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Deepak Gaba & Ors. vs State of Uttar Pradesh & Anr.

Criminal Appeal · 2023 INSC 1Decided 2 Jan 2023
Criminal Appeal No. 2328 of 2022
Sanjiv Khanna · J.K. Maheshwari

Background

Jotun India Pvt. Ltd. (a paint company) and two of its managers had a dealership arrangement with a Ghaziabad paint dealer, Adhunik Colour Solutions. When the dealer's two cheques bounced, the company filed cheque-dishonour cases against him in 2016. A year later, the dealer filed a private criminal complaint alleging that the company had raised a "forged" outstanding demand of about Rs 6.37 lakh, sent wrong bills, and not taken back unsold stock. The Ghaziabad magistrate summoned the company's unnamed "Manager" and "Chief Manager" for criminal breach of trust and later even issued a non-bailable warrant by designation; the Allahabad High Court refused to quash the proceedings.

Decision Breakdown

The Supreme Court allowed the appeal and quashed the summoning order, the non-bailable warrant and the High Court's order. It went through the ingredients of criminal breach of trust, cheating and forgery one by one and found none were made out: a merely wrong or disputed demand is not "entrustment and misappropriation"; there was no allegation of any fraudulent inducement to part with property; and a bill that was wrongly raised (and even withdrawn on objection) is not a "forged" or "false" document. The complaint, read as a whole, described an accounts-settlement dispute about defective goods, wrong invoices and returned stock: a civil matter dressed up as a crime. The Court stressed that a magistrate must carefully scrutinise the complaint and pre-summoning evidence before issuing process, because a summons sets criminal law in motion and causes real harm, and that when the accused lives outside the court's jurisdiction, Section 202 CrPC makes a prior inquiry mandatory, which was not done here.

Lesson Learnt

A business disagreement over bills, quality of goods or how much money is owed is a civil dispute. You cannot convert it into a criminal case simply by calling the other side's demand "forged". Magistrates should not issue summons (let alone non-bailable warrants against unnamed office-holders) without material showing every ingredient of the alleged offence.

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

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