Supreme Court Quashes FIR and High Court Order, Finds Dispute to Be Commercial and Civil in Nature

A bench of Justices Vikram Nath and Sandeep Mehta on Wednesday heard appeals arising from a common order of the Bombay High Court, which had declined to quash FIR No. 443 of 2015 registered at MIDC Walunj Police Station, Aurangabad. The appeals challenged the High Court’s dismissal of a Section 482 CrPC quashing petition filed by the appellants and a criminal writ petition seeking independent investigation by accused No. 6; the appellants were arraigned for offences under Sections 406, 420, 467, 468, 471 and 34 IPC.

The Court allowed the appeals and set aside the High Court order and the FIR, holding that the allegations, even if taken at face value, did not disclose any cognizable offence but a commercial dispute. The bench concluded that the complaint “present[ed] a dispute which is purely commercial and civil in nature” and that invocation of criminal law amounted to misuse of police machinery. The Court, in its reasoning, observed: "Coming to the prosecution of the appellants based on the impugned-FIR No. 443 of 2015 lodged by complainant ..., we find that the allegations levelled therein, even if taken to be true on their face value, do not disclose the necessary ingredients of any offence, what to say of a cognizable offence/s. The allegations, on the face of it, disclose a dispute which is purely civil in nature. ... The complaint, on the face of record, did not disclose any offence whatsoever and no FIR should have been registered based thereupon." The Court further noted that allowing the criminal proceedings to continue would "be nothing short of a gross abuse of process of the Court."

Background The dispute arose from a 2009-10 MIDC tender for construction of a sewerage water filter plant on BOT basis. Bharat Udyog Limited (BUL) won the tender and, after assigning sub-contracts, the complainant (a contractor operating as Sai Group) alleged that BUL and associated persons induced him to continue work by promising direct payment, then failed to remit substantial dues. The complainant alleged outstanding dues in excess of several crores and further alleged fabrication of documents and forged signatures to misrepresent employment and stock ownership.

The appellants contested that the grievance was commercial and civil in nature, pointing to part payments already made, arbitration awards in their favour, and settlement of bank accounts. Senior counsel for the appellants argued that the FIR represented an attempt to convert a recovery dispute into a criminal proceeding. The High Court, however, relied on perceived modus operandi by the company—raising loans on project records, not completing work and not passing monies to subcontractors—and directed a wider probe, even suggesting investigation by a specialized agency.

On appeal, the Supreme Court scrutinised the record, including the Section 173(2) CrPC report filed by the State and the Investigating Officer’s findings. The report did not substantiate the High Court’s broader suspicions of financial misappropriation or loans raised by misusing project assets. The Court observed that signature comparison reports were inconclusive and that no material supported the charge-sheet’s criminal allegations. Relying on established authority cautioning against criminalising civil disputes (notably Inder Mohan Goswami v. State of Uttaranchal), the bench held that the FIR and consequent proceedings were liable to be quashed. The Court allowed the appeals, quashed and set aside the impugned High Court order dated 8 October 2018, FIR No. 443 of 2015 and all proceedings including the charge-sheet, but clarified that investigating agencies remained free to probe any genuine financial irregularities that might surface.

Case Details: Case No.: 2025 INSC 794 Case Title: Shrichand Rajaram Kukreja and Anr. v. The State of Maharashtra and Anr. Appearances: For the Petitioner(s): Shri K. Parameshwar, Senior Counsel (for the appellants) For the Respondent(s): Aaditya Aniruddha Pande, Standing Counsel (for the State of Maharashtra); Advocate for the complainant (Respondent No.2) — name not specified in the order.