LI Network
Published on: January 23, 2024 at 14:45 IST
The Supreme Court expressed a prima facie opinion that a mere breach of contract does not amount to an offense under Section 420 or Section 406 of the Indian Penal Code (IPC) unless a fraudulent or dishonest intention is demonstrated from the outset of the transaction.
The Division Bench, comprising Justices Sanjiv Khanna and Dipankar Datta, denounced the conversion of purely civil disputes into criminal cases.
The Court, relying on the precedent set in Indian Oil Corpn. v. NEPC India Ltd. and Others, stated that any attempt to settle civil disputes and claims not involving criminal offenses by exerting pressure through criminal prosecution should be deprecated and discouraged.
The remarks were made during the hearing of a criminal appeal challenging the order of the Rajasthan High Court, Jodhpur bench.
The accused faced allegations of entering into a sale agreement with the complainant, receiving Rs. 80 lakhs, and subsequently failing to complete the registration or refund the money. An FIR was lodged against them under Sections 420 and 120-B (criminal conspiracy) of the IPC.
The accused, seeking anticipatory bail, argued in the High Court that the case was a civil matter arising from a breach of contract. However, the High Court dismissed their bail application. In response, the Supreme Court granted anticipatory bail to the appellants, clarifying that the observations made would not influence the merits of the case.
Case Title: JAY SHRI vs. THE STATE OF RAJASTHAN., Diary No.- 45821 – 2023