'Unfortunate, Abuse Of Process', SC Quashes Criminal Proceedings In Civil Dispute

The Supreme Court has quashed criminal proceedings in a 2006 cheating case arising from a dispute over the sale of a motor vehicle, holding that the matter was civil in nature and did not disclose any dishonest intention to attract criminal liability.

A Bench of Justices Sanjay Karol and Prashant Kumar Mishra allowed appeals filed by Indra Jeet Singh and another against two judgments of the Allahabad High Court dated January 24, 2017 and May 18, 2018, which had dismissed their petitions under Section 482 of the Code of Criminal Procedure (CrPC) seeking quashing of summons, rejection of a closure report, and setting aside of non-bailable warrants.

The Court observed that the continuation of proceedings in a dispute pertaining to the payment of money and handing over possession of a motor vehicle “in the realm of criminal laws, would be unfortunate as also an abuse of process of law.” It added that no dishonest intention was shown to satisfy the requirement of Section 420 of the Indian Penal Code (IPC), which deals with cheating.

The case originated from a complaint lodged by the respondent on June 22, 2009 under Section 156(3) CrPC, alleging offences under Sections 395, 120B, 420, 406, and 506 IPC. After investigation, the police submitted a closure report on August 11, 2009, stating that no offence was made out. However, the Chief Judicial Magistrate, Gautam Buddha Nagar, rejected the closure report and took cognizance under Section 190(1)(b) CrPC, issuing summons to the appellants.

The appellants then approached the High Court under Section 482 CrPC, but their petitions were dismissed, prompting them to file appeals before the Supreme Court.

Examining the record, the Bench noted that the case involved the sale of a motor vehicle by the complainant to the appellants for a consideration of ₹4 lakh. Some part of the payment was made, but a dispute later arose regarding the balance amount and delivery of possession. The Court said that the disagreement over consideration and possession, on the face of it, was a civil transaction “sought to be projected as criminal in nature.”

“We notice that the transaction goes back to 25th April 2006, and parties have been litigating since then,” the Bench observed, adding that the facts squarely fell within the principles laid down in State of Haryana v. Bhajan Lal (1992 Supp (1) SCC 335) and subsequent rulings such as Kunti v. State of Uttar Pradesh (2023) 6 SCC 109.

In Kunti, the Court had reiterated that mere breach of contract does not constitute cheating unless fraudulent or dishonest intention is shown at the inception of the transaction. The Bench cited several earlier rulings, including Sarabjit Kaur v. State of Punjab (2023) 5 SCC 360, where the Court held that failure to keep a promise, without more, cannot justify criminal prosecution for cheating.

Referring to its decision in ARCI v. Nimra Cerglass Technics (P) Ltd. (2016) 1 SCC 348, the Court underlined the distinction between civil breach and criminal fraud, explaining that criminal liability arises only when dishonest intent exists from the beginning of the transaction. It also cited Vijay Kumar Ghai v. State of West Bengal (2022) 7 SCC 124, where the Court warned that criminal process should not be invoked to settle civil scores.

Reiterating these principles, the Bench said, “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.”

Having perused the complaint, investigation report, and other materials, the Court concluded that the case lacked the essential element of fraudulent intention required to sustain a charge under Section 420 IPC. The dispute, it held, was purely civil in character and did not warrant criminal prosecution.

Allowing the appeals, the Court set aside the High Court’s orders and quashed the proceedings pending before the trial court. It further held that since the criminal case was rendered nugatory, the non-bailable warrants issued against the appellants would also stand void.

The judgment reinforces the settled position that disputes arising from contractual or monetary transactions, absent proof of initial dishonest intent, must be resolved through civil remedies rather than criminal proceedings.

Case Title: Indra Jeet Singh & Anr v. The State of Uttar Pradesh & Anr

Bench: Justices Sanjay Karol and Prashant Kumar Mishra

Date of Judgment: September 18, 2025