Criminal proceedings alleging cheating are quashed where the dispute is purely civil in nature.

The respondent instituted C.R. Case No. 1171C/2019 under Section 420 of the Indian Penal Code, 1860, alleging that he had advanced a loan of ₹9,00,000 to the petitioner under a notarised Deed of Agreement dated 15 June 2012, repayable within three years, but that she failed to repay the amount despite repeated demands and a legal notice dated 12 July 2018.

The petitioner sought quashing of the criminal proceedings under Section 482 of the Code of Criminal Procedure, 1973. She contended that the respondent had taken inconsistent positions regarding the amount and date of the alleged loan: the complaint referred to ₹9,00,000 advanced in 2012, whereas his statement referred to ₹13,00,000 given in 2016.

The respondent had also instituted Money Suit No. 241/2016 concerning an alleged loan of ₹12,00,000 to the petitioner’s husband, which remained pending with pleadings complete.

The High Court had stayed further proceedings on 27 June 2022, and the respondent did not appear despite opportunities.

1. Whether the allegations in C.R. Case No. 1171C/2019 disclosed a criminal offence under Section 420 IPC or constituted a purely civil dispute arising out of an alleged loan transaction.

2. Whether continuation of the criminal proceedings would amount to an abuse of the process of court warranting exercise of the High Court’s inherent jurisdiction under Section 482 CrPC.

The Court applied Section 482 of the Code of Criminal Procedure, 1973, which preserves the High Court’s inherent power to prevent abuse of the process of any court and to secure the ends of justice.

It considered the allegation under Section 420 IPC, which requires the essential elements of cheating, including dishonest or fraudulent intention.

The Court relied on Krishna Lal Chawla v. State of U.P. , AIR 2021 SC 1381, and the settled principle that criminal proceedings may be quashed where the dispute is essentially civil in nature and their continuation would constitute an abuse of process.

The Court examined the complaint and the surrounding documents and found that the dispute arose from an alleged failure to repay money under a loan arrangement.

The inconsistent versions concerning the amount and date of the alleged payment, together with the respondent’s pending civil action concerning related monetary transactions, indicated that the controversy was principally one of civil liability.

The material placed before the Court did not justify continuing criminal proceedings for cheating merely to enforce or secure repayment of the alleged loan.

In the absence of circumstances warranting criminal prosecution, continuation of the complaint would amount to abuse of the process of court under the principles governing Section 482 CrPC.

Exercising its inherent jurisdiction under Section 482 CrPC, the Court quashed the proceedings pending before the Special Judicial Magistrate, First Class, Kamrup (M), Guwahati.

The criminal petition was accordingly allowed.