Criminal proceedings arising from settled private commercial disputes may be quashed under Section 482 CrPC.

The petitioner sought quashing of the order dated 8 March 2022 passed by the Additional Chief Judicial Magistrate-IV, Patna, in Complaint Case No. 4626(C) of 2021, whereby cognizance was taken under Sections 406 and 420 of the Indian Penal Code and summons were issued against him.

The dispute arose from a commercial transaction between the petitioner and opposite party no.2 involving approximately ₹1,50,00,000. The complaint acknowledged payment of ₹10,00,000, and during the pendency of the criminal proceedings the petitioner paid a further ₹90,00,000.

Pursuant to submissions made before the High Court, the petitioner paid an additional ₹40,00,000, leaving ₹20,00,000 outstanding. The petitioner thereafter handed over a demand draft for ₹20,00,000, which was accepted by opposite party no.2’s counsel.

Opposite party no.2 had also instituted Money Suit No. 100 of 2021 concerning the dispute.

Upon receipt of the entire amount, opposite party no.2 stated that he did not wish to pursue the criminal case and had no objection to quashing the proceedings.

Whether the High Court should exercise its inherent jurisdiction under Section 482 of the Code of Criminal Procedure to quash criminal proceedings under Sections 406 and 420 IPC arising from a private commercial dispute that had been fully settled between the parties?

Whether the order taking cognizance dated 8 March 2022 and the entire prosecution arising from Complaint Case No. 4626(C) of 2021 should be quashed after full repayment and settlement?

Whether any direction should be issued concerning the pending Money Suit No. 100 of 2021?

The Court considered the offences under Sections 406 and 420 of the Indian Penal Code and exercised its inherent jurisdiction under Section 482 of the Code of Criminal Procedure.

The governing principle is that criminal proceedings arising out of a private dispute, particularly a commercial dispute, may be quashed where the parties have entered into a voluntary and genuine settlement, provided the offences do not involve heinous conduct, public interest, or overriding public policy concerns.

The Court relied on Parbatbhai Aahir v. State of Gujarat, (2017) 9 SCC 641, which recognizes the power under Section 482 CrPC to quash criminal proceedings arising from settled private disputes, and Naushey Ali v. State of U.P., (2025) 4 SCC 78, which holds that continuation of proceedings after an amicable resolution may amount to a futile exercise and abuse of process.

The Court treated the dispute as essentially commercial and private in nature. The petitioner had paid the entire disputed amount, including the final ₹20,00,000 through a demand draft accepted on behalf of opposite party no.2.

Opposite party no.2 confirmed the settlement and expressly stated that he had no objection to quashing the criminal proceedings.

Applying the principles governing Section 482 CrPC, the Court found that the dispute did not involve offences affecting society or public policy and that continuing the prosecution after full satisfaction of the monetary claim would serve no legitimate purpose.

Such continuation would unnecessarily consume judicial time and would constitute an abuse of the process of law.

As to the money suit, the Court recorded the undertaking that opposite party no.2 would withdraw it but left the matter to be dealt with by the court where the suit was pending.

The Court recorded that opposite party no.2 had agreed to withdraw Money Suit No. 100 of 2021 and directed that, if the parties approached the Sub Judge-XIII, Patna, with a copy of the order, that court should pass appropriate orders in accordance with law.