Classic Case of Civil Dispute Given Criminal Colour: Supreme Court Quashes FIR Against Widow and Daughter, Imposes ₹10 Lakh Cost on Complainant

“Rather than awarding interest to the complainant, it is a fit case wherein the complainant should be penalized with exemplary cost for misusing the process of criminal law in a case which was of purely civil nature,” the Supreme Court holds

On 18th July 2025, the Supreme Court , comprising Justice Vikram Nath and Justice Sandeep Mehta, exercised its jurisdiction under Article 136 of the Constitution to quash criminal proceedings initiated under Sections 406 and 420 of the Indian Penal Code, 1860. The Court observed that the criminal case was a classic example of a civil dispute being given a criminal colour, which resulted in harassment of the appellants, who are a 70-year-old widow and her daughter. The FIR and consequential proceedings were quashed, exemplary costs of ₹10,00,000/- were imposed on the complainant, and police protection was directed for the appellants, thereby reinforcing principles of fairness and preventing misuse of criminal law.

The litigation arose from a property transaction involving a 500-square-yard plot situated in Gachibowli, Telangana, owned by appellant No.1, a senior citizen widow of a retired Army Major General, and her daughter, appellant No.2. The complainant, who acted as an agent of a prominent real estate company, M/s Sandhya Constructions and Estates Pvt. Ltd., expressed interest in purchasing the property in 2020. Following oral negotiations, certain sums were transferred via banking channels amounting to ₹4.05 crores. The complainant later alleged further cash payments of ₹75 lakhs and accused the appellants of cheating and criminal breach of trust when the sale did not materialise.

The complainant lodged FIR No. 771 of 2020 at Gachibowli Police Station, Cyberabad, Telangana, which led to the arrest of appellant No.1 and criminal proceedings being initiated. Simultaneously, the complainant filed a civil suit for specific performance. The High Court of Telangana, by a perfunctory order dated 28th April 2023, dismissed the appellants’ petition under Section 482 CrPC without evaluating the merits of the dispute, leading to the appeal before the Supreme Court.

The Supreme Court was called upon to determine whether the criminal proceedings initiated against the appellants were an abuse of process in a dispute inherently civil in nature, whether the High Court had failed to exercise its jurisdiction properly, and whether continuation of such proceedings would cause grave injustice.

The appellants argued that the FIR was based on fabricated allegations since there was no binding written agreement to sell, the alleged cash transaction was unsupported by documentary proof, and the complainant had already sought civil remedies through a suit for specific performance. They highlighted material inconsistencies between the FIR and the civil pleadings, particularly regarding the sale consideration amount and the properties involved. They relied on previous judgments including Rikhab Birani v. State of Uttar Pradesh, Paramjeet Batra v. State of Uttarakhand, Sachin Garg v. State of Uttar Pradesh, A.M. Mohan v. State and Lalit Chaturvedi v. State of Uttar Pradesh to support their case that criminal law cannot be invoked in civil disputes.

The respondents, representing the complainant and the State of Telangana, contended that the appellants had dishonestly induced the complainant to part with a significant amount of money, making out a prima facie case of cheating and criminal breach of trust.

The Supreme Court, after examining the FIR, civil pleadings, and the parties' submissions, concluded that the FIR was an example of an abuse of criminal law, orchestrated to pressurise the appellants in a civil dispute. The Court noted with concern the mechanical disposal of the quashing petition by the High Court without discussing the merits and described it as a failure to exercise jurisdiction judiciously.

The Court highlighted that there were glaring contradictions in the complainant’s case. The FIR alleged an oral agreement for ₹5 crores involving multiple properties, including a farmhouse in Delhi, whereas the civil suit claimed ₹5.75 crores and was restricted to the Telangana plot. The Court observed, “there is a drastic variance in the complainant’s allegations qua the oral agreement as narrated in the FIR vis-a-vis as set out in the plaint” (Para 11).

The Court further found that the appellants, being a 70-year-old widow and her daughter residing in New Delhi, were unnecessarily dragged into criminal litigation for a dispute that should have been confined to civil proceedings. It noted that appellant No.1 was arrested, detained for eight days, and subjected to humiliation despite her age and medical condition.

The Court decisively stated, “In gross disregard to all tenets of law, the impugned FIR came to be registered for allegations which had no elements of any offence whatsoever what to talk of a cognizable offence” (Para 14).

Acknowledging the fair offer made by the appellants to refund ₹4.05 crores transferred through banking channels, the Court observed that the complainant was interested in exerting pressure by pursuing a parallel criminal action to secure additional financial gains through interest and coercion.

The Court ruled that the High Court erred in dismissing the Section 482 CrPC petition in a cursory fashion, failing to consider the essential facts that demonstrated no criminal offence had been made out. The Court therefore quashed FIR No. 771 of 2020 and all consequential proceedings, holding them to be a gross abuse of the criminal process.

Recognising the harassment faced by the appellants, the Court directed the Telangana police to provide security to the appellants when they visit Hyderabad in relation to the management of their property.

Most significantly, the Court imposed exemplary costs of ₹10,00,000/- on the complainant for abusing the criminal justice system, ordering the amount to be transferred to the appellants within 30 days.

The Supreme Court’s ruling in Mala Choudhary v. State of Telangana is a significant reaffirmation of the legal principle that criminal law cannot be misused to settle civil disputes. By quashing the FIR and awarding exemplary costs, the Court sent a strong message that civil disputes should remain within the domain of civil law and that the criminal machinery cannot be invoked to harass and humiliate litigants. The Court further clarified that perfunctory orders by High Courts in quashing matters are impermissible, particularly when the abuse of process is evident. This judgment strengthens the protection of vulnerable litigants from misuse of police powers and reinforces the principle that criminal courts should not be converted into tools of oppression in civil transactions.

Date of Decision: 18th July 2025