regular-article-logo Monday, 15 July 2024

Supreme Court imposes Rs 25-lakh fine on Delhi businessman over civil-criminal switch

'This unnecessary turning of a civil matter into a criminal case not only overburdens the criminal justice system but also violates the principles of fairness and right conduct in legal matters', the bench said

R. Balaji New Delhi Published 16.01.24, 08:41 AM
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The Supreme Court on Monday imposed a fine of Rs 25 lakh on a Delhi-based businessman for filing a motivated criminal complaint against two other Delhi businessmen over a financial transaction by registering an FIR in Noida, Uttar Pradesh, though the entire transaction occurred in Delhi.

“In the instant case, we find initiation of criminal proceedings before a forum which had no territorial jurisdiction by submitting incorrect facts and giving frivolous reasons to entertain such complaints. A closer look at the respondent’s actions reveals more than just an inappropriate use of jurisdiction.


“This unnecessary turning of a civil matter into a criminal case not only overburdens the criminal justice system but also violates the principles of fairness and right conduct in legal matters. The apparent misuse of criminal proceedings in this case not only damages trust in our legal system but also sets a harmful precedent if not addressed,” the apex court said.

A bench of Justice Vikram Nath and Justice Rajesh Bindal passed the verdict while allowing an appeal filed by Dinesh Gupta and Rajesh Gupta, challenging the refusal of Allahabad High Court to quash the criminal case of cheating, forgery and criminal breach of trust registered against them by Noida police on the basis of the complaint lodged by Karan Gambhir, owner of a Delhi-based company.

According to the complaint filed by Gambhir, he had extended short-term loans of Rs 5,16,00,000 and Rs 11,29,50,000 to the accused businessmen, Dinesh Gupta and Rajesh Gupta.

Gambhir accused the duo and certain other persons of defrauding him of the amount loaned to them by indulging in forgery and cheating.

According to the accused, the amount was not towards the loan, but towards the issuance of shares to Gambhir in the companies owned by the accused persons.

However, Gambhir denied having sought any shareholding in the companies owned by the accused.

Gambhir registered an FIR for cheating and forgery against Dinesh Gupta and Rajesh Gupta and certain others, on the basis of which summons were issued to the accused by a trial court.

Allahabad High Court had refused to quash the summons and the aggrieved duo filed the appeal.

The Supreme Court, after going through the records, noted that the issue involved in the dispute was purely a commercial transaction and yet the complainant chose
to invoke the jurisdiction of the Noida police despite the fact that both the complainant and the accused had their registered offices in New Delhi.

“The respondent Karan Gambhir having misused the legal system by lodging false and frivolous complaint with non-disclosure of necessary facts must bear its costs. The registration of FIR at Noida despite having registered offices of companies in question in Delhi shows a wishful forum shopping by the complainant, casting serious doubts on their bona fides,” Justice Vikram Nath, who authored the judgment, said.

“A criminal complaint was filed and FIR was registered against appellants despite the commercial nature of the dispute. Such ill-intended acts of abuse of power and of legal machinery seriously affect the public trust in judicial functioning. Thus, we find ourselves constrained to impose costs on complainant with a view to curb others from such acts leading to abuse of judicial remedies,” Justice Nath added.

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