Section 420IPC- Complaint Can Be Quashed If Company Is Not Made A Co-Accused In A Crime: Andhra Pradesh High Court

Brief Facts of the case

The Criminal Petition was filed under Section 482 CrPC seeking to quash the FIR registered under Section 420 of Indian Penal Code dealing with punishment for cheating and dishonestly inducing delivery of property.

The allegations made in the FIR was that that the petitioners had borrowed amounts from the defacto complainant to settle the financial discrepancies with sub-contractors at Kuwait but never intended to use the amounts for the specific purpose or return it.

The main grounds in assailing the FIR was that the petitioners were the Managing Director and Director Finance of Newton Engineering & Chemicals Ltd., the amounts were transferred to the account of the company but the defacto complainant made a complaint against the petitioners without making company as a party.

Furthermore, defacto complainant had already invoked civil jurisdiction for recovery of amounts. During the pendency of suit, making criminal complaint was abuse of process of law.

Ruling of the Court

The bank statements disclosed that the amounts were transferred to the company's accounts through RTGS. As per the ratio laid down in Sharad Kumar Sanghi v. Sangita Rane (2015), it was held by the Supreme Court that once a transaction was made with the company, the company being a legal entity, unless and until the company was made as co-accused, the complaint was not maintainable.

Justice D. Ramesh held that since the company was not made the co-accused, on this ground alone, the complaint is required to be quashed. Furthermore, there were no supporting materials to substantiate that the petitioners had cheated the defacto complainant. There was no specific proof to support the allegations made in the complaint. The respondents in its complaint itself clearly stated that basing on some information, the petitioner had not paid the amounts to the sub-contractors and utilized for the benefit of the business.

Accordingly, the criminal petition was allowed and FIR against the petitioners was quashed.