Madras High Court· 28 July 2026
Can criminal proceedings continue where a matter essentially of civil nature has been given a cloak of criminal offence?
Manav Goyal v. The State
Crl.O.P.Nos.26180, 26220, 32215 & 32234 of 2025 · Crl.O.P.Nos.26180, 26220, 32215 & 32234 of 2025
Coram: Justice G.K.Ilanthiraiyan
Answer
No. Civil liability cannot be converted into criminal liability, and the growing tendency to convert a purely civil dispute into a criminal case by applying pressure through criminal prosecution is to be deprecated. Where the matter is essentially of civil nature, criminal proceedings are not a short cut to the other remedies available in law and the jurisdiction of the High Court is exercised to prevent abuse of the process of Court; here the loan account was classified as a non performing asset and the bank had already initiated recovery proceedings under the SARFAESI Act.
Headnote
Indian Penal Code, 1860 — s.120B — s.405 — s.406 — s.420 — Criminal conspiracy — Entrustment — Cheating — Discharge — Quashing of proceedings — Civil liability not converted into criminal liability —
Indian Penal Code, 1860 — s.120B — Criminal conspiracy — Prior agreement and conscious participation —
Held: To attract the offence under Section 120B of the Indian Penal Code there must be a prior agreement and conscious participation; where the material discloses neither, there is no material to attract the charge. (¶16)
Indian Penal Code, 1860 — s.405 — s.420 — Entrustment and cheating essential ingredients —
Held further: Entrustment with property or with dominion over property is an essential ingredient of criminal breach of trust, and cheating is an essential ingredient of the offence under Section 420. (¶21, 22)
Indian Penal Code, 1860 — s.420 — Civil dispute given cloak of criminal offence —
Held further: Civil liability cannot be converted into criminal liability, and where a matter essentially of civil nature has been given a cloak of criminal offence, the proceedings are an abuse of the process of Court. (¶23, 24)
Indian Penal Code, 1860 — Discharge and quashing — No material against owners and developers —
Held further: Where the prosecution itself alleges that the signatures of the accused were fabricated by others and that they received only the actual market value, no charge is made out and the proceedings are quashed as against them alone. Petitions allowed. (¶19, 25, 26)
In the Court's own words
Paragraph 23It is relevant to rely upon the judgment made by the Honourable Supreme Court of India in the case of M/s. Indian Oil Corporation Vs. NEPC India Limited and others reported in (2006) 6 SCC 736, held that the civil liability cannot be converted into criminal liability and it is necessary to take notice of a growing tendency in business circle to convert purely civil dispute in criminal case. This is obviously on account of prevalent impression that civil law remedies are time consuming and do not adequately protect the interest of lender/creditors. Such a tendency is seen in several family disputes also, leading to irretrievable breakdown of marriages/families. There is also an impression that if a person could somehow be entangled in a criminal prosecution, there is a likelihood of imminent settlement. Any effort to settle civil disputes and claim which do not involve any criminal offence Crl.R.C.Nos.212 to 215 of 2026 and by applying pressure through criminal prosecution should be deprecated and dishonoured.
Paragraph 24In the case of G.Sagar Suri Vs. State of Uttar Pradesh reported in 2000 (2) SCC 636, the Honourable Supreme Court of India held as follows:- “It is to be seen if a matter, which is essentially of civil nature, has been given a cloak of criminal offence, criminal proceedings are not a short cut of other remedies available in law. Before issuing process a criminal Court has to exercise a great deal of caution. For the accused it is a serious matter. This Court has laid certain principles on the basis of which High Court is to exercise its jurisdiction under Section 482 of the Code. Jurisdiction under this Section has to be exercised to prevent abuse of the process of any Court or otherwise to secure the ends of justice.”
Paragraph 25Even according to the case of the prosecution, the developers’ signature has been fabricated by the borrower and also inflated the value of the Villas and applied for loan. Further, the loan account is now classified as non performing asset and the bank also initiated proceedings to recover the loan under the SARFAESI Act. Crl.R.C.Nos.212 to 215 of 2026 and Therefore, no charge is made out as against the petitioners and the entire proceedings cannot be sustained and are liable to be quashed as against the petitioners alone. Conclusion :-
Acts & Sections
s.120B Indian Penal Code, 1860s.420 Indian Penal Code, 1860s.406 Indian Penal Code, 1860s.405 Indian Penal Code, 1860s.415 Indian Penal Code, 1860s.468 Indian Penal Code, 1860s.471 Indian Penal Code, 1860One judgment a day. That's the whole habit.
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