Judgment :- 1) Accused Nos.1 and 2 in Crime No.177/2009 of Gangavati Town P.S. have sought for quashing of the investigation in the said case. 2) Stated in Brief the facts leading to the present petition are as under: a) As many as 11 agriculturists submitted their respective representations before the Secretary, APMC, Gangavati (complainant), alleging that the petitioner Nos.1 and 2 herein (respectively A.1 and A.2 in the said case), being the partners of Niranjan Trading Company, Gangavathi, purchased certain quantities of paddy from each of them and despite several demands failed to pay the price thereof and therefore the Secretary shall get the same paid by the petitioners (accused). b) The complainant-Secretary, while enclosing copies of each of the said representations and the documents annexed thereto by the respective agriculturists, filed his complaint dated 8/8/2009 before the PSI of Gangavati Town P.S. On the basis of the said complaint the said PSI registered the said crime against both the petitioners for the offence U/Sec.420 r/w. Sec.34 of IPC and issued FIR accordingly. Therefore both the petitioners have filed the present petition U/Sec.482 of Cr.P.C. seeking order quashing the entire investigation in the said case. 3) Heard the arguments of Sri.M.B. Gundawade, the learned counsel for the petitioners and Sri.P.H. Gotkhindi, the learned high Court Government Pleader. Perused the averments in the complaint dated 8/8/2009 filed by the complainant-Secretary, and the original representations said to have been submitted by the agriculturists before the complainant. Also perused the entire material found in the police papers copies whereof are furnished to the Court by the learned High Court Government Pleader. 4) Sri.M.B. Gundawade, the learned counsel for the petitioners-accused, strongly contends, the averments in the complaint dated 8/8/2009 filed by the complainant-Secretary to not constitute the ingredients of the offence of cheating as defined U/Sec.415 of IPC which is punishable U/Sec.420 of IPC and therefore the registration of the said crime against both the said complaint cannot be sustained in law and hence the entire investigation pursuant to the registration of the said case deserves to be quashed. He further contends that even if there be any dispute between the said agriculturists and the petitioners-accused in respect of the transactions said to have been taken place between them as to the sale and purchase of paddy and payment of price thereof by the accused to the said agriculturists, the same would be of civil nature and therefore the investigation in the said case pursuant to the said complaint cannot be allowed to be continued. 5) Sri.M.B. Gundawade, the learned counsel for the petitioners, further contends that even if there was any dispute between the said agriculturists on the one side and the petitioners-accused on the other, in respect of the transactions of sale and purchase of paddy, the same could have been settled by the complainant-Secretary as provided U/Secs.84 and 84-A of the Karnataka APMC (Regulation and Development) Act 1966 (hereinafter referred to as `APMC Act’ for short), but the complainant-Secretary, instead of settling the dispute, hastily filed this complaint against these petitioners before the police and therefore the investigation in the said case deserves to be quashed. 6) Per contra, the learned High Court Government Pleader (HCGP for short) strongly contends that the very fact that the accused, being partners of the said firm, purchased from the said 11 agriculturists various quantities of paddy promising them that the price thereof would be paid by them within a reasonable time, but failed to pay the same and the cheques issued to some of them towards part payment of price of the paddy supplied by them to the petitioners came to be dishonoured by the bank on the instructions of the petitioners, despite there being sufficient funds in the account of the petitioners clearly go to show that, while purchasing the said quantities of paddy from the said agriculturists the petitioners did not intend to pay its price and therefore it could not be said that the contents of the representations made by the said agriculturists before the complainant-Secretary and the contents of the complaint of the complainant lodged by him based on the said representations do not constitute the offence U/Sec.420 of IPC. 7) The learned HCGP further contends that, the intention with which the petitioners made promise in respect of payment of price of the paddy purchased by them from the said agriculturists has to be gathered from the facts proved by the prosecution during trial and therefore the investigation at the initial stage itself cannot be quashed. He further contends that the petitioners have not produced any material on record to show that the said agriculturists submitted their said representations falsely against the petitioners and thus there has been abuse of process of law so as to seek an order of this Court quashing the entire investigation in the said case. 8) The learned HCGP further contends that, the petitioners have not produced any material to substantiate their say that there has been Disputes Committee constituted U/Sec.84 of APMC Act and therefore the complainant-Secretary could have settled the disputes, between the agriculturists on the one side and the petitioners-accused on the other, instead of filing the present complaint against these petitioners. 9) As to the quashing of the criminal proceedings at the initial stage of investigation there is a decision of Hon’ble Supreme Court in the case of State of Bihar vs. Rajendra Agrawalla reported in (1996) 8 SCC 164 = 1996 AIR SCW 591. It is observed by the Hon’ble Supreme Court at para No.5 of its judgment in the said case as under: Para 5: It has been held by this Court in several cases that the inherent power of the court under Section 482 of the Code of Criminal Procedure should be very sparingly would be manifest injustice or there would be abuse of the process of the court, if such power is not exercised. So far as the order or cognizance by a Magistrate is concerned, the inherent power can be exercised when the allegations in the First Information Report or the complaint together with the other materials collected during investigation taken at their face value, do not constitute the offence alleged. At that stage it is not open for the court either to shift the evidence or appreciate the evidence and come to the conclusion that no prima facie case is made out. In a recent judgment of this Court to which one of us (Hon. K. Ramaswamy, J) was a member it has been held, following the earlier decision in Mrs. In a recent judgment of this Court to which one of us (Hon. K. Ramaswamy, J) was a member it has been held, following the earlier decision in Mrs. Rupan Deol Bajaj v. Kanwar Pal Singh Gill, (1995) 7 JT (SC) 299: (1995 AIR SCW 4100). It is thus settled law that the exercise of inherent power of the High Court is an exceptional one. Great care should be taken by the High Court before embarking to scrutinise the FIR/charge-sheet/complaint. In deciding whether the case is rarest of rare cases to scuttle the prosecution in its inception, it first has to get into the grip of the matter whether the allegations constitute the offence. It must be remembered that FIR is only an initiation to move the machinery and to investigate into cognizable offence. After the investigation is concluded and the charge-sheet is laid the prosecution produces the statements of the witnesses recorded under Section 161 of the Code in support of the Charge-sheet. At that stage it is not the function of the Court to weigh the pros and cons of the prosecution case or to consider necessity of strict compliance of the provisions which are considered mandatory and its effect of non-compliance. It would be done after the trial is concluded. The Court has to prima facie consider from the averments in the charge-sheet and the statements of witnesses on the record in support thereof whether court could take cognizance of the offence, on that evidence and proceed further with the trial. If it reaches a conclusion that no cognizable offence is made out no further act could be done except to quash the charge sheet. But only in exceptional cases, i.e. in rarest of rare cases of malafide initiation of the proceedings to wreak private vengeance process of criminal is availed of in laying a complaint or FIR itself does not disclose at all any cognizable offence – the court may embark upon the consideration thereof and exercise the power. 10) Further, in the case of K. Ashoka vs. N.L. Chandrashekar and others reported in (2009) 2 Supreme Court Cases (Criminal) 730, the Hon’ble Supreme Court has observed at Para No.14 as under: “Para 14. 10) Further, in the case of K. Ashoka vs. N.L. Chandrashekar and others reported in (2009) 2 Supreme Court Cases (Criminal) 730, the Hon’ble Supreme Court has observed at Para No.14 as under: “Para 14. It is now well-settled principle of law that the High Court in exercise of its inherent jurisdiction under Section 482 of the Code may quash a criminal proceeding inter alia in the event the allegations made in the complaint petition even if they are taken at their face value and accepted in their entirety do not disclose commission of a cognizable offence. Some of the principle which would be attracted for invoking the said jurisdiction have been laid down in Indian Oil Corpn. V. NEPC India Ltd. Are: (SCC p. 748 para 12). “(i) A complaint can be quashed where the allegations made in the complaint, even if they at taken at their face value and accepted in their entirety, do no prima facie constitute any offence or make out the case alleged against the accused. For this purpose, the complaint has to be examined as a whole, but without examining the merits of the allegations. Neither a detailed inquiry nor a meticulous analysis of the material nor an assessment of the reliability or genuineness of the allegations in the complaint, is warranted while examining prayer for quashing of a complaint. (ii) A complaint may also be quashed where it is a clear abuse of the process of the court, as when the criminal proceeding is found to have been initiated with malafide/malice for wreaking vengeance or to cause harm, or where the allegations are absurd and inherently improbable. (iii) The power to quash shall not, however, be used to stifle or scuttle a legitimate prosecution. The power should be used sparingly and with abundant caution. (iv) The complaint is not required to verbatim reproduce the legal ingredients of the offence alleged. If the necessary factual foundation is laid in the complaint, merely on the ground that a few ingredients have not been stated in detail, the proceedings should not be quashed. Quashing of the complaint is warranted only where the complaint is so bereft of even the basic facts which are absolutely necessary for making out the offence. If the necessary factual foundation is laid in the complaint, merely on the ground that a few ingredients have not been stated in detail, the proceedings should not be quashed. Quashing of the complaint is warranted only where the complaint is so bereft of even the basic facts which are absolutely necessary for making out the offence. (v) A given set of facts may make out: (a) purely a civil wrong; or (b) purely a criminal offence; or (c) a civil wrong as also a criminal offence. A commercial transaction or a contractual dispute, apart from furnishing a cause of action for seeking remedy in civil law, may also involve a criminal offence. As the nature and scope of a civil proceeding are different from a criminal proceeding, the mere fact that the complaint relates to a commercial transaction or breach of contract, for which a civil remedy is available or has been availed, is not by itself a ground to quash the criminal proceedings. The test is whether the allegations in the complaint disclose a criminal offence or not”. 11) Keeping in mind the above principles laid down by the Hon’ble Supreme Court in the decisions referred to supra, I now proceed to examine whether the averments in the complaint and the representations submitted by 11 agriculturists to the complainant- Secretary, taken at their face value, disclose the commission of the offence U/Sec.420 of IPC by the petitioners-accused herein. 12) The complaint dated 8/8/2009 filed by the complainant-Secretary reveals that as many as 11 agriculturists namely: 1) H.M. Ghanamath Swamy, 2) Kakkare Sharanappa and Basavaraj, 3) Suryanarayana Reddy, 4) Kargil Shivanagouda, 5) Parijatappa, 6) Lingappa, 7) Ramanna, 8) T. Nagappa, 9) K. Basavaraj, 10) Timmanna and Yamanappa, 11) Uttappa, submitted their representations to the complainant-Secretary alleging that the petitioner Nos.1 and 2 herein, being the partners of Niranjan Trading Company, Gangavati, purchased totally 7,237 bags of paddy for a total price of Rs.71,50,208/-without giving them proper bills but giving them only chits written on white paper, as to the quantity of paddy purchased, the price thereof and the total amount payable by them to the respective agriculturists. This complaint further discloses that the petitioners paid to the said 11 agriculturists totally a sum of Rs.23,69,442/-and failed to make payment of balance amount of Rs.47,80,766/-despite their demand and thus deceived the said agriculturists. This complaint further discloses that the petitioners paid to the said 11 agriculturists totally a sum of Rs.23,69,442/-and failed to make payment of balance amount of Rs.47,80,766/-despite their demand and thus deceived the said agriculturists. 13) It is the statutory requirement that even if a trader purchases paddy or any other agricultural produce directly from the producers (Agriculturists), they have to issue valid bills for having purchased the same. It is the specific case of the complainant that these petitioners, instead of issuing valid purchase bills to each of the said 11 agriculturists, they issued only chits written on white papers mentioning therein the quantity of paddy purchased, its price, the amount paid and balance payable, to each of the said agriculturists. It is also alleged in the said complaint that, the petitioners did not pay the market fees as required under the provisions of the APMC Act and thus committed an offence punishable U/Sec.114 of the APMC Act also as against APMC. 14) On careful reading of the representations of the said 11 farmers which are produced by the I.O. along with other police paper it could be seen that, these petitioners purchased from each of the said farmers specific quantities of paddy at specific price and did not make payment of the prices of the paddy so purchased. The said purchases were made during the month of June 2009. The documents annexed to the said representations, copies whereof are produce by the I.O. clearly go to show that they were issued on behalf of Niranjan Trading Company, showing therein total quantity of paddy purchased, price of the paddy and the balance amount payable by the said firm to the respective farmers. 15) Referring to the contents of these representations Sri.M.B. Gundawade, the learned counsel for the petitioners strongly contends that, there is no allegation in the said representations that at the time of purchase of the said paddy from each of the said farmers, the petitioners made promise to pay price thereof, without any intention of performing the said promise and thus, the dishonest intention on the part of the petitioners-accused is not alleged in the said representations and hence the transactions could be only of civil nature and they do not constitute any criminal offence, much less the offence U/Sec.420 of IPC. 16) I am unable to accept the above contention for the reason that, intention, whether honest or dishonest, has to be gathered from the facts proved during the trial or from the entire material collected by the I.O. during the investigation. The case is at the initial stage of investigation. The I.O. has to collect the material relevant to the facts of the case and then he has to come to the conclusion as to whether the entire material collected by him during investigation constitutes only a civil litigation between the parties or it attracts the penal provisions of any of the sections of the IPC including the provisions of Sec.420 of IPC. At the very threshold of the investigation it could not be possible to come to the conclusion that there was no dishonest intention on the part of the petitioners while purchasing the various quantities of paddy from the said farmers promising them to pay price thereof within reasonable time. 17) Hon’ble Supreme Court, in the case of K. Ashoka vs. N.L. Chandrashekar and others reported in (2009) 2 Supreme Court Cases (Criminal) 730, referred to supra has observed as: “the complainant is not required to verbatim produce the legal ingredients of the offence alleged; if necessary factual foundation is laid in the complaint, merely on the ground that a few ingredients have not been stated in detail, the proceeding should not be quashed. Quashing of the complaint is warranted only where the complaint is so bereft of even the basic facts which are absolutely necessary for making of the offence”. 18) I am of the considered opinion that in view of the above observations of Hon’ble Supreme Court, it cannot be held that this initial stage of investigation that for want of some allegation in the complaint or in the representations submitted by the said agriculturists to the complainant-Secretary as to the dishonest intention on the part of the petitioners-accused, the entire investigation cannot be quashed, since basic facts are alleged in the said representations and also in the complaint to the effect that the petitioners purchased certain quantities of paddy from each of the said 11 farmers with a promise to pay them the price thereof within a reasonable time and they failed to keep up the said promise despite the demands made by the farmers. Even at this stage, the petitioners are not in a position to come with a specific case as to whether they are liable to pay the said balance amount to the said 11 agriculturists or whether they are liable to pay an amount which is less than the said amount. 19) Though the learned counsel for the petitioners-accused contends that the complainant, by filing the present complaint, based on the said representations of the agriculturists, has abused the process of Court, no material is produced on record by the petitioners-accused to substantiate the same. The averments in the complaint, the allegations in the said representations of the said agriculturists and other material on record collected so far by the I.O., clearly go to show that the petitioners purchased the various quantities of paddy from the said farmers without issuing proper bills, and without making payment of market fees as required under the provisions of APMC Act and, despite demands made by the agriculturists, they failed to pay them the balance price of the paddy purchased from them. 20) On the other hand, the police papers contain a letter dated 9/1/2010 written by a partner of Niranjan Trading Company to the Secretary, APMC (complainant herein). When this letter was shown to the learned counsel for the petitioners, he submits that since this letter is dated 9/1/2010 i.e. the date which is subsequent to filing of the present petition, he cannot comment upon the contents of this letter. However, he does not deny that this is a letter written by one of the partners of the said Niranjan Trading Company on the letter head of the said firm. On careful reading of the contents of this letter it could be seen that it is stated therein that the firm is due some amount to the traders and agriculturists in respect of purchase of certain quantities of paddy and it was decided in the presence of the leaders that 50% of the price thereof should be paid by the firm, but, on account of dispute between N. Basavraj (petitioner No.1) the partner of the said firm and his elder brother Gurunathappa, the said amount could not be paid to the traders and farmers. 21) Thus it is clear that the complainant has produced on record, along with his complaint the representations submitted to him by the said 11 agriculturists along with the documents annexed therewith and the I.O. also has collected some other documents besides recording the statements of the said 11 agriculturists and other witnesses which clearly establish that the case of the complainant requires thorough investigation and the averments in the said complaint the allegations in the said representations of farmers and other material so far collected by the I.O. during the investigation clearly go to show that the initiation of criminal proceedings against these petitioners on the basis of the said complaint and representation, cannot be termed as an abuse of process of the Court justifying quashing of the entire investigation in the said case in exercise of inherent powers U/Sec.482 of Cr.P.C. 22) Sri.M.B. Gundawade, the learned counsel for the petitioners-accused has relied upon the decision of Hon’ble Supreme Court in the case of S.N. Palanitkar and others vs. State of Bihar and another reported in AIR 2001 Supreme Court 2960. It is observed by the Hon’ble Supreme Court at para Nos.10 and 11 of its judgment in the said case as under: Para 10: The ingredients of an offence of cheating are: (i) there should be fraudulent or dishonest inducement of a person by deceiving him, (ii) (a) the person so deceived should be induced to deliver any property to any person, or to consent that any person shall retain any property; or (b) the person so deceived should be intentionally induced to do or omit to do anything which he would not do or omit if he were not so deceived; and (iii) in cases covered by (ii) (b), the act of omission should be one which causes or is likely to cause damage or harm to the person induced in body, mind reputation or property. Para 11. One of us (D.P. Mohapatra, J.), speaking for the Bench, in Haridaya Ranjan Prasad Verma and others, v. State of Bihar and another ( 2000 (4) SCC 168 ), on facts of that case, has expressed thus: “In determining the question it has to be kept in mind that the distinction between mere breach of contract and the offence of cheating is a fine one. It depends upon the intention of the accused at the time of inducement which may be judged by his subsequent conduct but for this subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent, or dishonest intention is shown right at the beginning of the transaction, that is the time when the offence is said to have been committed. 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 fraudulent or dishonest intention at the time of making the promise. From his mere failure or keep up promise subsequently such a culpable intention right at the beginning, that is, when he made the promise cannot be presumed.” 23. In the said case before the Hon’ble Supreme Court, a complaint U/Sec.200 of Cr.P.C. was filed by the complainant. The sworn statements of the complainant and his witnesses were recorded. Based on the averments in the complaint and the sworn statements of the complainant and his witnesses, the learned Magistrate had taken cognizance of the offence alleged against accused therein. In the instant case there is no complaint filed U/Sec.200 of Cr.P.C. and there are no sworn statements of the complainant and his witnesses recorded by the Magistrate. On the other hand, the Secretary of APMC, by filing his complaint along with the original representations submitted to him by the agriculturists, has set the criminal law into motion. It is only after the investigation, it could be ascertained whether the petitioners-accused had any dishonest intention right at the time of making promise that they would pay the price of the paddy purchased by them to the agriculturists within a reasonable time and their failure to do so amounts to only a civil litigation. Therefore even applying the above observations of Hon’ble Supreme court to the facts of the instant case, the investigation herein cannot be quashed. 24) In the said decision relied upon by the learned counsel for the petitioners, the Hon’ble Supreme Court has quoted with approval, its earlier decision in the case of Trisuns Chemical Industry vs. Rajesh Agarwal and others reported in 1999 (8) SCC 686 = AIR 1999 SCW 3499 and the said observations read as under: 14. 24) In the said decision relied upon by the learned counsel for the petitioners, the Hon’ble Supreme Court has quoted with approval, its earlier decision in the case of Trisuns Chemical Industry vs. Rajesh Agarwal and others reported in 1999 (8) SCC 686 = AIR 1999 SCW 3499 and the said observations read as under: 14. In Trisuns Chemical Industry v. Rajesh Agarwal and others ( 1999 (8) SCC 686 ) dealing with the effect of existence of arbitration clause in the agreement on criminal prosecution on the ground that civil proceedings are also maintainable, this Court has held that quashing of F.I.R. or a complaint exercising power under Section 482, Cr.P.C. should be limited to a very extreme exception; merely because an act has a civil side. It is further held that a provision made in the agreement for referring the disputes to arbitration is not an effective substitute for a criminal prosecution when the disputed act constitutes a criminal offence. 25) In view of the above observations of Hon’ble Supreme Court, even if the transactions between the said agriculturists and the accused constitute some civil litigation, the investigation cannot be quashed only on that ground since there is abundant material on record warranting investigation in respect of the offences alleged against the petitioners-accused. 26) Sec.84 of the APMC Act provides that, for the purpose of settling the dispute between the producers, buyers and sellers or their agents, including any dispute regarding the quality or rate or payment for any agricultural produce, the Market Committee of that area shall appoint a Panel of Arbitrators periodically consisting of agriculturists, traders and commission agents and constitute a Dispute Committee from among its members in such manner as may be prescribed. Further Sec.84-A of the APMC Act provides that, any dispute between the produce, buyer, seller and then private market licencee, etc., shall be referred to the Director of Agricultural Marketing or any subordinate officer authorised by him in this regard and the Director of Agricultural Market or the authorised officer shall resolve the dispute after giving both the parties a reasonable opportunity of being heard in the manner as may be provided. 27) It is not in dispute that no Dispute Committee has been constituted by APMC, Gangavati. 27) It is not in dispute that no Dispute Committee has been constituted by APMC, Gangavati. Therefore the submissions of the learned counsel for the petitioners that the complainant-Secretary, to whom the said agriculturists made their representations, should have go the dispute resolved by invoking the provisions of Secs.84 and 84-A of the APMC Act cannot be accepted. Even where there was a clause for referring the dispute to arbitration, the Hon’ble Supreme Court held that, such clause would not prevent the aggrieved party to approach the Criminal Court. Therefore even if there were to be a Dispute Committee duly constituted by the APMC, it cannot be said that the complainant-Secretary should not have filed his complaint before the police for initiating proceeding against the present petitioners. 28) For the reasons aforesaid, I am of the considered opinion that the present petition filed U/Sec.482 of Cr.P.C. by the petitioners who are accused in the Crime No.177/2009, seeking quashing of the investigation in the said case, deserves to be dismissed as being devoid of merits. Accordingly the same is dismissed. However, after completion of investigation, if the charge sheet is laid by the police concerned against these petitioners, they would be at liberty to seek their discharge, if permissible under law.