Criminal law cannot be used against financial claims or disputes arising out of agreements or otherwise, the High Court of Karnataka has said.
The High Court passed the order while quashing a First Information Report registered by the police based on a direction issued by a magistrate court, which had acted on a private complaint lodged by Excel Security Services, a private security service agency.
Justice M. Nagaprasanna passed the order while allowing a petition filed by Pratik K. Mehta and two others of Unishire Developers Private Limited, Bengaluru, which had questioned the legality of initiation of criminal proceeding.
The complainant security service agency had an agreement with the petitioner developer for providing security to all the project sites across the city, and there was a dispute over demand made by the complainant seeking payment of around ₹17 lakh from the petitioner.
Though there was exchange of legal notices between the two parties, the security agency had finally lodged a private complaint before a magistrate court to recover money from the petitioner.
Referring to the guidelines issued by the apex court, the High Court has pointed out that the apex court had made it abundantly clear that “the High Courts have to see whether the dispute of a civil nature has been given colour of criminal offence, and in such a situation, the High Courts should not hesitate to quash the criminal proceedings.”
On perusing the contents of the complaint, the High Court noted that a claim over payment of money in terms of an agreement was sought to be agitated by the complainant by way of registration of a criminal case.
“Criminal law cannot be used against financial claims arising out of an agreement or otherwise...The proceedings pursuant to the complaint which is admittedly for recovery of money cannot be permitted to continue and if permitted, it would be an abuse of the process of law resulting in miscarriage of justice,” the High Court observed.
