Naresh Kumar vs. State of Karnataka [March 12, 2024]
Background
Naresh Kumar and another, key officials of a bicycle manufacturing company, appealed to the Supreme Court after the Karnataka High Court dismissed their petition to quash an FIR registered against them for criminal breach of trust and cheating. The dispute originated from a contract with Respondent No. 2, who was engaged to assemble, transport, and deliver bicycles. The complainant claimed to have assembled 83,267 bicycles and raised invoices for ₹1,01,58,574, but alleged that only ₹35,37,390 was paid, leading to the FIR under Sections 406, 420, and 506 of the Indian Penal Code.
Key Issues
Whether the dispute was essentially civil in nature or involved criminal intent justifying prosecution.
Whether the criminal proceedings amounted to an abuse of process, warranting quashing under Section 482 of the Criminal Procedure Code (CrPC).
Supreme Court’s Analysis
The Supreme Court scrutinized the nature of the dispute and found it to be a contractual disagreement over the number of bicycles assembled and the amount payable. The Court emphasized that a mere breach of contract, without evidence of fraudulent intent from the outset, does not amount to a criminal offence. The settlement reached between the parties, where the appellants paid an additional ₹26 lakhs (totaling ₹62 lakhs), was considered a bona fide resolution of the payment dispute, not an act of deception or coercion.
The Court reiterated the principle that criminal law should not be used to settle civil disputes, especially where the facts do not disclose the essential ingredients of cheating or criminal breach of trust. The Court cited precedents such as Paramjeet Batra v. State of Uttarakhand and Randheer Singh v. State of U.P., underscoring the judiciary’s duty to prevent the misuse of criminal proceedings for harassment or undue pressure in civil matters.
Judgment
The Supreme Court allowed the appeal, set aside the High Court’s order, and quashed the FIR and all criminal proceedings against Naresh Kumar and his co-appellant. The Court held that the dispute was purely civil, with no evidence of criminal intent or dishonest inducement from the beginning. The judgment reaffirmed the importance of judicial discretion under Section 482 CrPC to prevent abuse of process and to ensure that criminal law is not invoked in matters that are essentially contractual and civil.
Significance
The decision fortifies the distinction between civil disputes and criminal offences, cautioning against the misuse of criminal law for contractual disagreements.
It affirms the High Court’s responsibility to exercise its inherent powers to quash criminal proceedings that are fundamentally civil in nature, thereby upholding the principles of justice and fairness.
Citation:
Naresh Kumar vs. State of Karnataka, Supreme Court of India, Judgment dated March 12, 2024.
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