SC Reaffirms Quashing Criminal Cases in Civil Disputes: Naresh Kumar v. Karnataka
Supreme Court Reaffirms: High Courts Must Quash Prosecutions Arising from Civil Transactions
Case Title: Naresh Kumar & Ors. v. State of Karnataka & Anr.
The Supreme Court has reiterated that High Courts should exercise their inherent powers to quash prosecutions based on criminal complaints arising out of purely civil transactions.
Reference to Paramjeet Batra v. State of Uttarakhand (2013)
A bench comprising Justice Sudhanshu Dhulia and Justice PB Varale, while overturning the High Court's decision, quashed the criminal case against the accused. The Court noted that continuing such proceedings in the absence of criminal intent constitutes an abuse of the process of law.
The High Court had previously refused to quash the pending criminal case. However, the judgment authored by Justice Sudhanshu Dhulia, relying on Usha Chakraborty & Ors. v. State of West Bengal & Ors., held that where a dispute is essentially civil but given a cloak of a criminal offence, it can be quashed using inherent powers under Section 482 CrPC.
The Substance of the Dispute
The essence of the dispute was a complaint filed under Sections 406, 420, and 506 of the IPC against the appellant for paying only ₹62 lakhs against a total claim of ₹1,01,58,574/- for assembling cycles. The allegation was that the appellant cheated the complainant by getting more cycles assembled without paying the full assembly fees.
Key Findings of the Supreme Court
The Court disagreed with the High Court's findings for two primary reasons:
- The dispute is primarily civil, involving calculations of the number of cycles assembled and the resulting payments.
- The complainant failed to establish a "dishonest intent" on the part of the appellants from the very beginning. The mere fact that there was a discrepancy in the figures of cycles assembled does not prove an intent to cheat.
Observation on Paramjeet Batra Case:
"A complaint disclosing a civil transaction 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 a 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."
Furthermore, the Court clarified that every breach of contract does not necessarily give rise to the offence of cheating unless fraudulent or dishonest intent is shown from the inception of the contract.
Accordingly, the appeal was allowed, and the criminal proceedings pending against the accused were quashed.