Kiran Raj

The Supreme Court Division Bench of Justice J.B. Pardiwala and Justice R. Mahadevan has set aside a High Court order that had dismissed a quashing application in a criminal matter and remanded the case for fresh consideration. The apex court directed that the matter be assigned to a different judge, and further ordered that the concerned judge be withdrawn from all criminal jurisdiction assignments for the remainder of his tenure. The directions included the formation of a Division Bench with a senior judge if the concerned judge is to be assigned future judicial work. The registry was instructed to forward a copy of the order to the Chief Justice of the High Court at the earliest.

The matter arose from an order of the High Court of Judicature at Allahabad in Criminal Miscellaneous Application No. 2507 of 2024 dated 5 May 2025, where the application seeking quashing of Complaint Case No. 113283 of 2023 pending before the Additional Chief Judicial Magistrate-I, Kanpur Nagar, was rejected.

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The original complaint, filed by the second respondent in the court of Additional Chief Judicial Magistrate-I, Kanpur Nagar, alleged that the complainant was engaged in the wholesale and retail business of yarn through his firm, while the accused, through her firm M/s Shikhar Chemicals, manufactured and sold cloth using yarn supplied by the complainant. The complainant alleged a long-standing business relationship spanning 4-5 years. Between April and July 2019, yarn worth Rs. 52,34,385/- was supplied, of which Rs. 47,75,000/- was paid, leaving an outstanding balance of Rs. 4,59,385/-. The complainant claimed interest at 8% on the outstanding amount, resulting in an additional claim of Rs. 7,23,711/- as of the date of filing.

The complainant stated multiple attempts to recover the outstanding amount were unsuccessful, including contacting the accused telephonically and approaching the GST department, which issued notices to the accused. The department ultimately imposed a penalty under Section 73(9) of the GST Act. Legal notices sent to the GST-registered addresses of the accused were returned undelivered or refused. Complaints to the police authorities seeking registration of FIR under relevant provisions for fraud, cheating, and criminal conspiracy were made but no FIR was registered.

The Magistrate took cognizance of the complaint and, after a magisterial inquiry under Section 202 of the Criminal Procedure Code, issued process only for the offence punishable under Section 406 IPC (criminal breach of trust). The Magistrate noted the supply of goods, partial payment, and outstanding amount supported by documents and statements, and found a prima facie case under Section 406 IPC.

The High Court, in rejecting the quashing application under Section 482 CrPC, observed in paragraph 12 of its order that given the complainant's small business scale and the financial implications, pursuing a civil suit would be impractical and time-consuming, leading to potential irreparable loss.

The Supreme Court stated, "With all due deference and humility at our command, we are constrained to observe that the impugned order is one of the worst and most erroneous orders that we have come across in our respective tenures as judges of this Court." The court further recorded, "The judge concerned has not only cut a sorry figure for himself but has made a mockery of justice. We are at our wits’ end to understand what is wrong with the Indian Judiciary at the level of High Court."

It noted that as per the complainant's own case, the matter involved a sale of goods and recovery of a balance amount, with no element of entrustment to attract Section 406 IPC. The court cited the decision in State of Gujarat v. Jaswantlal Nathalal (1968) 2 SCR 408, stating, "A mere transaction of sale cannot amount to an entrustment." The bench recorded, "It was expected of the Additional CJM to know that in a case of sale transaction where is the question of any entrustment of goods so as to bring the case within the ambit of criminal breach of trust."

The court expressed concern at the High Court's reasoning in paragraph 12 of the impugned order, observing, "The observations recorded in para 12 are shocking... It was expected of the High Court to know the well-settled position of law that in cases of civil dispute a complainant cannot be permitted to resort to criminal proceedings as the same would amount to abuse of process of law."

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The Supreme Court partly allowed the petition and set aside the High Court's order. It remanded Criminal Miscellaneous Application No. 2507 of 2024 to the High Court for fresh consideration on its merits, directing that the matter be reassigned by the Chief Justice of the High Court to another judge.

The court ordered, "The Chief Justice of High Court shall immediately withdraw the present criminal determination from the concerned Judge." It directed that the concerned judge sit in a Division Bench with a seasoned senior judge, and further, "The concerned judge shall not be assigned any criminal determination, till he demits office. If at all at some point of time, he is to be made to sit as a single judge, he shall not be assigned any criminal determination."

The registry was directed to forward a copy of the order to the Chief Justice of the Allahabad High Court at the earliest.

Advocates Representing the Parties:
For the Petitioners: Mr. Surjadipta Seth, Advocate; Mr. Arindam Ghosh, Advocate-on-Record

Case Title: M/s Shikhar Chemicals v. State of Uttar Pradesh & Anr.
Neutral Citation: NA
Case Number: SLP (Crl.) No. 11445 of 2025
Bench: Justice J.B. Pardiwala, Justice R. Mahadevan