MP HC Sets Aside FIR In Property Case, Calls It Purely Civil Matter

New Delhi, May 16 (KNN) The Madhya Pradesh High Court has reiterated that disputes arising purely from commercial transactions cannot be converted into criminal prosecution, quashing an FIR filed for cheating and criminal breach of trust in a property dispute case.

A bench of Justice B.P. Sharma observed that disagreements involving contractual obligations, financial settlements and plot transfers must be resolved through civil proceedings rather than criminal action.

In the present matter, the court observed that the parties were engaged in commercial dealings arising from development agreements and property transactions. It held that the record did not show any entrustment of property in the legal sense required under Section 409 IPC. 

Dispute Stemmed From Property Development Agreements 

The dispute arose from property development agreements, with both sides alleging financial misconduct. 

The complainant accused the petitioner of misappropriating investment funds and dishonestly transferring plots, while the petitioner argued that the matter was purely civil, stemming from contractual obligations, and that no dishonest intention existed at the time of entering the agreement, a necessary element for cheating. 

The respondent, however, maintained that the FIR disclosed cognisable offences. 

Court Says Case Is ‘Quintessentially Civil In Nature’

After reviewing the records, the court said the case reflected a growing tendency to give civil disputes a criminal colour in order to pressure the opposite party.

The bench noted that the dispute primarily concerned refund of consideration and settlement of accounts, which are ‘quintessentially civil in character’ and should be adjudicated by competent civil courts.

The court further found no evidence to suggest fraudulent intent at the beginning of the transaction. Instead, records showed that both parties maintained long-standing commercial relations involving multiple agreements and financial transactions.

FIR Quashed, Criminal Proceedings Set Aside 

Holding that criminal law cannot be used as a coercive tool in business disputes, the court quashed the FIR and the consequential chargesheet against the petitioner.

The ruling reinforces the principle that disputes over payments, investment refunds and contractual breaches in commercial transactions should ordinarily be addressed through civil remedies rather than criminal prosecution.

(KNN Bureau)