Police must conduct preliminary enquiry before lodging FIR in commercial cases: Rajasthan High Court

The Rajasthan High Court recently ruled that police officials must conduct a preliminary enquiry in cases where the disputes are purely commercial in nature, before they consider registering a first information report (FIR) in the matter [Rana Ram v. State of Rajasthan and Anr.]. .Justice Arun Monga passed the order in a case where he found that an FIR was registered in complete abuse of police powers for a civil dispute between private parties. The Court has now directed the Rajasthan police to ensure that a preliminary enquiry is conducted before FIRs are registered in such matters that involve purely commercial transactions. "It is considered imperative to direct the police officials in respondent State of Rajasthan that, before they register FIRs in matters of alleged offences under sections 405/406 and 420 of IPC [corresponding Sections 316 and 318 of Bhartiya Nyaya Sanhita (BNS) 2023], where the transaction is purely commercial, such as sale-purchase of goods or even immovable property, and the interest/title in the goods/property has passed to the purchaser, to conduct a mandatory preliminary enquiry. Unless the report thereof shows that there is prima facie material suggestive of commission of offence, FIR ought not to be registered," the Court said in its August 6 order. .It added that the preliminary enquiry must be conducted within a week or 10 days at most so that the alleged offender does not gain any undue advantage to destroy evidence or abscond while the preliminary enquiry is being conducted. .The Court was dealing with a case where the complainant alleged that he was not paid for delivering certain goods to two persons (accused). Subsequently, an FIR was registered against the accused under Sections 406 (criminal Breach of Trust) and 420 (cheating) of the IPC. The police later seized these goods (worth around ₹25.54 lakhs) from a third person who claimed that he was a bonafide purchaser of these goods. He submitted that he purchased the goods from one of the two accused. This purchaser (petitioner) then moved the High Court seeking the release of the said goods. His counsel argued that he was not liable for any disputes between the accused men and the complainant. The complainant (a respondent before the High Court) countered that the petitioner was complicit in the alleged crime..The Court, however, found that the matter only involved a civil and private dispute between private parties, namely the original seller (complainant), the buyers (accused) and the subsequent buyer (petitioner). The contents of the FIR lodged did not disclose the commission of any crime requiring a police investigation or a criminal trial, the Court concluded."No preliminary enquiry of any kind was carried out. Complaint received in the police station was simply converted into an FIR ... I am of the view that it has been registered in complete abuse of police powers," it added..The Court also found that the police had not complied with the parameters laid down in the case of Lalita Kumari before registering the FIR. It observed that in such cases, it is for the complainant to institute appropriate civil proceedings for recovering his money from the debtor and not for the police officials to substitute themselves as his civil recovery agents under the garb of doing an investigation by misusing their khaki uniform. Therefore, the Court quashed the FIR, considering that the same would cause undue harassment and unnecessary ordeal to the petitioner and the other co-accused persons..Advocates Mahendra Singh Rajpurohit appeared for the petitioner.Public Prosecutor SS Rajpurohit represented the State.Advocate Shobha Prabhakar appeared for the complainant..[Read Order]