Karnataka High Court
Karthik Prabu S/O Santosh Prabhu vs State Of Karnataka on 6 March, 2026
Author: Hanchate Sanjeevkumar
Bench: Hanchate Sanjeevkumar
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IN THE HIGH COURT OF KARNATAKA, AT DHARWAD
DATED THIS THE 6TH DAY OF MARCH, 2026
BEFORE
THE HON'BLE MR. JUSTICE HANCHATE SANJEEVKUMAR
CRIMINAL PETITION NO. 104744 OF 2025
(482 Cr.PC/528 OF BNSS)
BETWEEN:
1. KARTHIK PRABU
S/O. SANTOSH PRABHU,
AGE: 23 YEARS,
1ST MAIN ROAD, SILVER TOWN,
NEHARU NAGAR, HUBBALLI,
HUBBALLI-580020,
DHARWAD CITY, KARNATAKA.
2. SANTOSH PRABU
S/O. VENKATESH PRABHU,
AGED 50 YEARS,
Digitally signed
by MALLIKARJUN 1ST MAIN ROAD, SILVER TOWN,
RUDRAYYA
KALMATH
Location: High
Court of
NEHARU NAGAR, HUBBALLI,
Karnataka,
Dharwad Bench
DHARWAD CITY, KARNATAKA,
PINCODE: 580020.
...PETITIONERS
(BY SRI SHRIDHAR PRABHU, ADVOCATE)
AND:
1. STATE OF KARNATAKA,
BY GOKUL ROAD POLICE STATION,
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HUBLI NORTH SUB DIVISION,
(REPRESENTED BY POLICE SUB INSPECTOR),
REP. BY SPP, HCK, DHARWAD.
2. KESHAV KAREKAR
S/O. HARISH KAREKAR,
AGE: 22 YEARS,
H. NO.23/7, RAGHAVENDRA COLONY,
UNAKAL CROSS, HUBBALLI,
HUBBALLI, DHARWAD CITY,
KARNATAKA-580023.
...RESPONDENTS
(BY SRI ABHISHEK MALIPATIL, HCGP FOR R1;
NOTICE TO R2 SERVED)
THIS CRIMINAL PETITION IS FILED UNDER SECTION 528
OF THE BHARATIYA NAGARIK SURAKSHA SANHITA, 2023,
PRAYING TO QUASH THE PRIVATE COMPLAINT PRIVATE FILED
BY THE RESPONDENT/COMPLAINANT IN PCR NO.222/2025, ON
THE FILE OF THE COURT OF JMFC-III, HUBBALLI DATED 4TH
OCTOBER 2025 TO THE EXTENT OF PETITIONER-1/ACCUSED-1
AND PETITIONER-2/ACCUSED-2 AND QUASH THE IMPUGNED
ORDER DATED 28TH OCTOBER 2025 PASSED BY THE COURT OF
JMFC-III, HUBBALLI TO THE EXTENT OF PETITIONER-1/
ACCUSED-1 AND PETITIONER-2/ACCUSED-2 AND QUASH THE
FIR IN CRIME NO.0158/2025 REGISTERED BY THE GOKUL ROAD
POLICE STATION, HUBBALLI DATED 10TH NOVEMBER 2025 THE
EXTENT OF PETITIONER-1/ACCUSED-1 AND PETITIONER-2/
ACCUSED-2 FOR OFFENCE PUNISHABLE UNDER SECTIONS 406,
420, 504, 506 READ WITH SECTION 34 OF IPC AND ETC.
THIS PETITION COMING ON FOR ADMISSION, THIS DAY
ORDER WAS MADE THEREIN AS UNDER:
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ORAL ORDER
(PER: THE HON’BLE MR. JUSTICE HANCHATE SANJEEVKUMAR)
This petition is filed under Section 528 of the
Bharatiya Nagarik Suraksha Sanhita, 2023 (for short,
‘BNSS’) /under Section 482 of Cr.P.C. for seeking for reliefs
of quashing the criminal proceedings initiated against the
petitioners as per following prayers made in the petition:
a) Quash the private complaint filed by the
Respondent/Complainant in PCR No.222/2025,
on the file of the Court of JMFC-III, Hubballi
dated 4th October 2025 to the extent of
Petitioner-1/Accused-1 and Petitioner-
2/Accused-2.
b) Quash the impugned order dated 28th October,
2025 passed by the court of JMFC-III, Hubballi
to the extent of Petitioner-1/ Accused-1 and
Petitioner-2/Accused-2.
c) Quash the FIR in Crime No.0158/2025
registered by the Gokul Road Police Station,
Hubballi dated 10th November, 2025 the extent
of Petitioner-1/Accused-1 and Petitioner-
2/Accused-2 for offence punishable under
sections 406, 420, 504 and 506 Read With
section 34 of IPC.
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2. The respondent No.2 herein is the complainant. He
has filed complaint in PCR No.222/2025 against the
petitioners and other accused with the allegation that the
accused have made belief the complainant to invest some
amount with the petitioners and other accused. Thereby,
the complainant has invested some amount by forwarding
same to various persons. But the accused have not paid the
amount invested by the complainant. Thus, committed
offence of criminal breach of trust and cheating. When the
complainant had asked his money to the petitioners, the
petitioners have criminally intimidated. Thus, with all the
allegations as indicated in the complaint filed private
complaint before the learned Magistrate. The learned
Magistrate has referring the case to the Police for
registering FIR and investigation. Accordingly, the police
have registered a crime for the offences punishable under
Sections 406, 420, 504 and 506 read with Section 34 of
IPC.
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3. The learned counsel for the petitioners submitted
that the entire complaint and its FIR is abuse of process of
Court. Upon bare perusal of the complaint, at the most, it is
disclosed that there is a money transaction between the
complainant and the accused and just because, there is
some variations in giving and taking money that does not
amount to offence of cheating and criminal breach of trust.
If at all the accused are still having balance to pay to the
complainant, then the remedy for complainant is to file civil
suit for recovery of money. But without doing so, filing of
complaint and setting criminal law into motion is nothing
but an abuse of process of law. Therefore, the method
adopted by the complainant is nothing but an act of arm-
twisting the petitioners, putting pressure and taking
coercive action against the petitioners by criminal law.
Therefore, he further submitted that as per the complaint
averments and FIR, complaint was lodged on 25.02.2024.
But, the FIR registered on 10.11.2025, i.e, after a period of
01 year 09 months. Further, in these types of money
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transactions, whether the allegation is made that the
petitioners have committed offence of criminal breach of
trust and cheating, both cannot go hand to hand. For that
to attract offence under Section 406 of IPC, there must be
entrustment of property. But in the present case, there is
no such entrustment of property to attract the offence
under Section 406 of the IPC. Therefore, upon bare perusal
of the complaint itself, it goes to reveal that the entire
transaction is revolving around the business and the very
transaction which does not attract offence alleged and there
is nothing but harassing the petitioners by adopting method
of arm-twisting. Therefore, prays to quash the proceedings
initiated by the complainant.
4. He places reliance on the decisions of the Hon’ble
Supreme Court in the case of Arshad Neyaz Khan vs.
State of Jharkhand and Another, reported in 2025 SCC
OnLine SC 2058 and in the case of Delhi Race Club
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(1940) Limited and Others vs. State of Uttar Pradesh
and Another, reported in (2024) 10 SCC 690.
5. Notice issued to respondent No.2-complainant is
served, but there is no representation from the 2nd
respondent.
6. On the other hand, Sri Abhishek Malipatil, learned
HCGP submitted that the complaint averments are matter
for trial and prima facie evidence is made out. Therefore,
opposed the petition and hence prays to dismiss the
petition.
7. The principal offences alleged in the complaint are
Sections 406 and 420 of IPC (corresponding to Sections 313
and 318 of BNS, 2023 retrospectively).
8. Section 406 of IPC reads as follows:
“406. Punishment for criminal breach of trust.-
Whoever commits criminal breach of trust shall
be punished with imprisonment of either
description for a term which may extend to three
years, or with fine, or with both.”
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9. Section 420 of IPC reads as under:
“420. Cheating and dishonestly inducing
delivery of property.- Whoever cheats and
thereby dishonestly induces the person deceived
to deliver any property to any person, or to
make, alter or destroy the whole or any part of a
valuable security, or anything which is signed or
sealed, and which is capable of being converted
into a valuable security, shall be punished with
imprisonment of either description for a term
which may extend to seven years, and shall also
be liable to fine.”
10. Upon considering the complaint averments, which
runs nearly 17 pages, the complaint goes to prima facie
shows that the allegations in the complaint as if made in the
plaint to be filed in the civil suit. The averments of
complaint are revolving around investment of the amount in
stock, in a real estate and in other business. Also upon
considering the complaint averments, the complainant
himself has said that he has paid various amounts to
various persons and one among the entry is that he has
paid the amount of ₹1,07,400/- to the petitioner
No.1/accused No.1. Further, in the same complaint, the
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complainant has made a tabular column that accused No.1
has paid and sent a sum of ₹14,18,637/- to the
complainant. Therefore, upon considering these two entries
in the tabular column in the complaint, the complainant
himself has stated that he has received more money from
accused No.1 than what the complainant has shown that he
has paid amount to accused No.1. Therefore, upon
considering the averments made in the complaint, there is
no ingredients that property is entrusted and there is
breach of trust.
11. Further to establish an offence of cheating, prima-
facie there shall be averment the complaint that since
inception point of time, before making the first transaction,
the petitioners had animus in their mind of element of
cheating, but this is lacking in the complaint. Therefore,
whether the ingredients are there so as to proceed with the
trial is to be considered in the light of the interpretation of
law laid down by the Hon’ble Supreme Court.
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12. The Hon’ble Supreme Court in the case of Delhi
Race Club (supra), has pleased to make interpretation of
Section 420 of IPC and Section 406 of IPC, it has observed
as follows:
“Difference between criminal breach of
trust and cheating
35. This Court in its decision in S.W. Palanitkar
v. State of Bihar reported in (2002) 1 SCC 241 :
2002 SCC (Cri) 129 expounded the difference in
the ingredients required for constituting an of
offence of criminal breach of trust (Section 406
IPC) viz-a-viz the offence of cheating (Section
420). The relevant observations read as under:
“9. The ingredients in order to constitute
a criminal breach of trust are: (i) entrusting a
person with property or with any dominion
over property, (ii) that person entrusted (a)
dishonestly misappropriating or converting
that property to his own use; or (b)
dishonestly using or disposing of that property
or wilfully suffering any other person so to do
in violation (i) of any direction of law
prescribing the mode in which such trust is to
be discharged, (ii) of any legal contract made,
touching the discharge of such trust.
10. The ingredients of an offence of
cheating are: (i) there should be fraudulent or
dishonest inducement of a person by
deceiving him, (ii)(a) the person so deceived
should be induced to deliver any property to
any person, or to consent that any person
shall retain any property; or (b) the person so
deceived should be intentionally induced to do
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or omit to do anything which he would not do
or omit if he were not so deceived; and (iii)
in cases covered by (ii)(b), the act of
omission should be one which causes or is
likely to cause damage or harm to the person
induced in body, mind, reputation or
property.”
36. What can be discerned from the above is
that the offences of criminal breach of trust
(Section 406 IPC) and cheating (Section 420 IPC)
have specific ingredients.
In order to constitute a criminal breach
of trust (Section 406 IPC): –
1) There must be entrustment with person for
property or dominion over the property,
and
2) The person entrusted: –
a) Dishonestly misappropriated or
converted property to his own use,
or
b) Dishonestly used or disposed of the
property or willfully suffers any other
person so to do in violation of:
i) Any direction of law prescribing the
method in which the trust is
discharged; or
ii) Legal contract touching the
discharge of trust (see: S.W.P.
Palanitkar (supra) reported in S.
W. Palanitkar Vs. State of Bihar,
(2002) 1 SCC 241: 2002 SCC (Cri)
129.
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Similarly, in respect of an offence under
Section 420 IPC, the essential
ingredients are: –
1) Deception of any person, either by
making a false or misleading
representation or by other action
or by omission;
2) Fraudulently or dishonestly
inducing any person to deliver any
property, or
3) The consent that any persons shall
retain any property and finally
intentionally inducing that person
to do or omit to do anything which
he would not do or omit (see:
Harmanpreet Singh Ahluwalia
v. State of Punjab reported in
(2009) 7 SCC 712 : (2009) 3 SCC
(Cri) 620.
37. Further, in both the aforesaid sections,
mens rea i.e. intention to defraud or the dishonest
intention must be present, and in the case of
cheating it must be there from the very beginning
or inception.
42. Whereas, for the criminal breach of trust,
the property must have been entrusted to the
accused or he must have dominion over it. The
property in respect of which the offence of breach
of trust has been committed must be either the
property of some person other than the accused
or the beneficial interest in or ownership’ of it
must be of some other person. The accused must
hold that property on trust of such other person.
Although the offence, i.e. the offence of breach of
trust and cheating involve dishonest intention, yet
they are mutually exclusive and different in basic
concept.
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43. There is a distinction between criminal
breach of trust and cheating. For cheating,
criminal intention is necessary at the time of
making a false or misleading representation i.e.,
since inception. In criminal breach of trust, mere
proof of entrustment is sufficient. Thus, in case of
criminal breach of trust, the offender is lawfully
entrusted with the property, and he dishonestly
misappropriated the same. Whereas, in case of
cheating, the offender fraudulently or dishonestly
induces a person by deceiving him to deliver any
property. In such a situation, both the offences
cannot co-exist simultaneously.
44. At the most, the court of the Additional
Chief Judicial Magistrate could have issued
process for the offence punishable under Section
420 of the IPC i.e. cheating but in any
circumstances no case of criminal breach of trust
is made out. The reason being that indisputably
there is no entrustment of any property in the
case at hand. It is not even the case of the
complainant that any property was lawfully
entrusted to the appellants and that the same has
been dishonestly misappropriated. The case of the
complainant is plain and simple. He says that the
price of the goods sold by him has not been paid.
Once there is a sale, Section 406 of the IPC goes
out of picture. According to the complainant, the
invoices raised by him were not cleared. No case
worth the name of cheating is also made out.
48. The aforesaid exposition of law makes it
clear that there should be some entrustment of
property to the accused wherein the ownership is
not transferred to the accused. In case of sale of
movable property, although the payment may be
deferred yet the property in the goods passes on
delivery as per Sections 20 and 24 respectively of
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the Sale of Goods Act, 1930.
“20. Specific goods in a deliverable
state. — Where there is an unconditional
contract for the sale of specific goods in
a deliverable state, the property in the
goods passes to the buyer when the
contract is made and it is immaterial
whether the time of payment of the price
or the time of delivery of goods, or both,
is postponed.
xxx xxx xxx
24. Goods sent on approval or “on
sale or return”. — When goods are
delivered to the buyer on approval or “on
sale or return” or other similar terms,
the property therein passes to the
buyer–
a) when he signifies his approval or
acceptance to the seller or does any
other act adopting the transaction;
b) if he does not signify his approval
or acceptance to the seller but
retains the goods without giving
notice of rejection, then, if a time
has been fixed for the return of the
goods on the expiration of such
time, and, if no time has been fixed,
on the expiration of a reasonable
time.”
49. From the aforesaid, there is no manner of
any doubt whatsoever that in case of sale of
goods, the property passes to the purchaser from
the seller when the goods are delivered. Once the
property in the goods passes to the purchaser, it
cannot be said that the purchaser was entrusted
with the property of the seller. Without
entrustment of property, there cannot be any
criminal breach of trust. Thus, prosecution of
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cases on charge of criminal breach of trust, for
failure to pay the consideration amount in case of
sale of goods is flawed to the core. There can be
civil remedy for the non-payment of the
consideration amount, but no criminal case will be
maintainable for it. [See : Lalit Chaturvedi and
Others v. State of Uttar Pradesh reported in
2024 12 SCC 483: 2024 SCC Online SC 171
and Mideast Integrated Steels Ltd. v. State
of Jharkhand reported in 2023 SCC Online
Jhar 301.”
13. Therefore, in order to attract the offences of
Sections 406 and 420 of IPC, mens rea i.e., the intention to
defraud or the dishonest intention must be present and in
the case of cheating, it must be there from the very
beginning or inception.
14. But considering the complaint averments, there
are various financial transactions between the complainant
and the accused and the complaint is not only against the
accused, but also with other accused has made several
financial transactions. Even according to the complaint
averments as stated by the complainant himself, the
amount of transaction reciprocally between the parties is
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invested in stock trading and real estate etc. Therefore, at
some point of time, due to difficulties in running business
there might be some lapses in making prompt payment of
the amount. This certainly does not show that the
petitioners have dishonest intention of to defraud at very
inception point of time. Therefore, the complaint averments
revolve regarding financial transactions in a routine course
of business attracting civil dispute.
15. Further, I placed reliance on the judgment of the
Hon’ble Supreme Court in the case of Arashad Neyaz
Khan (supra), which has observed as under:
16. The contents of the complaint as well as
the FIR would have to be read in light of the
ingredients of Sections 406 and 420 IPC and the
law settled by this Court through various judicial
dicta. On perusal of the complaint dated
29.01.2021, it is noted that the
complainant/respondent No.2 has filed the said
complaint invoking Sections 406, 420 and 120B
IPC. For ease of reference, the aforesaid Sections
are extracted as under:
“406. Punishment for criminal breach
of trust.– Whoever commits criminal
breach of trust shall be punished with
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imprisonment of either description for a
term which may extend to three years, or
with fine, or with both.
xxx
420. Cheating and dishonestly inducing
delivery of property.- Whoever cheats and
thereby dishonestly induces the person
deceived to deliver any property to any
person, or to make, alter or destroy the
whole or any part of a valuable security, or
anything which is signed or sealed, and which
is capable of being converted into a valuable
security, shall be punished with
imprisonment of either description for a term
which may extend to seven years, and shall
also be liable to fine.
xxx
120B. Punishment of criminal
conspiracy.-(1) Whoever is a party to a
criminal conspiracy to commit an offence
punishable with death, imprisonment for life
or rigorous imprisonment for a term of two
years or upwards, shall, where no express
provision is made in this Code for the
punishment of such a conspiracy, be
punished in the same manner as if he had
abetted such offence.
(2) Whoever is a party to a criminal
conspiracy other than a criminal conspiracy
to commit an offence punishable as aforesaid
shall be punished with imprisonment of either
description for a term not exceeding six
months, or with fine or with both.”
17. In Inder Mohan Goswami vs. State of
Uttaranchal, (2007) 12 SCC 1 (“Inder Mohan
Goswami”), while dealing with Section 420 IPC,
this Court observed thus:
“42. On a reading of the aforesaid section, it
is manifest that in the definition there are
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two separate classes of acts which the
person deceived may be induced to do. In
the first class of acts he may be induced
fraudulently or dishonestly to deliver
property to any person. The second class of
acts is the doing or omitting to do anything
which the person deceived would not do or
omit to do if he were not so deceived. In the
first class of cases, the inducement must be
fraudulent or dishonest. In the second class
of acts, the inducing must be intentional but
need not be fraudulent or dishonest.
Therefore, it is the intention which is the gist
of the offence. To hold a person guilty of
cheating it is necessary to show that he had
a fraudulent or dishonest intention at the
time of making the promise. From his mere
failure to subsequently keep a promise, one
cannot presume that he all along had a
culpable intention to break the promise from
the beginning.”
19. It is settled law that for establishing
the offence of cheating, the complainant/
respondent No.2 was required to show that the
appellant had a fraudulent or dishonest intention
at the time of making a promise or
representation of not fulfilling the agreement for
sale of the said property. Such a culpable
intention right at the beginning when the
promise was made cannot be presumed but has
to be made out with cogent facts. In the facts of
the present case, there is a clear absence of
dishonest and fraudulent intention on the part of
the appellant during the agreement for sale. We
must hasten to add that there is no allegation in
the FIR or the complaint indicating either
expressly or impliedly any intentional deception
or fraudulent/dishonest intention on the part of
the appellant right from the time of making the
promise or misrepresentation. Nothing has been
said on what the misrepresentations were and
how the appellant intentionally deceived the
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complainant/ respondent No.2. Mere allegations
by the complainant/ respondent No.2 that the
appellant failed to execute the agreement for
sale and failed to refund the money paid by the
complainant/respondent No.2 does not satisfy
the test of dishonest inducement to deliver a
property or part with a valuable security as
enshrined under Section 420 IPC.”
16. Upon keeping the principle of law laid down by the
Hon’ble Supreme Court and upon bare perusal of the
complaint, apparently there is a laxity in making out
ingredient of offences alleged in the complaint as alleged for
offences under Section 406 and Section 420 of the IPC. The
entire complaint averments prima facie goes to reveal that
the petitioners may be owing some amount to the
complainant and this is a purely a case of recovery of
money which can be adjudicated in civil proceedings. But
certainly do not attract the ingredients of Sections 406 and
420 of IPC. Therefore, upon considering the principle of law
laid down by the Hon’ble Supreme Court, the complainant
fails to refer the case for trial for trying the offences
alleged. The trial for alleged offence in prosecution in a
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criminal case is different from a trial of prosecuting a civil
case for recovery of money. For recovery of money,
prosecution of a criminal case is nothing but abuse of
process of Court. What the complainant has remedy to
recover the amount in the civil law, but without doing so,
launching criminal case is not permissible. Therefore, when
this is the abuse of process of Court is made out by the
counsel for the petitioners, then certainly, an inherent
power can be involved under Section 482 of Cr.P.C./under
Section 528 of the BNSS, so as to quash the proceedings
initiated against the petitioners. Therefore, the Court is of
the opinion that the complainant by lodging a private
complaint before the learned Magistrate has committed an
abuse of process of Court for the reasons that were
explained, therefore the criminal proceedings initiated
against the petitioners is liable to be quashed. Accordingly,
it is quashed. Therefore, the appeal is allowed.
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The complainant is at liberty to initiate civil
proceedings if he has any grievances.
Sd/-
(HANCHATE SANJEEVKUMAR)
JUDGE
CKK /CT-AN
List No.: 1 Sl No.: 68
