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Civil Disputes and Criminal Prosecutions

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 23-Jan-2024

Source: Supreme Court

Why in News?

Recently, the bench of Justices Sanjiv Khanna and Dipankar Datta heard a case where allegations of fraud were made to prove breach of contract.

  • The Supreme Court observed this in the case of Jay Shri v. The State of Rajasthan.

What was the Background of Jay Shri v. The State of Rajasthan?

  • The accused approached the SC against a decision of Rajasthan High Court where the HC denied anticipatory bail to accused.
  • The accused entered into a contract with the complainant where the complainant filed an FIR against the accused for fraud and criminal conspiracy due to breach of contract.

What was the Court’s Observation?

  • The SC reiterated that “Mere breach of contract does not amount to an offence under Section 420 or Section 406 of the Indian Penal Code, 1860 (IPC) unless the fraudulent or dishonest intention is shown right at the beginning of the transaction”.

What is the Difference Between Civil Dispute and Criminal Dispute?

Points of Difference Civil Dispute Criminal Dispute
Nature of the Dispute
    • The conflict typically involves private parties or entities seeking to resolve disagreements over legal rights or obligations.
    • E.g., contract disputes, personal injury claims, family law matters (divorce, child custody), and property disputes.
    • These involve the violation of laws that are considered offences against the state or society. Crimes are prosecuted by government authorities, and the aim is to punish the offender for wrongdoing.
    • E.g., theft, assault, murder, and drug offences.
Initiation of Proceedings
    • Usually initiated by private individuals or entities (plaintiffs) who file a lawsuit against another party (defendant) seeking damages, injunctions, or other remedies.
    • Initiated by the government, represented by a prosecutor, who files charges against an individual or entity accused of committing a crime.
Burden of Proof
    • The burden is generally on the plaintiff, who must establish their case by a preponderance of the evidence.
    • This means they must show that it is more likely than not that the defendant is liable.
    • The burden is on the prosecution, and it must be proved beyond a reasonable doubt.
    • This is a more demanding standard designed to protect the rights of the accused.
Purpose of Proceedings
    • To provide a remedy to the injured party or parties.
    • Remedies may include monetary compensation (damages), specific performance, or injunctions.
    • To punish the offender for the violation of laws and to deter others from committing similar offences.
    • Rehabilitation and protection of society are also important goals.

What were the Landmark Judgments Cited in the Case?

  • Indian Oil Corp. v. NEPC India Ltd. and Others (2006):
    • The SC held that “Any effort to settle civil disputes and claims, which do not involve any criminal offence, by applying pressure through criminal prosecution should be deprecated and discouraged”.
  • Sarabjit Kaur v. State of Punjab and Another (2023):
    • The SC held that breach of contract does not attract criminal charges.