P&H High Court Issues Guidelines Against Vexatious Prosecution, Says Unjust Conversion Of Civil Into Criminal Cases Is 'Rampant'

Taking note of the "rampant misuse of law by unjustly converting civil disputes into criminal cases," the Punjab & Haryana High Court has issued guidelines to the trial courts across the state to protect citizens from vexatious and unwanted criminal prosecution.

Justice Harpreet Singh Brar said, "In view of the rampant misuse of the process of law by unjustly converting civil disputes into criminal cases by disgruntled litigants and at times, even after availing civil remedies, this Court would like to issue necessary instructions to protect the citizens from vexatious and unwanted criminal prosecution."

The  Court issued the following directions:

In case the trial Courts, after the conclusion of the trial, finds:

(i) the dispute involved between the parties is purely civil in nature and the remedy lies in civil law; or

(ii) the basic ingredients of fraudulent intention of cheating from the very beginning is missing and the FIR in question is lodged mechanically;

"The trial Court should take appropriate steps to initiate proceedings by invoking any of the provisions contained in Chapter XI of the IPC which contains the provisions for offenses of adducing false evidence and offences against public justice, like the provisions under Section 211 IPC, which provides for punishment for instituting a false charge of offence with intention to cause injury against the concerned persons," it added.

The development came while hearing a plea under Section 482 CrPC seeking quashing of FIR filed under Sections 420, 120-B of IPC.

It was alleged that the petitioners had entered into an agreement to sell with the complainant for sale of land and despite receiving the earnest money, they did not executed the sale deed as per the agreement.

The counsel for the petitioner argued that no offence under Sections 420, 120-B of IPC is made out and it is purely a civil dispute and the same has been given a criminal colour which has been converted into the present FIR.

The complainant has already filed a civil suit for possession by way of specific performance for agreement to sell dated, he added.

Considering the submissions, the Court noted that it transpires that the genesis of the dispute is the agreement to sell and the case set up by complainant for setting the criminal law machinery into motion revolves around the allegation that the petitioner took Rs.25 lacs as earnest money in pursuance of aforementioned agreement to sell.

It said that "only bald assertions are made against the petitioners" that they did not show up for execution of the sale deed in spite of payment of earnest money. The failure of which party had resulted in the breach of the conditions of the agreement to sell "would be adjudicated by the Civil Court."

 The Court observed that "the sole reason to lodge FIR " under Sections 420, 120-B IPC "appears to entangle the petitioners in the present FIR by converting the civil dispute into a criminal offence."

Furthermore, the bench noted that there is "nothing on record to prove that there was an intention to cheat" on behalf of the petitioners since the inception, "which is a condition precedent to make out an offence under Section 420 IPC."

Adding that the existence of a pending civil suit between the parties before a Civil Court makes it clear that the current dispute is essentially of civil nature, the Court opined that, "the criminal proceedings launched by respondent No.5 (complainant) cannot be sustained in the facts and circumstances of the present case."

Reliance was also placed upon Apex Court's decision on Vesa Holdings P. Ltd. v. State of Kerala [(2015) 8 SCC 293], wherein the bench said, "It is true that a given set of facts may make out a civil wrong as also a criminal offence and only because a civil remedy may be available to the complainant that itself cannot be a ground to quash a criminal proceeding. The real test is whether the allegations in the complaint disclose the criminal offence of cheating or not."

The Court also referred to a recent ruling of the Supreme Court in which a two Judge bench in Kunti and Another v. State of U.P. [Criminal Appeal No. 1380 of 2023 decided on 03.05.2023], speaking through Justice Sanjay Karol, observed as follows:

“ However, we do not find the need to engage with the grounds as urged, because a perusal of the record in no uncertain terms reflects the dispute as being of a civil nature. This court recently, in Sarabjit Kaur v. State of Punjab and Anr., observed that "A breach of contract does not give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction. Merely on the allegation of failure to keep up promise will not be enough to initiate criminal proceedings...Having regard to the above well established principles and also noting that the present dispute is entirely with respect to property and more particularly buying and selling thereof, it cannot be doubted that a criminal hue has been unjustifiably lent to a civil natured issue."

"Dire Need To Curb Criminalisation Of Civil Dispute"

Justice Brar also said that the investigating agency often succumbs to various pressures and motives to launch prosecution at the behest of disgruntled litigants and mechanically registers FIRs and the concerned District Attorney often provide incorrect legal opinion.

The Court added that the predominantly civil dispute is given criminal contours to provide expeditious mechanism to pressurize the other party into a settlement. "The misuse of legal machinery to launch malicious and oppressive prosecution by converting a purely civil dispute into a criminal offence has been deprecated by the Courts and the constitutional Courts have come to the rescue of the victimized and harassed citizens entangled in vexatious unwanted criminal prosecution in purely civil disputes," the bench said.

It also referred to M/s Indian Oil Corporation v. M/s NEPC India [(2006) 6 SCC 736], wherein the bench observed that,

“While on this issue, it is necessary to take notice of a growing tendency in business circles to convert purely civil disputes into criminal cases. This is obviously on account of a prevalent impression that civil law remedies are time consuming and do not adequately protect the interests of lenders/creditors. Such a tendency is seen in several family disputes also, leading to irretrievable break down of marriages/families..."

In the light of the above the Court quashed the FIR.

While disposing the plea, the bench also directed the registry to "circulate a copy of this judgment to all the subordinate courts within the jurisdiction of this Court for information and compliance."

Citation: 2023 LiveLaw (PH) 251

Appearance: Ashok Bhardwaj, Advocate for the petitioners.

IPS Sabharwal, DAG Punjab.

Gulzar Mohd., Advocate for respondents No.4 & 5.

Case Title: Charanjit Sharma and Another v. State of Punjab and Other

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