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Synopsis

The Supreme Court recently observed that courts are required to apply great deal of caution in issuing process, particularly when the matter is of civil nature.

The court emphasised the prevalent impression that civil remedies, being time-consuming do not adequately protect the interests of creditors or lenders, should be discouraged and rejected as criminal procedure cannot be used to apply pressure and the failure to do so results in the breakdown of the rule of law and amounts to misuse and abuse of the legal process.

A bench of Chief Justice of India Sanjiv Khanna and Justice Sanjay Kumar took exception to Uttar Pradesh police lodging an FIR for offences of cheating, criminal breach of trust and the judicial magistrate issuing process against the appellants Rikhab Birani and Sadhana Birani on their failure to refund Rs 19 lakh to complainant Shilpi Gupta and her husband.

The complainant allegedly failed to pay the balance amount of sale consideration of Rs 1.35 cr for a godown at Kanpur. The accused claimed they had to sell the premises at a lower price of Rs 90 lakh only, making them suffer a loss of Rs 45 lakh.

The court noted the parties here did not initiate any civil proceedings. The complainant twice approached the Metropolitan Magistrate for lodging the FIR by filing private complaints and both the occasions, their plea was dismissed by a detailed order. 

However, despite this, the complainant approached the police which registered FIR and subsequently issued a charge sheet. The Metropolitan Magistrate, Kanpur Nagar, notwithstanding the two earlier orders, passed on the same allegations, dismissing the criminal complaints of Shilpi Gupta, passed an order of January 17, 2024 taking cognizance and summoning the appellants, Rikhab Birani and Sadhna Birani. 

"We are constrained to pass this detailed speaking order, as it is noticed that, notwithstanding the law clearly laid down by this court on the difference between a breach of contract and the criminal offence of cheating, we are continuously flooded with cases where the police register an FIR, conduct investigation and even file chargesheet(s) in undeserving cases," the bench said.

Reference was made to the judgment in Thermax Limited and Others Vs K M Johny and Others, (2011) which held that courts should be watchful of the difference between civil and criminal wrongs, though there can be situations where the allegation may constitute both civil and criminal wrongs. Further, there has to be a conscious application of mind on these aspects by the Magistrate, as a summoning order has grave consequences of setting criminal proceedings in motion.

"Though the Magistrate is not required to record detailed reasons, there should be adequate evidence on record to set criminal proceedings into motion. The Magistrate should carefully scrutinize the evidence on record and may even put questions to the complainant/investigating officer etc. to elicit answers to find out the truth about the allegations. The summoning order has to be passed when the complaint or chargesheet discloses an offence and when there is material that supports and constitutes essential ingredients of the offence. The summoning order should not be passed lightly or as a matter of course", the bench emphasised.

The appellants, Rikhab Birani and Sadhna Birani preferred a petition under Section 482 of the CrPC before the Allahabad High Court, which dismissed their plea by the impugned order of May 09, 2024, notwithstanding these facts, stating that at that stage, only a prima facie case was to be seen in the light of the law laid down by this court. 

Case Title: Rikhab Birani v. State of Uttar Pradesh