Punjab-Haryana High Court
Mukesh Kumar vs State Of Punjab on 17 July, 2026
Author: Jasjit Singh Bedi
Bench: Jasjit Singh Bedi
CRM-M-4144-2026 (O & M)
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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
(145) CRM-M-4144-2026 (O & M)
Reserved on: 15.07.2026
Date of Pronouncement:17.07.2026
Date of Uploading :17.07.2026
Mukesh Kumar ...... Petitioner(s)
V/s
State of Punjab ...Respondent(s)
CORAM: HON'BLE MR. JUSTICE JASJIT SINGH BEDI
Present: Mr. Imaan Singh Khara, Advocate,
with Mr. Prince Pal, Advocate,
for the petitioner(s).
Mr. Adeshwar S. Pannu, AAG, Punjab.
Mr. H.S. Randhawa, Advocate as Amicus Curiae.
Mr. Gourav Verma, Advocate and
Mr. Ajay Gupta, Advocate,
for the complainant-Markfed.
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JASJIT SINGH BEDI, J. (Oral)
The prayer in the present petition under Section 528 BNSS,
2023 is for quashing of case FIR No.60 dated 07.06.2018 under Sections
420, 406 and 120-B IPC registered at Police Station City Jalalabad, District
Fazilka (Annexure P-1) alongwith all consequential proceedings arising
therefrom including the Final Report (Annexure P-2).
2. The present FIR came to be registered at the instance of District
Manager, Markfed, Punjab and reads as under:-
Markfed The Punjab State Cooperative Supply and Marketing
Federation Ltd. Fazilka (01638-260162 email:
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I attest to the accuracy and [email protected] Office Order As per report of
integrity of this document
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Branch Incharge, committee is hereby formed for doing
physical verification of stocks of Paddy 2017-18 stored at M/s
P.M. Industries, Jalalabad as under: 1. Sh. Ramesh Kumar,
Technical Officer, Markfed Fazilka. 2. Sh. Vinod Kumar, Clerk,
Markfed Fazilka. 3. Sh. Sahil Verma, Accountant, Markfed
Fazilka. Afore-mentioned officials/employees are hereby
directed to complete physical verification of paddy stocks stored
at M/s P.M. Industries, Jalalabad and to produce report before
the undersigned. Ensure strict compliance of this order. Sd/-
District Manager Markfed Fazilka Date 31.05.2018 No.
DMF/Paddy/2018/4906 Dated 31.05.2018. Copy to: 1. Chief
Manager (Paddy & Rice) Markfed Chandigarh for information.
2. Concerned officials/employees for compliance. 3. Senior
Accounts Officer, Markfed Fazilka for Information. 4. Accounts
Officer, Markfed Branch, Jalalabad for information. No.
DM/Fazilka/2018/4922 Dated 01/06/2018. Το, The S.S.P,
Fazilka. Subject: Application for lodging FIR against Mukesh
Kumar S/o Sh. Prithve Raj Doomra Prop. M/s PM. Industries
(Rice Miller) Jalalabad for embezzlement of 6187.625 Qtls.
paddy supplied for custom milling for Year 2017-18. R/Sir, It is
respectfully submitted that M/s Industries (Rice Miller),
Jalalabad was supplied paddy 67187.625 Qtls. for custom
milling for year 2017-18. The said firm issued a receipt
regarding quality and quantity as per specifications laid by
G.O.I. The said firm has to supply rice to FCI on or before
30.05.2018 but in physical verification by committee formed by
District Manager, Markfed Fazilka which was conducted on 31-
05-2018 and a shortage of 15155 bags paddy crop 2017-18
found formed and only 2000 bags of substandard rice in
unstandard weight were found not in specifications of norms of
FCI. That proprietor of above said firm has embezzled paddy
SUKHPREET KAUR
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I attest to the accuracy and
integrity of this document supplied for custom milling for Year 2017-18 and is liable to
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pay Rs. 1,01,84,223/- to the Markfed and has not paid a single
penny to the department. So it is requested that a FIR as per
law against Sh. Mukesh Kumar S/o. Sh. Prithve Raj Doomra
Prop. of M/s P.M. Industries (Rice Miller) Jalalabad may kindly
be registered as the offence has already been committed by
firm. Yours sincerely, Sd/- District Manager Markfed Punjab.
3. Pursuant to the FIR (Annexure P-1), the Challan (Annexure
P-2) was submitted against the petitioner.
4. The learned counsel for the petitioner contends that a civil
dispute has been given the colour of a criminal case. An Arbitration Award
dated 29.09.2019 (Annexure P-3) already stands passed in favour of
Markfed. Sections 406 and 420 IPC are ante-thesis of each other. Therefore,
in view of the judgment in Kailash Verma versus Punjab State Civil
Supplies Corporation and Anr. 2005(2) Criminal Court Cases 39(SC), the
FIR (Annexure P-1) in question, and all consequential proceedings arising
therefrom including Final report (Annexure P-2) are liable to be quashed.
5. The learned counsel for the State and the learned counsel for
the complainant alongwith the learned Amicus Curiae, on the other hand,
contend that merely because a set of allegations lead to initiation of civil
proceedings would not preclude criminal prosecution if the facts so warrant.
As per the Arbitration Award passed by the Sole Arbitrator dated 29.09.2019
(Annexure P-3), the petitioner is liable to pay a sum of Rs.1,15,60,718/-,
though, he was proceeded against ex parte. The judgment in Kailash Verma
(supra) has been considered and distinguished by the Division Bench of this
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Court in ‘State of Punjab versus Pritam Chand and others 2014(5)
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integrity of this document
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RCR(Criminal) 792′. Therefore, the present petition is liable to be
dismissed.
6. I have heard the learned counsel for the parties.
7. In ‘State of Punjab versus Pritam Chand and others 2014(5)
RCR(Criminal) 792′, the Division Bench of this Court held as under:-
The following reference made by a learned Single Judge on
August 09, 2012 has led to placement of this Criminal Appeal
alongwith two Criminal Revisions (Criminal Revision Nos.1245
and 1412 of 2012) and two Criminal Misc. Petitions
(Crl.Misc.M Nos.5582 of 2009 and 24351 of 2012) before us:-
“Keeping in view the judgments on both the sides to the
effect that the civil proceedings as well as criminal
proceedings can be initiated in a case, it would be proper
to refer to this case to the Division Bench..”
2. To appreciate the controversy in its correct perspective, brief
reference to the facts may be made from Criminal Appeal
No.28-DBA of 1991 which has been preferred by the State of
Punjab against the order dated 18.1.1990, passed by the
Judicial Magistrate, First Class, Samana, acquitting the
respondents in a case under Section 406 I.P.C. which had
arisen out of FIR No.159 dated 26.9.1984 registered at Police
Station Ghagga, District Patiala.
3. The afore-stated FIR was registered on the basis of a written
complaint made by the District Manager, Punjab State Civil
Supplies Corporation Limited, Patiala (in short, the PUNSUP),
inter-alia, alleging that PUNSUP had purchased paddy as one
of the procuring agencies of the State Government for custom
milling and for delivering the resultant rice to Food
Corporation of India (in short, ‘FCI’) in the central pool, out of
which 4293-80-000 quintals of paddy was entrusted to M/s
Jagdamba Rice Mill, Ghagga, for shelling during the paddy
season 1983-84. The respondents accused were the partners of
the Firm M/s Jagdamba Rice Mill and as per the Government
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Instructions they were obligated to deliver 67% yield of rice of
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integrity of this document
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PR-106 variety. The respondents, however, did not deliver the
custom milled rice to the tune of 447-05-900 quintals as well as
3634 ‘B Class’ gunny bags which were entrusted to their firm.
In this manner, the respondents were alleged to have caused
loss to the tune of L 1,33,028.99 to PUNSUP and defalcated
paddy worth the above mentioned amount.
4. The matter was investigated and on presentation of challan,
charges under Section 406 I.P.C. were framed against the
respondents. The prosecution examined eight witnesses besides
producing documentary evidence. The respondents in their
statement under Section 313 Cr.P.C. denied the allegations,
pleaded innocence and took a specific plea that an arbitration
case was already pending against them initiated by PUNSUP.
They tendered a copy of the Award (Exhibit D-1) and closed the
defence evidence.
5. The learned Judicial Magistrate held that since the paddy
was supplied to the accused by the complainant under a
contract (Exhibit PW-3/A) dated 12.10.1983 and since they
allegedly failed to return the paddy or the extracted rice, it was
only a case of ‘breach of contract’ and not that of ‘breach of
trust’. It was observed that the complainant (PUNSUP) could
get the contract enforced, hence the registration of a criminal
case was sheer abuse of the process of law. The learned
Judicial Magistrate also took notice of the fact that after
registration of the criminal case, the accused had moved an
application before the Civil Court under the Arbitration Act for
referring the dispute for arbitration and vide order dated May
23, 1986 the Chairman of PUNSUP was appointed as
Arbitrator who had passed the Award dated 8.7.1987 (Exhibit
D- 1) holding the accused-respondents liable to pay L
1,81,315.43 to the PUNSUP. The Judicial Magistrate thus
concluded as follows:-
“13. In such like cases where matter was referred to the
Arbitrator and the Arbitrator rendered award, it has been
held in Mohan Lal v. State of Punjab, 1989 Chandigarh
Civil Cases 537 (HC) that in view of the Arbitrator’s
award, the matter assumed the character of civil nature,
FIR and also proceedings based thereof were quashed.
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2026.07.17 14:56 So, in this view of the judgment, it must be held that in
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view of the award Ex.D-1, criminal proceedings against
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the accused regarding the same subject matter must be
held to be an abuse of the process of Court..”
6. The Judicial Magistrate accordingly acquitted the
respondents.
7. The State of Punjab preferred this appeal against the
aforesaid order which was dismissed by a learned Single Judge
of this Court on 16.10.2002 observing that:-
“Learned counsel for the State submitted that a criminal
case may arise even where breach of contract is also there
and there is no bar for prosecution under the criminal law.
Though this proposition is correct, two views are possible
whether on the allegations made, it was purely a case of
civil dispute or a criminal case was also made out.
Having regard to the facts of this case, I am not inclined
to hold that the view taken by the trial Court is
unreasonable.
Accordingly, the appeal is dismissed.”
8. Still aggrieved, the State of Punjab preferred Criminal
Appeal No.1069 of 2004 and the Hon’ble Supreme Court, after
briefly noticing the ingredients of ‘criminal breach of trust’ as
defined under Section 405 of IPC and on consideration of the
decisions in (i) Rajesh Bajaj v. State NCT of Delhi, 1999 (3)
SCC 259 and (ii) Trisuns Chemical Industry v. Rajesh Agarwal
and others, 1999 (8) SCC 686, held vide its order dated
11.2.2009 as follows:-
“9. These aspects were not considered by the trial Court
and, therefore, the High Court should not have in a
summary manner dismissed the appeal after having
recorded that a criminal case may arise even when breach
of contract is also there and there is no bar for
prosecution under the criminal law. Having said so, the
High Court came to an abrupt conclusion because two
views are possible as to whether the allegation made was
of a civil dispute or of a criminal nature no interference
was called for. The approach is clearly erroneous.
Therefore, we set aside the impugned judgment of the
High Court and remit the matter to it for fresh
consideration in accordance with law”
9. When this appeal came up for hearing on August 09, 2012
SUKHPREET KAUR
after its remand by the Hon’ble Supreme Court, the learned
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integrity of this document Single Judge referred it to Division Bench for the reason
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mentioned in the reference order which we have reproduced at
the outset.
10. The principal issue that arises for consideration is whether
criminal proceedings under Section 405 of IPC (breach of trust)
or under Section 415 of IPC (cheating) can be initiated and/or
maintainable when antecedents of the occurrence originate out
of a binding contract between the parties and the arbitration
clause contained therein gives rise to civil liability in the event
of breach of such contract?
11. To be more specific, the question that we are called upon to
determine in these cases is whether a breach of contract giving
rise to ‘civil liability’ would, as a matter of principal, rule out to
the ‘criminal prosecution’?
XXXX XXXX XXXX
42. The principles that emerge out of the cited decisions may
thus be usefully summarised to lay down that:-
(i) if a prima-facie case for commission of an offence
under Sections 405 and 406 I.P.C. or under Section 415
I.P.C. or other related provisions of the Penal Laws is
made out from the allegations contained in a complaint
under Section 200 Cr.P.C., or a chargesheet submitted
under Section 173 Cr.P.C., the High Court would refrain
from invoking its inherent powers under Section 482 of
Cr.P.C. or the constitutional jurisdiction under Article 226
of the Constitution and shall not set at naught such
criminal prosecution only because the allegations against
the accused persons have emanated from an agreement of
‘civil nature’ between the parties or such an agreement
contains an ‘arbitration’ clause. In our humble view, the
conclusions drawn in Baldev Krishan and others’ and
Kailash Verma’s cases (supra), were founded upon the
peculiar facts and circumstances of those cases and the
same cannot be said to have laid down the principle that a
contract between the parties with an arbitration clause
shall be a lawful embargo against initiation or
continuation of criminal proceedings arising out of the
dispute touching such agreement between the parties;
(ii) A complaint on the basis of which FIR has been
registered or a criminal complaint under Section 200
SUKHPREET KAUR Cr.P.C., cannot be quashed at the threshold by the High
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Court in exercise of its inherent or constitutional
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jurisdiction nor are the complainant or the investigating
agency, as the case may be, expected to produce the
relevant material at the initial stage for consideration of a
court of competent jurisdiction for the formation of its
opinion whether or not a prima-facie case as per the
ingredients descripted in different provisions of the
Indian Penal Code or any other Penal Law, is made out;
(iii) However, in a case where the entire material
produced by the complainant or the investigating agency
at the stage of preliminary evidence or the charge-sheet
under Section 173 Cr.P.C., respectively, even if accepted
in its entirety, does not make out a prima-facie case such
proceedings being an abuse of process of law as well as
an exercise in futility, are liable to be quashed by the
High Court to prevent the abuse of process of any court
and to secure the ends of justice;
(iv) Wherever the material produced by a complainant or
the investigating agency, even if accepted in entirety, also
does not establish a prima-facie offence, an accused is
entitled to press for his discharge at the stage of framing
of charges and it is the duty of the trial Magistrate to
objectively consider his plea, of course without
permitting such accused to produce any proof of his
innocence at the stage of framing of charges;
(v) The High Court shall exercise its inherent power
under Section 482 Cr.P.C. or discretionary jurisdiction
under Article 226 of the Constitution, keeping in view the
three well known parameters, namely, (i) to give effect to
an order under the Code; (ii) to prevent abuse of process
of the Court, and (iii) to otherwise secure the ends of
justice, though no inflexible rule in this regard can be laid
down except to observe that the aforesaid jurisdiction is
exercisable sparingly and with great care and
circumspection;
(vi) The High Court, while invoking its powers under
Section 482 Cr.P.C. or Article 226 of the Constitution,
shall be guided by the seven celebrated principles
commencing from R.P. Kapoor v. State of Punjab, AIR
1960 Supreme Court 866 and summed up in Bhajan Lal’s
case (supra);
(vii) Additionally, the High Court would be well within
its power under Section 482 Cr.P.C. read with Article 226
of the Constitution to strike down criminal
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proceedings/prosecution on the basis of a compromise or
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limitations indicated or illustrated by a Five Judges
Bench of this Court in Kulwinder Singh v. State of
Punjab and others, 2007 (3) RCR (Criminal) 1052, which
has got the seal of approval by the Hon’ble Supreme
Court in Gian Singh v. State of Punjab and another, 2012
(10) SCC 303.
(viii) To sum up and reiterate, we hold that the appellant
or the petitioner-rice millers cannot seek quashing of
criminal proceedings initiated against them under
Sections 405, 406 or 415 IPC or other related provisions
of IPC only on the ground that they have entered into an
agreement with one or the other procuring agencies or
that non-delivery, shortage of delivery or delivery of poor
quality of rice by them, gives rise to civil liability for
which the complainant-procuring agencies have got an
efficacious remedy by invoking the arbitration clause and
seeking consequential recovery. However, if the
investigation report, even on its acceptance in entirety,
does not disclose prima-facie ingredients of any offence
under the penal law(s), the aggrieved party is at liberty to
raise such a plea before an appropriate forum as per the
conclusions summarised above.
8. Apparently, if the allegations levelled in the FIR constitute an
offence, then the criminal prosecution shall not be set to naught because the
allegations emanate from an agreement of a civil nature between the parties
or such an agreement contains an Arbitration Clause.
9. Coming back to the facts of the present case, a bare perusal of
the FIR (Annexure P-1) and the consequential challan (Annexure P-2) would
reveal that prima facie, the petitioner is criminally liable for having
embezzled paddy worth more than Rupees One Crore. In Arbitration
proceedings, where the petitioner was proceeded against ex parte, the Sole
Arbitrator vide his order dated 29.09.2019 (Annexure P-3) has passed an
Award of Rs.1,15,60,718/- but the petitioner has chosen not to pay the said
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10. Keeping in view the aforementioned facts and circumstances,
as the offences are prima facie established, the question of quashing of the
FIR (Annexure P-1), Final Report (Annexure P-2) and all consequential
proceedings arising therefrom does not arise and therefore, the present
petition stands dismissed.
11. The pending application(s), if any, shall stand disposed of
accordingly.
July 17, 2026 ( JASJIT SINGH BEDI)
sukhpreet JUDGE
Whether speaking/reasoned : Yes/No
Whether reportable : Yes/No
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