{"id":312699,"date":"2024-02-01T17:00:18","date_gmt":"2024-02-01T11:30:18","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=312699"},"modified":"2024-02-20T16:14:25","modified_gmt":"2024-02-20T10:44:25","slug":"supreme-court-quashes-case-commercial-dispute-given-colour-of-criminal-offence","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2024\/02\/01\/supreme-court-quashes-case-commercial-dispute-given-colour-of-criminal-offence\/","title":{"rendered":"\u2018No element of criminality\u2019: Supreme Court quashes case of commercial dispute given colour of criminal offence"},"content":{"rendered":"
\n

Supreme Court:<\/span> In a challenge against Allahabad High Court’s dismissal of application seeking to quash a criminal case for criminal breach of trust and intimidation, the Division Bench of Aniruddha Bose*<\/span> and Sanjay Kumar, JJ. found the matter to be a commercial dispute without any element of criminality and quashed the case.<\/p>\n

Factual Background<\/p>\n

The appellant was posted as Head of factory of Exide Industries Limited (‘EIL’) while the complainant ran a proprietary as Ambika Gases and was a supplier of Dissolved Acetylene Gas (‘DA Gas’) used for manufacturing battery in EIL Factory. The matter revolves around a purchase order dated 1-04-2019 for the supply of DA Gas, which was amended twice — first o 18-07-2019 to increase the rate from Rs 1.55 to Rs 1.65 per unit, and the second amendment was made on 20-12-2019 to bring down the rate to 1.48 per unit. The complainant raised an invoice with the said rates for a total sum of Rs.9,36,693.18, which was not paid, and it became the root cause of the dispute.<\/p>\n

The complainant instituted a case before the Court of Chief Judicial Magistrate for non-payment of the aforesaid amount for work done in December 2019. It was alleged that when work stopped due to non-payment, followed by a letter with a quotation fixing the rate of job work done at the rate of Rs. 1.40 per piece w.e.f. April 2019, while the work was completed in December 2019 wherein, request for changing rate at the rate of Rs 1.48 per piece was accepted w.e.f. 20-12-2019. It was alleged that deliberately, with an intention to cause financial loss and not paying the money, the applicant committed criminal breach of trust, abused him with filthy language and threatened of killing him.<\/p>\n

The Magistrate issued summons for trial under Sections 406<\/a>, 504<\/a> and 506<\/a> of the Penal Code, 1860<\/a> (‘IPC’). The appellant approached the Allahabad High Court with an application under Section 482<\/a> of the Criminal Procedure Code, 1973<\/a> (‘CrPC’) seeking to quash the summons and complaint, which was dismissed on 23-03-2023 for involving adjudication of disputed questions of fact. The matter was appealed before the Supreme Court in the instant matter with the claim that the complaint does not disclose any criminal offence, but a commercial dispute ought to be determined by a Civil Court.<\/p>\n

Court’s Analysis<\/p>\n

The Court referred to Neeharika Infrastructure (P) Ltd. v. State of Maharashtra<\/span>, (2021) 19 SCC 401<\/a> which laid the factors to be examined for quashing FIR at the threshold relating to factors which would apply to a proceeding, which forms the subject matter of the instant case with reference to seven-point edict laid in State of Haryana v. Bhajan Lal<\/span>, 1992 Supp (1) SCC 335<\/a>. It further referred to R.P. Kapur v. State of Punjab<\/span>, 1960 SCC OnLine SC 21<\/a> laying the principles for quashing.<\/p>\n

The Court highlighted that the impugned judgment pointed towards the applicant’s right of discharge to be taken up before the Trial Court. The Court referred to appellant’s reliance on Deepak Gaba v. State of U.P.<\/span>, (2023) 3 SCC 423<\/a> regarding basic ingredients of complaint under Sections 405<\/a> and 406<\/a> of IPC<\/a> involving similar facts.<\/p>\n

Coming to allegations under Sections 504<\/a> and 506<\/a> of IPC<\/a>, the court perused the complaint petition and the initial depositions and noted that only its last portion surfaced around it and only the complainant’s father mentioned abuse, etc. While going through the fact of admitted commercial relationship, dispute on rate and the lack of surfacing ingredients of IPC<\/a> Section 405<\/a>.<\/p>\n

The Court observed that “Such commercial disputes over variation of rate cannot per se give rise to an offence under Section 405<\/a> of the 1860 Code<\/a> without presence of any aggravating factor leading to the substantiation of its ingredients.” It further explained that it could not come to prima facie finding of any dishonest misappropriation or conversion of any material for personal use of appellant in relation to gas supply work done by the complainant, which was done in course of regular commercial transactions. The Court rejected the claims of misappropriation or conversion of subject property (DA Gas). Based on material available, the Court was of the opinion that there was no evidence for commission of offence under IPC<\/doclink> Sections 405<\/a> or 406<\/a>. It further pointed out the High Court’s failure to apply the test formulated in Dalip Kaur v. Jagnar Singh<\/span>, (2009) 14 SCC 696.<\/a> The Court also referred to Binod Kumar v. State of Bihar<\/span>, (2014) 10 SCC 663<\/a> wherein, the Court gave reasoning for quashing the criminal proceeding for retention of bill amount in course of commercial transaction.<\/p>\n

The Court cited Jagdish Ram v. State of Rajasthan<\/span>, (2004) 4 SCC 432<\/a> to reiterate that “While it is true that at the stage of issuing summons a magistrate only needs to be satisfied with a prima facie case for taking cognizance, the duty of the magistrate is also to be satisfied whether there is sufficient ground for proceeding”. It further explained that “At the stage of issue of summons, detailed reasoning as to why a Magistrate is issuing summons, however, is not necessary.” However, coming to the instant case, the Court was satisfied that the complainant’s allegations did not give rise to offences summoned for trial. It commented that “A commercial dispute, which ought to have been resolved through the forum of Civil Court has been given criminal colour by lifting from the penal code certain words or phrases and implanting them in a criminal complaint. The learned Magistrate here failed to apply his mind in issuing summons and the High Court also failed to exercise its jurisdiction under Section 482<\/a> of the 1973 Code<\/a> to prevent abuse of the power of the Criminal Court.”<\/p>\n

While agreeing with the appellant’s option to seek discharge of proceeding, the Court found that no case at all was made out to justify invoking machinery of the Criminal Courts, tagging the dispute per se as commercial bereft of having any element of criminality.<\/p>\n

Since the appellant worked for EIL and the complainant’s allegations were against EIL, it was argued that the complaint should not have been entertained without arraigning EIL as an accused. The Court reasoned against the same explaining that “complaint case cannot be rejected at the nascent stage on the sole ground of not implicating the company.”<\/p>\n

The Court set aside the impugned judgment and quashed the criminal complaint and summons and consequential proceedings.<\/p>\n

[Sachin Garg v. State of UP, 2024 SCC OnLine SC 82<\/a>, decided on 30-01-2024<\/span>]<\/p>\n

Judgment authored by: Justice Aniruddha Bose<\/span><\/strong><\/p>\n\n

Advocates who appeared in this case:<\/p>\n

For Petitioner:<\/span> Advocate on Record Misha Rohatgi, Advocate Sushil Shukla, Advocate Nakul Mohta, Advocate Devansh Srivastava, Advocate Alina Merin Mathew, Advocate Muthu Thangathurai<\/p>\n

For Respondent:<\/span> Advocate on Record Rajat Singh, Advocate Aviral Saxena, Advocate Sarthak Chandra, Advocate Arun Pratap Singh Rajawat, Advocate Vanshaja Shukla, Advocate on Record Divya Jyoti Singh<\/p>\n

Buy Code of Criminal Procedure, 1973  HERE<\/a><\/h3>\n

\"Code<\/a><\/p>\n

Buy Penal Code, 1860   HERE<\/a><\/h3>\n

\"penal<\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

“A commercial dispute, which ought to have been resolved through the forum of Civil Court has been given criminal colour by lifting from the penal code certain words or phrases and implanting them in a criminal complaint.”<\/p>\n","protected":false},"author":67513,"featured_media":312718,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,9],"tags":[2822,36639,14341,31928,37361,5363],"class_list":["post-312699","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-casebriefs","category-supremecourt","tag-Allahabad_High_Court","tag-commercial-dispute","tag-criminal-breach-of-trust","tag-criminal-case","tag-criminal-intimidation","tag-supreme-court"],"yoast_head":"\nSupreme Court quashes case of commercial dispute given colour of criminal offence<\/title>\n<meta name=\"description\" content=\"Supreme Court quashed a 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HC | Criminal cases involving offences of civil nature may be quashed where parties have reached settlement","author":"Bhumika Indulia","date":"July 10, 2019","format":false,"excerpt":"Orissa High Court: Dr A.K. Mishra J., allowed a criminal miscellaneous appeal to quash an on-going proceeding and also a cognizance order dated 07-02-2011 passed by the Learned Sub-Divisional Judicial Magistrate on the ground of settlement reached between the parties. In the instant case, the petitioner, husband and the opposite\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":355935,"url":"https:\/\/www.scconline.com\/blog\/post\/2025\/08\/07\/sc-sets-aside-allahabad-hcs-most-erroneous-order\/","url_meta":{"origin":312699,"position":1},"title":"\u2018One of the worse and most erroneous order\u2019: Supreme Court sets aside Allahabad High Court\u2019s order; remands matter for fresh consideration","author":"Arushi","date":"August 7, 2025","format":false,"excerpt":"\u201cAt times we are left wondering whether such orders are passed on some extraneous considerations or it is sheer ignorance of law. Whatever it be, passing of such absurd and erroneous orders is something unpardonable.\u201d","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"Allahabad HC's most erroneous order","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/08\/Allahabad-HCs-most-erroneous-order.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/08\/Allahabad-HCs-most-erroneous-order.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/08\/Allahabad-HCs-most-erroneous-order.webp?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/08\/Allahabad-HCs-most-erroneous-order.webp?resize=700%2C400&ssl=1 2x"},"classes":[]},{"id":221187,"url":"https:\/\/www.scconline.com\/blog\/post\/2019\/10\/19\/ph-hc-no-illegality-in-quashing-criminal-proceedings-in-a-matrimonial-dispute-if-parties-have-entered-into-a-settlement\/","url_meta":{"origin":312699,"position":2},"title":"P&H HC | No illegality in quashing criminal proceedings in a matrimonial dispute if parties have entered into a settlement","author":"Bhumika Indulia","date":"October 19, 2019","format":false,"excerpt":"Punjab and Haryana High Court: Hari Pal Verma, J. allowed the petition filed for quashing of FIR under Section 482 of Code of Criminal Procedure, 1973 on the ground that the matrimonial dispute had been resolved by mediation. An FIR was filed against the petitioner\u2019s husband accusing him of cruelty\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":281086,"url":"https:\/\/www.scconline.com\/blog\/post\/2023\/01\/05\/appeal-against-order-allahabad-high-court-dismissed-petition-section-482-crpc-challenging-summoning-order-and-non-bailable-warrant-by-aditional-chief-judicial-magistrate-ghaziabad\/","url_meta":{"origin":312699,"position":3},"title":"Supreme Court sets aside Allahabad High Court order in a civil matter guised as a criminal proceeding","author":"Editor","date":"January 5, 2023","format":false,"excerpt":"The Supreme Court expressed its displeasure by the attempts made by parties to invoke jurisdiction of criminal courts, by filing vexatious criminal complaints by camouflaging allegations which were ex facie outrageous or pure civil claims.","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/01\/MicrosoftTeams-image-87.jpg?resize=350%2C200&ssl=1","width":350,"height":200},"classes":[]},{"id":270373,"url":"https:\/\/www.scconline.com\/blog\/post\/2022\/07\/20\/jharkhand-high-court-criminal-proceedings-against-directors-cannot-continue-when-the-company-has-not-been-arrayed-as-a-party\/","url_meta":{"origin":312699,"position":4},"title":"Jharkhand High Court | Criminal proceedings against Directors cannot continue when the Company has not been arrayed as a party","author":"Editor","date":"July 20, 2022","format":false,"excerpt":"Jharkhand High Court: Sanjay Kumar Dwivedi, J., quashed the criminal proceeding registered under Sections 420, 406, 34, 120-B of the Penal Code on the ground that only the directors of the company were made accused in the FIR and not the Company. There was no mention of the bad intentions\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"Jharkhand High Court","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/07\/jharkhand_high_court.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/07\/jharkhand_high_court.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/07\/jharkhand_high_court.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/07\/jharkhand_high_court.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/07\/jharkhand_high_court.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":247672,"url":"https:\/\/www.scconline.com\/blog\/post\/2021\/04\/26\/gangster-previously-prosecuted-in-15-cases-gets-bail-in-a-murder-case-supreme-court-sets-aside-allahabad-high-court-order\/","url_meta":{"origin":312699,"position":5},"title":"Gangster previously prosecuted in 15 cases gets bail in a murder case! Supreme Court sets aside Allahabad High Court order","author":"Prachi Bhardwaj","date":"April 26, 2021","format":false,"excerpt":"\u201cThere is no doubt that liberty is important, even that of a person charged with crime but it is important for the courts to recognise the potential threat to the life and liberty of victims\/witnesses, if such accused is released on bail.\u201d","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/02\/sc-3-3.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/02\/sc-3-3.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/02\/sc-3-3.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/02\/sc-3-3.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/02\/sc-3-3.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]}],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/312699","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/users\/67513"}],"replies":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/comments?post=312699"}],"version-history":[{"count":0,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/312699\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media\/312718"}],"wp:attachment":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media?parent=312699"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/categories?post=312699"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/tags?post=312699"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}