Loan account adjustment disputes are civil, not criminal under cheating or breach of trust; requires dishonest intent from inception or entrustment, absent here; cannot invoke criminal process for civil recovery.

The present revision is directed against the order dated 15.10.2025, passed by learned Additional Chief Judicial Magistrate, Court No.1, Solan, HP (learned Trial Court), vide which the complaint filed by the petitioner (applicant before the learned Trial Court) under Section 175(3) of Bhartiya Nagrik Suraksha Sanhita, 2023 (BNSS) was dismissed. (Parties shall hereinafter be referred to in the same manner as they were arrayed before the learned Trial Court for convenience.)

2. Briefly stated, the facts giving rise to the present petition are that the applicant filed an application before the learned Trial Court for issuing a direction to the Station House Officer, Police Station, Sadar, Solan, HP, to register the FIR against the accused under Section 175(3) of BNSS. It was asserted that accused No. 1 is working as Managing Director in Baghat Urban Cooperative Bank Limited, whereas accused No.2 is working as a Manager in the Branch of Baghat Urban Cooperative Bank Limited, Chowk Bazar, Solan. HP. The applicant approached the Bank for financial assistance in the year 2011. The bank sanctioned a term loan of Rs. 12.00 lacs to the applicant, which was to be repaid in 60 monthly equated installments of Rs. 27,250/-subject to the floating rate of interest as per the directions issued by the Reserve Bank of India from time to time. The applicant paid some installments, but could not pay the remaining installments because of financial crises. The accused added wrong and illegal overdues to the applicant’s loan account. The applicant deposited money in his account, but it was adjusted against wrong and illegal deductions. The accused initiated proceedings under the SARFAESI Act and took the symbolic possession of the mortgaged property. The accused No.1 issued a loan account statement showing a balance of Rs. 12,84,327.17 on 10.6.2022. The applicant transferred Rs. 6.00 lacs on 13.7.2022 and Rs. 7,80,000/- on 14.7.2022 to the account of the accused. He requested accused No.1 to adjust the entire loan amount and issue a no-objection certificate. The accused, in collusion with each other, adjusted Rs. 6,00,000/- on 14.7.202 and Rs. 6,80,000/- on 15.7.2022. The applicant had deposited the excess money (Rs. 1.00 lac) in his account, but his loan account was not cleared. The applicant applied for documents under the Right to Information Act, but the accused withheld the applicant’s loan statement. The amount of Rs. 1.00 lac was adjusted against the wrong deduction, and the overdue amount of Rs. 1,51,026/- was shown. The applicant issued a legal notice to the bank, and the bank sent a reply claiming an amount of Rs. 14,762/-. The proceedings under the SARFAESI Act were wrongly initiated. The applicant filed a consumer complaint against the bank for a deficiency in service. He also filed a complaint before the Superintendent of Police, Solan and Station House Officer, Sadar, Solan, HP, for taking action against the accused, but no action was taken. Hence, it was prayed that the action be taken against the accused.

3. Learned Trial Court held that the complaint should disclose the commission of a cognizable offence before it can be referred to the police for investigation. The application in the present case disclosed a civil dispute between the parties regarding the adjustment of the amount paid by the applicant. Civil breach of contract or financial irregularity does not constitute a criminal offence. No prima facie case was made out for taking action as per the law. Hence, the application w