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quashes criminal case against MD, holds dispute civil
In a significant ruling underscoring the boundary between civil wrongs and criminal offences, the has quashed criminal proceedings initiated against the Managing Director of and another company official. Justice Dr. Ajoy Kumar Mukherjee held that the allegations—arising from a dispute over loan repayment and adjustment—did not disclose the ingredients of , , , or , and were, therefore, purely civil in nature.
The judgment, delivered on , allowed a criminal revision petition (CRR 2494 of 2025) and set aside the summons issued by the , in Case No. CR/561/2020. The court relied on settled principles that criminal law cannot be used as a shortcut for enforcing civil claims and that magistrates must scrupulously apply their before issuing process.
A Loan, a Lockdown, and a Criminal Complaint
The dispute originated from a series of financial transactions between the complainant (opposite party No. 2) and . According to the complaint, the borrower had previously taken and fully repaid two EMI‑based mobile phone loans after obtaining no‑dues certificates. In November 2018, she availed a personal loan of ₹69,000, and an amount of ₹62,350 was disbursed.
During the COVID‑19 lockdown in March 2020, the borrower allegedly faced difficulty in paying her EMIs and requested an extension. Instead of granting one, the finance company—without her explicit consent and through a midnight auto‑generated message—converted the existing loan into a new loan account of ₹63,830 and demanded that sum, ignoring earlier repayments of nearly ₹49,369. The complainant claimed that she had signed the fresh loan agreement without being allowed to read its contents, and that the company later assigned the disputed account to an , which began harassing her for recovery.
Based on these allegations, the borrower filed a criminal complaint alleging offences under Sections 420 (), 406 (), 468 (), 506 (), and 120B () of the . The Magistrate, after receiving a police report under , took and issued summons, also adding Section 34 () IPC.
Conversion or Coercion? The Competing Narratives
Before the High Court, the petitioners—the Managing Director of and another official—submitted that the entire transaction was a continuous commercial relationship spanning more than three years. They argued that during the pandemic, the borrower herself had accepted an offer to convert the outstanding balance into a “PLCS Growth Flexi Loan,” authenticated via her registered mobile number. The earlier loan of ₹69,000 was thus converted into a fresh loan of ₹63,830, giving her additional time to pay. The dispute, they contended, was simply about the calculation of dues—a classic civil disagreement—and did not involve any element of deception, misappropriation, or .
The borrower, on the other hand, insisted that she never genuinely consented to the conversion. She claimed that the company misappropriated the instalments she had already paid and then, with malafide intention, transferred the loan to an ARC, which harassed her. She also pointed out that an attempt to resolve the matter through the had failed because the finance company’s representatives did not participate in mediation. Her counsel urged the court to allow the criminal trial to continue to uncover the truth.
No Criminal Colouring to a Civil Canvas
Justice Mukherjee, after examining the complaint, the police report, and the legal provisions, found the allegations fundamentally civil. The court noted that the complainant herself admitted to signing the later loan agreement, and the police report confirmed that the conversion was authenticated through her registered mobile number. The sole grievance was that the finance company allegedly demanded an excess amount while ignoring payments already made.
The Court held that such a dispute—over adjustment of loan accounts and recovery of money—does not transform into a criminal offence without clear averments of dishonest intention or . “The complaint is conspicuously silent with regard to the nature of the documents allegedly forged by the petitioners and/or there specific role in manufacturing or forging any such document,” the judgment observed. “The essence of to do an illegal act before or after commission of offence has not been stated.”
Relying on the ’s decision in M/S Indian Oil Corporation v. M/S NEPC India Limited (2006) 6 SCC 736, the High Court reiterated the growing tendency to convert purely civil disputes into criminal cases and stressed that such efforts must be deprecated. The apex court had observed that “criminal proceedings are not a short cut of other remedies available in law.” Justice Mukherjee also recalled the caution in M/S Pepsi Foods Limited v. Special Judicial Magistrate (1998) 5 SCC 749 that an accused is a serious matter and the magistrate must carefully scrutinise the material to see if any offence is made out.
The judgment further pointed out procedural lapses: the police report under Section 202 CrPC was submitted by a Sub‑Inspector, not the Inspector‑in‑Charge as directed, and the inquiry itself was cursory. Regardless, the core reason for quashing was the absence of criminal ingredients. “Therefore,” the court concluded, “the dispute between the parties is purely civil in nature.”
Key Observations from the Bench
Justice Mukherjee made several telling remarks while quashing the proceedings:
“The dispute between the parties is purely civil in nature.”
“The complaint is conspicuously silent with regard to the nature of the documents allegedly forged by the petitioners and/or there specific role in manufacturing or forging any such document.”
“Criminal proceedings are not a short cut of other remedies available in law.”
“ of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a matter of course.”
“Any effort to settle civil disputes and claims, which do not involve any criminal offence, by applying pressure through criminal prosecution should be deprecated and discouraged.”
The Road Ahead: Civil Remedy Still Open
With these observations, the High Court allowed the revision petition and quashed the entire criminal proceeding in Case No. CR/561/2020 pending before the ACJM, Berhampore. The court made it clear that the borrower is not without remedy. If she genuinely believes that excess money has been demanded or her payments have not been properly accounted for, she may institute a civil suit challenging the legality and validity of the company’s claim—but criminal prosecution is not the appropriate vehicle.
The decision reinforces the principle that contractual disagreements, however bitter, belong to the realm of civil law. For businesses and consumers alike, it is a reminder that criminal complaints should not be weaponised to pressure opponents in purely monetary disputes, and that courts must remain vigilant against such .
