Supreme Court Upholds High Court's Quashing Only Of Section 406 Cognizance, Allows Trial On Sections 420, 344 and 506
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A bench of Justices Sanjay Karol and Vipul M. Pancholi heard an appeal by the accused challenging the Telangana High Court’s order of 19.02.2025 which had quashed cognizance under Section 406 IPC but had retained proceedings under Sections 420, 344 and 506 IPC in a dispute arising from construction-contract transactions.
The Supreme Court dismissed the appeal and upheld the High Court’s selective exercise of its power under Section 482 CrPC, holding that the dispute could not be treated as purely civil at the threshold and that sufficient material existed to proceed on charges under Sections 420, 344 and 506. The Court noted that the powers to quash criminal proceedings “is to be exercised sparingly, with circumspection and only in exceptional situations.” The Court, in its reasoning, observed: “20. The following steps should ordinarily determine the veracity of a prayer for quashing, raised by an accused by invoking the power vested in the High Court under Section 482 of the Cr.P.C.:-
(i) Step one, whether the material relied upon by the accused is sound, reasonable, and indubitable, i.e., the materials is of sterling and impeccable quality?
(ii) Step two, whether the material relied upon by the accused, would rule out the assertions contained in the charges levelled against the accused, i.e., the material is sufficient to reject and overrule the factual assertions contained in the complaint, i.e., the material is such, as would persuade a reasonable person to dismiss and condemn the factual basis of the accusations as false.
(iii) Step three, whether the material relied upon by the accused, has not been refuted by the prosecution/complainant; and/or the material is such, that it cannot be justifiably refuted by the prosecution/complainant?
(iv) Step four, whether proceeding with the trial would result in an abuse of process of the court, and would not serve the ends of justice?
If the answer to all the steps is in the affirmative, judicial conscience of the High Court should persuade it to quash such criminal-proceedings, in exercise of power vested in it under Section 482 of the Cr. P.C. Such exercise of power, besides doing justice to the accused, would save precious court time, which would otherwise be wasted in holding such a trial (as well as, proceedings arising therefrom) specially when, it is clear that the same would not conclude in the conviction of the accused. [(See: Rajiv Thapar v. Madan Lal Kapoor (Criminal Appeal No. 174 of 2013))]”
Background The dispute arose from construction work undertaken between 2008–2010. The complainant issued a No Dues Certificate dated 10.06.2010 (acknowledged on 12.06.2010), but later alleged non-payment for substantial work. FIR No. 240 of 2015 registered offences under Sections 420 and 506 IPC; after investigation a charge sheet (Charge Sheet No. 07 of 2016) added Sections 406 and 344 IPC and the matter proceeded as C.C. No. 1374 of 2016 before the III Additional Chief Metropolitan Magistrate, Hyderabad. The accused applied under Section 482 CrPC before the Telangana High Court seeking quashing; the High Court quashed only the cognizance under Section 406 IPC and retained proceedings under Sections 420, 344 and 506. The appellant challenged that order before this Court.
The appellant contended that the dispute was purely civil, relied on the No Dues Certificate and alleged mala fide prosecution, delay and lack of specific overt acts attributing fraudulent intention. Reliance was placed on authorities cautioning against criminalising commercial disputes. The State and the complainant (through an amicus) countered that the No Dues Certificate was disputed as fabricated, that investigation produced statements of four witnesses and that the allegations prima facie disclosed criminality, so the matters were for trial and not for quashing at threshold. The Supreme Court applied established precedents including the four-step test from Pradeep Kumar Kesarwani and the illustrative categories in State v. Bhajan Lal, and held that the appellant’s material did not meet the stringent benchmarks required to quash all charges. The High Court’s conclusion that ingredients of Section 406 were not made out was upheld; the refusal to quash the charges under Sections 420, 344 and 506 was affirmed. The appeal was dismissed and pending applications were disposed of. No interim stay had been granted during the SLP, and no additional interim directions were issued by this Court.
Case Details: Case No.: 2025 INSC 1384 Case Title: ROCKY v. State of Telangana & Anr. Appearances: For the Petitioner(s): Senior Counsel for the appellant (name not indicated) For the Respondent(s): Counsel for the State and Amicus Curiae for respondent no.2 (names not indicated)
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