In a stern message against the misuse of criminal law, the Supreme Court has imposed a Rs.50,000 cost on the Uttar Pradesh Government for treating a civil dispute as a criminal offence.
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NEW DELHI: In a significant ruling, the Supreme Court has reiterated its disapproval of the growing trend of civil disputes being mischaracterized as criminal offences, thereby misusing the criminal justice system. The Court imposed a cost of Rs. 50,000 on the State of Uttar Pradesh, while allowing a Criminal Appeal filed against a judgment of the Allahabad High Court.
The judgment, delivered by a Bench comprising Chief Justice of India Sanjiv Khanna and Justice Sanjay Kumar, came in the case titled Rikhab Birani & Anr. v. State of Uttar Pradesh & Anr. (Neutral Citation: 2025 INSC 512). The Bench expressed strong disapproval of the State’s role in the proliferation of criminal proceedings arising out of what are essentially civil disputes. It observed:
“We are also constrained to impose costs of Rs. 50,000/- on the State of Uttar Pradesh as, in spite of repeated judgments/orders of this Court, we are being flooded with cases of civil wrongs being made the subject matter of criminal proceedings by filing chargesheets, etc.”
Factual Background
The dispute arose from an oral agreement entered into in June 2020 between the appellants (sellers) and the complainant-respondent (buyer) for the sale of a godown for Rs. 1.35 crore. The complainant alleged that she and her husband had paid Rs.19 lakh as part of the sale consideration.
However, the appellants contended that the complainant failed to pay the agreed 25% advance by the stipulated date of September 15, 2020. A cheque of Rs. 10 lakh issued by the complainant also allegedly bounced due to insufficient funds.
Due to the failure of the transaction, the appellants eventually sold the property a year later for Rs. 90 lakh, claiming a loss of Rs. 45 lakh. Neither party initiated civil litigation for breach of contract or specific performance.
Instead, the complainant initiated multiple criminal proceedings, which were initially dismissed. Eventually, she managed to register an FIR under Sections 420 (cheating), 406 (criminal breach of trust), 354 (assault or criminal force to woman with intent to outrage her modesty), 504 (intentional insult), and 506 (criminal intimidation) of the Indian Penal Code, 1860.
The appellants, fearing arrest, obtained anticipatory bail and challenged the chargesheet before the Allahabad High Court under Section 482 CrPC, which was dismissed. They then approached the Supreme Court.
Supreme Court’s Reasoning
The Apex Court critically examined the chargesheet filed by the police and held that it lacked the material particulars required under Section 173(2) CrPC. The Bench noted that the document merely reproduced the contents of the FIR without presenting any credible material or evidence substantiating the alleged criminal offences.
The Court observed that:
“Notwithstanding the law clearly laid down by this Court on the difference between a breach of contract and the criminal offence of cheating, we are continuously flooded with cases where the police register an FIR, conduct investigation, and even file chargesheet(s) in undeserving cases.”
In the present matter, the FIR lacked evidence of criminal intent and failed to establish the necessary ingredients of the offences alleged. The Court also pointed out that the godown in question was recorded in the name of the appellant’s son and that there was no indication of fraudulent or dishonest inducement warranting criminal proceedings.
Consequently, the Court allowed the appeal, set aside the High Court’s order, and quashed the criminal proceedings.
Imposition of Cost and Observations on Accountability
In a stern message to the state machinery, the Court imposed a cost of Rs.50,000 on the State of Uttar Pradesh, directing it to deposit the amount within six weeks. Furthermore, the Court left it open to the State to conduct an internal inquiry and recover the amount from the erring officials responsible for initiating baseless prosecution.
Significantly, while the Court considered imposing costs on the complainant as well, it refrained from doing so, noting the possibility that she may have acted under erroneous legal advice.
Legal Significance
This judgment serves as a cautionary precedent against the misuse of criminal law in civil disputes. It emphasizes the distinction between contractual breaches and criminal liability and reiterates the responsibility of investigative agencies and magistrates to carefully scrutinize the material before initiating criminal trials.
The ruling underscores the need for institutional accountability and judicial vigilance in safeguarding individual liberty from unwarranted criminal prosecution.
CASE TITLE: Rikhab Birani & Anr. v. State of Uttar Pradesh & Anr.
Neutral Citation: 2025 INSC 512
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