Authority: Supreme Court of India, Criminal Appellate Jurisdiction

Order Date: 12 August 2026

Case Overview

  • Parties: Appellants – Parag Kishore Satoskar and four other executives of Oriental Aromatics Limited (Chairman & Managing Director, Executive Director, Chief Executive Officer, Chief Operations Officer, and a clerk). Respondents – State of Jharkhand and another; additionally, Respondent No. 2 is the sole proprietor of M/s D.K. Enterprises, the original informant.
  • Procedural History: The High Court of Jharkhand at Ranchi, in a common judgment dated 19‑02‑2025 (W.P. (Cr.) No. 1041 of 2024 and W.P. (Cr.) No. 1042 of 2024), declined to quash the FIR registered as Kotwali P.S. Case No. 323 of 2024 and dismissed the writ petitions. The Supreme Court granted leave and heard the two appeals together as they arose from the same FIR.
  • FIR Details: On 26‑11‑2024, based on a written complaint from Respondent No. 2, the police registered FIR Kotwali P.S. Case No. 323 of 2024 alleging offences under Sections 316(2), 318(4) and 3(5) of the Bharatiya Nyaya Sanhita, 2023 (cheating, criminal breach of trust, etc.).
  • Factual Background: Respondent No. 2 was offered a distributorship of ‘Saraswati’ camphor for the State of Jharkhand by Oriental Aromatics Ltd, effective 01‑04‑2024 to 01‑04‑2027, for a payment of Rs 20,00,000 spread over three years and promised gifts/benefits. He paid Rs 52,000 as token money in December 2023. An agreement was executed on 29‑03‑2024, signed and returned on 04‑05‑2024. He then paid Rs 73,00,000 as advance in six remittances between 04‑04‑2024 and 26‑06‑2024. In return, goods worth Rs 31,49,167 were supplied under four bills. Subsequently, the company stopped supplies, demanded additional money, and retained a balance of Rs 41,50,833.
  • Legal Questions: (i) Whether the allegations in the FIR, taken at face value, disclose the commission of the offences under Sections 318(4) (cheating) and 316(2) (criminal breach of trust) of the BNS. (ii) Whether a civil/commercial dispute has been given a criminal overtone, and the consequence thereof.
  • Court’s Reasoning: The Court referred to precedents – Delhi Race Club (1940) Ltd. v. State of U.P., Hridaya Ranjan Prasad Verma v. State of Bihar, and State of Haryana v. Bhajan Lal – emphasizing that for cheating, a dishonest intention at the time of inducement must be shown, and for criminal breach of trust, entrustment must be alleged. The FIR contained no factual averment of dishonest intention at inception nor any allegation of entrustment. The promise of future gifts was a forward‑looking promise, not a false representation. The termination of the distributorship and the price‑difference grievance were civil matters; the FIR’s conclusions (“cheated”, “I got deceived”) were unsupported by facts. The Court also noted the timing of the notice (23‑07‑2024), subsequent communication (29‑07‑2024), and the company’s reply (11‑09‑2024 demanding Rs 5,79,239) as indicative that the dispute was commercial, not criminal.
  • Conclusion on Offences: The ingredients of Section 318(4) BNS (cheating) were not satisfied – no dishonest intention inferred. The ingredients of Section 316(2) BNS (criminal breach of trust) were also absent – no entrustment pleaded. Consequently, the FIR could not sustain a criminal prosecution.

Final Outcome

  • Both appeals are allowed. The High Court’s judgment dated 19‑02‑2025 is set aside. The FIR (Kotwali P.S. Case No. 323 of 2024) and all proceedings arising thereunder under Sections 316(2), 318(4) and 3(5) of the Bharatiya Nyaya Sanhita, 2023 are quashed. Pending applications, if any, stand disposed of. The Court expressly refrains from commenting on any civil, arbitral or other proceedings between the parties.

Topics: Criminal Law, Commercial Dispute, Corporate Governance