Supreme Court Quashes Criminal Proceedings in Cheating Case: Srinivasan Iyenger vs. Bimla Devi Agarwal (2019)

Date of the Judgment: 15 February 2019

Citation: (2019) INSC 118

Judges: L. Nageswara Rao, J. and M. R. Shah, J.

Can a criminal case be quashed if the dispute is primarily civil and the parties have settled? The Supreme Court of India addressed this question in a recent case, where a criminal complaint was filed alleging cheating, forgery, and criminal conspiracy. The court examined whether it was appropriate to quash the criminal proceedings given the civil nature of the dispute and the settlement between the parties. The judgment was delivered by a two-judge bench comprising Justice L. Nageswara Rao and Justice M. R. Shah, with the opinion authored by Justice M.R. Shah.

Case Background

The case originated from a private complaint filed by Bimla Devi Agarwal (Respondent No. 1) through her husband (Respondent No. 2), who was also her power of attorney holder, in the Court of the Chief Judicial Magistrate (CJM) at Tinsukia, Assam. The complaint was against Srinivasan Iyenger and others (Appellants) for offences under Sections 406 (criminal breach of trust), 468 (forgery for purpose of cheating), and 120B (criminal conspiracy) of the Indian Penal Code, 1860.

The complainant alleged that she held an insurance policy with ICICI Life Prudential in August 2013. She received a call from Navin Mittal, who claimed to be an executive officer of Reliance Life Insurance Company Ltd. (Accused no. 1). Mittal informed her that, as per the instructions of the Insurance Regulatory and Development Authority (IRDA), funds related to her ICICI policy were being released through Reliance Life Insurance, along with a bonus amount.

The caller requested a cheque of Rs. 50,000 in favor of Reliance Life Insurance Company Ltd., along with copies of her PAN card and family identity cards for verification. He assured her that the amount, along with the bonus, would be released after verification. Subsequently, the complainant sent the cheque and documents. Later, she received calls from Meenakshi Rawat and Deepak Kapoor, who also identified themselves as executives of Reliance Life Insurance, requesting another cheque of Rs. 42,000 for the release of the bonus amount.

The complainant sent the second cheque. In December 2013, she received two life insurance policies from Reliance Life Insurance, with her as the policyholder. However, one policy also included her son as the life assured. The complainant was surprised to find that she had not signed any proposal forms or undergone any medical examination, and the documents were photocopies without original signatures.

She alleged that her signatures were forged, and that the accused persons had conspired to deceive her for wrongful gain. The policies were issued through Accused No. 4, who was a broker/agent of Reliance Life Insurance. The complainant alleged that all the accused persons were related and were benefiting from the issuance of these policies.

Timeline:

Course of Proceedings

The Appellants, originally Accused nos. 1 to 3, approached the High Court of Gauhati with a Criminal Petition No. 634 of 2014, seeking to quash the criminal proceedings under Section 482 of the Code of Criminal Procedure (CrPC). The High Court, however, dismissed the petition on 28.01.2015, refusing to quash the criminal proceedings. Aggrieved by this decision, the Appellants filed the present appeals before the Supreme Court.

Legal Framework

The case involves the following sections of the Indian Penal Code, 1860:

• Section 406, Indian Penal Code, 1860: “Punishment for criminal breach of trust.—Whoever commits criminal breach of trust shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both.” This section deals with the punishment for criminal breach of trust.
• Section 468, Indian Penal Code, 1860: “Forgery for purpose of cheating.—Whoever commits forgery, intending that the document or electronic record forged shall be used for the purpose of cheating, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.” This section deals with forgery for the purpose of cheating.
• Section 120B, Indian Penal Code, 1860: “Punishment of criminal conspiracy.—(1) Whoever is a party to a criminal conspiracy to commit an offence punishable with death, imprisonment for life or rigorous imprisonment for a term of two years or upwards, shall, where no express provision is made in this Code for the punishment of such a conspiracy, be punished in the same manner as if he had abetted such offence. (2) Whoever is a party to a criminal conspiracy other than a criminal conspiracy to commit an offence punishable as aforesaid shall be punished with imprisonment of either description for a term not exceeding six months, or with fine or with both.” This section deals with the punishment for criminal conspiracy.

Arguments

Appellants’ Submissions:

• The Appellants argued that the dispute was primarily civil in nature, arising from an insurance transaction, and that the criminal proceedings were an attempt to harass them.
• They contended that they had not committed any criminal offence and that the allegations were baseless.
• The Appellants expressed their willingness to settle the matter amicably with the Complainant.

Respondents’ Submissions:

• The original Complainant (Respondent No. 1) initially sought to pursue the criminal proceedings, alleging that the Appellants had cheated and defrauded her.
• However, during the hearing before the Supreme Court, the Complainant agreed to settle the matter for a sum of Rs. 10,00,000.
• The Complainant stated that upon receipt of the agreed sum, she would not object to the quashing of the criminal proceedings.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame specific issues in a dedicated section. However, the core issue before the court was:

• Whether the criminal proceedings initiated against the Appellants for offences under Sections 406, 468, and 120B of the Indian Penal Code, 1860, should be quashed given the settlement between the parties and the predominantly civil nature of the dispute.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The Supreme Court considered the following authorities:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Court relied on Parbatbhai Aahir v. State of Gujarat (2017) 9 SCC 641* to support its decision to quash the criminal proceedings, emphasizing that criminal proceedings can be quashed if the dispute is primarily civil and the parties have settled.
• The Court cited Gian Singh v. State of Punjab (2012) 10 SCC 303* to reinforce that the High Court can exercise its inherent powers under Section 482 of the CrPC to quash criminal proceedings in cases of settlement, especially when the dispute is predominantly civil.
• The Court invoked its powers under Article 142 of the Constitution of India to ensure complete justice, allowing the compounding of offences and quashing the criminal proceedings.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the fact that the dispute between the parties was predominantly civil in nature. The Court noted that the origin of the dispute was a private matter between two parties, with no significant public interest involved. The willingness of both parties to settle the matter amicably also played a crucial role in the Court’s decision to invoke its powers under Article 142 of the Constitution to do complete justice. The Court also considered the fact that the offences alleged were non-compoundable but allowed compounding to facilitate the settlement.

Fact:Law Ratio

Logical Reasoning:

The Court emphasized that the dispute was primarily a private matter between two parties and that there was no significant public interest involved. The willingness of both parties to settle the matter amicably played a crucial role in the Court’s decision. The Court also considered the fact that the offences alleged were non-compoundable but allowed compounding to facilitate the settlement. The Court’s reasoning was based on the principle that when a dispute is predominantly civil in nature and the parties have settled, criminal proceedings can be quashed to prevent the abuse of the legal process.

The Court did not consider any alternative interpretations, as the parties had reached a settlement and the Court was primarily focused on ensuring that the settlement was given effect. The decision was reached by considering the facts of the case, the nature of the dispute, and the settlement between the parties, along with the legal principles laid down in previous judgments.

The Supreme Court decided to allow the parties to compound the offences and quash the criminal proceedings. The Court ordered that upon payment of Rs. 10,00,000 by the Appellants to the original Complainant, the criminal proceedings would be quashed. The Court also directed the Registry to return the amount of Rs. 3,75,000, along with interest, to the Appellants, which they had deposited earlier.

The reasons for the decision included:

• The dispute was predominantly civil in nature.
• The parties had reached an amicable settlement.
• The dispute was a private matter between two parties.
• The Court’s power under Article 142 of the Constitution to do complete justice.
• The need to prevent the abuse of the legal process.

“…the dispute between the parties seems to be having predominant element of a civil dispute and the origin is predominantly or overwhelming a civil dispute…”

“…we allow the parties to compound the offences, even though the offences alleged are non­compoundable, as the dispute between the parties predominantly or overwhelming seems to be of a civil nature and that the dispute is a private one and between the two private parties.”

“…it is ordered that on payment of a sum of Rs.10,00,000/­ by the Appellants to the original Complainant to be deposited in the bank account of the original Complainant within a period of two weeks, the criminal proceedings being C.R. Case No. 40C of 2014 pending in the Court of learned CJM, Tinsukia, stand quashed.”

Key Takeaways

• Criminal proceedings can be quashed if the dispute is primarily civil and the parties have reached a settlement.
• The Supreme Court can exercise its powers under Article 142 of the Constitution to do complete justice and facilitate settlements.
• Courts may allow the compounding of offences, even non-compoundable ones, in cases where the dispute is predominantly civil.
• This judgment reinforces the principle that criminal proceedings should not be used to harass or pressure parties in civil disputes.

Directions

The Supreme Court directed the following:

• The Appellants were to deposit a sum of Rs. 10,00,000 in the bank account of the original Complainant within two weeks.
• Upon proof of deposit, the criminal proceedings in C.R. Case No. 40C of 2014 pending in the Court of learned CJM, Tinsukia, were to stand quashed.
• The Registry was directed to return the amount of Rs. 3,75,000, along with interest, to the Appellants, which they had deposited earlier.

Specific Amendments Analysis

There were no specific amendments discussed in this judgment.

Development of Law

The ratio decidendi of this case is that when a dispute is predominantly civil in nature and the parties have reached an amicable settlement, the Supreme Court can exercise its powers under Article 142 of the Constitution of India to quash criminal proceedings, even for non-compoundable offences, to ensure complete justice and prevent abuse of the legal process. This case reinforces the principle that criminal proceedings should not be used to harass or pressure parties in civil disputes. There is no change in the previous position of law, but this case clarifies the application of existing principles in the context of settlement.

Conclusion

The Supreme Court allowed the appeals, quashing the criminal proceedings against the Appellants. The Court held that the dispute was primarily civil in nature and that the parties had reached an amicable settlement. By invoking its powers under Article 142 of the Constitution, the Court facilitated the settlement and ensured complete justice. This judgment highlights the importance of amicable settlement in disputes and the Court’s role in preventing the abuse of criminal proceedings in civil matters.