ORDER : 1. In this petition filed under Section 482 Cr.P.C. the petitioners/A.1 and A.2 seek to quash the proceedings against them in Crime No. 116/2017 of Central Crime Station PS, Hyderabad, registered for the offences under Sections 406 and 420 IPC. 2. The brief allegations of the complaint are that the defacto complainant along with his friend i.e. Dr. Altaf Naseem and A.1 entered into a partnership deed on 14.05.2012 to establish Childrens clinic under the name Candy Children Hospital and subsequently, they entered into another Partnership Deed on 10.08.2015 to establish pharmacy styled as Candy Medical & General Stores. A.1 used to handle day-to-day collections/payments and other administrative expenses etc. but during the year 2016-17, it was noticed that there were lot of discrepancies in the maintenance of accounts since the year 2014. Initially the amounts were regularly deposited in bank but the said system was given a go-bye by A.1 for the reasons not known to other partners. The approximate amount which was not deposited by A.1 was worked out to Rs. 68 lakhs, which was the income of the Hospital supposed to be accrued as profit. A.1 never called for any meeting with partners to discuss affairs of the Hospital nor did he conduct any audit of accounts since 2014 onwards through the expert auditors and thus failed to adhere to terms of partnership. Whenever A.1 was requested for conducting meeting with partners, he misbehaved and gave evasive replies. A.1 removed the staff, who were appointed with consensus of all partners at the time of establishment of Hospital and recruited the staff of his own choice. It is further alleged that when the accounts of the Hospital were audited, it was noticed that there were huge discrepancies worth above Rs. 1 Crore, which included the income of Hospital, Pharmacy, lab services and equipments etc. but A.1 handed over a cash of Rs. 60,000/- and A.2, who is the wife of A.1 and incharge of Pharmacy, handed over Rs. 50,000/-. The Balance Sheet prepared by the auditor showed that the petitioners/A.1 and A.2 embezzled a sum of over Rs. 1 Crore causing huge loss to the hospital. The petitioners have acted high-handedly and approached the bankers to stop operation of accounts of the Hospital, which was in violation of partnership deed. 50,000/-. The Balance Sheet prepared by the auditor showed that the petitioners/A.1 and A.2 embezzled a sum of over Rs. 1 Crore causing huge loss to the hospital. The petitioners have acted high-handedly and approached the bankers to stop operation of accounts of the Hospital, which was in violation of partnership deed. Thus the petitioners were involved in mismanagement, breach of trust, cheating, coercing besides embezzlement of income to a tune of above Rs. 1 crore. Hence the complaint. 3. Heard arguments of Sri M.S. Srinivasa Iyengar, learned counsel for petitioners; Sri Nazir Ahmed Khan, learned counsel for 2nd respondent and learned Additional Public Prosecutor for the State (Telangana). 4. Severely castigating the complaint allegations as false and motivated due to the bickerings among the partners, learned counsel for petitioners would argue that even if the FIR allegations are taken to be true on their face value, still no offences under Sections 406 and 420 IPC, can be attributed against the petitioners. In expatiation, he would argue that admittedly the petitioners, who are the husband and wife are themselves partners in the two partnerships relating to the Candy Children Hospital and Candy Medical & General Stores. Therefore, the question of partners themselves committing criminal breach of trust in respect of the partnership properties in which they too have a share does not arise and thereby the criminal prosecution under Section 406 IPC is not attracted. Taking the Court through Sections 405 and 406 IPC, learned counsel sought to argue that unless the partnership properties and monies are specially and specifically entrusted to a partner for management and he failed in his duty and dishonestly misappropriated the same for his benefit, the charge under Section 406 IPC cannot be attributed against a partner. In the instant case, there is no such special entrustment to the petitioners in respect of the partnership assets and amounts so as to impute the petitioners of committing criminal breach of trust. He argued that the 1st petitioner was entrusted with the duty of hospital administration and maintenance but not with monetary affairs. On the other hand as per Memorandum of Understanding dated 30.01.2015, Dr. He argued that the 1st petitioner was entrusted with the duty of hospital administration and maintenance but not with monetary affairs. On the other hand as per Memorandum of Understanding dated 30.01.2015, Dr. Altaf Naseem, another partner was given responsibilities for accounts, maintenance, hospital permissions etc., and therefore, it is preposterous to ascribe that the petitioners have collected monies and misappropriated funds running into several lakhs over a period of three(3) years and such wild allegations were made against the petitioners as a counterblast to the notice issued by the petitioners for dissolution of partnership firm. He placed reliance on the following decisions: (i) Bhuban Mohan Das vs. Surendra Mohan Das, AIR 1951 (Cal) 69 (ii) Velji Raghavji Patel vs. State of Maharashtra, AIR 1965 SC 1433 (iii) Anil Saran vs. State of Bihar and Another, AIR 1996 SC 204 (a) Sofaras the offence under Section 420 IPC is concerned, he argued that there was no inducement on the part of petitioners to the complainant and other partners and there was no delivery of property by them to the petitioners and therefore, the offence of cheating is not attracted. It is further argued that the complaint allegations would at best reveal the differences among the partners and as the arbitration clause is already imposed in the two partnership deeds and as the parties have already resorted to the arbitration proceedings and as the matter is purely civil in nature, criminal prosecution would amount to abuse of process of the Court. He thus prayed to quash the proceedings. 5. Per contra, opposing the petition learned counsel for 2nd respondent argued that the hospital and pharmacy were established by way of partnership deeds i.e. Candy Children Hospital was established by way of partnership business by the petitioner No. 1, complainant and one more senior doctor i.e. Dr. Altaf Naseem. Similarly, pharmacy was established as a partnership firm by petitioner No. 2, Dr. Altaf Naseem and Farah Nishat (wife of complainant). While the complainant and Dr. Altaf Naseem, are the holders of MBBS and M.D with specialisation in Paediatrics, petitioner No. 1 was just holding MBBS degree and diploma in Paediatrics. However, petitioner No. 1 entered into the partnership business with an element of mens rea by drafting the documents of partnership deed. He has taken the responsibility of looking after the administration and accounts. Altaf Naseem, are the holders of MBBS and M.D with specialisation in Paediatrics, petitioner No. 1 was just holding MBBS degree and diploma in Paediatrics. However, petitioner No. 1 entered into the partnership business with an element of mens rea by drafting the documents of partnership deed. He has taken the responsibility of looking after the administration and accounts. He was not offering his best services because he was just holding diploma in Paediatrics and thereby complaints were received from the patients. Therefore, the petitioner No. 1 himself got inducted into the administration and management of the hospital and pharmacy including looking after the accounts. Since the complainant and other partner Dr. Altaf Naseem were busy in handling the patients, both the petitioners, who are the couple collusively started taking undue advantage of their busy schedule and petitioner No. 1 started taking entire daily collection from the hospital and pharmacy by putting his initials with a promise that he would deposit the said amount into the account of the Hospital and Pharmacy in relevant banks and mislead them for three(3) years and he did not deposit the amounts and misappropriated them. When the other partners realised the misdeeds and questioned, the petitioners, in order to save their skin, addressed letters in their individual capacity expressing their intention to dissolve the partnership business both in the hospital and pharmacy. They also addressed letters to the banks to freeze the accounts of the hospital and pharmacy. Therefore, the complainant was constrained to lodge the complaint against the petitioners. It is further argued that merely because the arbitration clause is there, that has nothing to do with the criminal offence committed by the petitioners. He placed reliance on the following decisions to contend that if the accusation of the petitioners also attracts criminal offences besides civil liability, criminal prosecution is maintainable. (i) Trisuns Chemical Industry vs. Rajesh Agarwal and Others, AIR 1999 SC 3499 (ii) Sri Krishna Agencies vs. State of Andhra Pradesh and Another, (2009) 1 SCC 69 (iii) HDFC Securities Ltd. and Others vs. State of Maharashtra and Another, 2017 (1) SCJ 650 He thus prayed to dismiss the petition. 6. The point for determination is: Whether there are merits in this petition to allow? 7. POINT: In the decision reported State of Haryana and Others vs. Ch. 6. The point for determination is: Whether there are merits in this petition to allow? 7. POINT: In the decision reported State of Haryana and Others vs. Ch. Bhajan Lal and Others, AIR 1992 SC 604 the Apex Court has laid down the following guidelines as to when the High Court can exercise its plenary powers under Section 482 Cr.P.C. to quash the proceedings. They are: “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 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 has now to be seen whether a prima-facie case is made out from the complaint for the offences under Sections 406 and 420 IPC to proceed with the investigation or whether continuation of the criminal prosecution is only an abuse of process of the Court. 8. As can be seen from the record, the partnership deed dated 14.05.2012 was entered into by petitioner No. 1, Dr. Altaf Naseem and 2nd respondent/complainant to run Candy Children's Hospital. It is pertinent to note that petitioner No. 2 is not a partner therein. I have gone through the terms of the contract. Clauses 7, 10, 11 and 12 would depict their status. They would show that all the partners are managing/working partners of the firm and they shall be at all time during the partnership devote sufficient time and attention to the said partnership business and diligently and faithfully carry on day to day affairs of the business for the greatest advantage of the partnership. Each partner shall have the access to the books of accounts and right to inspect and verify the same and take copies and extract there from. It is further mentioned that partners shall be entitled to make withdrawals from the firm from time to time such sum or sums as may be determined mutually by majority of the partners, provided such drawals shall be debited to the accounts of the respective partners in the firm. Managing/Working Partners shall be entitled to for the remuneration @ Rs. 20,000/- p.m. or as decided mutually amongst the partners. The other terms are incidental to the partnership business and they are not much relevant. Managing/Working Partners shall be entitled to for the remuneration @ Rs. 20,000/- p.m. or as decided mutually amongst the partners. The other terms are incidental to the partnership business and they are not much relevant. So from a close scrutiny of the partnership deed, it is pertinent to note that the maintenance of the accounts, assets, properties and cash are not specifically entrusted to any particular partner much-less to the petitioner No. 1. However, it appears, the division of the responsibilities among the three partners was made under a special document styled as Memorandum of Understanding dated 30.01.2015, a copy of which is filed by the petitioners. Clause 2 under the heading Division of responsibilities among 3 directors reads thus: (i) Dr. Altaf Naseem accounts maintenance, hospital permissions, renewals, inspections, contacts with police, politician and press, marketing. (ii) Dr. Tanveer Ahmed Pharmacy maintenance, petty cash approvals, salary pay slip approval, over time approvals, marketing (especially NICU marketing). (iii) Dr. Ahmed Khan hospital administration and maintenance (includes setting work flow protocols for all hospital departments, guidelines, software assessment, income verification, nurses management and training, doctor allotment and training). So the petitioner No. 1 is concerned, he was mainly assigned with the hospital administration and its maintenance. Accounts maintenance was given to Dr. Altaf Naseem, whereas pharmacy maintenance, petty cash approvals, salary pay slip approval, over time approvals etc. were given to respondent No. 2/complainant. 9. Coming to the pharmacy, under a partnership deed dated 10.08.2015, Dr. Altaf Naseem, Mrs. Farah Nishat (wife of respondent No. 2/complainant), 2nd petitioner and P.Vinod Kumar entered into partnership to run Candy Medical and General Stores to trade in pharmaceutical and general stores. 1 to 3 parties shall be the partners under whose control, the partnership business shall be conducted by the 4th party. As per one of the terms, the accounts of the partnership business shall be maintained by Mrs. Farah Nishat (wife of the complainant). The terms of the partnership deed do not show that accounts, amounts, properties etc, of the partnership were entrusted to the 2nd petitioner. In this backdrop, it has now to be seen whether offences under Sections 406 and 420 IPC could be attracted. 10. Farah Nishat (wife of the complainant). The terms of the partnership deed do not show that accounts, amounts, properties etc, of the partnership were entrusted to the 2nd petitioner. In this backdrop, it has now to be seen whether offences under Sections 406 and 420 IPC could be attracted. 10. The offence under Section 406 IPC is concerned, the Apex Court in Anil Sarans case (3 supra), held thus: “Para 7: It is next contended that the appellant, being a partner in the complainant firm, cannot be said to have committed criminal breach of trust of his own funds and that, therefore, it is a case of civil liability only. The contention that one partner cannot commit criminal breach of trust against other partners, though prima-facie alluring, on facts of this case, it does not appear to be tenable. Partnership firm is not a legal entity but a legal mode of doing business by all the partners. Until the firm is dissolved as per law and the accounts settled, all the partners have dominion in common over the property and funds of the firm. Only after the settlement of accounts and allotment of respective share, the partner becomes owner of his share. However, criminal breach of trust under Section 406 is not in respect of the property belonging to the partnership firm, but is an offence committed by a person in respect of the property which has been specially entrusted to such a person under a special contract and he holds that property in fiduciary capacity under special contract. If he misappropriates the same, it is an offence.” In Bhuban Mohan Dass case (supra) and Velji Raghavji Patels case (supra) similar view was expressed. In the instant case, as already noted supra, petitioner nos. 1 and 2 were not entrusted with the properties in their respective partnership firms, rather such responsibilities were entrusted to different partners. In that view, I find considerable force in the argument of learned counsel for petitioners that the offence under Section 406 IPC is not attracted against the petitioners. No doubt, learned counsel for 2nd respondent/ complainant argued that taking advantage of the busy schedule of the other two partners, 1st petitioner took the hospital administration and also collected amounts and misappropriated them without depositing in the bank accounts. No doubt, learned counsel for 2nd respondent/ complainant argued that taking advantage of the busy schedule of the other two partners, 1st petitioner took the hospital administration and also collected amounts and misappropriated them without depositing in the bank accounts. However, in the absence of any prima-facie material and particularly when the document speaks non-entrustment of the properties and monies, such contention cannot be accepted. 11. So also the offence under Section 420 IPC is concerned, as rightly argued by learned counsel for petitioners, no inducement by the petitioners and delivery of properties could be emanated from the complaint allegations to attract the offence of cheating. It appears, the parties have already resorted to Civil Court and arbitration proceedings before the concerned Civil Courts. It is true that as per the decisions in Trisuns Chemical Industries case (supra), Sri Krishna Agencies case (supra) and HDFC Securities Ltd. case (supra) relied upon by the 2nd respondent/complainant, mere pendency of the arbitration proceedings, is not an obstacle to proceed with the criminal prosecution, provided the acts of the petitioners prima-facie give rise to criminal prosecution. In the instant case, as already discussed supra, since the petitioners were the partners and there was no specific entrustment of the properties, accounts and monies to them and therefore, the offence under Section 406 IPC cannot be imputed and so also since there was no inducement by the petitioners and delivery of property within the meaning of Section 420 IPC, the offence under Section 420 IPC is also not made out. Therefore, continuation of investigation for the aforesaid offences would amount to abuse of process of the Court. 2nd respondent shall work out his remedies before the Civil Court if it is his grievance that the petitioners have not accounted for the partnership amounts. 12. In the result, this Criminal Petition is allowed and the proceedings in Crime No. 116/2017 of Central Crime Station PS, Hyderabad are quashed against the petitioners/A1 and A2. 13. As a sequel, miscellaneous petitions pending, if any, shall stand closed.