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Aaditya Khaitan @ Aditya Khaitan v. The State of Jharkhand

Criminal Appeal · 2025 INSC 575Decided 28 Apr 2025
Crl.A. No.-002252-002252 of 2025 (@ SLP (Crl.) No. 15413 of 2023)
Justice Sudhanshu Dhulia · Justice K. Vinod Chandran

Background

A company (whose officers were the appellants) had a construction contract with NBCCL and sub-let part of the work to the complainant, a sub-contractor. When payments allegedly fell into arrears and the sub-contractor discovered the main contract had a clause restricting subletting without NBCCL's consent, the sub-contractor filed an FIR alleging cheating, forgery, and criminal breach of trust. The High Court quashed the FIR against NBCCL's own manager but refused to quash it against the appellant company's officers, prompting this appeal.

Decision Breakdown

The Supreme Court held that reading the complaint as a whole, at its highest, it disclosed only a commercial payment dispute arising from a contract for which arbitration had already been invoked (though stayed due to insolvency proceedings), not criminal conduct. Even assuming the restrictive covenant with NBCCL had been concealed from the sub-contractor, that would at most give NBCCL a claim against the main contractor, not create criminal liability toward the sub-contractor, who remained entitled to be paid for work done. Finding no element of cheating or fraud made out even on a prima facie basis, the Court quashed the FIR against the appellants as well and allowed the appeal.

Lesson Learnt

A simple failure to pay dues under a commercial contract, or a non-disclosure of contractual terms between unrelated parties, does not by itself amount to criminal cheating or fraud: such disputes belong in civil or arbitration proceedings, not criminal prosecution used as a pressure tactic.

Official source (sci.gov.in)View Judgment (PDF)

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