Filing of criminal complaints to settle civil disputes

Dispute Resolution

Filing of criminal complaints to settle civil disputes

By on 09 May 2020


Authored by Chinmay J Mirji and Charitha V

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 the filing of civil suits or initiation of arbitration proceedings.

This mechanism of settling civil disputes has been increasingly used for recovery of the 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.