Supreme Court Quashes Criminal Proceedings in Cheating Case After Settlement with Main Accused: Jaswant Singh vs. State of Punjab (2021)

Date of the Judgment: October 20, 2021
Citation: (2021) INSC 724
Judges: Justices Dinesh Maheshwari and Vikram Nath
Can criminal proceedings continue against an individual when the main accused has settled the dispute with the complainant? The Supreme Court of India recently addressed this question in a case involving allegations of cheating. The Court decided that when the core dispute is resolved, continuing proceedings against other accused individuals is an abuse of the legal process. This judgment highlights the Court’s willingness to use its inherent powers to secure justice and prevent unnecessary harassment.

Case Background

The case began with a complaint by Nasib Singh (Respondent No. 2) against Gurmeet Singh, who was allegedly in the business of sending people abroad. Nasib Singh claimed that Gurmeet Singh promised to help his son find work in Italy with the help of Jaswant Singh (the Appellant) and Gurpreet Singh, who were already settled there. Nasib Singh paid a total of ₹7 lakhs to Gurmeet Singh for this arrangement: ₹4 lakhs in cash on December 10, 2008, and ₹2 lakhs through a cheque dated February 18, 2009. Nasib Singh’s son was sent to Italy on February 19, 2009. However, according to the complaint, Jaswant Singh and Gurpreet Singh did not fulfill their promise, harassed his son, and did not arrange for a job. Nasib Singh’s son had to return after three to four months. The complaint further alleged that the accused demanded an additional ₹3 lakhs and threatened dire consequences if the money was not paid. Nasib Singh claimed his son was mentally upset and that he had spent a lot on travel and treatment.

Timeline

Course of Proceedings

Initially, the police inquiry, conducted by ASI Manjit Singh, did not find any evidence of cheating or breach of trust. The inquiry was supported by the in-charge of the Economic Offences Wing and the Deputy Superintendent of Police, who recommended closing the case. However, the Senior Superintendent of Police directed the registration of an FIR on October 29, 2009. After further investigation, the police filed a report under Section 173(2) of the Criminal Procedure Code, finding a triable case only against Gurmeet Singh and exonerating Jaswant Singh and Gurpreet Singh. The Magistrate First Class took cognizance and registered the case. During the trial, the prosecution moved an application under Section 319 of the Criminal Procedure Code to summon Jaswant Singh and Gurpreet Singh. The Trial Court summoned them under Section 420 of the Indian Penal Code. Jaswant Singh, residing in Italy, did not appear and was declared a proclaimed offender on April 28, 2014. Subsequently, the complainant, Nasib Singh, compromised with Gurmeet Singh, leading to the Trial Court closing the case against Gurmeet Singh on September 26, 2014. Jaswant Singh then filed a petition before the High Court to quash the order declaring him a proclaimed offender. The High Court stayed the order and directed him to surrender. The High Court, however, declined to quash the proceedings against Jaswant Singh, stating that his name was specifically mentioned in the FIR.

Legal Framework

The primary legal provisions in this case are:

• Section 406 of the Indian Penal Code: This section deals with the punishment for criminal breach of trust.
• Section 420 of the Indian Penal Code: This section deals with the punishment for cheating and dishonestly inducing delivery of property.
• Section 482 of the Criminal Procedure Code: This section grants inherent powers to the High Court to prevent abuse of process or secure the ends of justice.
• Section 319 of the Criminal Procedure Code: This provision allows the court to summon any person as an accused if it appears from the evidence that they have committed an offense.
• Section 173(2) of the Criminal Procedure Code: This section relates to the police report after the investigation is completed.

The Supreme Court’s analysis focused on the scope and application of Section 482 of the Criminal Procedure Code, emphasizing its role in preventing the abuse of the judicial process and securing the ends of justice.

Arguments

Appellant’s Arguments:

• The appellant argued that the High Court should have quashed the proceedings under Section 482 of the Criminal Procedure Code because the main accused, Gurmeet Singh, had already settled with the complainant.
• The appellant contended that the dispute was primarily civil in nature, involving a financial transaction for overseas employment, and that the criminal proceedings were an abuse of the process.
• The appellant highlighted that the police investigation initially found no evidence against him and Gurpreet Singh, and the charge sheet was only filed against Gurmeet Singh.
• The appellant pointed out that the complainant had stated that he paid the money to Gurmeet Singh, not to him or Gurpreet Singh.
• The appellant emphasized that continuing the criminal case against him after the settlement with the main accused would be an injustice.

Respondent’s Arguments:

• The respondent (State of Punjab) argued that the High Court was correct in not quashing the proceedings because the appellant’s name was specifically mentioned in the FIR, and criminal acts were attributed to him.
• The respondent contended that the High Court’s order directing the appellant to surrender and seek regular bail was appropriate given the allegations in the FIR.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues, but the core issue was whether the High Court was correct in declining to quash the criminal proceedings against the appellant under Section 482 of the Criminal Procedure Code, given that the main accused had settled with the complainant and the dispute was primarily civil in nature.

Treatment of the Issue by the Court

Authorities

The Supreme Court referred to the following cases and legal provisions:

Judgment

How each authority was viewed by the Court:

• S.W. Palanitkar and others v. State of Bihar and another [(2002) 1 SCC 241]*: The Supreme Court reiterated the principle that the inherent power under Section 482 of the Criminal Procedure Code should be exercised to prevent the abuse of process of any court or otherwise to secure the ends of justice.
• P. Ramachandra Rao vs State of Karnataka [(2002) 4 SCC 578]*: The Supreme Court reaffirmed that the inherent power of the High Court under Section 482 of the Criminal Procedure Code can be invoked to make such orders as may be necessary to prevent abuse of the process of any court or to secure the ends of justice.
• Gian Singh vs State of Punjab [(2012) 10 SCC 303]*: The Supreme Court emphasized that criminal cases with a predominantly civil flavor, particularly those arising from commercial or financial transactions, may be quashed if the parties have settled their dispute.
• Parbatbhai Aahir Alias Parbatbhai Bhimsinhbhai Karmur and others v. State Gujarat and others [(2017) 9 SCC 641]*: The Supreme Court reiterated that the High Court must have due regard to the nature and gravity of the offense while exercising its power under Section 482 of the Criminal Procedure Code, and that cases with an overwhelming civil element may be quashed where parties have settled.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• The dispute had an overwhelming civil flavor, stemming from a financial transaction for overseas employment.
• The main accused, Gurmeet Singh, had already settled with the complainant, and the proceedings against him were closed.
• Continuing the criminal proceedings against the appellant, after the settlement with the main accused, would be an abuse of the legal process.
• The initial police investigation found no evidence against the appellant, and the charge sheet was only against the main accused.

Logical Reasoning:

The Court considered the alternative interpretation that the proceedings should continue against the appellant because his name was mentioned in the FIR. However, this was rejected because the primary dispute had been resolved with the main accused, and continuing the proceedings would be an abuse of process. The Court emphasized the need to secure the ends of justice and prevent harassment of the appellant.

The Supreme Court held that the High Court should have exercised its inherent powers under Section 482 of the Criminal Procedure Code to quash the proceedings against the appellant. The Court reasoned that the dispute was primarily civil in nature, and the complainant had already settled with the main accused, Gurmeet Singh. Continuing the proceedings against the appellant would be an abuse of the process of the court. The Court emphasized that its power under Section 482 of the Criminal Procedure Code is to be exercised to prevent the abuse of process of any court and also to secure the ends of justice.

The court quoted the following from the judgment:

• “The power under Section 482 Cr.P.C. is to be exercised to prevent the abuse of process of any Court and also to secure the ends of justice.”
• “In our considered view, the High Court erred in firstly not considering the entire material on record and further in not appreciating the fact that the dispute, if any, was civil in nature and that the complainant had already settled his score with the main accused Gurmeet Singh against whom the proceedings have been closed as far back as 26.09.2014.”
• “In this scenario, there remains no justification to continue with the proceedings against the appellant.”

There were no dissenting opinions in this case.

Key Takeaways

• Criminal proceedings can be quashed if the dispute is primarily civil and the main accused has settled with the complainant.
• The Supreme Court will use its inherent powers to prevent the abuse of the legal process.
• Courts should consider the entire material on record, not just the FIR, when deciding whether to quash proceedings.
• Settlements with the main accused can lead to the quashing of proceedings against other accused individuals in similar circumstances.

Directions

The Supreme Court quashed the criminal proceedings arising out of FIR No. 179 dated 29.10.2009, Police Station Fatehgarh Sahib, and all consequential proceedings against the appellant, Jaswant Singh.

Development of Law

The ratio decidendi of this case is that in cases where the dispute has a predominantly civil flavor, and the main accused has settled with the complainant, the High Court should exercise its inherent powers under Section 482 of the Criminal Procedure Code to quash the proceedings against other accused individuals to prevent abuse of process and secure the ends of justice. This judgment reinforces the principle that criminal proceedings should not be used to harass individuals when the core dispute has been resolved. There is no change in the previous position of the law, but the judgment clarifies the application of Section 482 in cases with civil disputes.

Conclusion

The Supreme Court allowed the appeal filed by Jaswant Singh and quashed the criminal proceedings against him. The Court held that the High Court should have exercised its inherent powers under Section 482 of the Criminal Procedure Code to prevent abuse of process, given that the main accused had settled with the complainant and the dispute was primarily civil. This judgment emphasizes the importance of using inherent powers to secure justice and prevent unnecessary harassment.