IMPORTANT POINT
Cheating, wrongful confinement and criminal intimidation – Existence of civil remedies does not preclude criminal prosecution where allegations disclose essential ingredients of an offence – Civil and criminal proceedings may validly coexist if factual matrix supports both.

JUDGMENT :

VIPUL M. PANCHOLI, J.

1. Leave granted.

2. This appeal challenges the final order dated 19.02.2025 passed by the High Court of Telangana at Hyderabad in Criminal Petition No. 1022 of 2019, whereby the High Court partly allowed the application of the appellant under Section 482 of the Code of Criminal Procedure, 1973 (hereinafter referred as “the CrPC”) by quashing cognizance under Section 406 of the Indian Penal Code, 1860 (hereinafter referred as “the IPC”), while maintaining cognizance under Sections 420, 344 and 506 of the IPC.

3. The dispute arises from contractual and financial dealings between appellant (accused no. 2) and respondent no. 2 (complainant) relating to construction work undertaken between 2008-2010. A No Dues Certificate dated 10.06.2010 was issued by respondent no. 2 and acknowledged on 12.06.2010. Subsequent disputes arose, culminating in cross- allegations.

4. FIR No. 240 of 2015 was lodged by respondent no. 2 against appellant under Sections 420 and 506 of the IPC. After investigation, Charge Sheet No. 07 of 2016 was filed against appellant under Sections 420, 406, 344 and 506 of the IPC and the matter was registered as C.C. No. 1374 of 2016 before the learned III Additional Chief Metropolitan Magistrate, Hyderabad.

5. The appellant filed an application under Section 482 of the CrPC before the High Court for quashing of the order dated 19.10.2016 passed by the learned Additional Chief Metropolitan Magistrate, taking cognizance of the offences punishable under Sections 420, 506, 344 and 406 of the IPC and issuing summons to the appellant in C.C. No. 1374 of 2016. The High Court partly allowed the said application and quashed the order of taking cognizance of the offence under Section 406 of the IPC whereas, the High Court declined to quash proceedings under Sections 420, 344 and 506 of the IPC.

6. Aggrieved by the aforesaid order, the appellant has filed the present appeal.

7. Learned Senior Counsel for the appellant contended that the dispute between the parties is entirely civil in nature and has been improperly given a criminal color. It is submitted that the No-Dues Certificate dated 10.06.2010, duly acknowledged by respondent no. 2, unequivocally records that no payments were outstanding, thereby exposing the falsity of the allegations subsequently raised. According to the appellant, the criminal proceedings have been initiated solely to exert pressure and extract additional amounts under the guise of criminal law.

8. It is further urged that the FIR is a motivated counterblast to the injunction order secured by the appellant in O.S. No. 98 of 2015. The filing of the FIR within three days of the said order demonstrates, according to learned senior counsel, the mala fide intent of respondent no. 2 to harass and intimidate the appellant. The FIR, lodged after an unexplained delay of more than five years from the incident, is stated to suffer from inherent improbabilities and lacks credibility. Such an inordinate and unexplained delay, it is submitted, vitiates the prosecution and renders the allegations unreliable. Moreover, neither the FIR nor the charge sheet attributes any specific overt act to the appellant in relation to the incident dated 09.02.2015 and there are no allegations of initial fraudulent intention or inducement. The entire dispute, it is submitted, pertains to non-payment of contractual dues and falls squarely within the realm of civil law.

9. It is also submitted that the outstanding amount of Rs. 43,29,833/- pertains to contractual performance and that criminal proceedings cannot be invoked for the enforcement of civil liabilities. Reliance is placed on M/s Shikhar Chemicals v. State of Uttar Pradesh, 2025 SCC OnLine 1643, and Mitesh Kumar J. Sha v. State of Karnataka, (2022) 14 SCC 572, wherein this Court cautioned against the misuse of criminal law to settle civil or commercial disputes and held that such attempts constitute an abuse of process.

10. Additionally, it is argued tha