“Unscrupulous Litigants Should Not Go Scot-Free": SC Imposes 25 Lakh Costs On A Complainant While Quashing FIR Over A Civil Dispute
The Supreme Court, while quashing criminal proceedings, imposed costs of Rupees 25 Lakhs on the complainant for unnecessary conversion of a civil/commercial matter into a criminal case.
The Court emphasized the need to hold unscrupulous litigants accountable by imposing strict terms, conditions, and costs.
“The entire factual matrix and the time lines clearly reflects that the complainant deliberately and unnecessarily has caused substantial delay and had been waiting for opportune moment for initiating false and frivolous litigation”, the Bench comprising Justice Vikram Nath and Justice Rajesh Bindal observed.
The Bench further observed, “unscrupulous litigants should not be allowed to go scot-free. They should be put to strict terms and conditions including costs. It is time to check with firmness such litigation initiated and laced with concealment, falsehood, and forum hunting. Even State actions or conduct of government servants being party to such malicious litigation should be seriously reprimanded”.
Senior Advocates Kapil Sibal, Nakul Dewan and Anjana Prakash appeared for the Appellant and Senior Advocates Vikas Singh and Nakul Dewan appeared for the State.
Karan Gambhir, owner of M/s D.D. Global Capital Pvt. Ltd., filed an FIR against Sushil Gupta, Rajesh Gupta, Dinesh Gupta, Baljeet Singh, and others. Private limited companies BDR, Gulab Buildtech, and Verma Buildtech were also accused. Dinesh Gupta and Rajesh Gupta sought to quash the summoning order and the FIR in the High Court.
The complaint alleged that Karan's company extended short-term loans to Gulab Buildtech and Verma Buildtech, later converted into debt equity with promises of high returns. The complainant acquired significant shareholding, but a share pledge agreement was allegedly forged. Amalgamation schemes reduced the company's shareholding, approved without notice. When the complainant sought loan repayment, the accused ignored him, leading to legal action. The police filed a charge sheet under IPC Sections 420, 467, and 120-B. The High Court dismissed Petitions to quash the FIR and summoning order, prompting the appeals.
The Court observed that the complainant, despite investing substantial amounts in the equity of two New Delhi-based companies, intentionally provided incomplete addresses in the complaint, falsely indicating jurisdiction in Gautam Budh Nagar. The charge sheet revealed accurate addresses in New Delhi for all accused, contradicting the FIR's incomplete addresses. The complainant's residential address and parentage were omitted while supporting witnesses provided New Delhi addresses.
The Court noted that the Trial Court had issued summons without proper consideration, as evident from the lack of reasoning and overlooking addresses. The allegation of the complainant being misled was refuted by resolutions, confirming the deliberate investment decisions in the companies. Additionally, the complainant concealed material facts about the merger of Gulab Buildtech and Verma Buildtech with BDR, indicating a deliberate attempt to mislead.
The Bench observed that a Company Petition sought the merger of Gulab Buildtech and Verma Buildtech with BDR. The High Court approved after due notice to stakeholders, including the complainant. The complainant did not object or participate. Subsequently, the complainant filed a recall application citing a lack of notice and a decrease in shareholding after the merger. This application, dismissed, did not mention the loan conversion or document forgery.
The Bench noted that the crucial fact of loan conversion and forged documents only surfaced in the police complaint, more than two years after the dismissal of the recall application. The complainant's deliberate non-disclosure of relevant details during this period demonstrates a malicious attempt to initiate criminal proceedings with ulterior motives.
Furthermore, the Bench observed that the transaction between the corporations was straightforward, involving a short-term loan in 2010 per the complainant. Remarkably, no efforts were made to recover the amount until the FIR was filed, approximately 8 years and 7 months later. Knowledge of the merger of Gulab Buildtech and Verma Buildtech with BDR dates back to 2013, yet no recovery steps were taken even after the recall application's dismissal. The deliberate delays and strategic timing in initiating legal action suggest the complainant's ill intentions.
Furthermore, the Court noted that the appointment of an arbitrator by the Delhi High Court indicated an alternative dispute resolution avenue was available and remains pending, as noted in the High Court's impugned order.
Accordingly, the Court allowed the Appeal, set aside the impugned order of the High Court and quashed the FIR and subsequent proceedings against the Appellants.
Cause Title: Dinesh Gupta v The State Of Uttar Pradesh & Anr. (2024 INSC 32)
Appearance:
Appellant: Harsh Sethi, Anant Nigam, Neil Chatterjee, Shantanu Parashar, Raghav Luthra, Nitin Bajaj, Shaurya Chaurasiya, Yash Saini, Avneesh Arputham, Mahesh Agarwal, Rishi Agrawala, Niyati Kohli, Pranjit Bhattacharya, Anju Prakash, Akhil Sachar and E. C. Agrawala Advocates
Respondents: Saurabh Soni, Akshay Girish Ringe, Nikhil Kohli, Gaurav Gupta, Megha Mukerjee, Mannat Singh, Sanjeet Thakur, Deepika Kalia, Keshav Khandelwal, Harsh Sethi, Anant Nigam, Neil Chatterjee, Shantanu Parashar, Raghav Luthra, Nitin Bajaj, Shaurya Chaurasiya, Yash Saini, Avneesh Arputham, Garvesh Kabra, Pooja Kabra, Shweta Yadav and Ahmer Shaikh, Advocates
