SUPREME COURT CAUTIONS PARITES AGAINST CONVERTING CIVIL DISPUTES INTO CRIMINAL CASES

A two Judge Bench of the Supreme Court comprising of Justice Sanjeev Khanna and Justice Dipankar Datta passed an Order dated 19.01.2024 in Jay Shri & Anr. V. State of Rajasthan SLP(Crl.) No. 14423 of 2023 where the Supreme Court allowed the Appeal and provided anticipatory bail to the Appellants namely Jay Shri and Hitesh Kela.

Facts

The present Appeal was filed in the Supreme Court challenging the arrest of the Appellants as an F.I.R, bearing No. 0220/2022 dated 26.08.2022 was registered with the Police Station Osiyan, District- Jodhpur Rural, Rajasthan. The Appellants were charged for the offence(s) under Sections 420 of the Indian Penal Code 1860 (IPC) (Cheating and dishonestly inducing delivery of property) and 120-B of IPC (Punishment of criminal conspiracy).

The Complaint filed by the Complainants led to the arrest of the Appellants. The trial is currently pending in the Ld. District Court, Jodhpur. The Court, however, rejected the Bail Application of the Appellants.

Aggrieved, the Appellants approached the High Court of Rajasthan in a Bail Application in SBCRMBA-10746-2023, which was dismissed, vide Order dated 10.10.2023.

Aggrieved by the High Court Order dated 10.10.2023, the Appellants approached the Hon’ble Supreme Court in SLP(Crl.) No. 14423 of 2023.

Issues

I) Whether the Complainants were justified in converting a civil suit of non-execution of Agreement into a criminal case?

II) Whether the Court should provide anticipatory bail to the Appellants?

Decision by the Supreme Court

The Apex Court was of the opinion that mere breach of contract does not amount to an offence under Section 420 IPC or Section 406 IPC (Punishment for criminal breach of trust), unless fraudulent or dishonest intention is shown right at the beginning of the transaction.

Placing reliance upon Sarabjit Kaur v. State of Punjab and Another[1], the Apex Court observed that, “Prima facie, in our opinion, mere breach of contract does not amount to an offence under Section 420 or Section 406 of the Indian Penal Code, 1860 (For short, IPC), unless fraudulent or dishonest intention is shown right at the beginning of the transaction.”

Reliance was also placed upon Indian Oil Corpn. v. NEPC India Ltd. and Others[2], wherein it was held that “in order to affirm that any effort to settle civil disputes and claims, which do not involve any criminal offence, by applying pressure through criminal prosecution should be deprecated and discouraged.”

Relying on the aforementioned judgements, the Supreme Court was satisfied that the Appellants had made out their case for grant of anticipatory bail. Therefore, the Apex Court granted bail by directing the arresting / investigating officer to release them as per the terms and conditions of the Trial Court. Moreover, the Appellants were directed to comply with the provisions of Section 438 of the Code of Criminal Procedure 1973 (CrPC) (Direction for grant of bail to person apprehending arrest).

Thus, the Appeal was allowed by the Supreme Court and the impugned High Court Order dated 10.10.2023 was set aside.

Conclusion

The Supreme Court has time and again cautioned about converting purely civil disputes into criminal cases and the Court again reiterated by way of this Order that parties must refrain from converting civil disputes into criminal cases just for the sake of pressurizing the opposite party to settle. Thus, the Appeal by the Appellants was allowed.

 

Arjav Jain

Associate

The Indian Lawyer & Allied Services

 

[1] LQ/SC/2023/216

[2] LQ/SC/2006/634