TaxTMI 
TaxTMI 
2026 (5) TMI 1681
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..../ 420/ 34 of the I.P.C. and all other investigation/ proceedings (if any) arising therefrom. I. FACTUAL MATRIX OF THE CASE: 3. The brief facts of the case are as follows: (i) As it transpires from the case record, the facts of the case, in a nutshell, are that pursuant to a successful tender process, on 17.05.2018 a contract ("Main Contract") was entered into between Punj Lloyd Ltd. (PLL) and the Gas Authority of India Ltd/ M/S Gail (India) limited ("GAIL") for the work of laying and construction of steel gas pipeline along with associated facilities from Dhamra to Angul section of Jagatisinghpur-Haldia-Bokaro-Dhamra Pipeline Project (JHBDPL) Phase-II (i.e., 0 to 207 kms). (ii) The NCLT passed an order dated 08.03.2019admitting the application for initiating Corporate Insolvency Resolution Process ("CIRP") in respect of PLL. Mr. Gaurav Gupta was appointed as Interim Resolution Professional. (iii) Subsequently, the Committee of Creditors of PLL at its meeting held on 08.05.2019 nominated Mr. Ashwini Mehra ("Liquidator of PLL")to act as a Resolution Processional ("RP") for PLL and the NCLT approved the appointment of the RP vide its order dated 22.05.....
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....ccount of PLL's contract with GAIL, PLL subcontracted several works to sub-contractors, wherein the Complainant was one such sub-contractor who had carried out some work as per the Work Order. It is alleged that an amount of INR3.28 crores remains outstanding and pending from PLL against the total work carried out by the Complainant. It is also alleged that PLL is withholding these amounts while availing GST benefit with the intention to cheat the Complainant. (ix) Being aggrieved, the Petitioners are constrained to approach this Court by way of the present criminal appeal seeking appropriate relief. II. SUBMISSIONS ON BEHALF OF THE PETITIONERS: 4. The learned counsel for the Petitioners earnestly made the following submissions in support of his contentions: (i) The allegations in the FIR do not satisfy the essential ingredients of Sections 418 or 420 of the IPC. Specifically, Section 418 IPC requires "cheating" with the intent of wrongful gain or wrongful loss, which is absent in the allegations. (ii) The FIR is absolutely silent on any fact which directly or indirectly states or implies that the Petitioners have induced the Complainant to deli....
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....olve any criminal offence) by applying pressure through criminal prosecution should be deprecated and discouraged. (x) The allegations in the FIR are so preposterous that any further prolongation of prosecution would be tantamount to sheer harassment. It is submitted that it is a gross violation of the Petitioners' rights if the rigmarole of criminal prosecution continues for years. The present facts clearly show that it is purely a civil dispute where no offences are disclosed against the Petitioners. The Opposite Party No. 2 has sought to wrongly give the commercial disputes a colour of criminality. (xi) The grievance raised by the Complainant appears to be purely contractual in nature, arising from alleged non-payment of outstanding dues in a contractual arrangement between the Petitioners and the Complainant. As stated above, a claim for recovery of money or financial grievances cannot be construed as a penal offense requiring criminal prosecution. (xii) ln Naresh Kumar and Another -vrs-. State of Karnataka and Another 2024 SCC Online SC 268, the Supreme Court held that where the allegations clearly stem from a contractual dispute, criminal procee....
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....rs if any such alleged loss is caused to the Complainant. Therefore, neither any motive was for the Petitioners to commit the alleged offence nor was any intentions or any benefit that the petitioners could have derived by cheating of the Complainant, as alleged in the FIR. (xvii) It is also submitted that filing of the FIR amounts to an abuse of the criminal justice process, with an intent to pressurize the Petitioners to fulfill the financial claims. The Complainant has misused the Government machinery for achieving their ulterior motives for their wrongful enrichment (xviii) In Paramjeet Batra-vrs.-State of Uttarakhand (2013) 11 SCC 673, the Supreme Court recognized that criminal proceedings arising from essentially civil disputes are liable to be quashed under Section 482 of the Cr.P.C. to prevent abuse of process (xix) It is also contended that continuation of the investigation and prosecution under the FIR will cause undue harassment to the Petitioners and disrupt the lawful liquidation proceedings, thereby prejudicing the interests of all stake holders of PLL. (xx) The Supreme Courtin the case of State of Haryana v. Bhajan Lal (1992) Supp ....
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.... the FIR. Only the form of the FIR has been annexed in the present CRLMC. In absence of the impugned FIR, the very foundation of the challenge is missing and no effective judicial review can be undertaken. (ii) It is trite that a petition seeking exercise of inherent jurisdiction under Section 528 of BNSS must be, accompanied by the order sought to be quashed /interfered with, and failure to annex the impugned FIR is, by itself, a sufficient ground to reject the petition at the very threshold. The petitioners, having chosen not to place the impugned FIR on record, cannot be permitted to maintain the present challenge on incomplete pleadings and defective CRLMC. (iii) In fact, the petitioners have separately filed I.A. only to seek exemption from filing certified copy of FIR (Annexure-5), showing that he is fully aware of the High Court Rules regarding mandatory annexures yet has chosen not to place the complete impugned order on record. A petitioner who withholds the very order under challenge cannot invoke the inherent jurisdiction of this Court. The CRLMC is, thus, liable tobe rejected at the threshold for non-compliance with the Orissa High Court Rules or suppr....
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....tial work under the work order dated08.01.2021, raised RA Bills (including RA Bill No. 13), and that the accused, in spite of receiving benefit and claiming GST input credit on such billed amount, have deliberately withheld payment with dishonest intention. The deliberate withholding of payment after deriving fiscal benefit, coupled with the promise to settle and repeated avoidance, prima facie indicates a fraudulent and dishonest intention, which takes the matter out of the realm of a mere civil/ commercial dispute. (xi) Whether, at the conclusion of investigation and on appreciation of entire materials, the offence of cheating is ultimately made out or not is a matter for the Investigating Agency and, thereafter, the trial court; at this nascent stage, this Court ought not to stifle a legitimate investigation by branding the case as "purely civil" on the basis of the petitioners' unilateral version. The plea of "commercial dispute" is a disputed factual defence which cannot be adjudicated in a quashing petition. (xii) The reliance of the petitioner on his status as Liquidator and on Section 233 of the IBC is also misconceived. The statutory protection under ....
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....d the GST amount of Rs. 35.95 lakh against Invoice RA-13" with the intention to cheat, thereby causing financial distress to the complainant company. (xvii) The email dated 14.04.2025, sent after the alleged coercive detention of accused No.4 states that the company is committed to ensuring that all payments are processed in a lawful manner and that DSP's rights and claims will be duly considered. This indicates that the claim was never treated as "non-existent" or "frivolous" by the petitioner at that time. The correspondence around the draft settlement agreement and the detailed calculations exchanged on 29.04.2025 etc. show that, on facts, there was a serious dispute about admitted dues, timing and mode of payment and the petitioner considered executing a settlement while in parallel planning to pursue quashing of FIR. These circumstances prima facie support the informant's stand that the accused induced and prolonged negotiations instead of paying admitted amounts, and that whether the conduct was bona fide or dishonest is a matter for investigation and trial, not for summary termination of proceedings. (xviii) The petitioner claims that IBBI had sough....
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....cise of inherent jurisdiction under Section 482 Cr.P.C./ Section 528 B.N.S.S. The inherent powers of the High Court are undoubtedly wide and are intended to secure the ends of justice and prevent abuse of the process of Court. However, the very amplitude of such jurisdiction requires it to be exercised with great circumspection, restraint and judicial discipline. The jurisdiction is extraordinary in nature and cannot be permitted to become an instrument either for prematurely stifling legitimate prosecution or for converting the High Court into a forum for adjudication of disputed factual controversies at the threshold stage itself 9. It is a settled principle of criminal jurisprudence that while exercising jurisdiction for quashing of criminal proceedings, the Court is not expected to undertake a meticulous appreciation of evidence, weigh the sufficiency of materials collected during investigation, or adjudicate upon the probable defence of the accused. The Court must proceed on the basis that the allegations contained in the complaint or the F.I.R. are prima facie true and determine whether the foundational ingredients of the alleged offences are disclosed. At the same time, i....
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....judication. 12. Significantly, the materials placed before this Court do not prima facie indicate that at the inception of the contractual relationship the Petitioners had harboured any fraudulent or dishonest intention to deceive the complainant. On the contrary, the undisputed circumstances reveal that the work order was issued in the course of ongoing business operations, substantial work was admittedly executed by the complainant and payments were also released from time to time. The continuation of contractual dealings over a prolonged period, exchange of invoices, reconciliations, negotiations and settlement discussions substantially militate against the theory that the transaction itself was conceived as a fraudulent device from the very beginning. A subsequent dispute regarding the quantum of outstanding dues or delayed payment cannot, without more, retroactively convert a commercial transaction into an offence of cheating. 13. This Court also finds considerable force in the contention advanced on behalf of the Petitioners that the allegations primarily revolve around recovery of alleged outstanding monetary claims. The complainant asserts that certain amounts remain ....
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....tations which they knew to be false from the very beginning. 16. The chronology of events further weakens the prosecution narrative regarding fraudulent intention at inception. The work order itself was issued after commencement of CIRP proceedings and during the subsistence of statutory supervision under the IBC regime. The complainant was fully aware of the commercial framework within which the contract was being executed. The continuation of business dealings, issuance of running account bills, partial release of payments and subsequent negotiations for reconciliation all indicate the existence of a subsisting commercial relationship rather than a pre-designed criminal conspiracy to cheat the complainant. 17. It is also trite that the pendency of civil remedies or insolvency proceedings does not by itself bar criminal prosecution where genuine ingredients of criminal offences are disclosed. However, the converse is equally true that the existence of a civil dispute cannot be artificially dressed in criminal colours merely to exert pressure for settlement or recovery. Courts must remain vigilant against the growing tendency of converting commercial disagreements into crimin....