Railway Subcontractor’s Payment Dispute Was “Purely Commercial”: J&K HC Quashes FIR, Chargesheet Alleging Cheating And Forgery

The petitions under Section 528 of the BNSS challenged an FIR alleging theft, cheating by personation, cheating, forgery and conspiracy arising from a dispute over a railway-work subcontract, payments, a bank guarantee, and subsequent settlement agreements.

The complainant alleged that the petitioners withheld amounts due, failed to honour settlements, and removed equipment; the petitioners contended that the dispute was commercial and civil in nature.

During the petitions’ pendency, the investigation was completed and a charge sheet filed.

The Court considered the charge sheet and supporting record in deciding whether the criminal proceedings disclosed offences or amounted to an abuse of process.

Section 528 of the BNSS preserves the High Court’s inherent power to prevent abuse of process and secure the ends of justice, including after a charge sheet has been filed; Anand Kumar Mohatta v. State (Govt. of NCT of Delhi) supports that proposition.

Under Indian Oil Corporation v. NEPC India Ltd., a commercial or contractual dispute may also disclose a criminal offence, but proceedings may be quashed where the allegations, taken at face value, do not make out an offence or constitute an abuse of process; a civil remedy alone is not sufficient for quashing.

Sections 415 and 420 IPC require deception and dishonest inducement, with the dishonest intention for cheating present at the inception of the transaction; Section 416 defines cheating by personation.

Forgery under Sections 463–464 IPC requires the making of a “false document”; merely executing a document in one’s own capacity, even while making an incorrect claim, does not necessarily amount to forgery.

Mohd. Ibrahim v. State of Bihar states that distinction.

The Court also applied Section 379 IPC’s requirement of theft, including dishonest taking of property belonging to another.

The Court found that the equipment allegedly removed belonged to M/s Beigh Construction Company Pvt. Ltd.; its removal could not, on the material before the Court, constitute theft of another’s property, though it might raise other questions about compliance with a civil-court order.

The agreement did not represent that Ashraf Beigh held authority he did not possess, and therefore did not establish personation.

The allegations concerning subletting, the escrow account, the bank guarantee and unpaid amounts showed contractual non-performance but did not establish dishonest intent at the transaction’s inception; substantial payments and the provision of security further weighed against that inference.

Nor did Ashraf Beigh’s execution of the agreement in his stated capacity make it a false document or establish forgery.

Considering the competing claims about work quality, termination and payment, the Court treated the dispute as commercial and held that the criminal process was being used to pursue a monetary claim.

It allowed both petitions and quashed FIR No. 0051/2022 dated 23 August 2022, together with the charge sheet arising from it.