Civil disputes cannot be resolved through the criminal prosecution: Supreme Court of India.
Case Title: Jay Shri v. The State of Rajasthan
Case No: Criminal Appeal No. _ of 2024 (arising out of SLP(Crl.) No. 14423 of 2023)
Decided on: 19th January, 2024
CORAM: THE HON’BLE MR. JUSTICE SANJIV KHANNA AND HON’BLE MR. JUSTICE DIPANKAR DATTA
Facts of the Case
The accused individuals were accused of entering into a sales agreement with the complainant, receiving Rs. 80 Lacs, and subsequently failing to complete the registration or refund the money. Consequently, an FIR was filed against them under Sections 420 and 120-B (criminal conspiracy) of the Indian Penal Code. The Supreme Court heard a criminal appeal challenging the order issued by the Jodhpur bench of the Rajasthan High Court.
Dissatisfied with the outcome, the accused sought anticipatory bail from the High Court. In their plea, among other arguments, they asserted that the matter pertained to a breach of contract and fell within the domain of civil disputes. Despite their contentions, the High Court rejected their bail plea, prompting them to file the current appeal.
Issue
The matter at hand involves assessing the practice of employing criminal prosecution as a means to settle disputes that are purely of a civil nature.
Legal Provision
Section 420 in the Indian Penal Code deals with Cheating and dishonestly inducing delivery of property. It states that whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.
Section 120-B of the Indian Penal Code makes it a punishable offence for a person to be a party to a criminal conspiracy to commit an offence that is punishable with death, imprisonment for life, or rigorous imprisonment for a term of two years or more.
Court’s analysis and decision
The Supreme Court made a preliminary observation stating that a mere violation of a contract does not constitute an offense of cheating or breach of trust under the Indian Penal Code unless there is evidence of fraudulent or dishonest intent.
Furthermore, the Division Bench, comprising Justices Sanjiv Khanna and Dipankar Datta, disapproved of the transformation of purely civil disputes into criminal cases. Drawing on the precedent set in Indian Oil Corporation v. NEPC India Ltd. and Others, the Court emphasized that any attempt to resolve civil disputes and claims, devoid of any criminal wrongdoing, by exerting pressure through criminal prosecution should be criticized and discouraged.
After careful consideration, the Court found merit in the appellants’ request for anticipatory bail. Consequently, the Court approved their bail, explicitly stating that the observations made during this decision should not influence the final determination of the case.
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Written by- Afshan Ahmad