Allahabad High Court Grants Anticipatory Bail, Rejecting Non-Payment of Money Under Contract as Ground for Prosecution

LI Network

Published on: 4 August 2023 at 10:30 IST

The Allahabad High Court recently emphasized that mere non-payment of money under a contract cannot be a basis for criminal prosecution of a party to the agreement. Additionally, the court clarified that this cannot be a ground to deny anticipatory bail to the accused person.

Justice Subhash Vidyarthi’s bench granted anticipatory bail to Vijay Pal Prajapati, who was accused of breaching an agreement related to the sale and marketing of excavated sand.

The court also noted the increasing trend of initiating criminal proceedings to exert pressure on parties involved in commercial transactions, instead of opting for civil proceedings for specific performance of contracts or recovery of money. The court observed that filing FIRs for such purposes was becoming a general practice.

However, the court acknowledged its duty to scrutinize whether there is sufficient material to warrant the incarceration of the accused and determine if the criminal proceedings were genuinely based on offenses or misused to persecute parties involved in an agreement dispute.

The case originated from an FIR filed in July 2021 by Deepak Sharma against four accused, including Vijay Pal Prajapati. Sharma alleged that one of the co-accused demanded one crore rupees from him in 2019 for a government tender related to excavation of sand.

Sharma claimed that he transferred 1.6 crores rupees to Prajapati’s firm, and they mutually agreed to distribute investments and profits from the tender among all parties.

Subsequently, a sale and marketing agreement was executed, but Prajapati and the other accused allegedly breached it by marketing excavated sand through their firm. Forgery allegations were also raised against Prajapati.

During the hearing, Prajapati’s counsel argued that the case was a civil dispute over non-payment of money under the agreement and that the matter was already pending before the Commercial Court in Gwalior. He emphasized that the issue of payment and recovery would be addressed in those proceedings.

The court granted anticipatory bail to Prajapati, noting that the offense alleged appeared to be of a civil nature. It also emphasized that mere beneficiary status in an offense does not automatically render the person guilty of forgery. Moreover, no specific allegations of forgery were made against Prajapati in the FIR.

The court further clarified that the dismissal of a Section 482 Cr.P.C. application (under the Criminal Procedure Code) would not bar the consideration of an anticipatory bail application on its merits. Parity, although relevant in granting bail to co-accused with similar charges, cannot be used to reject bail applications.

In conclusion, the Allahabad High Court highlighted the need to distinguish civil disputes from criminal offenses and granted anticipatory bail to Vijay Pal Prajapati based on the lack of allegations of forgery and the civil nature of the dispute.

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