Supreme Court Quashes FIRs in Cheating Case Due to Civil Dispute and Procedural Lapses: Babu Venkatesh & Ors. vs. State of Karnataka & Anr. (2022) INSC 129 (18 February 2022)

Date of the Judgment: 18 February 2022
Citation: (2022) INSC 129
Judges: B.R. Gavai, J. and Krishna Murari, J.
Can a criminal complaint be filed to harass the other party when a civil suit regarding the same transaction is already pending? The Supreme Court of India recently addressed this question while hearing an appeal against the order of the High Court of Karnataka. The court quashed the criminal proceedings, emphasizing that the criminal process cannot be used to settle civil disputes and also highlighted the importance of following the correct procedure while filing a complaint under Section 156(3) of the Code of Criminal Procedure. The judgment was delivered by a two-judge bench comprising Justice B.R. Gavai and Justice Krishna Murari, with Justice B.R. Gavai authoring the opinion.

Case Background

The case involves a dispute between Babu Venkatesh and others (the appellants) and the State of Karnataka and another (the respondents). The appellants had entered into various Agreements for Sale with respondent No. 2 for properties in Bangalore. According to the appellants, they had paid the agreed amount via three bearer cheques. However, respondent No. 2 allegedly avoided registering the sale deed. Consequently, the appellants filed four suits for specific performance of the contract on 24th November 2017.

Subsequently, on 10th September 2019, respondent No. 2 filed a complaint with the Tilak Nagar Police Station, alleging cheating by the appellants. Following this, on 18th September 2019, respondent No. 2 filed a private complaint before the II Additional Chief Metropolitan Magistrate, Bangalore. On the same day, respondent No. 2, along with his wife (respondent No. 3 in other connected appeals), filed three other private complaints before the same court.

The respondents alleged that the appellants had obtained blank stamp papers and created forged Agreements for Sale, thereby committing offences punishable under Sections 420, 464, 465, 468, and 120-B of the Indian Penal Code, 1860.

Timeline:

Course of Proceedings

The II Additional Chief Metropolitan Magistrate, Bangalore, on 6th December 2019, ordered an investigation under Section 156(3) of the Code of Criminal Procedure, 1973. Subsequently, FIRs were registered against the appellants.

The appellants then filed petitions under Section 482 of the Code of Criminal Procedure, 1973 before the High Court of Karnataka at Bengaluru, arguing that the Magistrate had passed the order under Section 156(3) of the Code of Criminal Procedure, 1973 in a mechanical manner and without proper application of mind. They also contended that the application under Section 156(3) of the Code of Criminal Procedure, 1973 was not supported by an affidavit. The High Court dismissed these petitions, stating that serious allegations of cheating and forgery were made in the complaint.

Legal Framework

The case revolves around the interpretation and application of Section 156(3) of the Code of Criminal Procedure, 1973, which empowers a Magistrate to order an investigation by the police. The Supreme Court also referred to Section 482 of the Code of Criminal Procedure, 1973, which deals with the inherent powers of the High Court to prevent abuse of the process of law.

The relevant sections of the Indian Penal Code, 1860, mentioned in the complaint are:

• Section 420: Cheating and dishonestly inducing delivery of property.
• Section 464: Making a false document.
• Section 465: Punishment for forgery.
• Section 468: Forgery for purpose of cheating.
• Section 120B: Punishment of criminal conspiracy.

The Supreme Court also considered the principles laid down in previous judgments regarding the exercise of powers under Section 482 of the Code of Criminal Procedure, 1973 to quash criminal proceedings.

Arguments

The appellants argued that the Magistrate had passed the order under Section 156(3) of the Code of Criminal Procedure, 1973 in a mechanical manner, without applying his mind to the facts of the case. They contended that the application under Section 156(3) of the Code of Criminal Procedure, 1973 should have been supported by an affidavit. They further argued that the dispute was civil in nature and that the criminal complaint was filed to harass them.

The State argued that the High Court was correct in dismissing the petitions as there were serious allegations of cheating and forgery.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section. However, the core issues that the Court addressed were:

1. Whether the Magistrate had correctly exercised his power under Section 156(3) of the Code of Criminal Procedure, 1973 while ordering an investigation.
2. Whether the High Court was justified in dismissing the petitions under Section 482 of the Code of Criminal Procedure, 1973.
3. Whether the criminal proceedings should be quashed given the existence of a civil dispute between the parties.

Treatment of the Issue by the Court

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

Authorities

The Supreme Court relied on the following authorities:

Judgment

The Supreme Court allowed the appeals and set aside the judgments and orders of the High Court. The court quashed the FIRs registered against the appellants.

The Court also considered the following authorities:

• State of Haryana v. Bhajan Lal [1992 Supp (1) SCC 335]*: The court used this case to categorize instances where the power to quash criminal proceedings can be exercised. The court noted that the present case falls under the category where the criminal proceeding is maliciously instituted with an ulterior motive to wreak vengeance on the accused.
• Priyanka Srivastava v. State of U.P. [(2015) 6 SCC 287]*: The court relied on this case to emphasize that applications under Section 156(3) of the Code of Criminal Procedure, 1973 must be supported by an affidavit. The court noted that the Magistrate failed to consider this requirement.

What weighed in the mind of the Court?

The Supreme Court was primarily concerned with the misuse of the criminal justice system to settle civil disputes. The Court emphasized that the Magistrate should not act mechanically while passing orders under Section 156(3) of the Code of Criminal Procedure, 1973 and that such applications should be supported by an affidavit. The Court also noted that the complaint was filed by respondent No. 2 after a considerable delay, which further indicated a mala fide intention to harass the appellants.

The ratio of fact:law that influenced the court to decide is:

The court’s reasoning can be summarized as follows:

The court rejected the High Court’s view that the serious allegations in the complaint were sufficient to continue the criminal proceedings. The court emphasized that the procedural lapses and the mala fide intention of the complainant could not be ignored.

The court quoted from Priyanka Srivastava v. State of U.P.:

“In our considered opinion, a stage has come in this country where Section 156(3) CrPC applications are to be supported by an affidavit duly sworn by the applicant who seeks the invocation of the jurisdiction of the Magistrate.”

“That apart, it becomes more disturbing and alarming when one tries to pick up people who are passing orders under a statutory provision which can be challenged under the framework of the said Act or under Article 226 of the Constitution of India. But it cannot be done to take undue advantage in a criminal court as if somebody is determined to settle the scores.”

“The warrant for giving a direction that an application under Section 156(3) be supported by an affidavit is so that the person making the application should be conscious and also endeavour to see that no false affidavit is made.”

There was no minority opinion in this case.

Key Takeaways

• Criminal proceedings should not be used to settle civil disputes.
• Magistrates must apply their mind while passing orders under Section 156(3) of the Code of Criminal Procedure, 1973.
• Applications under Section 156(3) of the Code of Criminal Procedure, 1973 must be supported by an affidavit.
• Filing a criminal complaint after a significant delay may indicate a mala fide intention to harass the other party.
• The High Court has the inherent power under Section 482 of the Code of Criminal Procedure, 1973 to quash criminal proceedings to prevent abuse of the process of law.

Directions

The Supreme Court quashed the FIRs registered with Jayanagar Police Station, Bengaluru City.

Development of Law

The ratio decidendi of the case is that criminal proceedings should not be used to settle civil disputes and that Magistrates must follow the procedure laid down by law while ordering an investigation under Section 156(3) of the Code of Criminal Procedure, 1973. This case reinforces the principles laid down in Priyanka Srivastava v. State of U.P. regarding the requirement of an affidavit for applications under Section 156(3) of the Code of Criminal Procedure, 1973 and also reiterates the principles laid down in State of Haryana v. Bhajan Lal regarding the exercise of inherent powers under Section 482 of the Code of Criminal Procedure, 1973.

Conclusion

The Supreme Court’s decision in this case underscores the importance of adhering to legal procedures and the need to prevent the misuse of the criminal justice system for settling civil disputes. The court’s emphasis on the requirement of an affidavit for applications under Section 156(3) of the Code of Criminal Procedure, 1973 is a significant step towards ensuring that such applications are not filed in a routine manner to harass individuals.