Karnataka High Court: Criminal Justice System Shouldn’t Be Put To Use For Recovery Of Money, Unless Facts Make Out Prima Facie Offence Under Criminal Law

The Court allowed the Petition quashing the impugned criminal proceedings pending against the Petitioners, stating that the proceedings against the Petitioners would constitute an abuse of the process of law and result in miscarriage of justice.

A Single Bench of Justice M Nagaprasanna held, “The criminal justice system should not be put into use for the purpose of recovery of money, unless the facts are glaring and make out a prima facie offence under the criminal law. It therefore, becomes germane to notice the law laid down by the Apex Court in entertaining a criminal case for recovery of money or business rivalry.”

Advocate Adya Bojamma appeared for the Petitioners, while Addl. SPP B.N. Jagadeesha represented the Respondents.

Brief Facts

The Petitions were filed seeking to quash criminal proceedings that had arisen from a complaint alleging offenses under Section 420 of the IPC and Section 138 of the Negotiable Instruments Act, 1881 (NI Act).

Court’s Reasoning

The High Court stated that the matter at hand was a "pure commercial transaction or breach of an agreement between the parties" that was "sought to be given a colour of crime."

“At best the civil suit was entertainable and not the criminal law that is being set into motion for the reasons more than one. It is a business rivalry between the petitioners and the complainants/Company and the rivalry emerging on the score that the petitioners have started their own Company which was the 1st defendant in the suit and thereby taken away all the customers of the complainants/Company which resulted in loss,” the Bench remarked.

The Court stated, “Therefore, these factors at best could be the ingredients of a civil Suit seeking damages or orders of restraint against the petitioners. The Company has acted correctly, in the considered view of this Court, by filing a civil suit. But, the Company has also chosen to set the criminal law into motion. The two cannot be considered to go hand in hand in the peculiar facts of the case.”

“In the light of the afore-quoted judgments, the registration of crime is rendered unsustainable. While it is correct that in a given case, on a given set of facts, both civil and criminal laws could be set into motion as there would be common ingredients, which has a flavour of civil law and which has a rigour of criminal law,” the Bench held.

Consequently, the Court ordered, “Impugned proceedings pending before the XLV Additional Chief Metropolitan Magistrate, Bengaluru in CC.No.7576/2024 qua the petitioners stand quashed.”

Accordingly, the High Court allowed the Petition.

Cause Title: Ramiah Sambandam @ R.Sambandam & Ors. v. The State Of Karnataka & Ors. (CRIMINAL PETITION No.6306 OF 2024)

Appearance:

Petitioners: Advocate Adya Bojamma

Respondents: Addl. SPP B.N. Jagadeesha; Advocate Arjun Rao

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