'Web Of Transactions' Cannot Defeat Criminal Investigation: J&K&L High Court Refuses To Quash FIR In NH-40 Investment Case

The Court held that allegations of dishonest inducement from the inception, involving substantial financial investment of approximately ₹77 lakhs and non-refund of ₹60 lakhs, required investigation.

The Court was hearing a petition filed under Section 482 of the Code of Criminal Procedure (corresponding to Section 528 of BNSS) seeking quashing of FIR registered at Police Station EOW Crime Branch, Jammu for offences under Sections 420 and 120-B IPC.

The petitioner, a Delhi resident, was accused of inducing the complainant to invest approximately ₹77 lakhs in a National Highway road-maintenance contract on the assurance that he would be made a 10% partner, and thereafter failing to fulfill the promise or return the amount.

A Bench of Justice Wasim Sadiq Nargal, while dismissing the petition, observed,

"The petitioner has sought to create a web of transactions by relying upon bank statements and payments made by persons other than the respondents. According to the respondents, several of the transactions relied upon by the petitioner were either payments made by the other accused, namely Jagdish Nain, or transactions involving M/s Akash Ganga Infrasolutions LLP and other entities and did not constitute repayment of the amount allegedly invested by respondent No.2 in the NH-40 contract."

The Court further observed,

"The allegations are not confined to a mere failure to fulfill a contractual obligation or discharge a financial liability arising out of a transaction between the parties. The case of the prosecution is that the complainant was induced to part with money on the basis of a particular representation and that such inducement was allegedly part of a concerted design involving the petitioner and the co-accused."

The dispute arose from a transaction concerning a road-maintenance contract for NH-40 (Kadappa to Kurmool section) in Andhra Pradesh. According to the complainant, the petitioner and his co-accused Jagdish Nain induced him to invest money on the assurance that he would be made a 10% partner in the contract. The petitioner allegedly furnished documents of his Najafgarh property as security to gain the complainant's confidence.

The complainant alleged that an aggregate amount of approximately ₹77 lakhs was paid, including ₹17 lakhs in the account of Jagdish Nain and ₹60 lakhs in the account of Nain Enterprises. Only ₹17 lakhs were subsequently returned, leaving an amount of approximately ₹60 lakhs unpaid. The petitioner and his partner neither made respondent No.2 a 10% partner in the road-maintenance contract nor executed any partnership document in his favour.

The FIR was registered and a notice under Section 160 CrPC was issued to the petitioner. The petitioner contended that the transaction was purely civil, that the dispute arose from a cancelled property deal in Gurugram, and that substantial amounts had already been returned. The respondents disputed this, contending that the Gurugram transaction was entirely distinct from the NH-40 contract, and that the petitioner was attempting to create a web of transactions to portray a civil dispute.

Court's Observation:

Justice Nargal examined the allegations in the FIR and found that the complainant had specifically alleged that money was parted with pursuant to a representation concerning the NH-40 road-maintenance contract.

The Court observed,

"The allegations, if taken at their face value, are sufficient to require an investigation into the circumstances in which the money was obtained, the representations allegedly made and the role attributed to the accused."

The Court noted the dispute between the parties regarding the nature of the transactions. The Court observed,

"The petitioner relies upon the Gurugram agreements and various financial transactions to contend that the amounts referred to by the complainant pertain to a different transaction and that the amounts paid in connection with the present transaction were duly repaid. The complainant, however, disputes this assertion and maintains that the Gurugram transaction is entirely distinct from the transaction forming the subject matter of the FIR."

Addressing the contention that the dispute is essentially civil or commercial in nature, the Court observed,

"A transaction may have civil consequences and yet, depending upon the allegations and the circumstances in which the transaction was entered into, may also disclose the ingredients of a criminal offence as well. The relevant consideration, therefore, is not merely the nature of the underlying transaction, but whether the allegations disclose the ingredients of the offence alleged."

The Court relied upon State of Haryana v. Bhajan Lal (1992 Supp (1) SCC 335) and Dineshbhai Chandubhai Patel v. State of Gujarat (2018) 3 SCC 104, holding that once the Court finds that the FIR does disclose prima facie commission of any cognizable offence, it should stay its hand and allow the investigating machinery to step in.

On the scope of inherent jurisdiction, the Court relied upon M/s Neeharika Infrastructure Pvt. Ltd. v. State of Maharashtra (2021) 19 SCC 401, wherein the Supreme Court reiterated that police has the statutory right and duty to investigate into a cognizable offence, and courts would not thwart any investigation into cognizable offences.

The Court observed that the petitioner's case would require the Court to examine the nature and interrelationship of the transactions relied upon by the respective parties, which would amount to conducting a "mini-trial" at the stage of quashing. The Court observed,

"The petitioner maintains that the transactions relied upon by him were genuine and related to the contractual arrangement in question. The complainant, however, contends that those transactions pertain to another contract and have been relied upon to conceal the true nature of the dealings. The correctness of these rival versions, and the true relevance of the transactions relied upon by the petitioner, cannot be conclusively determined in the present proceedings and require examination in the course of investigation."

In consonance with the findings above the court dismissed the petition and vacated the interim order staying the investigation. The Court held that the investigating agency shall be at liberty to complete the investigation in accordance with law.

Case Title: Satyavir Singh Arya v. U.T. of Jammu and Kashmir and Others

Citation: 2026 LiveLaw (JKL) 326

Appearances

Petitioner: Ms. Anshuja Tak, Sr. Advocate; Mr. Habib Ur Rehman, Advocate

Respondent No. 1: Mr. Pawan Dev Singh, Dy. AG

Respondent Nos. 2 & 3: Mr. Mandeep Singh, Advocate

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