High Court Must Not Hesitate In Quashing Criminal Proceedings Which Are Essentially Of Civil Nature: Supreme Court

The Supreme Court reiterated that the High Court by exercising their inherent power must quash the prosecution based on the criminal complaint arising out of a civil transaction.

"...although the inherent powers of a High Court under Section 482 of the Code of Criminal Procedure should be exercised sparingly, yet the High Court must not hesitate in quashing such criminal proceedings which are essentially of a civil nature," the Court stated referring to the precedent Paramjeet Batra v. State of Uttarakhand (2013) 11 SCC 673.

Reversing the decision of the High Court which had refused to quash the pending criminal case against the appellant/accused, the Bench Comprising Justices Sudhanshu Dhulia and PB Varale quashed the criminal case against the accused arising out of a civil transaction by noting that the High Court must quash proceedings arising out of civil transaction as continuation of the proceedings would be an abuse of the process due to absence of the criminal intent.

“In Usha Chakraborty & Anr. v. State of West Bengal & Anr. relying upon Paramjeet Batra (supra) it was again held that where a dispute which is essentially of a civil nature, is given a cloak of a criminal offence, then such disputes can be quashed, by exercising the inherent powers under Section 482 of the Code of Criminal Procedure.”, the Judgment authored by Justice Sudhanshu Dhulia observed.

The gist of the dispute was that the complaint under Sections 406, 420, and 506 of the Indian Penal Code was registered against the accused/appellant for only paying Rs.62 lakhs as against the full amount of Rs. 1,01,58,574/- to the complainant for assembling the bicycle. The allegation levied against the appellant/accused was that he committed cheating by intentionally deceiving the complainant to assemble more bicycles without paying the assembling fees for more bicycles assembled by the complainant.

After finding that the dispute between the parties is purely civil dispute emanating from a civil transaction where settlement was also being arrived between the parties to which the complainant admitted that he had received the additional amount from the accused/appellant, the Supreme Court found that “this is a case where the inherent powers should have been exercised by the High Court under Section 482 of the Criminal Procedure Code as the powers are there to stop the abuse of the process and to secure the ends of justice.”

"We do not agree with the findings arrived at by the High Court for two reasons. Firstly, the dispute between the parties is primarily, civil in nature. It is after all a question of how many bicycles the complainant had assembled and the dispute between the parties is only regarding the figure of bicycles and consequently of the amount liable to be paid. This is a civil dispute. The complainant has not been able to establish that the intention to cheat the complainant was there with the appellants right from the beginning. Merely because the appellants admit that only 28,995 bicycles were assembled, but they have admittedly paid an amount of Rs. 62,01,746/- to the complainant, which is of a much higher number of bicycles, would not prove that the intention of the appellants right from the beginning was to cheat.”, the Supreme Court noted.

The Supreme Court placed reliance on its earlier Judgment of Paramjeet Batra v. State of Uttarakhand, to hold that the High Court must not hesitate in quashing such criminal proceedings which arise out of a civil nature.

“A complaint disclosing civil transactions may also have a criminal texture. But the High Court must see whether a dispute which is essentially of a civil nature is given a cloak of criminal offence. In such a situation, if a civil remedy is available and is, in fact, adopted as has happened in this case, the High Court should not hesitate to quash the criminal proceedings to prevent abuse of process of the court.”, the Supreme Court held in Paramjeet Batra.

Further, the Court clarified that every breach of contract wouldn't essentially give rise to an offence of cheating unless the fraudulent or dishonest intention on the part of the accused is shown by the complainant since the making of the contract.

“In the case at hand, the dispute between the parties was not only essentially of a civil nature but in this case, the dispute itself stood settled later as we have already discussed above. We see no criminal element here and consequently, the case here is nothing but an abuse of the process.”, the Supreme Court observed.

Accordingly, the appeal was allowed and the criminal proceedings pending against the accused stand quashed.

Counsels For Appellant(s) Mr. Aman Lekhi, Sr. Adv. Mr. Abhishek Gupta, AOR Mr. Chaitanya Mahajan, Adv. Ms. Payal Kakra, Adv. Mr. Ehraaz Zafar, Adv. Mr. Kunalkakumanu, Adv.

Counsels For Respondent(s) Mr. D. L. Chidananda, AOR Mr. Ravindera Kumar Verma, Adv. Mr. Anand Sanjay M Nuli, Sr. Adv. Mr. Suraj Kaushik, Adv. Mr. Agam Sharma, Adv. Mr. Dharm Singh, Adv. Mr. Nanda Kumar, Adv. Ms. Akhila Wali, Adv. Mr. Shiva Swaroop, Adv. Mr. Akash Kukreja, Adv. M/S. Nuli & Nuli, AOR

Also Read: Efforts To Settle Pure Civil Disputes By Applying Pressure Through Criminal Prosecution Must Be Deprecated: Supreme Court

Case Title: NARESH KUMAR & ANR. VERSUS THE STATE OF KARNATAKA & ANR.

Citation : 2024 LiveLaw (SC) 228

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