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Quashes Cheating Case Against Shivamy Directors Over Unpaid Steel Dues
The has firmly reiterated that , quashing a cheating case against two directors of . The bench ruled that the complainant's attempt to recover unpaid dues through criminal proceedings amounted to an .
A bench of Justice Ujjal Bhuyan and Justice Atul S. Chandurkar set aside the 's order that had sustained charges under read with of the against the directors. The Court held that the grievance raised by the employee of was "" and that no criminal case could be sustained.
The Dispute: A Business Transaction Gone Sour
The appellants, Yogesh Premjibhai Suvariya and another director, were at the helm of Shivamy Enterprises, a company engaged in the steel business. Since , Shivamy had been purchasing steel bars from , where the second respondent worked as an employee. The informant alleged that in , the appellants purchased 293 metric tonnes of TMT bars worth Rs 1.19 crore, issued post-dated cheques that were dishonoured, and failed to pay the bills.
This led to the registration of FIR No. I-8/ under Sections 406, 420, and 114 IPC at in Kutch, Gujarat. After investigation, a charge-sheet was filed, and the appellants' discharge application was rejected by the trial court and initially by the High Court on maintainability grounds. In , the held the revision was maintainable, and in , the High Court partly allowed it, discharging the directors from criminal breach of trust ( IPC) but sustaining the cheating charge.
The Real Story: A ₹2 Crore Deposit and a Set-Off
During arguments before the , senior counsel for the appellants revealed a crucial detail: Shivamy Enterprises had deposited approximately Rs 2 crore with when the company was owned by the . The appellants insisted on repayment of this deposit, and when it was not returned, they withheld payments of Rs 1.19 crore as a set-off. The informant's own statement under admitted this deposit, claiming it was a matter between the and the appellants.
The noted that no civil suit had been filed by the informant for recovery, and the criminal machinery was being misused.
'' for Cheating: Fraud or Dishonest Inducement
The Court meticulously examined the ingredients of IPC, which requires cheating and dishonest inducement to deliver property. Referring to its recent judgment in
, the bench highlighted that the
for attracting
(cheating) is
"
."
Absent these elements, the offence of cheating is not made out.
The Court also relied on , which held that when a complainant claims an amount is due, a civil suit is the appropriate remedy, not a criminal complaint. In that case, the Court observed that the offences of cheating and criminal breach of trust are "" and cannot coexist in the same set of facts. Similarly, in , it was held that even if the complaint's assertions are correct, no criminal offence is established in the absence of deception at the time of entering the contract.
'Money Cannot Be Recovered Through Criminal Proceedings'
The bench quoted
with approval:
"Money cannot be recovered, more particularly, in a civil dispute between the parties by filing a First Information Report and seeking the help of the Police. This amounts to
."
Applying these principles, the Court concluded that the dispute was essentially about unpaid dues arising from a business transaction, with the informant's own statement showing a counter-claim of a Rs 2 crore deposit. The Court observed:
"Instead of availing his civil remedy, Respondent No. 2 has resorted to criminal proceedings to recover the amounts stated to have been withheld by the appellants. This certainly cannot be the object of a criminal proceeding."
Key Observations from the Judgment
The made several pointed observations that serve as a strong warning against misuse of criminal law:
"The grievance raised by Respondent No.2 is essentially civil in nature. Instead of availing his civil remedy, Respondent No. 2 has resorted to criminal proceedings to recover the amounts stated to have been withheld by the appellants. This certainly cannot be the object of a criminal proceeding."
"Allowing the criminal proceedings to continue would be nothing but an abuse of the process of the Court."
"The two offences [cheating and criminal breach of trust] cannot coexist simultaneously in the same set of facts. They are ."
Final Decision: Criminal Case Quashed
The allowed the appeal, setting aside the impugned order of the dated , and the trial court's order rejecting discharge. Consequently, Criminal Case No. 584 of pending before the , was quashed in its entirety.
The decision reinforces the settled legal position that criminal proceedings cannot be used as a tool for recovery of money in civil disputes, and that courts must be vigilant in preventing abuse of the criminal justice system.
