How a Commercial Transaction Turned Into Cheating, Fraud, and Criminal Breach of Trust — and How We Recovered ₹3.1 Crore of the ₹4.5 Crore Lost.
What Was the Case
Our client runs a reputed pharmaceutical trading company. He mainly deals in APIs (Active Pharmaceutical Ingredients). It is the same raw materials that are used to make medicines. Client buys APIs from manufacturers and then further sells to drug-making companies across North India.
In 2022, a Mumbai-based company approached our client. They claimed to be an authorised importer of Germany-based APIs and could offer it at a much lower price than the usual market rate. This Mumbai-based company had a professional office and a company website listing several international partners. They presented copies of past import bills to prove they had done this kind of business before.
On Paper, Everything was looking fine. Our client's paid ₹4.5 crore in advance to book this big import order. In the APIs business, paying in advance before the goods are shipped and cleared at customs is normal. The Mumbai based company promised delivery within 60 days, after customs clearance.
After 60 days, the shipment did not arrive. The company gave excuses of customs delay, paperwork problems, and shipping issues. Our client's team then contacted the German manufacturer directly. The German manufacturer replied that they had never worked with this Mumbai company at all. Our client also checked with the Drug Controller General of India to verify their import medicine licence. After this cross-check, our client came to know that the Mumbai company had no licence to import pharmaceutical raw material.
Then Our client contacted SPJ Advocates, we filed a criminal complaint under Section 420 of the IPC / Section 318 of the Bharatiya Nyaya Sanhita, 2023, for cheating, and Section 406 IPC / Section 316 BNS, for criminal breach of trust. This fraud was clearly planned by more than one person working together. So, Section 120B of the IPC / Section 61 of the BNS was also added for criminal conspiracy. The Mumbai company had also used a fake import licence number on its documents. So we filed a separate complaint under the Drugs and Cosmetics Act, 1940 for falsely claiming to be an authorized importer of pharmaceutical material. Because the dealing amount was so big (in crores), the Economic Offences Wing (EOW) took up this case.
What Made This Case Difficult
- The accused closed the company's bank accounts within days of getting the ₹4.5 crore. He transferred the received funds in several other bank accounts
- Pharma related import fraud cases are technical and take time to prove. We had to get written confirmation from the German manufacturer, and from the Drug Controller General of India, to prove that the import licence was fake.
- From sources, We came to know that two other drug manufacturing companies in Punjab and Himachal Pradesh had also paid advances to the same Mumbai company for different chemical imports, but their cases were filed separately in different states.
- The accused's lawyers argued that this was a "failed business deal" due to genuine shipping delays, not a planned fraud, and tried to slow down the case on this basis.
How SPJ Advocates Handled It
Month 1 — Evidence collection and Filing the Complaint
- Collected all emails, WhatsApp messages, the fake import documents, and bank transfer proof of the ₹4.5 crore payment.
- Got written confirmation directly from the German manufacturer, stating clearly that they had no business relationship with the Mumbai company at any point.
- Received official letter from the Drug Controller General of India confirming the Mumbai company held no valid license to import this category of pharmaceutical material.
- Filed a detailed complaint with the Economic Offences Wing, laying out exactly how the fake license and fake manufacturer tie-up were used to gain our client's trust.
Months 2–9 —Tracing the Money and Freezing the Accused’s Bank Accounts
- We worked with the EOW to trace out how the ₹4.5 crore was transferred in multiple bank accounts. Some of these accounts were in the names of the accused's relatives.
- We coordinated with the lawyers of two other drug manufacturing companies to bring all three cases together as one combined complaint.
- Since the joint case value was more than ₹7 crore, it got more attention from the EOW than three small, separate cases filed in different states.
- Based on this combined evidence, the EOW froze several bank accounts connected to the accused before more funds could be moved.
Months 10–17 —Investigation, Arrest and Recovery Action
- The EOW collected the evidence from all three victim companies and completed its investigation. Based on this, the main accused and one associate were arrested.
- We filed an application in court to attach the accused's properties and fixed deposits to stop the money from being transferred, spent or hidden before we could recover it.
- We presented the fake licence papers and the German manufacturer's denial letter to court. This proved the accused's "genuine delay" excuse was false. The whole deal was dishonest from the very beginning.
Months 18–24 — Recovery and Settlement
- The accused's bank accounts were frozen and their properties attached to put pressure on them. This helped us negotiate a recovery settlement for all three victim companies together.
- Our client recovered ₹3.1 crore out of the ₹4.5 crore paid in advance. This money came from the accused's frozen bank funds, and partly through a repayment plan with legal guarantees.
- Even after getting back the part payment, the criminal case continued separately. This is because the fraud was too big to close with just a settlement.
The Result
After 24 months, our client recovered ₹3.1 crore out of the ₹4.5 crore it had lost. The main accused remains under trial under Section 420, Section 406, and Section 120B of the IPC / the corresponding sections of the BNS, along with charges under the Drugs and Cosmetics Act, and the Economic Offences Wing is still trying to find and recover the rest of the missing money.
Victim of Cheating or Fraud in a business deal? Don't wait, call SPJ Advocates at +91-8920245815, to recover your amount.
