Delhi High Court Rejects NBFC’s Bid for FIR Over ₹60 Crore Commercial Dispute; Holds Second Revision Cannot Bypass BNSS Bar Through Inherent Powers
Delhi High Court Imposes ₹25,000 Costs on Exclusive Capital; Calls Second Revision Seeking FIR in Commercial Loan Dispute Frivolous and Abuse of Process
Facts
The petitioner, Exclusive Capital Limited, a non-banking financial company engaged in wealth management and financial services, challenged the Sessions Court’s order dated 29 November 2025 affirming a Magistrate’s refusal to direct registration of an FIR under Section 175(3) of the Bharatiya Nagarik Suraksha Sanhita, 2023 (“BNSS”).
The underlying dispute arose from substantial financing arrangements involving Asian Hotels (North) Ltd. IndusInd Bank had extended a ₹100 crore term loan and ₹5 crore overdraft facility to Asian Hotels, while other banks constituted a consortium of lenders.
During pending civil litigation concerning the financial facilities, IndusInd Bank executed a Deed of Assignment dated 28 December 2022, assigning its receivables from Asian Hotels to Exclusive Capital for ₹98 crore. To finance that acquisition, Exclusive Capital obtained a ₹60 crore Inter-Corporate Deposit (ICD) from respondent No. 3 at 7% annual interest, secured by a demand promissory note.
The dispute centred on an alleged Inter-Corporate Loan Agreement dated 14 December 2022. Exclusive Capital denied ever executing that agreement and alleged that its Company Secretary, acting in conspiracy with the other respondents, had stolen confidential documents and used them to fabricate the agreement.
Based on those allegations, Exclusive Capital sought registration of an FIR for alleged theft of documents, fabrication of the loan agreement, dishonest misappropriation and fraudulent assignment of rights. The Economic Offences Wing reported that no concrete evidence supporting the criminal allegations had emerged and considered the controversy essentially civil.
The Magistrate declined to order an FIR under Section 175(3) BNSS, holding that the complainant could proceed with pre-summoning evidence and, if necessary, limited investigation could subsequently be ordered under Section 225 BNSS, corresponding to Section 202 CrPC. The Sessions Court affirmed that decision in revision.
Exclusive Capital thereafter approached the Delhi High Court invoking its inherent powers under Section 528 BNSS, effectively challenging the same refusal after losing its revision.
Issues
The principal issues were:
- Whether a petition under Section 528 BNSS could be entertained after the petitioner had already unsuccessfully exercised revisional jurisdiction, despite the prohibition against a second revision contained in Section 438(3) BNSS.
- Whether the case involved gross injustice, grave miscarriage of justice or abuse of process sufficient to justify exceptional exercise of the High Court’s inherent powers.
- Whether the allegations concerning the disputed ₹60 crore commercial transaction required a full-fledged police investigation under Section 175(3) BNSS, or could appropriately be dealt with through pre-summoning evidence and limited inquiry under Section 225 BNSS.
- Whether criminal machinery was being invoked to give a criminal character to what was predominantly a contractual and commercial dispute.
Petitioner’s Arguments
Exclusive Capital argued that the scope of the High Court’s inherent jurisdiction under Section 528 BNSS was considerably wider than its revisional jurisdiction under Section 438 BNSS.
It submitted that merely because a litigant had already availed itself of revision before the Sessions Court, it was not absolutely prohibited from invoking the High Court’s inherent jurisdiction.
Reliance was placed upon Krishnan v. Krishnaveni and Shakuntala Devi v. Chamru Mahto to contend that the bar against a second revision does not completely extinguish the High Court’s inherent jurisdiction.
The petitioner also relied on observations made in earlier commercial proceedings concerning the disputed agreement to contend that its allegations warranted criminal proceedings and could not simply be characterised as a civil dispute.
Respondents’ Arguments
The State and respondent No. 3 opposed the petition principally on maintainability.
They contended that after the Magistrate’s order had already been challenged unsuccessfully before the Sessions Court, the petitioner could not use Section 528 BNSS to obtain what would effectively amount to a second revision, contrary to Section 438(3) BNSS.
Their case was also that the dispute was fundamentally contractual and commercial, the relevant persons and documents were already known to the petitioner, and no investigation requiring the coercive or specialised machinery of the police was necessary.
Analysis of the Law
The High Court examined the interplay between Section 438(3) BNSS, corresponding to Section 397(3) CrPC, and Section 528 BNSS, corresponding to Section 482 CrPC.
The Court held that the BNSS had not materially altered these provisions, meaning that precedents governing Sections 397(3) and 482 CrPC continued to govern their BNSS counterparts.
Section 438(3) expressly prohibits a person who has invoked revisional jurisdiction before either the High Court or Sessions Court from thereafter filing another revision before the other forum.
Although inherent powers are broad, the High Court held that they cannot routinely be invoked to provide a “backdoor entry” to a remedy expressly prohibited by statute. Otherwise, the statutory prohibition against second revisions would become meaningless.
However, the prohibition is not absolute. In exceptional situations involving gross injustice or grave miscarriage of justice, the High Court retains inherent jurisdiction to intervene.
The Court therefore formulated the applicable principle: inherent jurisdiction may overcome the second-revision bar only in rare cases where the impugned order is without jurisdiction, constitutes abuse of process, or results in gross injustice.
Precedent Analysis
The Court undertook an extensive review of Supreme Court precedent.
In Krishnan v. Krishnaveni, the Supreme Court held that although Section 397(3) bars a second revision, the High Court’s inherent jurisdiction survives where intervention is required to prevent a grave miscarriage of justice or abuse of judicial process. But such jurisdiction must be exercised sparingly and cautiously.
In Shakuntala Devi v. Chamru Mahto, the Supreme Court similarly held that the doors of the High Court are not completely closed merely because a litigant has lost before the Sessions Court; Section 482 can still operate in exceptional cases.
The Court also considered Madhu Limaye v. State of Maharashtra, Bhajan Lal, and Girish Kumar Suneja v. CBI, emphasising that inherent jurisdiction survives statutory revisional restrictions but must remain exceptional and cannot become a mechanism for circumventing express legislative prohibitions.
On the scope of Section 156(3) CrPC/Section 175(3) BNSS, the Court examined Devarapalli Lakshminarayana Reddy, Indian Oil Corporation v. NEPC India, Ramdev Food Products, Priyanka Srivastava, Kailash Vijayvargiya and Om Prakash Ambadkar.
The authorities established that directing registration and police investigation is not automatic merely because allegations disclose a cognizable offence. The Magistrate must apply judicial mind and determine whether State investigative machinery is actually required.
The Court particularly relied upon the principle that commercial parties should not use criminal proceedings as a shortcut or pressure mechanism for settling essentially civil claims.
Court’s Reasoning
The High Court agreed with both courts below that the dispute principally concerned interpretation of contractual arrangements and determination of rights and liabilities arising from commercial transactions.
The petitioner knew the identities of all proposed accused persons and the roles allegedly played by them. The relevant evidence was predominantly documentary and within the petitioner’s possession or capable of being secured with assistance from the Magistrate.
Accordingly, there was no immediate need for custodial interrogation, searches, seizures or other investigative measures requiring full-fledged police intervention.
The Court explained that Section 175(3) BNSS should ordinarily be invoked where investigation involves matters beyond the capacity of a private complainant—for example, unknown accused, recovery through raids and searches, collection of physical evidence, unknown witnesses, or complex facts requiring State expertise.
Where those features are absent, refusal to direct an FIR is legally sustainable, particularly where criminal machinery appears to be invoked to “arm-twist” the opposite party into settling an essentially civil dispute.
Most importantly, Exclusive Capital had not been left remediless. It remained free to enter the witness box and lead pre-summoning evidence before the Magistrate. If police assistance later became necessary, the Magistrate could invoke Section 225 BNSS.
The Court went further and observed that ordering registration of an FIR in these circumstances would itself cause gross injustice to the proposed accused by exposing them to criminal pressure to settle what appeared to be a civil dispute “synthetically tainted with criminality.”
Consequently, there was no gross injustice or miscarriage of justice capable of triggering the exceptional inherent jurisdiction under Section 528 BNSS.
Conclusion
The Delhi High Court refused to use Section 528 BNSS as a means of granting “backdoor entry” to what was practically a second revision, contrary to the statutory prohibition under Section 438(3) BNSS.
The Court held that the Magistrate had correctly declined to direct registration of an FIR because the petitioner could lead pre-summoning evidence and seek limited investigative assistance under Section 225 BNSS if subsequently required.
The petition was characterised as “frivolous and mischievous” and an abuse of the Court’s process. It was therefore dismissed along with the pending applications, with costs of ₹25,000, payable to Bharat Ke Veer within one week.
Case Details
Case: Exclusive Capital Limited v. State Govt. of NCT Delhi & Ors.
Court: High Court of Delhi at New Delhi
Case Number: CRL.M.C. 471/2026 with CRL.M.A. 1881/2026 & CRL.M.A. 1879/2026
CNR Number: DLHC010012742026
Judge: Justice Girish Kathpalia
Date: 17 August 2026 (reserved on 5 August 2026)
Result: Petition dismissed with ₹25,000 costs; refusal to direct FIR/police investigation upheld, and Section 528 BNSS relief rejected as an impermissible second-revision attempt absent gross injustice
