Supreme Court Quashes Criminal Proceedings Arising Out of Adjudicated Civil Dispute.

Supreme Court quashed criminal proceedings initiated against Dinesh Kumar Mathur, who is accused in a property fraud case, involving properties relating to the Madhya Pradesh Housing Board of which he was a former officer. The Court ruled that the case was without merit, based upon a civil dispute already adjudicated.

Background:
The dispute arising out of house allotment on a hire-purchase basis by the Madhya Pradesh State Housing Board in the year 1991 of House No. D-90 in Dindayal Nagar, Ratlam, which subsequently changed hands by a series of agreements and transactions culminating in a complaint for forgery and cheating against several persons including the appellant Mathur.

Gopaldas sold the property to Mangi Bai on an agreement to execute a sale deed after registration in the year 1991 and Mangi Bai sold the property to the complainant on an agreement to sell in 1994. Ashok Dayya, a co-accused, allegedly forged a Power of Attorney from Gopaldas and fraudulently registered the property in his name with the alleged connivance of Housing Board officials, including Mathur.

Accordingly, the complainant has filed a civil suit 2014 for specific performance of the 1994 agreement to sell and an injunction against further property transfers, along with an FIR lodged against five persons, including Mathur, for offenses related to forgery, cheating, and criminal conspiracy.

In the year 2016, the civil court rejects the complainant's suit finding that the substantive issues were not proven. and a quash peititon is file 2017, however The High Court refuses to quash the FIR and subsequent proceedings against Mathur on ground that prima facie evidence of his involvement in the alleged crimes had been found. Being unhappy with the decision of the High Court, Mathur filed an appeal to the Supreme Court.

After considering the records of the case and arguments, the Supreme Court pointed out as under:

Protection of Acts done in Good Faith: The Court identified the availability of protection under the Madhya Pradesh Housing Board Act, 1972, granted to the officials from prosecution for acts done in good faith in the discharge of official duties and obligations. This is similar to the protection granted to a public servant under Section 197 of the Code of Criminal Procedure. Inadequate Proof of Criminal Offenses: The Court reviewed the charges against Mathur for commission of offenses under Sections 419, 420, 467, 468, 471, and 120B of the Indian Penal Code and found no adequate evidence for convicting him.

No Proof of Intention to Defraud: No evidence was found that Mathur had acted with intent to deceive or cheat regarding the registration of the property.

No Proof of Knowledge of Forgery: The prosecution has not established that Mathur knew of or was a party to the alleged forgery of the Power of Attorney.

No Substance in Charges of Conspiracy: The case of criminal conspiracy was not supported by any evidence, and the prosecution had only pleaded "connivance".

The Case is a Civil Dispute and the Apex Court brought out that there was a basic dispute arising from a series of agreements and transactions relating to property, thus purely being a civil dispute. The attempt to criminalize the dispute was unjustified. The Apex Court further observed that the specific performace suit filed by the complainant for enforcement of the agreement of sale in the year 1994 itself was dismissed by the competent civil court. Further, this aspect fortified the view that it was a civil dispute.

Considering these eventualities in their entirety, the Supreme Court granted the appeal of Mathur and set aside the impugned judgment of the High Court. The Court held that prima facie, there was no justification to initiate criminal proceedings against Mathur, particularly after his superannuation from service and the damage to reputation caused to him.

This judgement is a reminder that criminal law should not be used to decide the disputes which are essentially of a civil nature and when there is no clear evidence of criminal intention and act.

Coram: Justice C.T Ravikumar and Justice Sanjay Karol
Between: Dinesh Kumar Mathur vs State Of M.P. & Anr
DOJ: 02-01-2025