SURESH KUMAR AGARWAL V. M/S. HALDIA STEELS LIMITED & ANR 2025 INSC 636:

DATE: 15/04/2025

COURT: Supreme Court of India

BENCH: Justice Vikram Nath and Justice Sandeep Mehta

FACTS:

The Complainant company (Respondent) alleged that the Appellant–accused visited the company’s registered office and introduced himself as the proprietor of a business entity operating under the name and style of M/s. Haryana Minerals, located at Gandhiganj, Chhindwara, Nagpur. The Appellant claimed that his concern was a leading and well-established business in Madhya Pradesh with a strong reputation and substantial expertise in the mining of manganese minerals. He further asserted that his firm had been granted a mining lease by the Government of Madhya Pradesh for the extraction of manganese ore.

According to the Complainant, multiple meetings took place between its officers and the Appellant, during which the terms and modalities for the transfer of the mining lease to the Complainant were thoroughly discussed. However, it was alleged that the Appellant later reneged on his assurances and failed to comply with the terms and conditions outlined in the Memorandum of Understanding (MoU). As a result, the Complainant filed a complaint, which was forwarded to the concerned police station for further action.

Subsequently, the Chief Metropolitan Magistrate (CMM) dismissed the Protest Petition filed in the matter. The CMM observed that the core issue between the parties stemmed from a breach of contractual obligations, and noted that the Complainant had failed to make the agreed payment to the Appellant as per the MoU. Dissatisfied with this decision, the Complainant challenged the order before the High Court by filing a Criminal Revision Petition. The High Court allowed the revision and overturned the CMM's order. Aggrieved by this outcome, the Appellant approached the Supreme Court seeking relief.

ISSUES:

The primary issue in this case revolved around whether the continuation of criminal proceedings was justified despite the Chief Metropolitan Magistrate’s earlier acceptance of a negative final report submitted by the police, which effectively closed the matter. The High Court of Calcutta had reversed that order and allowed the Complainant’s Criminal Revision, thereby reopening the case. The Supreme Court, however, found the facts and circumstances identical to those in a connected appeal it had already allowed. Consequently, the Court held that the High Court's judgment was unsustainable, set it aside, and restored the Magistrate’s order accepting the police's closure report.

JUDGEMENT WITH REASONING:

The Supreme Court allowed the appeal, quashed the judgment dated 17th October 2023 passed by the Calcutta High Court, and restored the order dated 5th October 2015 passed by the Chief Metropolitan Magistrate, Calcutta, which had accepted the police's closure report. The Court held that the criminal proceedings initiated against the appellant lacked any prima facie basis and constituted an abuse of the legal process.

The Court found that the complainant-company’s allegations were not only unsubstantiated but also made belatedly, long after the investigation had concluded. The complainant shifted its narrative by suddenly alleging that a government order approving the mining lease transfer was forged, a claim for which no prima facie evidence was presented. The Court considered this allegation to be speculative and aimed at pressuring the appellant rather than seeking justice. The High Court, in directing further investigation based on these unverified claims, had inappropriately exercised its revisional jurisdiction, without offering any sound reasoning to justify reopening the matter.

The Supreme Court emphasized that the FIR was lodged after an undue and unexplained delay of six years, which undermined its credibility. Moreover, the complainant's attempt to reinterpret the advance payment of Rs.50,00,000 as consideration for procurement of manganese ore contrary to the original terms of the MoU, further weakened the complaint. The Court concluded that the facts on record did not disclose the commission of any cognizable offence, and continuing the prosecution would serve no legal purpose. Hence, the trial court’s decision to accept the closure report and dismiss the protest petition was deemed legally sound and beyond reproach.

ANALYSIS:

This case highlights the Supreme Court's emphasis on preventing the misuse of criminal law to settle what is essentially a civil or contractual dispute. The core of the disagreement between the parties stemmed from alleged non-compliance with a Memorandum of Understanding (MoU) concerning the transfer of a mining lease. The complainant-company initially pursued the matter through criminal proceedings but failed to produce credible or timely evidence to support any claim of fraud or criminal intent on the part of the appellant.

A key element in the Court’s reasoning was the lack of prima facie material to substantiate the complainant’s late-stage claim that a government order approving the lease transfer had been forged. The Court viewed this allegation as a tactical move by the complainant to revive a contract-based dispute under the guise of criminality. It reaffirmed that criminal proceedings cannot be used to exert undue pressure or to coerce performance under a failed commercial arrangement, especially in the absence of supporting evidence.

The Court also scrutinized the procedural history of the case, particularly the inordinate delay of six years in filing the FIR. Such delay, coupled with the complainant’s shifting narrative, significantly weakened the case. The Supreme Court was critical of the High Court's decision to direct further investigation without adequate justification and underscored that the High Court had overstepped its revisional jurisdiction. In restoring the Chief Metropolitan Magistrate’s acceptance of the police closure report, the Supreme Court reaffirmed that prosecuting a frivolous and stale complaint would amount to an abuse of the judicial process, thereby setting a clear precedent against the criminalization of contractual breaches.