Criminal Color to Civil Cases and Judicial Remedies
Since the past few decades, there has been a notable spike in the number of frivolous criminal complaints being filed to settle civil disputes. Majority of civil disputes related to family inheritance, partitions, property, will execution, disputes between two companies or disputes resulting from a contract between two parties – the general tendency is to lodge a criminal complaint against the opposite party in addition to the filing of civil suits or initiation of arbitration proceedings. This mechanism of settling civil disputes has been increasingly used for recovery of the alleged outstanding amount payable by one party to another in the course of business transactions bound by contracts. The delay in the adjudication of civil disputes has led to converting civil disputes into criminal cases. Further, the quick relief offered by a criminal prosecution as opposed to a civil dispute encourages the litigant to initiate false and vexatious proceedings.
High Court may quash the criminal proceedings if it finds that the criminal proceedings are a result of malice or ill-will on the part of the complainant, cause abuse of the process of law or are otherwise vexatious in nature. This provision is applicable to both civil and criminal cases and is meant to ensure the quashing of the criminal proceedings if it finds that the allegations made in the complaint are false or frivolous.
Jurisdiction of Court
Jharkhand High Court in Shiv Shankar Prasad and anr v The State of Jharkhand reiterated that both civil case and criminal proceedings can be initiated simultaneously, given that some sense of “criminality” is involved in the allegations. The observation was made while hearing a quashing plea for the alleged offense of cheating while a suit for recovery of money.
If the dispute beforehand appears to be of Civil nature but has been given a criminal colour by the first informant for extraneous considerations, such kinds of criminal cases can be quashed by the High Courts by exercising powers and jurisdictions provided under Article 226 of the Indian Constitution read with section 482 of Criminal Procedure Code (CrPC).
In Usha Chakraborty. v. State of West Bengal, 2022, the Supreme Court has held that criminal proceedings can be quashed in exercise of powers under Section 482 CrPC when it is found that the attempt was to give a “cloak of criminal offence” to a dispute which is essentially of civil nature. A Bench of Justices Ajay Rastogi and CT Ravikumar passed the above judgment in a criminal appeal arising out of a judgment passed by the Calcutta High Court. The appellants had approached the High Court under Section 482 Cr.P.C. seeking quashment of F.I.R. No. 189/2017 under Sections 323, 384, 420 and 120B of Indian Penal Code raising various grounds. The High Court declined to exercise the jurisdiction under Section 482 Cr.P.C. holding that perusal of the case diary as also the materials prima facie made out a case for investigation.
“Jurisdiction under Section 482 Cr.P.C. is to be exercised with care and caution and sparingly. To wit, exercise of the said power must be for securing the ends of justice and only in cases where refusal to exercise that power may result in the abuse of process of law”
The court in Nagender Yadav vs State of Telangana, 2022, also said, “while no one with a legitimate cause or grievance should be prevented from seeking remedies available in criminal law, a complainant who initiates or persists with a prosecution, being fully aware that the criminal proceedings are unwarranted and his remedy lies only in civil law, should himself be made accountable, at the end of such misconceived criminal proceedings”.
The Court also referred to the precedent Paramjeet Batra v. State of Uttarakhand & Ors, 2013, whereby it was held -“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”
In Mitesh Kumar J. Sha v. The State of Karnataka & Ors. 2021, the facts of the case were that a complaint was levied against the Appellants alleged criminal breach of trust and cheating as the builder company builder company which was entitled to sell only 9 flats in its favour, has instead executed sale deed for 13 flats in total and accordingly was liable for criminal prosecution and cannot evade criminal liability on a mere premise that a civil dispute already pending between the parties.
In the arbitration proceedings, the arbitrator partly allowed the claims of the Appellants as well as Respondent No. 2. The arbitrator held that unilateral revocation of GPA by Respondent No. 2 was illegal and that the company had the right to effectuate sale agreements/sale deeds in terms of MoU. Furthermore, regarding the question of sale of four excess flats by the Appellants, the question was left unanswered in the arbitral award as Respondent No. 2 had withdrawn his claim prayed for in paras (e), (f) and (g) of the written submissions in light of pending civil proceedings, with liberty to pursue the issue in those proceedings.Aggrieved by the award, Respondent No 2 preferred a challenge.
Appellants argued that the averments in the complaint, read on its face, do not disclose the ingredients necessary to constitute offenses under the Penal Code, that the “complaint filed by the first Respondent against the Appellants constitutes an abuse of process of court and is liable to be quashed.”
Respondents contested that, the ingredients of the offenses Under Sections 406 and 420 Indian Penal Code cannot be said to be absent on the basis of the allegations in the complaint/FIR/charge sheet. We would like to add that whether the allegations in the complaint are otherwise correct or not, has to be decided on the basis of the evidence to be led during the course of trial. Simply because there is a remedy provided for breach of contract or arbitral proceedings initiated at the instance of the Appellants, that does not by itself clothe the court to come to a conclusion that civil remedy is the only remedy, and the initiation of criminal proceedings, in any manner, will be an abuse of the process of the court for exercising inherent powers of the High Court Under Section 482 Code of Criminal Procedure for quashing such proceedings. It was further submitted that the Appellants after selling a property that they were unauthorized to sell cannot evade a criminal case merely on the contention that the person whose property has been sold has filed a civil suit for recovery of the said property
Court held that the cause of action in civil and criminal proceedings instituted by Respondent No. 2 are separate and independent of each other, i.e., liability for breach of agreement is independent of the liability for the commission of offense Under Sections 405 and 415 of the Indian Penal Code. Therefore, criminal proceedings so instituted against the Appellants herein cannot be quashed.
In Randhir Singh v. The State of U.P. & Ors, 2021, high court held that, in this appeal, we are not concerned with the underlying civil disputes between the parties which are the subject matter of diverse civil proceedings which are pending between the Appellant and the private Respondent in the concerned civil courts. All those civil suits will obviously be decided on their own merits.
Court also said that though inherent power Under Section 482 of the Code of Criminal Procedure is very wide, it has to be exercised in exceptional cases. There can be no doubt that the jurisdiction Under Section 482 is not exercised for the asking, it is exercised with care in exceptional cases. The scope of interference with an FIR is much more restricted and ordinarily the Court does not interfere Under Article 226 of the Constitution of India, when there is an alternative remedy available to the applicant.
Thus, Court was of the opinion that this case was nothing but abuse of process of law on the part of the complainant to implicate the Appellants in a criminal case after a period of twelve years of execution of registered sale deeds in question, who is neither party to the sale deeds nor a member of the Society. Therefore, we allow the appeal and set aside the orders passed by the High Court and the courts below. Accordingly, the order passed by the Magistrate summoning the Appellants in the criminal complaint filed by Respondent 1, in respect of the offenses punishable Under Sections 406, 409, and 420 Indian Penal Code, also stands quashed.
In Vesa Holdings Private Limited vs State Kerala , 2015, Court held, it is the 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.
In Syed Yaseer Ibrahim v. State of Uttar Pradesh & Anr, 2022, it was found by the court that none of the ingredients of the offence punishable under Section 420 of the IPC have been found to exist after the investigation was complete. Neither the FIR nor the charge sheet contains any reference to the essential requirements underlying Section 420. In this backdrop, the continuation of the
prosecution against the appellant would amount to an abuse of the process where a civil dispute is sought to be given the color of a criminal wrongdoing.
In conclusion, when a civil case is given a criminal color, the High Court may quash the criminal proceedings if it finds that the criminal proceedings are a result of malice or ill will on the part of the complainant. The court may also quash the criminal proceedings if it finds that the allegations made in the complaint are false or frivolous.It is important to note that the power of the High Court to quash criminal proceedings under Section 482 of the CrPC is discretionary in nature and the court may exercise its discretion depending on the facts and circumstances of the case. The court may also take into consideration the interests of justice while deciding whether to quash the criminal proceedings or not.
Therefore, it is possible to quash criminal proceedings in a situation where a civil case is given a criminal color, provided the High Court is satisfied that the criminal proceedings are either an abuse of the process of law or are otherwise vexatious in nature.
Written by Parthvi Patel, student at United World School of Law.