'Worrisome Trend' Of Litigants To Criminalise Contractual Disputes For Imminent Settlement: Orissa HC Calls For Mandatory Preliminary Inquiry By Police Before FIR In Such Cases [Read Judgment]

The Orissa High Court on Monday called for a procedural reform of conducting mandatory preliminary inquiry before the registration of a FIR in contractual disputes and other civil cases, urging that such safeguard can prevent criminalization of disputes that are civil in nature.

"The duty to curb such menace, by not forcing a person to go through the rigmarole of criminal prosecution, in purely civil disputes, commences with the police", stated Justice S. K. Panigrahi.

Noting that "there is a growing tendency among litigants to give civil cases the colour and complexion of criminal cases in the likelihood of an imminent settlement", the bench commented that this Court is regularly witnessing a "worrisome trend" of increasing instances of abuse of the process of law by litigants seeking to settle civil disputes, using the criminal law machinery.

The Single Judge was considering a bail plea, where the petitioner was accused of cheating for not paying back Rs. 64 lakh which he owed to a co-villager with whom he had business relationship for 15 years.

"The instant case, prima facie, seems to be born out of a civil dispute between the parties and it was given a colour of criminal case", commented the Single Bench in granting bail. Coming to the charges invoked by the complainant under Sections 420, 417, I.P.C. etc. to set the criminal proceedings in motion, Justice Panigrahi declared that "it is, at best, falling under a breach of contract", but the element of cheating, prima facie, does not come to the fore. "The case in hand, prima facie, has the ingredients of a civil dispute having several remedies available outside this Court", he said.

The Single Judge observed that one of the major reasons why litigants opt for a criminal prosecution as opposed to civil proceedings is because of a perceived notion that criminal proceedings offer "quick relief" which often drives the litigants to initiate false and vexatious proceedings. "This tendency is also observed in several family disputes leading to irretrievable break down of marriages", said the bench.

The High Court reflected that a general notion prevalent in the mind of an average litigant is that if a person could somehow be involved in a criminal prosecution, there are "high chances of imminent settlement".

"Any effort to settle a civil dispute which does not involve any criminal offence, by applying pressure though criminal prosecution should be discouraged", asserted the Single Bench.

Justice Panigrai appreciated that the Apex Court in Lalita Kumari vs. Govt. of U.P & Ors (2013) has also held that if the information received does not disclose a cognizable offence but indicates the necessity for an inquiry, a preliminary inquiry may be conducted only to ascertain whether a cognizable offence is disclosed or not. As per the said decision, an illustrative category of cases in which a preliminary inquiry may be made are: Matrimonial disputes/family disputes, Commercial offences, Medical negligence cases, Corruption cases and Cases where there is abnormal delay/laches in initiating criminal prosecution.

"Apart from the precedents, there are in-built mechanisms in statutes conferring on courts the power to prevent the abuse of the process of the court with respect to a matter which should be dealt by a civil court", expounded the Single Judge, adding that when a criminal case is falsely initiated for disputes that are civil in nature, a remedy is available under Section 211 (False charge of offence made with intent to injure) of the IPC read with Section 182 (False information, with intent to cause public servant to use his lawful power to the injury of another person) of the IPC.

The High Court quoted that the Advisory Council of the National Mission for Justice Delivery and Legal Reforms has noted that out of over 18.6 million criminal cases pending in the subordinate courts of the country only 2.8 million cases pertain to serious crimes.

"Needless to state, filing of frivolous cases which seek to wreck vengeance by tweaking civil disputes into criminal cases adds to these petty crimes", remarked the Single Bench, insisting that such attempts should be stalled so that the "focus of attention in the criminal courts remain on serious crimes", which affect the society at large.

Accordingly, it was of the view that "it is imperative that in cases of some contractual disputes or other kinds of civil dispute which are sought to be criminalized should follow a procedure of conducting a mandatory preliminary inquiry before resorting to file/registering a FIR".

Click Here To Download Judgment

[Read Judgment]