SH. AJIT S/O SHIRISH KORDE AND ANOTHER v. THE STATE OF MAHARASHTRA, THROUGH P.S.O. PRATAP NAGAR POLICE STATION, NAGPUR AND ANOTHER
Quashing of FIR - Concealment of Full and Final Settlement and Civil Suit Regarding Bank Guarantee Invocation Constitutes Abuse of Process.
Court: Bombay High Court
Citation: 2026:BHC-NAG:3175-DB
Decision Date: 23-02-2026
List of Laws
The Indian Penal Code, 1860; The Code of Criminal Procedure, 1973 (Section 482); Constitution of India (Article 226); Banking Regulation Act, 1949; SARFAESI Act, 2002; Law of Contract (Bank Guarantees)
- Facts: The Respondent No.2 (Complainant), partner of Aradhya Infratech Pvt. Ltd., was awarded civil work contracts by BGR Energy Systems Limited (Petitioners in W.P. 631/2015). To secure these contracts, the Complainant furnished four bank guarantees totaling Rs. 81,37,822/- through the Bank of India (where Petitioners in W.P. 609/2015 were officials). The bank guarantees were valid until 30.09.2012. Although the Complainant requested the bank to close the guarantees after expiry, the Bank subsequently invoked and transferred the amount to BGR Energy on 18.01.2013, claiming a request for invocation was received within the validity period but had been initially misplaced. Crucially, while a civil suit was pending regarding this dispute, the Complainant and BGR Energy entered into a full and final settlement on 12.07.2013, whereby the Complainant received Rs. 47,35,198/- and confirmed no further claims. Despite this settlement, the Complainant lodged an FIR in 2015 alleging cheating and criminal breach of trust against the bank and company officials, concealing the fact of the settlement and the pending civil litigation.
- Procedural Posture: The Petitioners filed Criminal Writ Petitions under Article 226 of the Constitution of India and Section 482 of the Code of Criminal Procedure seeking to quash FIR No. 262/2015 registered for offences under Sections 420, 403, 406, 418, 425, and 427 of the Indian Penal Code.
- Issue: Whether the FIR should be quashed on the ground that the dispute is essentially civil in nature and that the Complainant abused the process of law by concealing a material settlement?
- Holding: Yes, the FIR and subsequent proceedings are quashed. The Court also imposed a cost of Rs. 2,00,000/- on the Complainant for abusing the process of law.
- Reasoning: The Court reasoned that a bank guarantee is an autonomous contract, and its invocation is a commercial matter between the bank and the beneficiary. The evidence showed that BGR Energy had indeed sent an invocation letter within the validity period, which the bank officials followed after internal verification. More importantly, the Complainant had already entered into a full and final settlement with the beneficiary company regarding the same service orders before filing the FIR. By suppressing this settlement and the existence of a pending civil suit, the Complainant acted with "unclean hands". The Court noted that the ingredients of cheating (dishonest intention at inception) and criminal breach of trust (dishonest misappropriation) were not prima facie made out and cannot co-exist simultaneously. Continuing the prosecution would constitute a gross abuse of the process of law, as the dispute was essentially a commercial transaction given a criminal cloak.
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