCC 124]. The judgment of

this Court in the case of Dalip Kaur and Ors. -vs- Jagnar Singh

and Anr. [(2009) 14 SCC 696] has also been cited in support of the

appellant’s case and in this decision it has been, inter-alia, held:-

“10. The High Court, therefore, should have posed a

question as to whether any act of inducement on the part

of the appellant has been raised by the second respondent

and whether the appellant had an intention to cheat him

from the very inception. If the dispute between the parties

was essentially a civil dispute resulting from a breach of

contract on the part of the appellants by non-refunding

the amount of advance the same would not constitute an

offence of cheating. Similar is the legal position in respect

of an offence of criminal breach of trust having regard to

its definition contained in Section 405 of the Penal Code.”

[2024] 1 S.C.R. 1145

Sachin Garg v. State of U.P. and Anr.

This goes for allegations relating to Section 406 of the 1860 Code.

11. So far as the allegations of commission of offence under Sections 504

and 506 of the 1860 Code are concerned, we have gone through the

petition of complaint as well as the initial depositions. The allegations

pertaining to the aforesaid provisions of the 1860 Code surfaces in

the last portion of the petition of complaint. The complainant, in his

initial deposition has not made any statement relatable to criminal

intimidation. But his father made the following statement at that stage

under Section 202 of the 1973 Code:-

“…With effect from 18.07.2019, the Opposite Party

had fixed rate of job work as Rs.1.65/- per piece with

the company of my son, which remained continued till

December, 2019 and Opposite Party used to make payment

of job work to my son, also on this rate and an amount of

Rs. 9,36,693.18/- of my son was due for payment on the

Opposite Party, due to which, he demanded the Opposite

Party to make payment, but, Opposite Party did not make

payment and after doing calculation on less rates, he said

that no amount is due for payment and on demanding

money, the Opposite Party has abused my son with filthy

language and has threatened him to kill. An amount of

Rs. 9,36,693.18/- of my son is due for payment on the

Opposite Party, which he clearly refused to pay the same.”

(quoted verbatim from paperbook)

12. On behalf of the complainant, it has been urged that a detailed

description of the offending acts need not be disclosed at the stage

at which the appellant wants invalidation of the complaint. He has

drawn our attention to the judgment of this Court in the case of

Jagdish Ram -vs- State of Rajasthan and Another [(2004) 4 SCC

432]. In this judgment it has been, inter-alia, held:-

“10…. It is well settled that notwithstanding the opinion of

the police, a Magistrate is empowered to take cognizance

if the material on record makes out a case for the said

purpose. The investigation is the exclusive domain of the

police. The taking of cognizance of the offence is an area

exclusively within the domain of a Magistrate. At this stage,

the Magistrate has to be satisfied whether there is sufficient 

1146 [2024] 1 S.C.R.

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ground for proceeding and not whether there is sufficient

ground for conviction. Whether the evidence is adequate

for supporting the conviction, can be determined only at

the trial and not at the stage of inquiry. At the stage of

issuing the process to the accused, the Magistrate is not

required to record reasons.”

Similar views have been expressed by this Court in the case of Birla

Corporation Ltd. -vs- Adventz Investments and Holdings Ltd.

and Ors. [(2019) 16 SCC 610] as also Smt Nagawwa -vs-Veeranna

Shivalingappa Konjalgi and Others [(1976) 3 SCC 736].

13. As far as the allegations of criminal intimidation are concerned, our

attention has been drawn to the judgment of this Court in the case

of Fiona Shrikhande -vs- State of Maharashtra and Another

[(2013) 14 SCC 44]. It has been held in this case that the petition

of complaint need not repeat the actual words or language of insult

word by word and the complaint has to be read as a whole. If the

Magistrate comes to a conclusion, prima facie, that there has been

an intentional insult so as to provoke any person to break the public

peace or to commit any other offence it should be sufficient to bring

the complaint within the ambit of the aforesaid provision. It has also

been argued on behalf of the respondent no.2 that the appellant in

any event has got the right to apply for discharge and the petition

of complaint does not suffer from the defect of not having made out

any offence at all. This was the view taken by the High Court.

14. Past commercial relationship between the appellant’s employer and

the respondent no.2 is admitted. It would also be evident from the

petition of complaint the dispute between the parties centred around

the rate at which the assigned work was to be done. Neither in the

petition of complainant nor in the initial deposition of the two witnesses

(that includes the complainant) the ingredients of the offence under

Section 405 of the 1860 Code surfaced. Such commercial disputes

over variation of rate cannot per se give rise to an offence under

Section 405 of the 1860 Code without presence of any aggravating

factor leading to the substantiation of its ingredients. We do not find

any material to come to a prima facie finding that there was dishonest

misappropriation or conversion of any material for the personal use of

the appellant in relation to gas supplying work done by the respondent

no.2. The said work was done in course of regular commercial

transactions. It cannot be said that there was misappropriation 

[2024] 1 S.C.R. 1147

Sachin Garg v. State of U.P. and Anr.

or conversion of the subject property, being dissolved acetylene

gas which was supplied to the factory for the purpose of battery

manufacturing at EIL. The dispute pertains to the revision of rate per

unit in an ongoing commercial transaction. What has emerged from

the petition of complaint and the initial deposition made in support

thereof that the accused-appellant wanted a rate variation and the

entire dispute arose out of such stand of the appellant. On the basis

of these materials, it cannot be said that there was evidence for

commission of offence under Section 405/406. The High Court also

did not apply the test formulated in the case of Dalip Kaur (supra).

We have narrated the relevant passage from that decision earlier.

15. In the case of Binod Kumar and Ors. -vs- State of Bihar and

Another [(2014) 10 SCC 663], a coordinate Bench of this Court

dealt with a criminal complaint arising out of retention of bill amount

in course of commercial transaction. The Court found essential

ingredients of criminal breach of trust or dishonest intention of

inducement, which formed the foundation of the complaint were

missing. The High Court’s judgment rejecting the plea for quashing

the criminal proceeding was set aside by this Court. The reasoning for

quashing the criminal proceeding would be revealed from paragraphs

18 and 19 of the Report, which reads:-

“18. In the present case, looking at the allegations in the

complaint on the face of it, we find that no allegations

are made attracting the ingredients of Section 405 IPC.

Likewise, there are no allegations as to cheating or the

dishonest intention of the appellants in retaining the

money in order to have wrongful gain to themselves or

causing wrongful loss to the complainant. Excepting the

bald allegations that the appellants did not make payment

to the second respondent and that the appellants utilised

the amounts either by themselves or for some other work,

there is no iota of allegation as to the dishonest intention

in misappropriating the property. To make out a case of

criminal breach of trust, it is not sufficient to show that

money has been retained by the appellants. It must also

be shown that the appellants dishonestly disposed of the

same in some way or dishonestly retained the same. The

mere fact that the appellants did not pay the money to the

complainant does not amount to criminal breach of trust.

1148 [2024] 1 S.C.R.

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19. Even if all the allegations in the complaint taken at

the face value are true, in our view, the basic essential

ingredients of dishonest misappropriation and cheating

are missing. Criminal proceedings are not a shortcut for

other remedies. Since no case of criminal breach of trust

or dishonest intention of inducement is made out and the

essential ingredients of Sections 405/420 IPC are missing,

the prosecution of the appellants under Sections 406/120-

B IPC, is liable to be quashed.”

16. So far as the criminal complaint and the initial depositions with which

we are concerned in this case, the factual basis is broadly similar.

We have reproduced these materials earlier in this judgment. We do

not find they carry the ingredients of offence as specified in Section

405 of the 1860 Code.

17. The allegation of criminal intimidation against the accused is made

in the complaint statements made by the appellant, no particulars

thereof have been given. Both in the complaint petition and the

initial deposition of one of the witnesses, there is only reproduction

of part of the statutory provision giving rise to the offence of criminal

intimidation. This would constitute a mere bald allegation, short of any

particulars as regards to the manner in which threat was conveyed.

18. While it is true that at the stage of issuing summons a magistrate only

needs to be satisfied with a prima facie case for taking cognizance,

the duty of the magistrate is also to be satisfied whether there is

sufficient ground for proceeding, as has been held in the case of

Jagdish Ram (supra). The same proposition of law has been laid

down in the case of Pepsi Foods Ltd. and Anr. -vs- Special Judicial

Magistrate and Ors. [(1998) 5 SCC 749]. The learned Magistrate’s

order issuing summons records the background of the case in rather

longish detail but reflects his satisfaction in a cryptic manner. At the

stage of issue of summons, detailed reasoning as to why a Magistrate

is issuing summons, however, is not necessary. But in this case, we

are satisfied that the allegations made by the complainant do not

give rise to the offences for which the appellant has been summoned

for trial. A commercial dispute, which ought to have been resolved

through the forum of Civil Court has been given criminal colour by

lifting from the penal code certain words or phrases and implanting

them in a criminal complaint. The learned Magistrate here failed to 

[2024] 1 S.C.R. 1149

Sachin Garg v. State of U.P. and Anr.

apply his mind in issuing summons and the High Court also failed

to exercise its jurisdiction under Section 482 of the 1973 Code to

prevent abuse of the power of the Criminal Court.

19. It is true that the appellant could seek discharge in course of the

proceeding itself before the concerned Court, but here we find that

no case at all has been made out that would justify invoking the

machinery of the Criminal Courts. The dispute, per se, is commercial

in nature having no element of criminality.

20. The appellant also wanted dismissal of the complaint and the orders

passed in ensuing proceeding on another ground. The respondent

no. 2’s allegations were against EIL, for whom he did the job-work.

The appellant’s argument on this point is that the complaint should

not have been entertained without arraigning the principal company

as an accused. The judgment relied upon on this point is a decision

of a Coordinate Bench in the case of Sharad Kumar Sanghi -vsSangita Rane [(2015) 12 SCC 781]. This was a case where complaint

was made by a consumer for being sold a damaged vehicle under

Section 420 of the 1860 Code. But arraigned as accused was the

managing director of the dealer, the latter being a corporate entity.

Cognizance was taken in that case and summons were issued. The

accused failed to get relief after invoking the High Court’s jurisdiction,

but two-judge Bench of this Court quashed the proceeding primarily

on the ground that the company was not made an accused. The

Coordinate Bench found that the allegations were made against

the company, which was not made a party. Allegations against the

accused (managing director of that company) were vague. So far the

present case is concerned, the ratio of the decision in the case of

Sharad Kumar Sanghi (supra) would not be applicable for ousting

the complaint at the threshold on this ground alone. The perceived

wrongdoing in this case has been attributed to the appellant, though

the complaint petition acknowledges that the job-work was being

done for EIL. Moreover, the allegation of criminal intimidation is

against the appellant directly – whatever be the value or quality of

such allegations. Thus, for that reason the complaint case cannot be

rejected at the nascent stage on the sole ground of not implicating the

company. But as otherwise we have given our reasons for quashing

the complaint and the summons, we do not find any reason to dilate

further on this point. 

1150 [2024] 1 S.C.R.

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21. We accordingly set aside the impugned judgment and quash the

Criminal Complaint Case No.7990 of 2020 as also the summoning

order issued on 18.08.2021. The appeal stands allowed in the above

terms. All consequential steps in connection with the said proceeding

shall stand quashed.

Headnotes prepared by: Divya Pandey Result of the case: Appeal allowed.