Disputes governed by arbitration clauses in civil agreements should not be pursued as criminal offenses.

ORDER :

1. The present petition is filed with the following prayers:

“It is, therefore, prayed that your Lordships may graciously be pleased to accept and allow this Misc. Petition and further be pleased to quash and set aside the FIR No. 485/2023 registered at police station, Shyam Nagar-South, Jaipur under Section 420, 406 IPC.

Any other order or direction, which this Hon’ble High Court may deem fit and proper, be also passed.”

2. At the outset, learned counsel for the petitioner has submitted that the factual background of the instant matter is that the petitioner is a renowned architect/contractor. The controversy arose when the complainant lodged the impugned FIR dated 10.10.2023 bearing No. 485/2023, U/S 420, 406 IPC at Police Station, Shayam Nagar, Jaipur. The allegations leveled against the petitioner were that the petitioner and respondent No. 2 executed an agreement dated 13.08.2021 (Annexure-2), for construction of house. The said agreement expounded an arbitration clause which might be invoked in case of any dispute. Shri Om Prakash Agrawal was appointed as the arbitrator.

3. In light of the agreement dated 13.08.2021, the petitioner as well as the arbitrator have exhorted the complainant to fulfill the conditions of the agreement and complete the agreed construction work. It is an admitted fact that the petitioner thereafter performed his duties as per the agreement; the construction is already complete and the respondent No. 2 is already residing in the said property. Therefore, it is evident that the impugned FIR is lodged merely to harass the petitioner.

4. Per contra, learned counsel for the respondent has submitted that vide order dated 19.12.2023, the anticipatory bail application of the petitioner was dismissed. Subsequently, the bail application before the High Court was withdrawn.

5. In this regard, reliance has been placed upon the ratio encapsulated in AIR 2023 SC 1814 titled as State of Madhya Pradesh vs. Shilpa Jain, and has submitted that when the genesis of the dispute emanates from civil proceedings, however, the same is registered as criminal dispute, the same ought not to have been scuttled at the threshold, and in fact ought to be considered on its own merits, in accordance with law.

6. Upon a perusal of the record, considering the arguments averred by the learned counsel for the parties, and taking note of the judgments cited at the Bar, this Court at this juncture, deems it apposite to note down certain undisputed facts of the instant matter:

6.1 That the petitioner is an architect/contractor, who provides services of construction of buildings, houses etc.

6.2 That the parties herein, entered into an agreement dated 13.08.2021, wherein, the terms and conditions qua the said construction is spelled out. Clause 26 of the said agreement, categorically states that any dispute shall be adjudicated via arbitrator, and Shri Om Prakash Agrawal was appointed as the arbitrator.

6.3 That the contents of the FIR state that there is non-construction of a specified portion of the house/said construction and exceeded payment qua the petitioner. Nevertheless, at this juncture, the same prima facie appears fallacious.

7. Considering the facts and circumstances of the matter in toto, and taking special note of the fact that the FIR and the dispute in hand pertains to civil jurisprudence, it can be inferred that the police authorities have wrongly contemplated the instant dispute. Moreover, in presence of an arbitration clause in the agreement, the instant FIR is not tenable.

8. Upon scanning of the judgment cited by the respondents it is noted that Shilpa Jain (Supra) is of distinguishable factual matrix, as the matter in hand categorically states the mode of settlement as arbitration, and no such provision has been expounded in the cited dictum.

9. For the aforementioned reasons, this Court deems it appropriate to allow the instant petition. As a result FIR No. 485/2023, registered at Police Station Shayam Nagar, Jaipur wit