Criminal prosecution for recovery of outstanding dues in commercial disputes constitutes abuse of process of law.

The applicants sought to quash FIR No. 11191001220292 of 2022 registered at Anandnagar Police Station for alleged offenses under Sections 406, 420, and 114 of the IPC.

The complainant alleged that the applicants, intending to defraud, concealed the full extent of encumbrances on a flat during a property transaction.

Following the cancellation of the Agreement to Purchase, the applicants allegedly returned only ₹10 lakh out of ₹15.15 lakh paid.

However, during proceedings, the applicants produced evidence (Annexure ‘C’) showing the remaining balance of ₹5,15,000/- was paid to the complainant on 12.12.2022.

1. Whether the dispute between the parties is predominantly civil in nature, thereby warranting the quashing of criminal proceedings to prevent abuse of the process of law.

2. Whether the continuation of criminal prosecution is justified when the underlying financial grievance has been settled.

Section 482 of the Code of Criminal Procedure, 1973, which grants the High Court inherent powers to quash proceedings to prevent abuse of the process of any court or to secure the ends of justice.

The precedent set in Madhavrao Jiwaji Rao Scindia v. Sambhajirao Chandrojirao Angre (AIR 1988 SC 709), which established that if a case is predominantly a civil wrong and the chances of conviction are bleak, the court should quash the proceedings rather than allowing the criminal machinery to be used for oblique purposes or debt recovery.

The court observed that the core of the FIR was a financial dispute arising from a cancelled property agreement.

It noted that 10 lakh had been paid prior to the FIR and the remaining ₹5,15,000/- was settled shortly after the FIR was filed, as evidenced by bank statements.

The court reasoned that the allegations, even if taken at face value, denoted a civil wrong rather than a criminal offense.

Following the Madhavrao doctrine, the court determined that since the complainant’s financial grievance was satisfied, the criminal proceedings were being used as a "pressure tactic" for recovery.

Consistently, the court found that allowing the trial to continue would be an exercise in futility and an abuse of the judicial process.

Consequently, the application was allowed, and FIR C.R. No. 11191001220292 of 2022 and all consequential proceedings were quashed and set aside against the applicants.

The court reserved liberty for the de facto complainant to move the Court and revive the application in case of any difficulty.