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| Crime Branch can’t act as recovery agent in commercial disputes: HC quashes FIR | | | Early Times Report
Jammu, Nov 10: In a significant ruling against the misuse of criminal proceedings in commercial disputes, the High Court of Jammu & Kashmir and Ladakh has quashed a Crime Branch FIR and consequential charge sheet against three members of the Beigh family in connection with a railway construction contract dispute, observing that the investigating agency appeared to have assumed the role of a recovery agent on behalf of the complainant.
Justice Sanjay Dhar held that a purely commercial dispute involving contractual obligations and outstanding payments cannot be converted into a criminal prosecution in the absence of ingredients constituting a criminal offence.
The Court allowed two petitions filed by Mohammad Ashraf Beigh, Imran Beigh and Abid Beigh, challenging FIR No. 51/2022 dated August 23, 2022, registered by the Crime Branch’s Economic Offences Wing, Jammu, under Sections 379, 419, 420, 465, 467, 468, 471 and 120-B of the Indian Penal Code.
The dispute originated from a subcontract relating to the construction of underground railway tunnel T-77D at Banihal.
According to the prosecution, Imran Beigh, Managing Director of Beigh Construction Company Private Limited, had entered into an arrangement with Ghulam Rasool Wani for executing work originally awarded to the company by IRCON.
The complainant alleged that despite executing work worth approximately Rs 3.78 crore, the subcontractor was denied his contractual share of payments. Allegations were also levelled concerning a bank guarantee of Rs 1 crore, subsequent settlement agreements, outstanding liabilities and the removal of machinery from the construction site.
Following a complaint lodged by Waseem Wani, an investigation was conducted by a Special Investigation Team headed by an officer of the rank of Deputy Superintendent of Police, culminating in the filing of a charge sheet.
During the hearing, Senior Advocate P.N. Raina, along with Advocates Deeksha Handoo, Sandeep Gupta and Zulker Nain Sheikh, appeared for the petitioners. Senior Additional Advocate General Monika Kohli and Advocates Malvika Gupta, Farhan Mirza and Vastav Sharma represented the respondents.
After examining the agreements, financial transactions, settlement documents and material collected during investigation, Justice Dhar observed that the essential ingredients of cheating, impersonation, theft and forgery were not established.
The Court noted that substantial payments exceeding Rs 1.50 crore had been made to the complainant party and possession of a house at Bathindi, Jammu, had also been handed over as security towards the outstanding liability.
These circumstances, the Court observed, indicated the absence of fraudulent intention at the inception of the transaction, an essential requirement for establishing the offence of cheating.
The High Court further held that failure to honour contractual obligations or settlement agreements would not automatically constitute cheating.
Dealing with the allegations of theft, the Court observed that the machinery and equipment belonged to Beigh Construction Company. Their removal might constitute a violation of a civil court order but could not amount to theft of one’s own property.
Similarly, the allegations of impersonation and forgery against Mohammad Ashraf Beigh were found unsustainable, as the agreement in question disclosed the capacity in which he was representing the company.
In particularly strong observations, Justice Dhar held that the dispute concerned contractual performance and financial liabilities, which were matters for determination through appropriate civil proceedings.
The Court observed that the investigating agency appeared to have converted the commercial dispute into a criminal case by assuming the role of a recovery agent for the complainant.
It further remarked that the charge sheet appeared to resemble a claim petition filed on behalf of the complainant rather than a criminal prosecution based on legally established ingredients of an offence.
Referring to Supreme Court precedents, the High Court reiterated that criminal proceedings cannot be employed as a pressure tactic for recovering money in disputes that are essentially civil or commercial in nature.
The Court clarified that the mere existence of a commercial transaction does not automatically bar criminal prosecution, but the allegations must independently disclose the commission of a criminal offence.
Holding that continuation of the proceedings would amount to an abuse of the process of law, Justice Dhar exercised the High Court’s inherent jurisdiction under Section 528 of the Bharatiya Nagarik Suraksha Sanhita (BNSS).
Accordingly, the High Court quashed FIR No. 51/2022 along with the charge sheet arising from it, bringing the criminal proceedings against the three petitioners to an end. (JNF) |
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