India:

Filing Of Criminal Complaints To Settle Civil Disputes

17 September 2020

HSA Advocates

The last few years has witnessed a significant hike 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 filing of civil suits or
initiation of arbitration proceedings.

This mechanism of settling civil disputes has been increasingly
used for recovery of alleged outstanding amount payable by one
party to another in the course of business transaction bound by
contracts. The delay in 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.

This growing trend of converting pure civil disputes into
criminal cases has drawn flak from the courts of India and the same
has been upheld by the Hon’ble Apex Court. A summary of the
judgments passed by the Hon’ble Apex Court is set out
below:

• Govind Prasad Kejriwal Vs.
  State of Bihar & Anr: In the judgement dated January
  31, 2020, the apex court has observed that ‘It cannot be
  disputed that while holding the inquiry under Section 202 of CrPC,
  the Magistrate is required to take a broad view and a prima facie
  case. However, even while conducting/holding an inquiry under
  Section 202 of CrPC, the Magistrate is required to consider whether
  even a prima facie case is made out or not and whether the criminal
  proceedings initiated are an abuse of process of law or the Court
  or not and/or whether the dispute is purely of a civil nature or
  not and/or whether the civil dispute is tried to be given a colour
  of criminal dispute or not. As observed hereinabove, the dispute
  between the parties can be said to be purely of a civil nature.
  Therefore, this is a fit case to quash and set aside the impugned
  criminal proceedings.’ Therefore, the underlying principle
  observed by the Hon’ble apex court is that filing a criminal
  complaint to settle civil disputes is nothing but an abuse of
  process of law and the Court.

• The Commissioner of Police
  & Ors Vs Devender Anand & Ors: The Hon’ble
  apex court vide order dated August 8, 2019 has observed that
  ‘Even considering the nature of allegations in the complaint,
  we are of the firm opinion that no case is made out for taking
  cognizance of the offence under Section 420/34 of IPC. The case
  involves a civil dispute and for settling a civil dispute, the
  criminal complaint has been filed, which is nothing but an abuse of
  the process of law.

• M/S Indian Oil Corporation Vs
  M/S Nepc India Ltd. And Ors: The Hon’ble apex court
  vide order dated July 20, 2006 has concurred with its order passed
  in the matter of G. Sagar Suri v. State of U.P, that, ‘it is
  to be seen if a matter, which is essentially of civil nature, has
  been given a cloak of criminal offence. Criminal proceedings are
  not a short cut of other remedies available in law.’

The bench comprising of Justice H.K. Sema and Justice R V
Raveendra while deciding an appeal filed by Indian Oil Corporation,
challenging an order of the Madras High Court quashing criminal
cases filed by it against NEPC India have sent out a clear warning
that ‘Any effort to settle civil claims and disputes which
does not encompass any criminal offence, by applying pressure
through criminal prosecution should be deprecated and
discouraged.’ . Further, the bench has observed that
‘While no one with a legitimate cause or grievance should be
prevented from seeking remedies 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.’

• Binod Kumar Vs. State of
  Bihar: The Hon’ble apex court reiterated the
  principle of law that criminal proceedings are not to be used as a
  shortcut for civil remedies and since no case of cheating is made
  out in any of the FIRs, the petitions are allowed and FIRs was
  quashed.

The conclusions drawn from all the above-mentioned judgements,
essentially stipulates that courts have time and again deprecated
the initiation of false criminal proceedings in cases having the
elements of a civil dispute. Despite several warning and judgements
passed by the Hon’ble apex court against using criminal
complaints as a weapon to settle civil disputes, there has been no
change in the number of criminal cases being filed. However, it
becomes essential to not let such frivolous criminal complaints act
as a bargaining weapon to attain a speedy settlement or to get the
desired results. Criminal complaints are not to be used as a means
to intimidate people to achieve their goals of settling civil
disputes. It becomes the duty of the counsels to help uphold the
principle of natural justice in the view of the judgements passed
by the Hon’ble apex court and make sure that civil disputes
given the colour of criminal offence should be quashed and the
guilty must be held accountable for abusing the process of law and
the courts.

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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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