In CRM-M-49311-2021(O&M)-PUNJ HC- Deprecating practice of giving criminal color to purely civil dispute between landlord and tenant, P&H HC quashes FIR Justice Vikas Bahl [08-04-2022]

Read Order: Balram Garg v. State of Haryana and another

Monika Rahar

Chandigarh, April 14, 2022: While dealing with a quashing plea, the Punjab and Haryana High Court has held that in this case, a purely civil dispute, based on a written contract between the landlord and the tenant, was sought to be given a criminal color. 

Thus, the Bench of Justice Vikas Bahl held that the Supreme Court has repeatedly held that the practice of giving a criminal color to a purely civil dispute with a malafide intent and an ulterior motive to extract money from the accused persons as a shortcut to civil proceedings, should be deprecated and in a large number such cases, the Supreme Court has quashed criminal proceedings.

Justice Bahl quashed the present FIR also on the ground that the complainant did not make any attempt at initiating civil justice machinery to recover the amount owed by the first accused and rather she directly initiated criminal proceedings to exert pressure on the accused to extract her money. 

Essentially, in this case, the complainant-second respondent was operating a Patanjli Shop. The first accused (M/s PC Jewelers ) has no showroom in Sirsa and thus they approached the complainant with a request to lend her show to them for operating their show-room in return for rent and commission at pre-decided rates on the articles sold in the jewelry show-room. 

It was the claim of the complainant that she made substantial changes in her show to convert it into a showroom as per the demands of the first accused. The complainant was also made to pay the interior designer and the entire expense of renovation. The complainant, after making necessary infrastructural changes, shifted her shop products to the basement. 

A lease deed was entered into between the complainant and the first accused, some of the terms of which were not acceptable to the complainant, however, out of pressure, she signed it. The sum owed by the first accused in favor of the complainant was not paid, apart from other factors which aggravated the grievance of the complainant. The complainant also alleged that the first accused sold jewelry without bills in order to evade taxes and that the items sold in the show-room were bought or procured by obtaining a huge loan amount from banks. 

Thus, at the instance of the complainant, the present FIR under Section 420 IPC was registered against five persons including the present petitioner. The present petition was filed by the first accused under Section 482 of the Code of Criminal Procedure, 1973 for quashing said FIR. 

At the very outset the Court opined that in the present case, that a purely civil dispute, based on a written contract between the landlord and the tenant, has been sought to be given a criminal color, and thus the Court stated that the Supreme Court of India has repeatedly held that the practice of giving a criminal color to a purely civil dispute with a malafide intent and an ulterior motive to extract money from the accused persons as a shortcut to civil proceedings, should be deprecated and in a large number such cases, the Supreme Court has quashed criminal proceedings.

Further, in order to bring home the point that in case the criminal machinery is moved just to extract money, the Court made reference, among other leading precedents, to Anand Kumar Mohatta and another Vs. State (NCT of Delhi), Department of Home and another, (2019) 11 Supreme Court Cases 706, wherein the Supreme Court after considering the powers of High Court under Section 482 Cr.P.C. and after noticing the growing trend in business circles to convert purely civil dispute into criminal cases without making any attempt at recovering the money under the civil justice system, quashed the FIR. 

The Court said, “In the present case also, no suit/proceedings have been filed/instituted by respondent No.2 for the recovery of the alleged amount due to respondent No.2, except for filing the present criminal case, so that her demands can be met by pressurizing the accused persons under the threat of criminal prosecution.”

Additionally, the Court observed that in the question as to whether the second respondent could be held to be entitled to any money, including damages etc., in spite of the fact that the specific terms of the agreement entered into between the parties did not provide for the same, were all issues to be decided by the civil Court/arbitrator as, in order to claim amounts beyond the written agreement, a very heavy onus would lie upon the complainant- second respondent which she would have to discharge to be able to make good her claim and the appropriate forum for the same would be a civil Court/Arbitrator. [Reference in this regard can be made to the Top Court in Randheer Singh Vs. State of U.P. & Ors.]. 

Thus, the Court reached the conclusion that in the present case, a purely civil dispute, based on a written contract between the landlord and the tenant, has been sought to be given a criminal color by stretching the contours of a civil dispute, with a malafide intent and an ulterior motive, in order to extract money out of the company and the petitioner instead of filing a civil suit/ initiating the arbitration proceedings, as per the arbitration clause, has chosen to institute the present the criminal proceedings and the same amounts to an abuse of the process of the Court and thus, the FIR and the subsequent proceedings arising therefrom, deserve to be quashed on the said ground alone. 

Also, the Court highlighted one more aspect in favor of the present petitioner, namely that the lease deed was between the company and the second respondent and the petitioner was not privy to the said agreement and did not sign the same. The Court added that even the franchise agreement, which was sought to be relied upon by the second respondent was also between the company and the second respondent and even the said agreement was not signed by the petitioner. 

“The company in the present case has not been made an accused. Apparently, the petitioner has been roped in the matter, only on account of the position he holds in the company, so as to enable respondent No.2 to pressurize and to extract money out of the company/petitioner”, held the Court. 

Thus, the Court observed that it was a clear dispute of purely civil nature between the landlord (complainant) and the tenant (company), whose relationship is based upon a written lease deed, which was executed in 2019 and its term was for a period of three years and after a period of 2 years and 7 months of the said term having been completed, the impugned FIR was registered by making allegations contrary to the terms of the written lease deed as well as the admitted documents i.e, emails, legal notice sent/issued on behalf of the second respondent. 

Accordingly, while holding that allowing the continuation of the FIR would be an absolute abuse of the process of the Court, the Court quashed the same.