Criminal Law Cannot Be Used as a Weapon in a Family Property Dispute: Supreme Court Quashes Forgery Case

“Dispute Inter Se Between the Parties Has Civil Colour” – In a significant ruling underscoring the distinction between civil disputes and criminal prosecution, the Supreme Court quashed criminal proceedings arising out of allegations of forgery, cheating and fraudulent land transfers between two brothers. The Bench of Justice Vikram Nath and Justice Sandeep Mehta held that once the dispute had been amicably resolved and compensation of ₹60 lakhs paid, continuation of criminal proceedings would not be “expedient in the interest of justice.”

The Court set aside the order of cognizance dated 24 December 2011 passed by the S.D.J.M., Berhampur and the affirming order of the Orissa High Court dated 16 December 2020, thereby bringing quietus to a prosecution that had its genesis in a 2009 FIR.

Alleged Forged Gift Deed Between Brothers

The dispute arose from a property transaction within a family. The respondent-complainant, though born to the same parents as the appellant, had been adopted by one Shri Brundaban Nayak and inherited his estate upon his demise. The appellant claimed that a gift deed dated 28 January 1992 had been executed in his favour by the respondent. Acting upon this document, he sold portions of the property between 1997 and 2005.

In 2009, relations soured and the respondent alleged that the gift deed was forged and that the appellant had fraudulently alienated the land. The complaint was forwarded under Section 156(3) CrPC, leading to registration of FIR No. 55 of 2009. After investigation, a charge sheet under Section 173(2) CrPC was filed alleging offences under Sections 420, 423, 469, 471 and 201 IPC.

The Magistrate took cognizance, and the High Court declined to interfere in revision. The matter thus reached the Supreme Court under Article 136.

“Civil Dispute Given a Cloak of Criminality” – Appellant’s Stand

Before the Supreme Court, the appellant contended that the matter was essentially civil in nature and had been deliberately dressed up as a criminal case. It was highlighted that although specimen signatures were collected during investigation, they were never sent for handwriting expert comparison, thereby weakening the very foundation of the forgery allegation.

The thrust of the argument was that even if the allegations were accepted at face value, the dispute revolved around title and validity of transactions — matters typically adjudicated in civil courts.

Mediation, Compensation and Judicial Balancing

Taking note of the fact that the contesting parties were brothers, the Supreme Court referred the matter to mediation. Initial efforts failed due to disagreement over valuation, with the appellant offering ₹45 lakhs and the respondent demanding ₹95 lakhs.

However, the Court intervened to strike a balance. After hearing both sides and considering the benchmark and market value assessments, the Bench fixed ₹60 lakhs as reasonable compensation. This direction was recorded in the order dated 29 July 2025, granting time to pay the amount in six equated monthly instalments.

By affidavit dated 12 February 2026, the appellant demonstrated full compliance. The respondent did not dispute receipt of the entire ₹60 lakhs.

“Permitting Continuance of Criminal Proceedings… Would Not Be Expedient”

Recording its satisfaction that the dispute bore a predominant civil character, the Court made a crucial observation:

“In view of the above and prima facie being satisfied that the dispute inter se between the parties has civil colour, we are of the firm opinion that permitting the continuance of the criminal proceedings against the appellant, after he has paid a substantial amount by way of compensation to the respondent-complainant, would not be expedient in the interest of justice.”

This observation forms the heart of the judgment. The Court exercised its extraordinary jurisdiction to prevent abuse of the criminal process, especially where the aggrieved party stood fully compensated.

Complete Closure to Litigation

The Supreme Court set aside both the Magistrate’s order taking cognizance and the High Court’s affirming order. All proceedings arising out of PS Case No. 55 of 2009 and Chargesheet No. 133 of 2011 were quashed.

In a decisive step to prevent future rounds of litigation, the Court directed that “no other proceedings, either civil or criminal, shall be instituted by the parties in relation to the disputed lands.”

Thus, the Court not only terminated the criminal prosecution but also ensured finality to the property dispute.

The judgment reinforces a consistent judicial principle — criminal law must not be invoked to settle essentially civil scores, particularly in family property disputes. Where parties have amicably resolved their differences and compensation has been paid, the continuation of prosecution may amount to misuse of judicial process.

By balancing legal doctrine with practical justice, the Supreme Court ensured that reconciliation prevailed over prolonged adversarial litigation.

Date of Decision: 13.02.2026