MP High Court Quashes FIR, Citing Procedural Lapses Under S. 175(3) BNSS and Conversion of Civil Dispute into Criminal Case - 2025-04-23

MP High Court Quashes FIR Over Procedural Flaws and Civil Nature of Corporate Dispute

Indore , MP: The Madhya Pradesh High Court, Indore Bench, has quashed an FIR and subsequent criminal proceedings in a case involving a dispute over a private company's shareholding and management, citing both significant procedural non-compliance in registering the complaint and the apparent conversion of a civil and commercial matter into a criminal one.

Justice Binod Kumar Dwivedi , presiding over the matter (Misc. Criminal Case Nos. 6312/2025 and connected petitions), noted that the complaint leading to the FIR failed to adhere to mandatory procedures under Section 175(3) of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS), which corresponds to the erstwhile Section 156(3) of the Code of Criminal Procedure, 1973.

The case stemmed from a complaint filed by Gaurav Ahlawat (respondent No. 2), founder and former director of GRV Biscuits Pvt. Ltd., against Nitin Jeevnani , Vijay Jaiswani , Sanjay Jaiswani , Kanchan Jeevnani , and others. Ahlawat alleged fraud, cheating, forgery, criminal conspiracy, house trespass, kidnapping, and dacoity in relation to the transfer of company shares and changes in its directorship and shareholding pattern. The FIR (No. 1354/2024) was registered at Police Station Lasudia, Indore , for various offences under BNSS, equivalent to sections including 420, 467, 468, 471, 120-B, 323, 341, 342, 458, 506, 365, 395, 406, 409, and 34 of the IPC.

Ahlawat claimed that the accused, including his former business associate Sanjay Jaiswani and his relatives/employees, conspired to illegally take over his company by diluting his shareholding, forging documents, and conducting meetings without his knowledge. He also made allegations of being physically assaulted, illegally detained, and robbed of personal belongings and company documents.

The petitioners, represented by Shri Mohammad Ibrahim , argued that the Judicial Magistrate First Class's order directing the FIR registration was passed mechanically and without proper application of mind. Crucially, they contended that the complainant failed to comply with the mandatory requirement under Section 175(3) BNSS (and as interpreted by the Supreme Court in cases like Priyanka Srivastava and Ranjit Singh Bath ) to first approach the Superintendent of Police and file a copy of that complaint, supported by an affidavit, when moving the Magistrate.

Furthermore, the petitioners asserted that the core dispute was civil and commercial, arising from an inter-corporate loan of approximately ₹21 Crores taken by GRV Biscuits Pvt. Ltd. from entities associated with the petitioners, with an option for conversion into equity shares. They highlighted that a petition concerning the legality of share transfers and company management was already pending before the National Company Law Tribunal (NCLT) in Chandigarh. They alleged that the complainant had deliberately concealed material facts regarding the loan, his authorization for share conversion, and the nature of the disputed properties and events to give the civil dispute a criminal colour and harass the accused.

Shri Ravindra Singh Chhabra, Senior Advocate representing the complainant, countered that the mandatory procedures were substantially complied with (a complaint to the Commissioner of Police was in the case diary) and that the Magistrate applied judicial mind. He strongly argued that the allegations involved serious criminal offences like kidnapping, dacoity, forgery, and cheating, which are distinct from the issues before the NCLT and warrant police investigation. He cited various Supreme Court judgments to support the view that criminal proceedings are not barred merely because a civil remedy is available or pending, and that quashing should be done sparingly at the initial stage of investigation.

After considering the arguments and examining the record, the High Court sided with the petitioners on both grounds. The court noted that a "bare perusal of complaint and order reflects that the complainant failed to adhere to the procedure as prescribed under Section 175(3) of BNSS and in Priyanka Shrivatava ’s case (Supra) and Om Prakash Ambadkar ’s case (Supra)." It specifically pointed out the absence of specific averments regarding exhausting the remedy before the Superintendent of Police and the filing of the copy of such complaint, as well as the Magistrate's failure to record the submissions of the police officer as required by the new BNSS provision.

More significantly, the court found that the dispute "primarily appears to be a commercial / civil dispute" and that the complainant had "deliberately and intentionally converted a civil commercial dispute... into a serious criminal offence by concealing and suppressing the material facts". The judgment detailed the complainant's concealment of the significant loan amount received, his authorization to the director ( Sanjay Kalwani ) to execute the loan agreement with a conversion option, and factual inconsistencies regarding the alleged kidnapping, dacoity, and the ownership/residence in the disputed house.

Referring to Supreme Court judgments, including the recent decision in Dinesh Gupta Vs. The State of Uttar Pradesh (2024), the court emphasized the need to check litigants who use criminal prosecution for "personal vengeance rather than seeking true justice" and convert financial disputes into criminal cases laced with "concealment, falsehood, and forum hunting."

The court concluded that the criminal prosecution initiated by the complainant was "mala fide and with an ulterior motive" and a "clear abuse of process of law" aimed at "wrecking vendetta" against the petitioners.

Resultantly, the court allowed the petitions, quashing the Magistrate's order dated 07.12.2024, FIR No. 1354/2024, and all subsequent proceedings.