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Vijay Kumar Ghai vs. The State of West Bengal

Criminal Appeal · 2022 INSC 326Decided 22 Mar 2022
Criminal Appeal No. 463 of 2022

Background

A company (represented by the complainant, an authorized representative of SMC Global Securities) invested Rs. 2.5 crore in the appellants' company, Priknit Apparels, in exchange for equity shares, expecting the company to later go public. When the IPO did not happen, the complainant filed a series of complaints: first two in Delhi (one of which was rejected by a magistrate who found the dispute purely civil in nature), and then, after that rejection, an almost identical complaint in Kolkata that eventually became an FIR under IPC sections for cheating and criminal breach of trust. The appellants sought to have the Kolkata FIR quashed by the Calcutta High Court, arguing it was a case of "forum shopping" and that the dispute was purely commercial, but the High Court refused to quash it.

Decision Breakdown

The Supreme Court quashed the FIR and the related criminal proceedings. It held that filing near-identical complaints in two different cities over the same transaction, after the first attempt failed, is impermissible "forum shopping" and an abuse of the legal process, especially since the complainant did not disclose the earlier Delhi complaints when filing the Kolkata one. On the merits, the Court found the dispute was fundamentally a commercial/civil disagreement (delayed share allotment and a failed IPO) rather than a case of cheating, because there was no evidence the appellants had any dishonest intention at the time they made their promises: a mere failure to keep a business promise is not, by itself, a crime. The Court reiterated settled law that criminal proceedings should not be used as a pressure tactic to enforce what is really a civil/contractual claim.

Lesson Learnt

Filing multiple complaints in different cities over the same dispute, hoping one venue will succeed where another failed, is an abuse of process that courts will strike down; and a broken business promise, without proof of dishonest intent from the very outset, does not amount to the criminal offence of cheating.

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

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