S. R. K. PRASAD, J. ( 1 ) THE petitioners in Crl. P. No. 5496/2002 who are A1 and A2 seek for quashing of the proceedings in fir No. 896 of 2001 registered at Police station, panjagutta, Hyderabad. The petitioners in Crl. P. No. 5497/2002 who are a-1 to A-4 seek for quashing of FIR No. 51 of 2001 of Police Station, Panjagutta. ( 2 ) A brief resume of background of facts is necessary to appreciate the contentions of both parties. The 1st respondent-company deals in manufacture and sale, Import and export of all types of electrical switches, components and other electrical accessories and fittings used for installation of electrical controls in house hold utilization and institutional electrical circuits and other plastic moulding components, having a technical and financial collaboration for manufacture of the said items with German Collaborator since 1986. Mr. Anil Kainya, Mrs. Neelam Kainya, mr. Umashanker and Mr. Jagadish Agarwal, started a partnership company at Mumbai and they used to operate as distributors of the 1st respondent-company s products from 1994 onwards in the name and style of shakti Sales (India) situated at Rajnigandha shopping Centre, Film City Road, Goregaon (East) Mumbai. Later, the 1st respondent has informed that they wish to continue the distributorship in the name and style of Shiva shakthi Trading Company under the same terms and conditions and also taking over all the responsibilities of Shakti Sales (India ). The petitioners continued to carry on the dealership with the 1st respondent s company and agreed to act upon as dealers of the said company. On 31-01-1996 Kainya associates Private Limited, informed the 1st respondent herein that he wish to continue the distributorship in the name and style of Chirag distributors so as to suite a reorganisation of their set up. They have also informed that all the dealings in the name of shiva Shakti Trading Company shall be taken over by M/s. Chirag Distributors, and the petitioners continue to be the Distributors of the 1 st respondent-company under the terms and conditions set out in the original distributorship agreement of the 1st respondent-company. On 7-4-1996, the 1st respondent addressed a letter appointing m/s. Chirag Distributors as its Authorized distributors. The petitioners have accepted the terms and conditions of distributorship issued by the 1st respondent in the agreement dated 7-6-1996. On 7-4-1996, the 1st respondent addressed a letter appointing m/s. Chirag Distributors as its Authorized distributors. The petitioners have accepted the terms and conditions of distributorship issued by the 1st respondent in the agreement dated 7-6-1996. It is alleged that they are made to understand that M/s. Kainya associates Private Limited is a culmination of Shakti Sales (India), M/s. Shakti Trading company and M/s. Chirag distributors. A letter was also addressed on 1-1-1997 and the 1st respondent also demanded a sum of rs. 70,04,405/- from Kainya and Associates private Limited, which was acknowledged by Kainya and Associates Private Limited, but there was no response. It is alleged that they dishonestly misappropriated the funds belonging to the company by converting the same into their own personal benefits. Thus, the petitioners are liable for the offence under Section 405 IPC, for the breach of law. It is also alleged that the petitioners have misappropriated funds to a tune of rs. 70,00,000/- by converting them to their personal benefits, in violation of conditions and stipulations of distributary agreement. Thereafter, the 1st respondent have presented a complaint against the petitioners and another alleging that they have committed an offence under Sections 405, 409 and 420 ipc. The said complaint was presented on 12-01-2001. Thereupon, the learned magistrate, referred the case to Police under section 156 (3) Cr. P. C. for investigation and report. During the pendency of investigation, another complaint was presented before the learned Magistrate on 9-11-2001 alleging that they have previously presented a complaint against the petitioners-company and another. But during the course of investigation and scrutiny of records, it has tome to light Nandalal Kainya was one of the partners of M/s. Shakti Sales (India) and the Proprietor of the firm M/s. Shiv Sakti trading Company which has been converted into Kainya and Associates Private Limited. It is also alleged that Nandalal Kainya has also issued cheques to the 1st respondent- company as the Proprietor of Shiv Shakti trading Company and misappropriated the funds to a tune of Rs. 70,00,000/ -. It is also alleged that Mr. V. Keshavan, also colluded with the petitioners to cause wrongful loss to the 1st respondent company and for his own unlawful gains. This complaint was also forwarded to the Police by the learned magistrate, under Section 156 (3) Cr. P. C. for investigation. 70,00,000/ -. It is also alleged that Mr. V. Keshavan, also colluded with the petitioners to cause wrongful loss to the 1st respondent company and for his own unlawful gains. This complaint was also forwarded to the Police by the learned magistrate, under Section 156 (3) Cr. P. C. for investigation. The petitioners in both the petitions, seek for quashing of the F. I. Rs. registered against them by the Police, panjagutta, by invoking inherent powers of this Court under Section 482 Cr. P. C. ( 3 ) THE learned Senior Counsel Sri E. Manohar, appearing on behalf of the petitioners in both the petitions has contended that when once a case has been registered, another FIR cannot be registered on the same set of facts, and the second FIR is liable to be quashed. It is also contended by him that the transaction is a commercial transaction and it does not disclose any criminal offence as alleged in the complaint. It is further contended by the learned Senior counsel that the averments mentioned in the complaint along with the documents produced alone have to be considered and the subsequent events cannot be taken into consideration before proceeding against the petitioners. The learned Senior Counsel Mr. C. Padmanabha Reddy, appearing for the 1st respondent-company has contended that the petitioners kept quite for two long years without asking for any quashing, it is only when the investigation is in progress and the police have gathered sufficient material, the petitioners have approached this Court by way of these Criminal Petitions. Therefore, at this stage, this Court cannot exercise the inherent powers vested under Section 482 cr. P. C. for quashing of the FIRs. registered against the petitioners. It is further contended by him that it is a case of domain over the company goods supplied by the 1st respondent-company and funds to a larger extent have been misappropriated by converting them for their personal benefits, and also the averments made in the complaints certainly constitutes an offence under Sections 405, 409 and 420 I. P. C. It is also contended by him that the Court has to take into consideration of the subsequent events that took place and the material available during the course of investigation. It is further contended by the learned Senior counsel Sri Padmanabha Reddy that during the course of investigation, it has come to light that Sri Nandlal Kainya was one of the partners in the firm M/s. Shakti Sales (India) and the Proprietor of the firm M/s. Shiv shakti Trading Company which were ultimately converted as M/s. Kainya and associates Private Limited, and hence a private complaint needed to be proceeded against Nandalal Kainya and Mr. Keshavan. Therefore, the 2nd complaint registered against the petitioners for the offence under Sections 406 and 409 IPC is perfectly valid. ( 4 ) ADVERTING to the same it is clear from the averments made in the complaint presented before the lower Court that the earliest complaint has been made on 12-01-2001 against the petitioners and one Jagadeesh Agarwal which has been forwarded to the Police by the learned magistrate, thereafter it was registered as cr. No. 51/2001. Investigation has been proceeded to some extent. It appears that anil Kainya is said to have been arrested and later released on bail. On the strength of the available material on record during investigation by the investigating agency, the 1st respondent moved the lower Court by presenting another complaint against sri Nandlal Kainya and V. Keshavan and the company by name Kainya and associates Private Limited, represented by its proprietor Sri Nandalal Kainya. The same was also forwarded to the police, which led to registering of another FIR No. 896/2001. The learned Senior Counsel Sri E. Manohar appearing for the petitioners mainly places reliance on a decision of the Apex Court reported in T. TAntony v. State of Kerala and others, 2001 (6) SCC 181 , and contends that only one FIR can be registered in respect of an offence for investigation, and the second FIR cannot be registered in respect of the connected offence and therefore, the registering of 2nd FIR on the same set of facts is bad and it is liable to be quashed. He has drawn my attention to paras 18, 19, 20, 22, 24, 28 and 34 of the said decision, the relevant portion of the above paras read as follows:18. An information given under sub-section (1) of Section 154 of Cr. P. C. is commonly known as First Information Report (FIR) though this term is not used in the Code. It is a very important document. An information given under sub-section (1) of Section 154 of Cr. P. C. is commonly known as First Information Report (FIR) though this term is not used in the Code. It is a very important document. And as its nickname suggests it is the earliest and the first information of a cognizable offence recorded by an officer-in-charge of a police station. It sets the criminal law into motion and marks the commencement of the investigation, which ends up with the formation of opinion under Section 169 or 170 of Cr. P. C. , as the case may be and forwarding of a police report under section 173 of Cr. P. C. It is quite possible and it happens not infrequently that more intimations that one are given to a police officer-in-charge of a police station in respect of the same incident involving one or more than one cognizable offence. In such a case he need not enter every one of them in the station house diary and this is implied in section 154 of Cr. P. C. Apart from a vague information by a phone call or a cryptic telegram, the information first entered in the station house diary, kept for this purpose, by a police officer-in-charge of a police station is the First Information Report - FIR postulated by Section 154 of Cr. P. C. All other infirmations made orally or in writing after the commencement of the investigation into the cognizable offence disclosed from the facts mentioned in the First Information report and entered in the station house diary by the police officer or such other cognizable offences as may come to his notice during the investigation, will be statements falling under Section 162 of Cr. P. C. No such information/statement can properly be treated as an F. I. R. and entered in the station house diary again, as it would in effect be a second fir and the same cannot be in conformity with the scheme of the Cr. P. C. No such information/statement can properly be treated as an F. I. R. and entered in the station house diary again, as it would in effect be a second fir and the same cannot be in conformity with the scheme of the Cr. P. C. Take a care where an FIR mentions cognizable offence under Section 307 or 320 I. P. C. and the investigating agency learns during the investigation or receives a fresh information that the victim died, no fresh FIR under section 302 I. P. C. need be registered which will be irregular; in such a case alternation of the provision of law in the first FIR is the proper course to adopt. Let us consider a different situation in which H having killed w, his wife, informs the police that she is killed by an unknown persons that W is killed by his mother or sister, Howns up the responsibility and during investigation the truth is detected; it does not require filing of fresh FIR against II-the read offender-who can be arraigned in the report under Section 173 (2) or 173 (8) of Cr. P. C. , as the case may be. It is of course permissible for the investigating officer to send up a report to the concerned Magistrate even earlier that investigation is being directed against the person suspected to be the accused. 19. The scheme of the Cr. P. C. is that an officer-in-charge of a Police Station has to commence investigation as provided in section 156 or 157 of Cr. PC. on the basis of entry of the First Information Report, on coming to know of the commission of a cognizable offence. On completion of investigation and on the basis of evidence collected he has to form opinion under section 169 or 170 of Cr. P. C. , as the case may be, and forward his report to the concerned Magistrate under Section 173 (2) of Cr. On completion of investigation and on the basis of evidence collected he has to form opinion under section 169 or 170 of Cr. P. C. , as the case may be, and forward his report to the concerned Magistrate under Section 173 (2) of Cr. P. C. However, even after filing such a report if he comes into possession of further information or material, he need not register a fresh FIR, he is empowered to make further investigation, normally with the leave of the Court, and where during further investigation he collects further evidence, oral or documentary, he is obliged to forward the same with one or more further reports: this is the import of sub-section (8) of Section 173 Cr. P. C. 20. From the above discussion it follows that under the scheme of the provisions of sections 154, 155, 156, 157, 162, 169, 170 and 173 of Cr. P. C. only the earliest or the first information in regard to the commission of a cognizable offence satisfies the requirements of Section 154 Cr. P. C. Thus there can be no second FIR and consequently there can be no fresh investigation on receipt of every subsequent information in respect of the same cognizable offence or the same occurrence or incident giving rise to one or more cognizable offences. On receipt of information about a cognizable offence or an incident giving rise to a cognizable offence or offences and on entering the FIR, in the station house diary, the officer-in-charge of a Police Station has to investigate not merely the cognizable offence reported in the FIR but also other connected offences found to have been committed in the course of the same transaction or the same occurrence and file one or more reports as provided in section 173 of the Cr. P. C. 22. On a perusal of the judgment of this court in M. Krishna v. State of Karnataka, 1999 (3) SCC 247 , we do not find anything contra to what is stated above. The case is distinguishable on facts of that case. In the case on hand the second FIR is filed in respect of the same incident and on the same facts after about three years. 24. This plenary power of the police to investigate a cognizable offence is, however, not unlimited. It is subject to certain well recognised limitation. The case is distinguishable on facts of that case. In the case on hand the second FIR is filed in respect of the same incident and on the same facts after about three years. 24. This plenary power of the police to investigate a cognizable offence is, however, not unlimited. It is subject to certain well recognised limitation. One of them, is pointed out by the Privy Council, thus: "if no cognizable offence is disclosed, and still more if no offence of any kind in disclosed, the police would have no authority to undertake an investigation. "28. Coming to the facts of this case, which are not free from political overtones, the incident which gave rise to registering of firs, took place on November 25, 1994 on the occasion of the visit of the Minister to alakkandy Complex at Kuthuparamba, tellicherry Road (Kannur District) for inauguration of the evening branch of the co-operative Urban Bank. The events that developed there led to firing by police at two places - (i) in the vicinity of town hall for which FIR was lodged and Crime No. 353/ 94 under Sections 143,147, 148, 332, 353, 324, 307 read with Section 149 IPC, section 3 (2xe) of P. D. P. P. Act and Sections 3 and 5 of Explosive Substances Act, was registered and (ii) in the vicinity of the Police station, Kuthuparamba in respect of which fir was filed and Crime No. 354/94 of kuthuparamba Police Station under Sections 143, 147, 148, 307 and 427 read with Section 149 IPC and Section 3 (2) (e) of P. D. P. P. Act was registered. While the investigations on the basis of the said FIRs were pending, the report of Mr. K. Padmanabhan Nair, inquiry Commission, was submitted to the government. On June 30, 1997, the additional Chief Secretary wrote to the director-General of Police that the government had accepted the report of the Commission and directed that the legal action be taken against those responsible on the basis of the findings of the Commission. On July 2, 1997, the Director General of police, however, wrote to Inspector General of Police (North Zone) to register a case immediately and have the same investigated by a senior officer. On July 2, 1997, the Director General of police, however, wrote to Inspector General of Police (North Zone) to register a case immediately and have the same investigated by a senior officer. Two days thereafter, the inspector General of Police added his own remarks -"firing without justification by which people were killed amounted to murder" and ordered the Station House officer to register a case under the appropriate sections and forward the investigation copy of the FIR to the Deputy inspector of Police (North Zone) for urgent personal investigation. On the date when the additional Chief Secretary wrote to the director-General of Police, the investigations initiated in the said two crimes relating to the same incident were in progress. The investigating agency should have taken advantage of the report of the Commissioner for a proper further investigation into the case. On the facts, which might come to light during Investigation, if necessary, the investigating agency should have altered the offences under appropriate section of the relevant Acts and concluded the investigations. In view of the orders of the director General of Police to register a case and on the further direction of the Inspector general of Police, the officer-in-charge of police Station registered Crime No. 268/97 of Kuthuparamba Police Station. A comparison and critical examination of the firs in Crime Nos. 353 and 354 of 1994 on one hand and FIR in Crime No. 368/97 on the other, discloses that the date and place of occurrence are the same; there is alluding reference to the deaths caused due to police firing in the FIRs in Crime Nos. 353 and 354 of 1994. In any event, that fact was evident on the scene of occurrence. The narration of events, which we need not repeat here, are almost the same. The additional averments in Crime No. 268/97 are based on the findings in the report of the Commission. Having regard to the test laid down by this court in Naranss case (supra), with which we are in respectful agreement, we find that in truth and substance the essence of the offence in Crime Nos. 353 and 354 of 1994 is the same as in Crime No. 268 of 1997 of kuthuparamba Police Station. Having regard to the test laid down by this court in Naranss case (supra), with which we are in respectful agreement, we find that in truth and substance the essence of the offence in Crime Nos. 353 and 354 of 1994 is the same as in Crime No. 268 of 1997 of kuthuparamba Police Station. In our view, in sending Information in regard to the same incident, duly enclosing a copy of the report of the commission of inquiry, to the Inspector general of Police for appropriate action, the additional Chief Secretary adopted the right course of action. Perhaps the endorsement of the Inspector General of Police for registration of a case misled the subordinate police officers and the said letter with regard to the incident of November 25,1994 at kuthuparamba was registered again under section 154 of Cr. P. C, which would be the second FIR and, in our opinion, on the facts of this case, was irregular and a fresh investigation by the investigating agency was unwarranted and illegal. On that date the investigations in the earlier cases (Crime nos. 353 and 354 of 1994) were pending. The correct course of action should have been to take note of the findings and the contents of the report, streamline the investigation to ascertain the lure and correct facts, collect the evidence in support thereof, form an opinion under Sections 169 and 170 cr. P. C. . as the case may be, and forward the report/reports under Section 173 (2) or Section 173 (8) Cr. P. C. top the concerned Magistrate. The course adopted in this case, namely, the registration of the information as the second fir in regard to the same incident and making afresh investigation is not permissible under the scheme of the provisions of the cr. P. C. as pointed out above, therefore, the investigation undertaken and the report thereof cannot but be invalid. We have, therefore, no option except to quash the same leaving it open to the investigating agency to seek permission in Crime No. 353/94 or 354/94 of the Magistrate to make further investigation, forward further report or reports and thus proceed in accordance with law. 34. We have, therefore, no option except to quash the same leaving it open to the investigating agency to seek permission in Crime No. 353/94 or 354/94 of the Magistrate to make further investigation, forward further report or reports and thus proceed in accordance with law. 34. Acting thus the investigating agency may with advantage make use of the report of the commission in its onerous task of investigation bearing in mind that it does not preclude the investigating agency from forming a different opinion under section 169/170 of Cr. P. C. if the evidence obtained by it supports such a conclusion. In our view, the Courts civil or criminal are not bound by the report or findings of the commission of Inquiry as they have to arrive at their own decision on the evidence placed before them in accordance with law. Whereas the learned Senior Counsel Sri c. Padmanabha Reddy, appearing on behalf of the 1st respondent-company categorically places reliance on a decision reported in m. Krishna v. State of Karnataka, AIR 1999 sc 1765 , and contends that registering of 2nd FIR is not barred and it is perfectly valid in the present set of facts of the case. The relevant portion at para-5 of the decision 2nd cited reads as follows:5. Having considered the rival submissions made by Counsel for the parties and having examined the provisions of the Criminal procedure Code as well as the Prevention of corruption Act we find ourselves unable to agree with the submission of Mr. Sibbal, the learned senior Counsel appearing for the appellant that the present FIR itself is bad in law. We do not find any provision in the Code which debars the filing of an FIR and investigating into the alleged offences merely because of an earlier period, namely, 1. 8. 1978 to 24. 8. 1989 there was First information Report which was duly investigated into and culminated in a b form which was accepted by a Competent court. At the same time we are also of the opinion that the conclusion of the High Court that the present proceeding relates to fresh alleged assets and fresh check period is not wholly correct, in as much as admittedly the check period from 1. 8. 1978 till 24. 8. 89 was the subject-matter in the Crime Case No. 22 of 1989 and the same ended in submission of b form. 8. 1978 till 24. 8. 89 was the subject-matter in the Crime Case No. 22 of 1989 and the same ended in submission of b form. Though the earlier period also could be a subject-matter of investigation for variety of reasons like some assets not being taken into account or some materials brought during investigation not being taken into account yet at the same time the results of the earlier investigation cannot be totally obliterated and ignored by the investigating Agency. But that cannot be a ground for quashing of the First Information report itself and for injuncting the investigating authority to investigate into the offence alleged. We also find sufficient force in the arguments of Mr. Sibbal that the assets which were valued in the earlier investigation proceeding at a particular value cannot be valued higher in the present proceeding unless any positive ground is there for such valuation. For example, a car which was valued in the earlier proceeding at Rs. 60,000/- could not have been valued at Rs. 1,70,000/- in the present proceedings but at this stage the Court is not required to go into these matters as investigation is only at threshold. For the aforesaid reasons, while we are not in a position to quash the FIR, but we would make it clear that the investigating Authority will certainly look into the earlier proceedings and the result of investigation thereunder and the submission of b Form which was duly accepted by the competent Court while investigating into the present proceedings as well as the observations made by us in this Judgment, subject to the aforesaid observations this appeals is disposed of. ( 5 ) IT is clearly stated by the Apex court in the decision 2nd cited that earlier fir relating to same period was duly investigated into and culminated in b form and accepted by competent Court and therefore, registering of 2nd FIR is not barred. This decision has been considered by the supreme Court in a decision T. T. Antony v. State of Kerala (Supra) and categorically states that the facts in that case differ from the facts of this case, and ultimately held that 2nd FIR cannot be registered, as can be seen from para-22 of the Judgment which is extracted above. This decision has been considered by the supreme Court in a decision T. T. Antony v. State of Kerala (Supra) and categorically states that the facts in that case differ from the facts of this case, and ultimately held that 2nd FIR cannot be registered, as can be seen from para-22 of the Judgment which is extracted above. It is clear from the decision in Antony s case that the supreme Court has considered the principles laid down in the decision and gave its own interpretation and stated that there cannot be a second FIR for the connected offences found to have been committed in the course of the same transaction or the same occurrence. Hence, I am of considered view that the principles laid down by the supreme Court in the decision 1st cited (T. T. Antony v. State of Kerala) shall apply to the facts of the case on hand. I am also of considered view that the question of registering the 2nd FIR for the connected offences found to have been committed in the course of same transaction, normally, will not arise and cannot be entertained, and therefore, it cannot be registered as a 2nd fir. The Parliament in its own wisdom incorporated Section 210 in the Code of criminal Procedure, 1973 for the first time. Section 210 of Cr. P. C. reads as follows: 210. Procedure to be followed when there is a complaint case and police investigation in respect of the same offence : (1) When in a case instituted otherwise than on a police report (hereinafter referred to as a complaint case), it is made to appear to the Magistrate, during the course of the inquiry or trial held by him, that an investigation by the police is in progress in relation to the offence which is the subject-matter of the inquiry or trial held by him, the Magistrate shall stay the proceedings of such inquiry or trial and call for a report on the matter from the police officer conducting the investigation. (2) If a report is made by the investigating police officer under Section 173 and on such report cognizance of any offence is taken by the Magistrate against any person who is an accused in the complaint case, the magistrate shall inquire into or try together the complaint case and the case arising out of the police report as if both the cases were instituted on a police report. (3) If the police report does not relate to any accused in the complaint case or if the magistrate does not take cognizance of any offence on the police report, he shall proceed with the inquiry or trial, which was stayed by him, in accordance with the provisions of this Code. As can be seen from Section 210 (1) Cr. P. C. that whenever an enquiry or trial or investigation is in progress, in relation to an offence, which is being the subject-matter of the inquiry or trial held by him, the magistrate shall stay the proceedings of such inquiry or trial and call for a report on the matter from the police officer. It is also observed at C1. 3 of Section 210 that if the police report does not relate to any accused in the complaint of if the Magistrate does not take cognizance of any offence on the police report, he shall proceed with the inquiry or trial which has been stayed by him. Originally a complaint has been presented which has been forwarded to the police, and the police have seized of the matter for conducting investigation and the same is in progress. The second complaint has been presented in respect of the same offence alleging that some more facts have come to the knowledge, which constitute an offence, and hence the 2nd complaint has also been forwarded to the same police, for investigation. The same is said to have been registered by the Police. It is clear from the principles laid down by the apex Court that the question of registering another FIR in respect of connected offences found to have been committed in the course of same transaction or the same occurrence, does not arise. The same is said to have been registered by the Police. It is clear from the principles laid down by the apex Court that the question of registering another FIR in respect of connected offences found to have been committed in the course of same transaction or the same occurrence, does not arise. It is clear from the principles laid down in the aforesaid decision of the Apex Court that there should be only one FIR in respect of any cognizable offence and only under that fir the connected offence found to have been committed shall be enquired into. Therefore, the question of registering 2nd fir for the self same purpose taking into consideration of the subsequent events that came to light during the course of investigation, will not arise. Hence, i respectfully disagree with the contentions canvassed by the learned Senior Counsel for the 1 st respondent-company. ( 6 ) IT is next to be seen what are the contents that can be taken into consideration, in order to judge, whether the complaint discloses any prima facie material to proceed against the petitioners, for the alleged offences. The Apex Court has categorically stated that only the contents of complaint and documents produced along with the complaint can be taken into consideration to judge whether the averments made in the complaint constitute an offence as alleged by the complainant. It is also categorically stated that the subsequent events or the material gathered during the course of investigation cannot be taken into consideration. Hence, I am of considered view that in order to judge whether there any prima facie material to constitute an offence as mentioned in the complaint, only the complaint and the documents filed along with it have to be considered and the material gathered by the investigating agency shall not be looked into. It is not the law that a person cannot challenge the FIR after commencement investigation. The principles that have been borne in mind while judging the complaint have been clearly stated in a decision reported in Trisuns chemical industry v. Rajesh Agarwal and others, (1999) 8 SCC 686 . The relevant portions at paras-7, 8, 9, 11 and 13 read as follows:7. The principles that have been borne in mind while judging the complaint have been clearly stated in a decision reported in Trisuns chemical industry v. Rajesh Agarwal and others, (1999) 8 SCC 686 . The relevant portions at paras-7, 8, 9, 11 and 13 read as follows:7. Time and again this Court has been pointing out that quashment of FIR or a complaint in exercise of inherent powers of the High Court should be limited to very extreme exceptions [vide State of Haryana v. Bhajan Lal, 1992 Suppl. (1) SCC. 335 and rajesh Bajaj v. State NCT of Delhi, 1999 (3) scc 259 . 8. In the last referred case this Court also pointed out that merely because an act has a civil profile is not sufficient to denude it of its criminal outfit. We quote the following observations:"it may be that the facts narrated in the present complaint would as well reveal a commercial transaction or money transaction. But that is hardly a reason for holding that the offence of cheating would elude from such a transaction. In fact, many a cheatings were committed in the course of commercial and also money transactions. "9. We are unable to appreciate the reasoning that the provision incorporated in the agreement for referring the disputes to arbitration is an effective substitute for a criminal prosecution when the disputed act is an offence. Arbitration is a remedy for affording reliefs to the party affected by breach of the agreement but the arbitrator cannot conduct a trial of any act which amounted to an offence albeit the same act may be connected with the discharge of any function under the agreement. Hence, those are not good reasons for the High Court to axe down the complaint at the threshold itself. The investigating agency should have had the freedom to go into the whole gamut of the allegations and to reach a conclusion of its own. Pre-emption of such investigation would be justified only in very extreme cases as indicated in State of Haryana v. Bhajan lal (supra ). 11. It is an erroneous view that the Magistrate taking cognizance of an offence must necessarily have territorial jurisdiction to try the case as well. Chapter XIII of the Code relates to jurisdiction of the criminal Courts "in enquiries and trials. 11. It is an erroneous view that the Magistrate taking cognizance of an offence must necessarily have territorial jurisdiction to try the case as well. Chapter XIII of the Code relates to jurisdiction of the criminal Courts "in enquiries and trials. " That chapter contains provisions regarding the place where the enquiry and trial are to take place. Section 177 says that "every offence shall ordinarily be inquired into and tried by a Court within whose local jurisdiction it was committed. " but Section 179 says that when an act is an offence by reason of anything which has been done and of a consequence which has ensued, the place of enquiry and trial can as well be in a Court "within whose local jurisdiction such thing has been done or such consequence has ensued. " It cannot be overlooked that the said provisions do not trammel the powers of any Court to take cognizance of the offence. Power of the court to take cognizance of the offence is laid in Section 190 of the Code. Sub-sections (1)and (2) read thus:" (I) Subject to the provisions of this Chapter, any Magistrate of the first class, and any magistrate of the second class specially empowered in this behalf under subsection (2), may take cognizance of any offence (a) Upon receiving a complaint of facts which constitute such offence; (b) Upon a police report of such facts; (c) Upon information received from any person other than a police officer, or upon his own knowledge, that such offence has been committed. (ii) The Chief Judicial Magistrate may empower any Magistrate of the second class to take cognizance under sub-section (1) of such offences as are within his competence to inquire into or try. "12. The only restriction contained in Section 190 is that the power to take cognizance is "subject to the provisions of this Chapter. " there are 9 Sections in Chapter XIV most of which contain one or other restriction imposed on the power of a first class magistrate in taking cognizance of an offence. But none of them incorporates any curtailment on such powers in relation to territorial barrier. In the corresponding provision in the old Code of Criminal procedure (1898) the commencing words were like these: "except as hereinafter provided. " Those words are now replaced by "subject to the provisions of this chapter. But none of them incorporates any curtailment on such powers in relation to territorial barrier. In the corresponding provision in the old Code of Criminal procedure (1898) the commencing words were like these: "except as hereinafter provided. " Those words are now replaced by "subject to the provisions of this chapter. " therefore, when there is nothing in chapter XIV of the Code to impair the power of a judicial magistrate of first class taking cognizance of the offence on the strength of any territorial reason it is impermissible to deprive such a magistrate of the power to take cognizance of an offence - of course, in certain special enactments special provisions are incorporated for restricting the power of taking cognizance of offences falling under such acts. But such provisions are protected by non-obstante clauses. Any way that is a different matter. ( 7 ) IT is not stated in State of Haryana v. Bhajan Lal s case, AIR 1992 SC 604 , that fir cannot be quashed when investigation is going on. The Supreme Court has provided the following guidelines, wherein the proceedings relating to cognizable offences under Section 482 Cr. P. C. can be quashed. The seven principles adumbrated in the said decision at para-108 can be briefly cited as follows:10. In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under Section 482 of the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any Court or otherwise to secure the ends of justice, though it, may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised. 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. 2. 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. 2. Where the allegations in the First information Report and other materials, if any, accompanying the F. I. R. 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. 3. Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused. 4. Where, the allegations in the F. I. R. 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. 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. 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. 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. It is also clearly laid down by the Supreme court Lal Muni Devi (Smt.) v. State of Bihar and others, (2001) 2 SCC 17 , at para-8 as follows:8. There could be no dispute to the proposition that if the complaint does not make out an offence it can be quashed. However, it is also settled law that facts may give rise to a civil claim and also amount to an offence. There could be no dispute to the proposition that if the complaint does not make out an offence it can be quashed. However, it is also settled law that facts may give rise to a civil claim and also amount to an offence. Merely because a civil claim is maintainable does not mean that the criminal complaint cannot be maintained. In this case, on the facts, it cannot be stated, at this prima facie stage, that this is a frivolous complaint. The High Court does not state that on facts no offence is made out. If that be so, then merely on the ground that it was a civil wrong the criminal prosecution could not have been quashed. It is clear from the above principles laid down by the supreme Court that if the complaint does not make out an offence, it can be quashed. Contents of the nature and scope of Section 482 Cr. PC have been clearly stated by the Apex Court in another decision reported in State of karnataka v. M. Devendrappa, (2002) 3 SCC89. It is observed at para-6 of the said decision that when no offence is disclosed by the complaint, the Court may examine the question of fact. When a complaint is sought to be quashed, it is permissible to look into the materials to assess what the complaint has alleged and whether any offence is made out even if the allegations are accepted in toto. In the said decision, the principles laid down in the case of State of Haryana v. Bhajanlal, have been upheld by the Apex Court. It is further observed that inherent powers can be exercised to quash the proceedings only in a case where the complaint does not disclose any offence or is frivolous , vexatious or oppressive. If the allegations set out in the complaint do not constitute the offence of which cognizance has been taken by the Magistrate, it is open to the High Court to quash the same in exercise of its inherent powers under section 482 Cr. P. C. It is further observed that the complaint has to be read as a whole. If the allegations set out in the complaint do not constitute the offence of which cognizance has been taken by the Magistrate, it is open to the High Court to quash the same in exercise of its inherent powers under section 482 Cr. P. C. It is further observed that the complaint has to be read as a whole. If it appears that on consideration of the allegations in the light of the statement made on oath of the complainant that the ingredients of the complaint is mala fide, frivolous or vexatious, in that event there would be no justification for interference by the High Court. Hence, in view of the settled principles, I am of considered view that the averments made in the complaint and the documents filed along with the complaint have to be looked into and the subsequent proceedings, namely, the material gathered during the course of investigation cannot be looked into and cannot be considered, for the purpose of culling out, prima facie material which constitute an offence as alleged in the complaint. The facts or ingredients that have to be mentioned in order to constitute an offence under sections 420, 415 and 405 IPC have been clearly adumbrated in a decision reported in s. W. Palanitkar and others v. State of Bihar and another, (2002) 1 SCC 241 . In order to constitute an offence of cheating under section 420, 415 and 405 IPC the Supreme court has categorically stated at paras 8,15, 20,21 and 22 as follows:8. Before examining respective contentions on their relative merits, we think it is appropriate to notice the legal position. Every breach of trust may not result in a penal offence of criminal breach of trust unless there is evidence of a mental act of fraudulent misappropriation. An act of breach of trust involves a civil wrong in respect of which the persons wronged may seek his redress for damages in a civil Court but a breach of trust with mens rea gives rise to a criminal prosecution as well. 15. In case of a complaint under Section 200 cr. An act of breach of trust involves a civil wrong in respect of which the persons wronged may seek his redress for damages in a civil Court but a breach of trust with mens rea gives rise to a criminal prosecution as well. 15. In case of a complaint under Section 200 cr. P. C. of IPC a Magistrate can take cognizance of the offence made out and then has to examine the complainant and his witnesses, if any, to ascertain whether a prima facie case is made out against the accused to issue process so that the issue of process is prevented on a complaint which is either false or vexatious or intended only to harass. Such examination is provided in order to find out whether there is or not sufficient ground for proceeding. The words sufficient ground" used under Section 203 have to be construed to mean the satisfaction that a prima facie case is made out against the accused and not sufficient ground for the purpose of conviction. 21. Turning to the facts of the case, there is nothing either in the complaint and/or in the sworn statements of the complainant and the three witnesses that any property was entrusted to any of the appellants at all or the appellants had domain over any of the properties of respondent No. 2 which they dishonestly converted to their own use so as to satisfy the ingredients of Section 405 IPC punishable under Section 406 IPC. Further the agreement also did not require entrustment of any property to the appellants. Taking the complaint and the statements of the witnesses as they are, it cannot be said even prima facie, that the appellants committed any offence punishable under section 406 IPC, since the ingredients of that offence were not satisfied. Hence the learned Magistrate committed a serious error in issuing process against the appellants for the said offence. Unfortunately, the High court also failed to correct this manifest error. 22. It is clear from the allegations made in the complaint and the sworn statements that the appellant No. 1 company entered into an agreement with the respondent No. 2 on certain terms and conditions, it is alleged that the appellant No. 7 went to Patna and contracted respondent No. 2 and induced him to enter into an agreement assuring him of huge profit. At the time of arriving at such an agreement, none of the other appellants either met the respondent No. 2 or induced him to enter into any agreement with a view to cheat him. The agreement was further renewed for a period of one year. It is not the case that there was no supply of goods at all as it has come on record that there was supply of 400 ton of fertilizer, may be it was far less than the required quantity. The allegations made against the appellants other than the appellant No. 7 are very vague and bald. From the material that was placed before the magistrate, even prima facie, it cannot be said that there was conspiracy or connivance between the other appellants and the appellant No. 7. If the appellants have committed breach of agreement, it is open to respondent No. 2 to seek redressal in a competent Court or forum to recover damages, if permissible in law in case he had sustained any loss. In order to constitute an offence of cheating, the intention to deceive should be in existence at the time when the inducement was made, it is necessary to show that a person had fraudulent or dishonest intention at the time of making the promise, to say that he committed an act of cheating. A mere failure to keep up promise subsequently cannot be presumed as an act leading to cheating. 23. Looking to the complaint and the grievances made by the complainant therein and having regard to the agreement, it is clear that the dispute and grievances arise out of the said agreement. Clause 29 of the agreement provides for reference to arbitration in case of disputes or controversy between the parties and the said clause is wide enough to cover almost all sorts of disputes arising out of the agreement. As a matter of fact, it is also brought to our notice that the complaint issued a notice dated 3. 10. 1997 to the appellants involving this arbitration clause claiming Rs. 15 lakhs. It is thereafter the present complaint was filed. From the alleged breach of the agreement in relation to commercial transaction, it is open to the respondent No. 2 to proceed against the appellants for his redressal for recovery of money by way of damages for the loss caused, if any. 15 lakhs. It is thereafter the present complaint was filed. From the alleged breach of the agreement in relation to commercial transaction, it is open to the respondent No. 2 to proceed against the appellants for his redressal for recovery of money by way of damages for the loss caused, if any. Merely because there is an arbitration clause in the agreement, that cannot prevent criminal prosecution against the accused if an act constituting a criminal offence is made out even prima facie. It is clearly stated in a decision reported in anna Reddy v. State of A. P. , 2002 (2) ALT (Crl) 532 (A. P.), that in order to constitute an offence of 420 IPC there is always thin line of distinction that has to be made between the criminality and civil liability. Before adverting to the same, it is necessary to have a look at the definition of Crime. Crime has been defined in the Judicial dictionary in P. S. R. Sadhanantham v. Arunchalam ( AIR 1980 SC 856 ). "a Crime is an act deemed by law to be harmful to society in general even though its immediate victim is an individual. The notion of crime as a threat to the whole community is the material counterpart of the formal rule that the State alone is master of a criminal prosecution. No private person has a direct interest in a criminal proceeding, although exception may be made by the statute in certain cases. It is common knowledge that a criminal prosecution is not intended for the private satisfaction of a personal vendetta or revenge. "the Court has to see whether there is any element of criminality in the complaint presented before the Court. A wilful misrepresentation with an intent would be cheating. It is clearly stated in a decision reported in AIR 1963 SC 666 as follows:"for a person to be conviction under Section 420, it has to be established not only that he has cheated some one but also that by doing so he has dishonestly induced the person who cheated to deliver any property etc. A person can be said to have done a thing dishonestly if he does so with the intention of causing wrongful gain to one person or wrongful loss to another person. A person can be said to have done a thing dishonestly if he does so with the intention of causing wrongful gain to one person or wrongful loss to another person. Wrongful loss is the loss by unlawful means of property to which a person is entitled while wrongful gain to a person means a gain to him by unlawful means of property to which the person gaining is not legally entitled. " ( 8 ) IT is clear from the principle laid down in the above decision that breach of contract or breach of faith does not amount to criminal offence of cheating. I add that failure to pay the amount, refusing to pay any debt or failure to pay the prices, recoverable for the goods supplied do not constitute any criminal offence and they are only civil liabilities. In the present case, the averments discloses that the 1st respondent has been informed that there is change of institutions and all the liabilities are taken over by the institutions which have came into existence subsequently. In spite of that the 1st respondent is dealing with them, knowing fully well that they are family concerns and they are dealing with goods. It is only when notices are said to have been issued and claimed the amounts, the problem arose. What is stated by the learned senior Counsel for the 1 st respondent is that he has deliberately received the goods and put them to use and refused to pay the amounts and that amounts to cheating within the meaning of Section 420 IPC, since there is element of Criminality in the said act. 1 am of considered view that that itself is not sufficient to presume the element of criminality, as they have been dealing with the said concerns since a long time and they have been informed about the change in the concerns. I state that failure to pay the amounts do not in any way constitute a criminal offence, since no law prohibits the non-payment of debts or amounts fastens the criminal liability, on the strength of the default. The future events that took place after registration of the fir cannot be considered while judging whether there is any prima facie material as mentioned in the complaint, which constitute ingredients of offence. The future events that took place after registration of the fir cannot be considered while judging whether there is any prima facie material as mentioned in the complaint, which constitute ingredients of offence. The petitioners counsel has also drawn my attention to the several dates of the offences mentioned in the petition and contends that it is only of civil liability and there is no criminal liability. It is mentioned in Crl. P. No. 5496/2002 that the dates of offence as 7-6-1996, 1-4-1997, 2-6-1997 and 23-7-1997 and in crl. P. No. 5497 of 2002 the dates mentioned are 7-6-1996, 1-4-1997,2-5-1997,23-7-1997 and 27-6-1999. The element of cheating also must be found at the time of supply of goods. In supplying of goods, it appears that there is no element of cheating, as can be seen from the documents produced along with the complaint. This transaction is purely of commercial transaction and terms have been reduced into writing and they are continuing the said agreement as can be seen from the letters dated 10-1-1994 and 7-6-1996. It is also contended by the learned senior Counsel for the 1st respondent that investigation has been proceeded quiet a long period and this Court has to sparingly use its power to quash the proceedings under 482 Cr. P. C. proceedings, when investigation has proceeded for a long period. I have already stated that there is no legal bar to quash the proceedings in respect of complaints. It is also not the law laid down either in Bhajanlal s case or in other cases, the complaints cannot be quashed, simply because the investigation has proceeded further and gathered some material. I state that the averments made in the 1st complaint do not constitute criminal offence as alleged and it is liable to be quashed. I also state that the second complaint is not maintainable on the self-same set of facts. I also state that it is always open to the complainant to move the lower Court, if any, new averments are disclosed and the lower Court is always at liberty to entertain such complaint, in view of Section 210 cr. P. C. I am also of considered view that it is a commercial transaction and instead of moving for recovery of the amounts, by invoking civil jurisdiction, the Criminal machinery has been set in motion which has to be deprecated. P. C. I am also of considered view that it is a commercial transaction and instead of moving for recovery of the amounts, by invoking civil jurisdiction, the Criminal machinery has been set in motion which has to be deprecated. The criminal machinery is not intended to interfere with the commercial transactions or aid for recovery of the amounts. Time and again this Court has stated that police shall not involve themselves in commercial transactions or aid for recovery of amounts due which constitute purely a civil liability. This is one such case. There is always a distinction in between fraud and mis-representation which may constitute civil liability and it cannot be a criminal liability. In that view of the matter, both the complaints are liable to be quashed, for the fact that they do not constitute criminal liability. I accordingly quash both the complaints. However, the 1st respondent is at liberty to work out his remedies on the civil side. ( 9 ) IN the result, both these Criminal petitions allowed, insofar as the petitioners are concerned. The 1st respondent is entitled to proceed against others.