Administrative billing errors and service grievances do not constitute criminal offences absent dishonest intention or entrustment.

In brief

The question

1. Whether the allegations in the complaint, taken at face value, disclose the commission of a criminal offence under Sections 406, 420, and 120B of the IPC or Section 34 of the 2017 Act

The court held

The Supreme Court allowed the appeal and quashed Complaint Case No. C-533 of 2021

It also directed

The Court held that the allegations failed to disclose any criminal offence and that the dispute was of a civil/statutory nature

The Court set aside the High Court’s remand order, clarifying that the quashing of criminal proceedings does not bar the complainant from pursuing civil or statutory remedies for service deficiencies in accordance with law

01Facts

The second respondent (complainant) admitted his mother to Narayana Multispecialty Hospital for surgery in February 2021

p. 2

Post-discharge, the complainant alleged billing discrepancies, specifically a charge of ₹2,500 for an HRCT test that was never performed

p. 3

While the hospital admitted the error and offered a refund via email, the complainant filed a criminal complaint alleging offences under Sections 406, 420, and 120B of the IPC, and Section 34 of the West Bengal Clinical Establishments Act, 2017

pp. 3-4

The Magistrate issued process

p. 4

On appeal, the High Court set aside the summoning order due to jurisdictional procedural lapses but remarked that a prima facie case was made out, remanding the matter for reconsideration

p. 5

The appellants moved the Supreme Court seeking to quash the proceedings in their entirety

p. 5

02Issues

i.1. Whether the allegations in the complaint, taken at face value, disclose the commission of a criminal offence under Sections 406, 420, and 120B of the IPC or Section 34 of the 2017 Act

pp. 1-2

ii.2. Whether the High Court erred in remanding the matter instead of quashing the proceedings under Section 482 of the CrPC

pp. 4-5

03Law Applied

The Court applied the criteria for quashing criminal proceedings established in State of Haryana v. Bhajan Lal, specifically where allegations do not constitute a prima facie offence or are inherently improbable

pp. 6-7

For Section 405 IPC (Criminal Breach of Trust), it required "entrustment" and "dishonest misappropriation" (Sadhupati Nageswara Rao v. State of AP)

p. 7

For Section 420 IPC (Cheating), it required "dishonest intention" at the inception of the transaction (Joseph Salvaraj A. v. State of Gujarat)

p. 8

Regarding Section 120B IPC, it held that conspiracy cannot stand if foundational offences are not disclosed (R.K. Vijayasarathy v. Sudha Seetharam)

p. 9

It also considered the regulatory and penalty framework for billing "deficiencies" under Sections 29, 35, and 36 of the West Bengal Clinical Establishments Act, 2017

pp. 11-12

Provisions in the judgment · 16 · Linked ones open on LawLens

Indian Penal Code, 1860 Section 34 Section 405 Section 406 Section 420 Section 503 Section 504

Code of Criminal Procedure, 1973 Section 155 Section 156 Section 200 Section 202 Section 482

West Bengal Clinical Establishments ( Registration, Regulation And Transparency ) Act, 2017 Section 7 Section 29 Section 34 Section 35 Section 36

04Reasoning

The Court found the IPC charges unsustainable as the ₹2,500 billing error lacked the "fiduciary obligation" required for criminal breach of trust

pp. 7-8

the "dishonest intention" required for cheating, especially since the hospital proactively offered a refund

p. 8

The Court criticized the High Court for suo motu suggesting an offence under Section 504 IPC without a factual basis

pp. 9-10

Regarding the 2017 Act, the Court reasoned that the legislative scheme distinguishes between "deficiencies" (billing/records), which are subject to civil/regulatory adjudication under Sections 29, 35, and 36, and "offences" under Section 34

pp. 11-13

Since the dispute was essentially a service-related grievance, invoking criminal jurisdiction was deemed an abuse of process

p. 13