2025 (6) TMI 111 - HC - GST

Seeking quashing of FIR - issuance of false and fake invoices and E-Way bills with an intent to cheat the complainant - HELD THAT - The well settled proposition of law is that except in exceptional circumstances where non-interference would result in miscarriage of justice the Courts ought not to interfere at the stage of investigation of an offence as if the FIR is quashed at the very inception the same thwarts legitimate investigation. Reliance in this context can be made to the observations made by Hon ble Supreme Court in Neeharika Infrastructure (P) Ltd. vs. State of Maharashtra 2021 (4) TMI 1244 - SUPREME COURT wherein after analyzing a catena of judicial precedents it was observed that the police had statutory right and duty to investigate into cognizable offences under the relevant provisions of the Code of Criminal Procedure. The Courts should not thwart any investigation into cognizable offences. The criminal proceedings ought not to be scuttled at the initial stage. While examining a FIR/complaint quashing of which is sought the Court cannot embark upon an inquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR/complaint. Reliance can be placed upon Union of India v. Prakash P. Hinduja 2003 (7) TMI 744 - SUPREME COURT wherein it was held that the Court should not interfere with investigation or during the course of investigation i.e. till the filing of a report under Section 173 of Cr.P.C. by exercise of inherent jurisdiction. Recourse to quashing of FIR has to be taken only in rarest of rare cases and when the investigation of a case is at its nascent stage this power should be used sparingly. In the instant case the investigation is at its initial stage. The petitioner has not joined the same so far. After conducting preliminary inquiry an FIR has been registered since it appears prima facie that cognizable offences were committed by the petitioner. However it cannot be ascertained at this stage as to whether the petitioner had any intention to dupe the complainant and cause wrongful loss to him by not fulfilling the obligations cast upon him or not? The FIR has also been lodged after a gap of about three years from the date when the offences alleged were committed. In the considered opinion of this Court it would be premature to pronounce any conclusion based on given facts that the FIR does not deserve to be investigated. Conclusion - The FIR registered under Sections 420 468 and 471 IPC cannot be quashed at this stage. The petitioner s contention of false implication and civil nature of dispute is not a ground for quashing. This Court is of the opinion that no case for quashing of FIR has been made out at this stage. As such no ground for allowing the petition is made out. As a consequence the same is dismissed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court are:

(a) Whether the FIR registered under Sections 420 (cheating), 468 (forgery for purpose of cheating), and 471 (using as genuine a forged document) of the Indian Penal Code against the petitioner warrants quashing at the nascent stage of investigation;

(b) Whether the allegations in the FIR disclose the commission of cognizable offences against the petitioner;

(c) Whether the petitioner's contention that the dispute is essentially civil in nature and has been given a criminal color to abuse the process of law is sustainable;

(d) Whether the petitioner has been falsely implicated due to his role as a connecting person in the transactions;

(e) Whether the Court should interfere in the investigation stage under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (pari materia to Section 482 Cr.P.C.) to quash the FIR and proceedings.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (a) & (b): Whether the FIR discloses commission of cognizable offences and merits quashing at investigation stage

The Court examined the settled legal framework governing quashing of FIRs at the initial stage of investigation. Reliance was placed on authoritative precedents, including the Supreme Court's observations in Neeharika Infrastructure (P) Ltd. v. State of Maharashtra, which emphasize that courts should generally refrain from interfering with ongoing investigations unless exceptional circumstances exist that would result in miscarriage of justice.

The Court noted that the FIR alleges issuance of false and fake invoices and E-Way bills with dishonest intention to cheat the complainant, causing a loss of Rs. 3.5 crores, prima facie disclosing cognizable offences under Sections 420, 468, and 471 IPC. The police have initiated investigation, which remains at an early stage, and the petitioner has not joined the investigation so far.

The Court reiterated that at this stage it is not permissible to delve into the reliability or genuineness of the allegations or to test the correctness of the complaint. The Court must allow the investigating agency to complete its probe and file an appropriate report under Section 173 Cr.P.C. if no substantive evidence is found. The Court cited the principle that the FIR is not an encyclopaedia of all facts and details, and the investigation should not be scuttled prematurely.

The Court also referred to the recent Supreme Court ruling in Somjeet Mallick v. State of Jharkhand, which clarified that the court must evaluate allegations and materials collected during investigation at face value to determine if a prima facie case exists, without testing the correctness or specific offence at this stage.

Thus, the Court concluded that the FIR prima facie discloses cognizable offences and no exceptional circumstances exist to justify interference at this stage.

Issue (c) & (d): Whether the dispute is civil in nature and petitioner is falsely implicated as a connecting person

The petitioner contended that the dispute is essentially civil, relating to business transactions and payments, and the criminal proceedings have been initiated to abuse the process of law. He argued that he was merely a connecting person facilitating transactions between the complainant and a third party, Mr. Anil Rai, who allegedly committed the fraud. The petitioner submitted that he had no dishonest intention and had even lodged an FIR against the third party for fraud.

The Court acknowledged these contentions but observed that such factual disputes and contentions regarding the nature of the transactions and intent cannot be adjudicated at the stage of investigation. The Court emphasized that the existence of a civil dispute does not preclude investigation into criminal offences if prima facie ingredients are made out.

The Court also noted that the petitioner's role in receiving advances through his bank account and issuing invoices was a relevant factor for investigation. The prior closure of an earlier complaint by the police was not determinative of the present FIR's validity.

Therefore, the Court held that the petitioner's claim of false implication and civil nature of dispute cannot be a ground for quashing the FIR at this stage.

Issue (e): Whether the Court should exercise inherent jurisdiction under Section 528 BNSS to quash FIR and proceedings

The Court considered the scope of inherent jurisdiction under Section 528 BNSS, which is pari materia to Section 482 Cr.P.C., allowing quashing of FIRs to prevent abuse of process or miscarriage of justice. However, the Court reiterated the principle that such power is to be exercised sparingly and only in rarest of rare cases, especially when investigation is in its infancy.

The Court relied on multiple precedents to underscore that premature quashing of FIRs hampers the statutory right and duty of the police to investigate cognizable offences. The Court held that no exceptional circumstances exist in this case warranting interference at the investigation stage.

Accordingly, the Court declined to quash the FIR or proceedings, emphasizing that the petitioner is free to participate in the investigation and that the police may file a report under Section 173 Cr.P.C. if no case is made out.

3. SIGNIFICANT HOLDINGS

The Court's crucial legal reasoning is encapsulated in the following verbatim excerpts:

"The well settled proposition of law is that except in exceptional circumstances where non-interference would result in miscarriage of justice, the Courts ought not to interfere at the stage of investigation of an offence as if the FIR is quashed at the very inception, the same thwarts legitimate investigation."

"The first information report is not an encyclopaedia which must disclose all facts and details relating to the offence reported. Therefore, when the investigation by the police is in progress, the court should not go into the merits of the allegations in the FIR."

"The Court is also not required to ascertain at this stage as to which specific offence is committed. It is only after investigation, at the time of framing charge, when the material collected during investigation is before the Court, that the Court has to draw an opinion as to for commission of which offence, the accused should be tried."

"Recourse to quashing of FIR has to be taken only in rarest of rare cases and when the investigation of a case is at its nascent stage, this power should be used sparingly."

"It would be premature to pronounce any conclusion based on given facts that the FIR does not deserve to be investigated."

Core principles established include:

- The FIR must prima facie disclose a cognizable offence to sustain investigation.

- Courts must exercise restraint and not interfere at the investigation stage except in exceptional circumstances.

- The correctness or genuineness of allegations cannot be tested at the FIR quashing stage.

- Civil disputes cannot be converted into criminal cases without prima facie material, but mere civil nature of dispute does not preclude investigation if criminal ingredients are prima facie present.

Final determinations:

- The FIR registered under Sections 420, 468, and 471 IPC cannot be quashed at this stage.

- The petitioner's contention of false implication and civil nature of dispute is not a ground for quashing.

- Investigation should be allowed to proceed and the petitioner is expected to cooperate.

- Police may file appropriate report under Section 173 Cr.P.C. after investigation.