Quashed

Amita Karia v. State of Orissa and Anr.

Orissa HC13 Aug 2025CRLMC/2862/2016

Case brief

AI extract

What is this about?

Petitioners challenged the Magistrate's cognizance under Sections 420/506/34 IPC in a dispute over supply of an educational software package. The High Court held the allegations disclosed only a contractual/civil dispute without fraudulent intent at inception and quashed the cognizance order as an abuse of process.

What did the court decide?

Order of cognizance dated 22.07.2016 in 1CC Case No.129 of 2015 quashed; CRLMC disposed of.

Amita Karia Vs State of Orissa and Anr. — Contract and Commercial Disputes | Orissa HC (2025)

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IN THE HIGH COURT OF ORISSA AT CUTTACK CRLMC No.2862 of 2016

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Amita Karia and another

…. Petitioner

Mr. J. Pal Advocate

-versus-

…. State of Orissa and another Opp. Parties Mr. A. K. Apat, Addl. P. P.

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CORAM:

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THE HON’BLE MR. JUSTICE CHITTARANJAN DASH Date of Judgment: 13.08.2025

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Chittaranjan Dash, J.

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By means of this application, the Petitioners seek to assail the order of cognizance dated 22.07.2016, passed by the learned SDJM, Nayagarh in 1CC Case No.129 of 2015 wherein the learned Magistrate took cognizance for the offences punishable under Sections 420/506/34 of the IPC against the Petitioners along with another.

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The background facts of the case are that the complainant has two schools in the name of Millennium Academy of Higher Education. One is situated at Village Panikoila under Sadar Police Station, Nayagarh, District-Nayagarh and another situates at Khandapara Road, Nayagarh. It is alleged in the complaint petition that in the month of March 2013, the Petitioners visited the office of the complainant situated at Nayagarh and discussed with the complainant regarding the betterment of students, and approached the complainant to take the package provided by the Petitioners

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called the ‘ClassEdge’ package for the Odia medium. It is also alleged in the complaint that Petitioner Nos. 2 and 3, along with another person, Mr. Sanjib Kumar Shaw, the then employee of the Petitioners’ company, took the signatures of the complainant on some printed forms as agreement papers and took an amount of Rs.27,000/- for each of the institutions, towards signing amounts for providing the said package to Millennium Academy of Higher Education. It is further alleged in the complaint petition that after taking the aforesaid amount and signatures of the complainant, the Petitioners left the office and sent a copy of the agreement through e-mail ID of the complainant. It is also alleged that the Petitioners installed hardware in the said two schools of the complainant, but instead of providing the ‘ClassEdge’ packages in Odia medium, the Petitioners provided ‘ClassEdge’ packages in English medium to the complainant’s schools. It is further alleged that the Petitioners assured the complainant that they would replace the English medium package within a short period of time and provide the Odia medium package to the complainant’s institution. The complainant thereafter continued paying Rs.81,000/- per quarter to the Petitioners’ company, but no software in Odia medium was supplied. At this juncture, the complainant requested the Petitioners to refund Rs.54,000/-, which was the signing amount, as well as the deposited amount for three quarters, amounting to Rs.2,43,000/-, as they had failed to provide the software content in Odia medium. While the matter stood thus, on 30.11.2013, Tata Interactive Systems (T.I.S.) terminated the agreement. It is further the case of the complainant that on 13.01.2015, after termination of the agreement, the AGM (Legal) of Tata Interactive Systems sent

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letters to the complainant demanding an illegal amount. According to the complaint, the Petitioners failed to provide the ClassEdge package in Odia medium and fraudulently and dishonestly took away an amount of Rs.2,97,000/- from the complainant. On account of the aforesaid actions of the Petitioners, the complainant issued a pleader’s notice on 07.03.2015 to the Petitioners, as well as to the AGM (Legal) of Tata Interactive Systems, through registered post with acknowledgment due, demanding refund of the money within 15 days. It is further alleged by the complainant that on 26.04.2015 at about 9:00 A.M., accused person, namely Petitioner No.2, and Mr. Sanjib Kumar Shaw, the then employee of the company, rushed to the office of the complainant at Nayagarh and forcibly demanded the amount. When the complainant objected, Petitioner No.2 and Mr. Sanjib Kumar Shaw allegedly attempted to kidnap him with the intention to cause his murder, and when witnesses reached the spot, the Petitioners fled away after threatening him with dire consequences. Accordingly, the complainant filed a complaint, on the basis of which the learned court recorded the statement of the complainant under Section 200 of the Cr.P.C., recorded the statements of the witnesses under Section 202 of the Criminal Procedure Code, and took cognizance of offences against the Petitioners.

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Learned counsel for the Petitioners submitted that the aforesaid cognizance has been taken by the court mechanically, without the application of judicial mind. It is further submitted that two agreements were executed with the complainant on 25.02.2013, i.e., one with regard to the Millennium Academy of Higher Education situated at Panikoila and the other with regard to the

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same institution at Khandapada Road, Nayagarh, and from the agreements it is clear that there is no privity of contract between the parties for supplying Odia content with regard to the company package, i.e., ‘ClassEdge’.

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Learned counsel for the Petitioners further submitted that the complainant, after purchasing the package from the Petitioners’ company, avoided making payment to the company under one pretext or another and issued a legal notice demanding the outstanding amount till that date, i.e., Rs.1,62,000/-, to which the complainant gave a reply on 12^th February 2015 through his lawyer, Kalu Charan Swain, and requested withdrawal of the notice dated 13.01.2015 and further requested a refund of an amount of Rs.2,70,000/-. The demand notice dated 13.01.2015 sent by the Petitioners to the complainant was for non-payment of the outstanding dues of Rs.1,62,000/-, for which the complainant, vide his letter dated 22.11.2013, requested the Academic Manager that he would clear the dues in two instalments, and for which he had also handed over two cheques, bearing No. 000030 dated 12.01.2014 and No. 000031 dated 31.01.2014, drawn on Bank of Baroda, Nayagarh Branch, amounting to Rs.81,000/- each. In the said letter dated 22.11.2013, the complainant himself had requested cancellation of the agreement due to financial reasons.

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Mr. Pal, learned counsel for the Petitioners, also submitted that Petitioner No.2 was never present on the alleged date of occurrence, i.e., 26.04.2015, as disclosed in the complaint petition, and in fact she had left for Jeypore on 23.04.2015 by train and reached Jeypore on 24.04.2015 at about 11:00 A.M. in the morning,

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and checked in at Hotel Apsara, where she stayed overnight. On that day, she conducted a training at Public School, Jeypore, and on the next day, i.e., 25.04.2015, but as the said programme got cancelled, she decided to move to Bhawanipatna from where it would be easier for her to return to Bhubaneswar, and accordingly she went to Bhawanipatna. At Bhawanipatna, she checked in at Hotel Binayak on 25.04.2015, stayed overnight there, and checked out on 26.04.2015 at 5:15 P.M., and since the travel agent got the ticket for Petitioner No.2 from Jeypore, as there were no other available tickets to go to Bhubaneswar, she boarded the train at Rayagada Junction and reached Bhubaneswar the next day, i.e., 27.04.2015, at 8:30 A.M. The complainant deliberately added Sanjib Kumar Shaw and another person, alleging that on 26.04.2015, the said Sanjib Kumar Shaw went to Nayagarh and threatened and assaulted the complainant, which is totally false and concocted, as the said Sanjib Kumar Shaw was terminated from his service way back in 2014, more specifically with effect from 31.05.2014. According to Mr. Pal, the entire allegation in the complaint is a counterblast to the proceedings initiated by the Petitioners for the dishonour of a cheque issued by the complainant in favour of the Petitioners’ company. He vehemently argued that none of the ingredients of Sections 420/506 of the IPC is attracted from the allegations in the complaint, and on the contrary, he submitted that ‘ClassEdge’, formerly known as Tata Interactive Systems, has filed a money suit before the Bombay City Civil Court at Mumbai vide S.C. Suit No. 1090 of 2016 on 28.03.2016 against the institution of the complainant demanding payment of a sum of Rs.7,15,248/- along with interest at the rate of 18% per annum.

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According to Mr. Pal, there was no clause in the contract to show that the company had ever agreed to supply Odia content with regard to the ClassEdge package which the complainant had purchased from the company. Further, Petitioner No.1 is only an authorised signatory of the company, duly authorised to sign the agreement on behalf of the company, and she has never visited Nayagarh or any place in Odisha. According to him, Petitioner No.2 was not present on the day of the alleged occurrence, and the same is supported by the travel documents annexed under Annexure-7 series. He further contended that the allegations made by the complainant against Sanjib Kumar Shaw, alleging that on 26.04.2015, he, along with Petitioner No.2, went to Nayagarh and threatened and assaulted the complainant, are absolutely false as Sanjib Kumar Shaw was no longer in the service of the company with effect from 31.05.2014. The complainant, in order to avoid making payment to the Petitioners’ company, falsely raised a demand notice for Rs.1,62,000/-, whereas the complainant, through its Academic Manager, issued two cheques towards payment to the Petitioners’ company, which were dishonoured for insufficient funds. The Petitioners’ company also filed a money suit before the Bombay City Civil Court at Mumbai vide S.C. Suit No. 1090 of 2016 for recovery of outstanding dues of Rs.7,15,248/-. Accordingly, the entire story propounded by the complainant is nothing but an attempt to thwart the proceedings of the Petitioners’ company against the complainant. He, therefore, submitted that the learned court, while taking cognizance against the Petitioners, did not take into account the fact that a civil dispute has been deliberately diverted to a criminal proceeding to avoid payment, the

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recovery of which has been claimed through the suit pending before the Bombay City Civil Court, Mumbai. The Opposite Party, though represented through one of his counsels, did not appear on call during hearing consecutively for two days

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Perused the averments in the complaint filed by the Petitioners’ Company before the Bombay City Civil Court, Mumbai in S.C. Suit No.1090 of 2016. This is a suit, wherein the TATA ‘ClassEdge’ has prayed for a decree against the Defendant i.e. the complainant Company Millinium Academy of Higher Education to pay a sum of Rs.7,15,248/- along with the interest @18% per annum, with other reliefs.

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Perusal of the allegations made in the complaint petition filed before the Bombay City Civil Court at Mumbai vis-à-vis, the averments made in the plaint in the S.C. Suit No.1090 of 2016, it clearly reveals that the Parties to the litigation were in business transaction with each other pursuant to a contract. There is apparently some dispute regarding payment and non-payment of dues by each of them in their respective sides. There is admittedly, the complainant had issued the cheque bearing Nos.000030 and 000031 dated 12.01.2014 and 30.01.2014 respectively, in favour of TATA Interactive Systems for Rs.81,000/- each. The pleader notice issued by the complainant’s Company through its lawyer, namely Kalu Charan Swain dated 12.02.2015 and the letter of the Petitioners, addressed to the complainant through the Principal, Millenium Academy of Higher Education and the legal notice issued through Kalu Charan Swain dated 12.02.2015 clearly reveals that the Parties have acted under agreement to transact according to

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its term. Consequently, the transaction, if any, between the Parties is to subject matter of the terms only.

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In the matter of Anil Mahajan Vs. Bhor Industries Limited and Anr. , reported in 2006 (1) SCC (Crl.) 746, the Hon’ble Apex Court held that in order to constitute the offence under Section 420 of the IPC, the essential ingredients is dishonest intention of the parties. Mere breach of contract cannot give rise to the criminal prosecution for cheating unless the very intention right from inception is fraudulent at the beginning of the transaction.

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Similar view has also been reiterated in the matter of Haridaya Ranjan P.D. Verma and Ors. Vs. State of Bihar and Anr . , reported in II (2000) CCR 62 (SC) and Hotline Teletubes and Components Ltd. and Ors. Vs. State of Bihar and Anr . reported in (2005) 10 SCC 261 , as relied upon by the learned counsel for the Petitioners.

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The Hon’ble Apex Court in its decision in the matter of State of Haryana and Ors. Vs. Ch. Bhajanlal and Ors. reported in 1992 Supp(1) SCC 335 , has laid down the following guidelines: -

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“(1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused.

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(2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code.

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(3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support

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of the same do not disclose the commission of any offence and make out a case against the accused.

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(4) Where, the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code.

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(5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused.

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(6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party.

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(7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge.”

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From the very averments made in the complaint, there appears to be no material to deduce that the Petitioners had any dishonest intention so as to attract the ingredients of the offence under Section 420 IPC. Admittedly, the parties are bound by the terms of the agreement entered into between them. The allegation that no such agreement was executed between the parties and that the Petitioners forcefully obtained the complainant’s signature, when examined in the context of the complaint and the documents filed by the Petitioners evidencing the transaction between the parties, clearly reveals that the dispute essentially relates to non-

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performance of the contract, or at best, would amount to a breach of contract.

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The Hon’ble Supreme Court in the matter of K. Bharati Devi and another Vs. State of Telengana , reported in 2024 INSC 750 , it is held as follows:-

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“31. It could thus be seen that this Court reiterates the position that the criminal cases having overwhelmingly and predominantly civil character, particularly those arising out of commercial transactions or arising out of matrimonial relationship or family disputes should be quashed when the parties have resolved their entire disputes among themselves.

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Though in the said case, the High Court had refused to exercise its jurisdiction under Section 482 CrPC to quash the proceedings wherein a serious offence under Section 307 IPC was involved, this Court after taking into consideration various factors including that the elders of the village, including the Sarpanch, had intervened in the matter and the parties had not only buried their hatchet but had decided to live peacefully in the future, quashed and set aside the criminal proceedings under Section 307 IPC.

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The aforesaid view has consistently been followed by this Court in various cases including Gold Quest International Private Limited (supra) and Sadhu Ram Singla and others (supra).

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The facts in the present case are similar to the facts in the case of Sadhu Ram Singla and others (supra) wherein a dispute between the borrower and the Bank was settled. In the present case also, undisputedly, the FIR and the chargesheet are pertaining to the dispute concerning the loan transaction availed by the accused persons on one hand and the Bank on the other hand. Admittedly, the Bank and the accused persons have settled the matter. Apart from the earlier payment received by the Bank either through Equated Monthly Instalments (EMIs) or sale of the mortgaged properties, the borrowers have paid an amount of Rs.3,80,00,000/- under OTS. After receipt of the amount under OTS, the Bank had also decided to close

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the loan account. The dispute involved predominantly had overtures of a civil dispute.

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Apart from that, it is further to be noted that in view of the settlement between the parties in the proceedings before the DRT, the possibility of conviction is remote and bleak. In our view, continuation of the criminal proceedings would put the accused to great oppression and prejudice.

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In any case, as discussed hereinabove, both the appellants have been arraigned as wives of the Accused Nos. 1 and 2. The specific role that was attributed in the chargesheet was pertaining to Accused No.1.

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In the result, we find that this was a fit case wherein the High Court ought to have exercised its jurisdiction under Section 482 CrPC and quash the criminal proceedings.”

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In the matter of Urmila Devi and Others Vs. Balram and another , reported in 2025 INSC 915 , the Hon’ble Supreme Court held as follows:-

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“8.7 In this regard, our attention was drawn to paras 42-44 and 46 of Inder Mohan Goswami vs. State of Uttaranchal, (2007) 12 SCC 1 , dealing with Sections 420 and 467 IPC, which are extracted hereunder:

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“42. On a reading of the aforesaid section, it is manifest that in the definition there are 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 inducing 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

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presume that he all along had a culpable intention to break the promise from the beginning.

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We shall now deal with the ingredients of Section 467 IPC. …

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The following ingredients are essential for commission of the offence under Section 467 IPC: 1. the document in question so forged; 2. the accused who forged it; 3. the document is one of the kinds enumerated in the aforementioned section.

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x x x

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The court must ensure that criminal prosecution is not used as an instrument of harassment or for seeking private vendetta or with an ulterior motive to pressurise the accused. On analysis of the aforementioned cases, we are of the opinion that it is neither possible nor desirable to lay down an inflexible rule that would govern the exercise of inherent jurisdiction. Inherent jurisdiction of the High Courts under Section 482 CrPC though wide has to be exercised sparingly, carefully and with caution and only when it is justified by the tests specifically laid down in the statute itself and in the aforementioned cases. In view of the settled legal position, the impugned judgment cannot be sustained.”

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8.8 This Court, in Madhavrao Jiwajirao Scindia vs. Sambhajirao Chandrojirao Angre, (1988) 1 SCC 692, (Madhavrao Jiwajirao Scindia) reasoned that the criminal process cannot be utilized for any oblique purpose. This Court also observed that the court should quash those criminal cases where the chances of an ultimate conviction are bleak and no useful purpose is likely to be served by continuation of a criminal prosecution.

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8.9 In R.K. Vijayasarathy , this Court held that while exercising powers under Section 482 of the Cr.P.C, a High Court can examine whether a matter which is essentially of a civil nature has been given a cloak of a criminal offence. Recently, in Vishal Noble Singh v. State of Uttar Pradesh, 2024 SCC OnLine SC 1680 , this Court held that courts have to be vigilant to ensure that the machinery of criminal justice is not misused for achieving oblique motives and agendas. Tacitly endorsing such misuse only unnecessarily burdens the courts and the

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criminal justice system. In Anand Kumar Mohatta , this Court, whilst quashing the FIR and chargesheet therein, highlighted the following words of this Court in State of Karnataka v. L. Muniswamy, (1977) 2 SCC 699, that describe the fundamental principle for exercise of powers under Section 482 of the Cr.P.C.:

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“7. … In the exercise of this wholesome power, the High Court is entitled to quash a proceeding if it comes to the conclusion that allowing the proceeding to continue would be an abuse of the process of the Court or that the ends of justice require that the proceeding ought to be quashed. The saving of the High Court’s inherent powers, both in civil and criminal matters, is designed to achieve a salutary public purpose which is that a court proceeding ought not to be permitted to degenerate into a weapon of harassment or persecution. In a criminal case, the veiled object behind a lame prosecution, the very nature of the material on which the structure of the prosecution rests and the like would justify the High Court in quashing the proceeding in the interest of justice.”

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On a careful consideration of the aforementioned judicial dicta, we find that none of the offences alleged against the accused appellants herein are made out. The instant case is just another one in a string of cases filed in recent years that seek to disguise a civil dispute as criminal. The complaint case against the accused appellants has been pending for over two decades and its continuation would not serve any purpose. The observations made by this Court in Madhavrao Jiwajirao Scindia inform our decision and the judgment of this Court in the case of Bhajan Lal and particularly subparagraphs 1, 3, 5 and 7 of paragraph 102 extracted above, squarely apply to the facts of this case. In our view, it is in the interest of justice that present proceedings be quashed.”

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In view of the above discussion and upon careful consideration of the allegations in the complaint vis-à-vis the admitted contractual relationship between the parties, it is evident that the dispute in question is predominantly of a civil nature arising

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out of alleged non-performance of contractual terms. Furthermore, the materials on record do not disclose the essential ingredients of the offences under Sections 420/506/34 IPC and there is no prima facie material to infer dishonest or fraudulent intention on the part of the Petitioners at the inception of the transaction, and the allegations essentially amount to breach of contract, if at all.

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Applying the principles laid down by the Hon’ble Supreme Court in Bhajan Lal (Supra) and other above-cited decisions, this is a fit case where continuance of the criminal proceeding would amount to abuse of the process of the court. Accordingly, the order dated 22.07.2016, passed by the learned SDJM, Nayagarh in 1CC Case No. 129 of 2015 taking cognizance of offences under Sections 420/506/34 IPC against the Petitioners is hereby quashed. The CRLMC is accordingly disposed of.

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(Chittaranjan Dash) Judge

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Sarvani/AK.Pradhan

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Signature Not Verified

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Digitally Signed Signed by: ANANTA KUMAR PRADHAN Designation: Sr. Stenographer Reason: Authentication Location: HIGH COURT OF ORISSA Date: 19-Aug-2025 12:05:02

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Amita Karia v. State of Orissa and Anr.

Case brief

What is this about?

What did the court decide?

Amita Karia v. State of Orissa and Anr.

Case brief

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What did the court decide?

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