Dispute Predominantly Has Overtures Of Civil Dispute: Supreme Court Quashes FIR Involving Financial Dispute With Bank

The Court set aside the decision of the Gujarat High Court, which dismissed a Writ Petition under Article 226 of the Constitution seeking quashing of an FIR as well as the charge sheet for offences punishable under Section 420, 467, 468 and 471 and 120B of the IPC.

A Bench of Justice Abhay S Oka and Justice Augustine George Masih remarked, “We have already observed that the dispute involved is primarily of civil nature. The aggrieved party, if any, would have been the Bank which has no grievance against the Appellants. Further, no loss has been caused to the Bank as is apparent from the calculations presented by the appellants before this Court. Not only the principal amount has been returned but an amount over and above thereto, on the basis of the settlement, has been received by the Bank.”

Advocate Bhadrish Raju represented the Appellants, while ASG Aishwariya Bahti and Senior Advocate Ravindra Kumar appeared for the Respondents.

Brief Facts

Between 1998 and 2005, the Bank of Maharashtra had sanctioned credit facilities to the Appellants due to their strong financial standing. However, beginning in 2005, the Appellant companies faced financial difficulties, which led to the bank classifying their loans/credit facilities as Non-Performing Assets (NPA). The Bank of Maharashtra initiated proceedings before the Debt Recovery Tribunal, Ahmedabad (DRT) to recover the debt.

During these proceedings, the Central Bureau of Investigation (CBI) registered an FIR against the Appellants.

A One Time Settlement proposal was put forth as a compromise during the DRT proceedings, and this was accepted by the Bank. The CBI, however, filed a chargesheet.

Court’s Reasoning

The Court referred its decision in Gian Singh v. State of Punjab (2012), wherein the Supreme Court held that “there are certain offences which overwhelmingly and predominantly bear civil flavour having arisen out of civil, mercantile, commercial, financial, partnership or such like transactions or the offences arising out of matrimony, particularly relating to dowry, etc. or a family dispute, where the wrong is basically to the victim and the offender and the victim have settled all disputes between them amicably, the High Court would be justified in quashing the criminal proceedings, even if the offences have not been made compoundable.”

Similarly, in Narinder Singh v. State of Punjab (2014), the Court reiterated that “criminal cases having overwhelmingly and predominantly civil character, particularly those arising out of commercial transactions or arising out of matrimonial relationship or family disputes should be quashed when the parties have resolved their entire disputes among themselves.”

“This Court accordingly proceeded to quash the proceedings against the accused-Appellants therein on coming to the conclusion that the dispute predominantly involved and had overtures of civil disputes,” the Bench remarked.

Consequently, the Court held that “the prayer made in the present appeal is accepted. The impugned order passed by the High Court is hereby quashed and set aside. As a consequence thereof, the criminal proceedings against the Appellants and arising out of FIR…are quashed. The appeal is allowed.”

Accordingly, the Supreme Court allowed the Appeal.

Cause Title: Suresh C. Singal & Ors. v. The State Of Gujarat & Ors. (Neutral Citation: 2025 INSC 495)

Appearance:

Appellants: AOR E.C. Agrawala; Advocates Bhadrish Raju, Mahesh Agarwal, Ankur Saigal, Kajal Dalal, Kaustubh Singh and Dhanesh R. Patel

Respondents: ASG Aishwariya Bahti; Senior Advocate Ravindra Kumar; AOR Mukesh Kumar Maroria, Divya Roy and Swati Ghildiyal; Advocates Kiran Suri, Mohan Prasad Gupta, V.v.v. Pattabhi Ram, Sarthak Karol, Satvika Thakur, Jagdish Chandra Solanki, Deepanwita Priyanka, Devyani Bhatt and Srujana Suman Mund

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