High Court · 2025

1. Heard Sri Dharmendra Kumar Shukla, learned counsel for the applicant, Sri Neelkant Upadhyay, learned Additional Government Advocate for the State-opposite party no.1 and Shri Manish Tiwari, learned Senior Counsel assisted by Shri Aditya Gupta, learned counsel for opposite party no.2 and perused the record.

2. The present application under Section 482 Cr.P.C. has been filed by the applicant praying for quashing of charge sheet dated 27.08.2024 as well as entire proceeding of Criminal Case No.115138 of 2024 (State Vs. Sadbhav Engineering Limited Company and others), arising out of Case Crime No.185 of 2024, under Sections 406 and 409 IPC, P.S. Paschim Para, District Kanpur Nagar, pending in the Court of Additional Chief Judicial Magistrate, First, Kanpur Nagar.

3. Facts which emerge from the record are that the applicant is a practicing Chartered Accountant and is providing professional services on assignment basis to M/s Sadhbhav Engineering Limited (in short 'SEL').

4. On 05.09.2018, the National Highway Authority of India (in short 'NHAI') gave a contract to the SEL for construction of road and on 17.04.2021, opposite party no.2 was appointed as a Sub-Contractor for transportation of aggregates and GSB for the said project. On 14.09.2022, NHAI cancelled the contract awarded to SEL due to delay in completion of the said project. Subsequently, the contract was given to other Sub-Contractor, M/S Gawar Construction Limited through SEL.

5. On 05.07.2023 an amicable settlement took place between SEL and opposite party no.2 whereby opposite party no.2 was paid Rs.2,43,27,721/- against its outstanding claim. After getting the entire settlement amount, the opposite party no.2 sent a legal notice to SEL that the settlement agreement was got executed under duress and asked for further payment of Rs.1,18,86,216/-, which was replied by the SEL vide reply dated 19.08.2023.

6. Thereafter, opposite party no.2 filed a recovery suit against SEL, which is pending before the concerned Court.

7. During pendency of suit just to extort more money then the settled amount between the parties, opposite party no.2 filed an application under Section 156(3) Cr.P.C. before the Court concerned against SEL and others alleging that opposite party no.2 was Sub-Contractor, who was given contract to supply sand and aggregate for completion of project and initially, the payment was made regularly, but after sometime, the SEL refused to make payment, on which the Court of Chief Judicial Magistrate-I, Kanpur vide order dated 05.06.2024 directed the police to register an FIR, and in compliance of Court's order an FIR was registered on 07.06.2024 against SEL and others in which after investigation chargesheet has been submitted and the Court has taken cognizance. The chargesheet as well as entire criminal proceedings are under challenge by means of instant application.

8. Learned counsel for the applicant submits that the applicant was working as Chartered Accountant and providing professional services in the SEL and opposite party no.2 was Sub-Contractor of the SEL, who was given contract for transportation of GSB and aggregate for construction of road. He further submits that the NHAI had cancelled the contract awarded to SEL due to delay in completion of the project, and the contract was awarded to some other entity and opposite party no.2 was paid its dues, which was accepted by it by way of amicable settlement dated 05.07.2023. After getting the entire settled amount, opposite party no.2 had given a notice, filed a suit and thereafter, proceeded under Section 156(3) Cr.P.C. claiming that an amount of Rs.1,18,86,216/- is still outstanding. These proceedings have been initiated by concealing the fact that there was an amicable settlement between the parties and the settled amount was already paid to opposite party no.2.

9. Learned counsel for the applicant further submits that it is a purely civil dispute, which has already been settled by way of settlement dated 05.07.2023. After that opposite party no.2, who had turned greedy had also filed a suit for recovery against SEL, which is pending consideration. The opposite party no.2 has admitted that there was an amicable settlement between them but has filed the complaint by concealing the fact that he has received the settlement amount.

10. He further submits that applicant has never committed any offence as alleged by opposite party no.2. Further submission is that no offence against the applicant is disclosed and the court below has utterly failed to consider as no prima facie case is made out against the applicant. He submits that the present proceeding is nothing but a tactics to create pressure upon the applicant and give colour of criminality to the civil dispute.

11. Learned counsel for the applicant in support of his submission has placed reliance on the judgement of Hon'ble Apex court in Suresh C. Singhal & Ors Versus The State Of Gujarat & Ors. Criminal Appeal NO. 3862 OF 2024 has held that the courts while dealing with criminal cases which predominately involves essence of civil disputes can invoke the inherent powers. The court observed :- “19.6 This Court accordingly proceeded to quash the proceedings against the accused-Appellants therein on coming to the conclusion that the dispute predominantly involved and had overtures of civil disputes.

20. Now, coming to the case in hand, we have already observed that the dispute involved is primarily of civil nature. The aggrieved party, if any, would have been the Bank which has no grievance against the Appellants. Further, no loss has been caused to the Bank as is apparent from the calculations presented by the appellants before this Court. Not only the principal amount has been returned but an amount over and above thereto, on the basis of the settlement, has been received by the Bank. The case is at the very initial stage with the chargesheet having been filed. Keeping in view the observations made by this court in Narinder Singh (supra), in the facts of this case, it can safely be said that the criminal case which has been sought to be projected and proceeded with against the Appellants has an overwhelming and pre-dominant civil character arising out of pure commercial transaction where the parties have resolved their entire dispute amongst themselves.

12. He further placed reliance on the judgement of Hon'ble Apex court in Md.Ibrahim & Ors vs State Of Bihar & Anr 2010 AIR SCW 405 has held :- “7. This Court has time and again drawn attention to the growing tendency of complainants attempting to give the cloak of a criminal offence to matters which are essentially and purely civil in nature, obviously either to apply pressure on the accused, or out of enmity towards the accused, or to subject the accused to harassment. Criminal courts should ensure that proceedings before it are not used for settling scores or to pressurise parties to settle civil disputes. But at the same, it should be noted that several disputes of a civil nature may also contain the ingredients of criminal offences and if so, will have to be tried as criminal offences, even if they also amount to civil disputes.”

13. He also placed reliance on the judgement of Hon'ble Apex Court in the case of Anand Kumar Mohatta vs State (Govt. Of Nct Of Delhi) Department AIR 2019 SUPREME COURT 210 :- “We do not see how it can be contended by any stretch of imagination that the Appellants have misappropriated the amount or dishonestly used the amount contrary to any law or contract. In any case, we find that the dispute has the contours of a dispute of civil nature and does not constitute a criminal offence.

24. Having given our anxious consideration, we are of the view that assuming that there is a security deposit of Rs. One Crore and that he has misappropriated the dispute between the two parties can only be a civil dispute.

14. Learned counsel for the applicant has further placed reliance on the judgement of Hon'ble Apex Court in Indian Oil Corporation v. NEPC Ltd. and others wherein the Hon'ble Apex Court has observed as under: - “13. ….. 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…..” The Court noticed a growing trend in business circles to convert purely civil dispute into criminal cases. We find it strange that the complainant has not made any attempt for the recovery of the money of Rs. One Crore except by filing this criminal complaint. This action appears to be mala fide and unsustainable.“

15. Lastly, learned counsel for the applicant has placed reliance on the judgement of Hon’ble Apex court in the case of State of Karnataka v. L. Muniswamy and others, wherein it has been held : - “7. …..In the exercise of this wholesome power, the High Court is entitled to quash a proceeding if it comes to the conclusion that allowing the proceeding to continue would be an abuse of the process of the Court or that the ends of justice require that the proceeding ought to be quashed. The saving of the High Court's inherent powers, both in civil and criminal matters, is designed to achieve a salutary public purpose which is that a court proceeding ought not to be permitted to degenerate into a weapon of harassment or persecution. In a criminal case, the veiled object behind a lame prosecution, the very nature of the material on which the structure of the prosecution rests and the like would justify the High Court in quashing the proceeding in the interest of justice…..”

16. Per contra, Mr. Manish Tiwari, learned Senior Advocate appearing on behalf of opposite party no.2 states that the settlement agreement dated 05.07.2023 is false, null and void document. The agreement was entered between the applicant and a partner of opposite party no.2, who was not authorized to enter into an agreement on behalf of opposite party no.2, the opposite party no.2 is a partnership firm in which he is a partner.

17. After considering rival submissions and perusing the record, this Court is of the view that apparently it is a purely civil dispute regarding business transaction wherein the settlement agreement took place between the parties and as per settlement an amount of Rs.2,43,27,721/- was paid to opposite party no.2, which was accepted by him. It is a case where opposite party no.2 after accepting the settled amount initiated the instant criminal proceedings. It is evident that for recovery of money for which this criminal proceeding has been initiated, opposite party no.2 had earlier filed a Suit, which is still pending. The opposite party no.2 ought to have pursued the said dispute in the civil proceedings. During pendency of the Suit, opposite party no.2 has initiated instant criminal proceeding just to extract a pound of flash from them.

18. The entire criminal proceeding is nothing but an evil design. When there are different judicial forums/courts set up in the country, taking cognizance in this case would amount to encroaching the jurisdiction of other forums/courts and that would defeat the very purpose of setting up all such forums/Courts.

19. In view of the above, the charge sheet dated 27.08.2024 as well as entire proceeding of Criminal Case No.115138 of 2024 (State Vs. Sadbhav Engineering Limited Company and others), arising out of Case Crime No.185 of 2024, under Sections 406 and 409 IPC, P.S. Paschim Para, District Kanpur Nagar, pending in the Court of Additional Chief Judicial Magistrate, First, Kanpur Nagar are hereby quashed.

20. The instant Application U/S 482 Cr.P.C. is allowed. Order Date :- 18.4.2025 S.P. SANJAY PURI High Court of Judicature at Allahabad

1. Heard Sri Dharmendra Kumar Shukla, learned counsel for the applicant, Sri Neelkant Upadhyay, learned Additional Government Advocate for the State-opposite party no.1 and Shri Manish Tiwari, learned Senior Counsel assisted by Shri Aditya Gupta, learned counsel for opposite party no.2 and perused the record.

2. The present application under Section 482 Cr.P.C. has been filed by the applicant praying for quashing of charge sheet dated 27.08.2024 as well as entire proceeding of Criminal Case No.115138 of 2024 (State Vs. Sadbhav Engineering Limited Company and others), arising out of Case Crime No.185 of 2024, under Sections 406 and 409 IPC, P.S. Paschim Para, District Kanpur Nagar, pending in the Court of Additional Chief Judicial Magistrate, First, Kanpur Nagar.

3. Facts which emerge from the record are that the applicant is a practicing Chartered Accountant and is providing professional services on assignment basis to M/s Sadhbhav Engineering Limited (in short 'SEL').

4. On 05.09.2018, the National Highway Authority of India (in short 'NHAI') gave a contract to the SEL for construction of road and on 17.04.2021, opposite party no.2 was appointed as a Sub-Contractor for transportation of aggregates and GSB for the said project. On 14.09.2022, NHAI cancelled the contract awarded to SEL due to delay in completion of the said project. Subsequently, the contract was given to other Sub-Contractor, M/S Gawar Construction Limited through SEL.

5. On 05.07.2023 an amicable settlement took place between SEL and opposite party no.2 whereby opposite party no.2 was paid Rs.2,43,27,721/- against its outstanding claim. After getting the entire settlement amount, the opposite party no.2 sent a legal notice to SEL that the settlement agreement was got executed under duress and asked for further payment of Rs.1,18,86,216/-, which was replied by the SEL vide reply dated 19.08.2023.

6. Thereafter, opposite party no.2 filed a recovery suit against SEL, which is pending before the concerned Court.

7. During pendency of suit just to extort more money then the settled amount between the parties, opposite party no.2 filed an application under Section 156(3) Cr.P.C. before the Court concerned against SEL and others alleging that opposite party no.2 was Sub-Contractor, who was given contract to supply sand and aggregate for completion of project and initially, the payment was made regularly, but after sometime, the SEL refused to make payment, on which the Court of Chief Judicial Magistrate-I, Kanpur vide order dated 05.06.2024 directed the police to register an FIR, and in compliance of Court's order an FIR was registered on 07.06.2024 against SEL and others in which after investigation chargesheet has been submitted and the Court has taken cognizance. The chargesheet as well as entire criminal proceedings are under challenge by means of instant application.

8. Learned counsel for the applicant submits that the applicant was working as Chartered Accountant and providing professional services in the SEL and opposite party no.2 was Sub-Contractor of the SEL, who was given contract for transportation of GSB and aggregate for construction of road. He further submits that the NHAI had cancelled the contract awarded to SEL due to delay in completion of the project, and the contract was awarded to some other entity and opposite party no.2 was paid its dues, which was accepted by it by way of amicable settlement dated 05.07.2023. After getting the entire settled amount, opposite party no.2 had given a notice, filed a suit and thereafter, proceeded under Section 156(3) Cr.P.C. claiming that an amount of Rs.1,18,86,216/- is still outstanding. These proceedings have been initiated by concealing the fact that there was an amicable settlement between the parties and the settled amount was already paid to opposite party no.2.

9. Learned counsel for the applicant further submits that it is a purely civil dispute, which has already been settled by way of settlement dated 05.07.2023. After that opposite party no.2, who had turned greedy had also filed a suit for recovery against SEL, which is pending consideration. The opposite party no.2 has admitted that there was an amicable settlement between them but has filed the complaint by concealing the fact that he has received the settlement amount.

10. He further submits that applicant has never committed any offence as alleged by opposite party no.2. Further submission is that no offence against the applicant is disclosed and the court below has utterly failed to consider as no prima facie case is made out against the applicant. He submits that the present proceeding is nothing but a tactics to create pressure upon the applicant and give colour of criminality to the civil dispute.

11. Learned counsel for the applicant in support of his submission has placed reliance on the judgement of Hon'ble Apex court in Suresh C. Singhal & Ors Versus The State Of Gujarat & Ors. Criminal Appeal NO. 3862 OF 2024 has held that the courts while dealing with criminal cases which predominately involves essence of civil disputes can invoke the inherent powers. The court observed :- “19.6 This Court accordingly proceeded to quash the proceedings against the accused-Appellants therein on coming to the conclusion that the dispute predominantly involved and had overtures of civil disputes.

20. Now, coming to the case in hand, we have already observed that the dispute involved is primarily of civil nature. The aggrieved party, if any, would have been the Bank which has no grievance against the Appellants. Further, no loss has been caused to the Bank as is apparent from the calculations presented by the appellants before this Court. Not only the principal amount has been returned but an amount over and above thereto, on the basis of the settlement, has been received by the Bank. The case is at the very initial stage with the chargesheet having been filed. Keeping in view the observations made by this court in Narinder Singh (supra), in the facts of this case, it can safely be said that the criminal case which has been sought to be projected and proceeded with against the Appellants has an overwhelming and pre-dominant civil character arising out of pure commercial transaction where the parties have resolved their entire dispute amongst themselves.

12. He further placed reliance on the judgement of Hon'ble Apex court in Md.Ibrahim & Ors vs State Of Bihar & Anr 2010 AIR SCW 405 has held :- “7. This Court has time and again drawn attention to the growing tendency of complainants attempting to give the cloak of a criminal offence to matters which are essentially and purely civil in nature, obviously either to apply pressure on the accused, or out of enmity towards the accused, or to subject the accused to harassment. Criminal courts should ensure that proceedings before it are not used for settling scores or to pressurise parties to settle civil disputes. But at the same, it should be noted that several disputes of a civil nature may also contain the ingredients of criminal offences and if so, will have to be tried as criminal offences, even if they also amount to civil disputes.”

13. He also placed reliance on the judgement of Hon'ble Apex Court in the case of Anand Kumar Mohatta vs State (Govt. Of Nct Of Delhi) Department AIR 2019 SUPREME COURT 210 :- “We do not see how it can be contended by any stretch of imagination that the Appellants have misappropriated the amount or dishonestly used the amount contrary to any law or contract. In any case, we find that the dispute has the contours of a dispute of civil nature and does not constitute a criminal offence.

24. Having given our anxious consideration, we are of the view that assuming that there is a security deposit of Rs. One Crore and that he has misappropriated the dispute between the two parties can only be a civil dispute.

14. Learned counsel for the applicant has further placed reliance on the judgement of Hon'ble Apex Court in Indian Oil Corporation v. NEPC Ltd. and others wherein the Hon'ble Apex Court has observed as under: - “13. ….. 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…..” The Court noticed a growing trend in business circles to convert purely civil dispute into criminal cases. We find it strange that the complainant has not made any attempt for the recovery of the money of Rs. One Crore except by filing this criminal complaint. This action appears to be mala fide and unsustainable.“

15. Lastly, learned counsel for the applicant has placed reliance on the judgement of Hon’ble Apex court in the case of State of Karnataka v. L. Muniswamy and others, wherein it has been held : - “7. …..In the exercise of this wholesome power, the High Court is entitled to quash a proceeding if it comes to the conclusion that allowing the proceeding to continue would be an abuse of the process of the Court or that the ends of justice require that the proceeding ought to be quashed. The saving of the High Court's inherent powers, both in civil and criminal matters, is designed to achieve a salutary public purpose which is that a court proceeding ought not to be permitted to degenerate into a weapon of harassment or persecution. In a criminal case, the veiled object behind a lame prosecution, the very nature of the material on which the structure of the prosecution rests and the like would justify the High Court in quashing the proceeding in the interest of justice…..”

16. Per contra, Mr. Manish Tiwari, learned Senior Advocate appearing on behalf of opposite party no.2 states that the settlement agreement dated 05.07.2023 is false, null and void document. The agreement was entered between the applicant and a partner of opposite party no.2, who was not authorized to enter into an agreement on behalf of opposite party no.2, the opposite party no.2 is a partnership firm in which he is a partner.

17. After considering rival submissions and perusing the record, this Court is of the view that apparently it is a purely civil dispute regarding business transaction wherein the settlement agreement took place between the parties and as per settlement an amount of Rs.2,43,27,721/- was paid to opposite party no.2, which was accepted by him. It is a case where opposite party no.2 after accepting the settled amount initiated the instant criminal proceedings. It is evident that for recovery of money for which this criminal proceeding has been initiated, opposite party no.2 had earlier filed a Suit, which is still pending. The opposite party no.2 ought to have pursued the said dispute in the civil proceedings. During pendency of the Suit, opposite party no.2 has initiated instant criminal proceeding just to extract a pound of flash from them.

18. The entire criminal proceeding is nothing but an evil design. When there are different judicial forums/courts set up in the country, taking cognizance in this case would amount to encroaching the jurisdiction of other forums/courts and that would defeat the very purpose of setting up all such forums/Courts.

19. In view of the above, the charge sheet dated 27.08.2024 as well as entire proceeding of Criminal Case No.115138 of 2024 (State Vs. Sadbhav Engineering Limited Company and others), arising out of Case Crime No.185 of 2024, under Sections 406 and 409 IPC, P.S. Paschim Para, District Kanpur Nagar, pending in the Court of Additional Chief Judicial Magistrate, First, Kanpur Nagar are hereby quashed.

20. The instant Application U/S 482 Cr.P.C. is allowed. Order Date :- 18.4.2025 S.P. SANJAY PURI High Court of Judicature at Allahabad