Continuing Trend Of Projecting Purely Civil Financial Dispute As Criminal Matter 'Extremely Disturbing': Supreme Court

The Supreme Court observed that the continuing trend of projecting a purely civil financial dispute as a criminal matter is extremely disturbing.

The bench of Justices Krishna Murari and Sanjay Kumar observed thus while considering a contempt petition. The petitioners’ case was that there is trend of initiating mala fide criminal proceedings against financial institutions/lenders and their officers, representatives and managers, to somehow restrain them from pursuing recovery proceedings of their enforceable debts, and/or to compel them to make settlement of their dues. It was submitted that FIRs are registered to circumvent legally owed debts by scuttling the statutory regime of SARFAESI.

In this context, the court observed:

"In “Priyanka Srivastava Vs. State of U.P.”, (2015) 6 SCC 287, this Court had noticed that taking recourse to criminal law by bypassing statutory remedies to bring the financial institutions on their knees, has the inherent potentiality to affect the marrows of economic health of the nation. Further, in “Vijay Kumar Ghai & Anr. Vs. State of W.B. & Ors.” (2022) 7 SCC 124, this Court quashed the criminal proceedings being abuse of law in a purely civil financial dispute and being a case of forum shopping. Despite these judgments, continuation of such trend appears extremely disturbing."

The court permitted the petitioners to approach the respective jurisdictional High Courts to challenge all four FIRs and the ECIR within two weeks.

Case details

Gagan Baba vs Samit Mandal | 2023 LiveLaw (SC) 500 | CONMT.PET.(C) No. 774/2023 in Crl.A. No. 463/2022 | 4 July 2023

Headnotes

Code of Criminal Procedure, 1973 ; Section 482 - Trend of projecting a purely civil financial dispute as a criminal matter with a view to intimidate and in abuse of the criminal process - In “Priyanka Srivastava Vs. State of U.P.”, (2015) 6 SCC 287, this Court had noticed that taking recourse to criminal law by bypassing statutory remedies to bring the financial institutions on their knees, has the inherent potentiality to affect the marrows of economic health of the nation. Further, in “Vijay Kumar Ghai & Anr. Vs. State of W.B. & Ors.” (2022) 7 SCC 124, this Court quashed the criminal proceedings being abuse of law in a purely civil financial dispute and being a case of forum shopping. Despite these judgments, continuation of such trend appears extremely disturbing.

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