Court’s Decision
The Patna High Court allowed a petition under Section 482 of the Code of Criminal Procedure and quashed the FIR lodged against the petitioners under Sections 406, 420, 467, 468, 504, 506 read with Section 34 of the Indian Penal Code. The Court held that the FIR was an abuse of the process of law, since the transaction itself was tainted by illegality and both parties were equally at fault. It stated:
“Both the parties are pari delicto… the informant cannot be permitted to turn around and invoke criminal action for cheating or criminal breach of trust.”
The Court clarified that the informant could pursue a civil remedy through a money suit, and directed that any delay in filing the same be considered leniently due to the pendency of the criminal proceedings.
Facts
The informant, a resident of Bihar, alleged that he came into contact with the first petitioner (a railway TTE) through a mutual acquaintance. In 2019, the petitioner assured the informant that he could secure a government licence to open shops at railway stations using his connections in the Railways. The informant agreed and allegedly paid ₹45,00,000 in total, partly in cash and partly by bank transfer (₹10,00,000 transferred to the second petitioner’s account, who is the wife of the first petitioner). A receipt on stamp paper was also executed.
However, when the promised licence did not materialize even after more than a year, the informant visited the petitioners’ residence in Bhopal and was allegedly threatened. An FIR was filed thereafter.
Issues
- Whether the allegations in the FIR disclosed the essential ingredients of cheating, criminal breach of trust, or forgery.
- Whether the FIR could be quashed considering that the object of the alleged transaction was illegal (to secure a government licence through unofficial means).
- Whether the petitioner could be prosecuted for forgery without any averment of a forged document.
Petitioner’s Arguments
The petitioners argued:
- The FIR essentially relates to a civil dispute over recovery of money paid for an illegal purpose, not a cognizable criminal offence.
- The object of the transaction—obtaining a railway shop licence through influence—was illegal, and thus, criminal charges like Sections 406 and 420 IPC cannot be invoked.
- There was no allegation of any forged document; hence, Sections 467 and 468 IPC were wrongly applied.
- The receipt referred to by the informant was fabricated on an old stamp paper and bore no resemblance to the petitioner’s signature.
They relied on:
- Mohd. Ibrahim v. State of Bihar (2009) 8 SCC 751 (explaining the concept of forgery).
- Vijay Sharma v. State of Bihar (2011) 1 PLJR 780 = 2010 SCC OnLine Pat 1642 (holding that illegal agreements cannot form the basis of cheating or breach of trust).
- State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335 (guidelines for quashing FIRs under Section 482 CrPC).
Respondent’s Arguments
Opposing the petition, the learned counsel for the State and the informant contended:
- The allegations in the FIR disclose clear elements of cheating and criminal breach of trust.
- The FIR is based on a valid complaint supported by documents.
- A charge sheet has already been filed; thus, interference at this stage is unwarranted.
Analysis of the Law
The Court examined the FIR in the context of Section 23 of the Indian Contract Act, 1872 and concluded:
- The informant admitted that the money was paid to illegally secure a government licence.
- Such a transaction was unlawful in its very inception and void under Section 23 of the Indian Contract Act.
- In such cases, the parties are said to be pari delicto (equally at fault), and one cannot later claim to have been cheated.
It cited Spring Field Financial Services Ltd. v. State of A.P. AIR 1953 SC 479 to reinforce that debts arising from unlawful transactions are not legally enforceable.
Further, relying on Mohd. Ibrahim, the Court held that forgery under Section 467 IPC requires making a false document, which was not alleged or proven in the present case.
Precedent Analysis
- Vijay Sharma v. State of Bihar (2011) 1 PLJR 780
Held that criminal remedies cannot be invoked when both parties were complicit in an illegal transaction. - Mohd. Ibrahim v. State of Bihar (2009) 8 SCC 751
Defined “false document” and clarified that forgery requires specific allegations which were absent here. - State of Haryana v. Bhajan Lal (1992 Supp (1) SCC 335)
Laid down illustrative cases where FIRs can be quashed if continuation amounts to abuse of law. - Spring Field Financial Services Ltd. v. State of A.P. AIR 1953 SC 479
Clarified that legal remedy is not available for recovery of money arising out of an illegal transaction.
Court’s Reasoning
- The Court found that the informant voluntarily parted with money for an illegal purpose.
- No criminal offence under Sections 406, 420, 467 or 468 IPC was made out.
- The informant’s own actions were tainted by illegality; thus, he could not later claim to be a victim.
- The transaction may at best give rise to a civil claim, but not criminal liability.
Conclusion
The Court quashed the FIR and all consequential proceedings, holding that continuation would amount to an abuse of process. It allowed the petitioner’s application and clarified:
“The informant may file a money suit in the competent Court, and any delay in filing shall be condoned considering pendency of these proceedings.”
Implications
- The judgment sets a clear precedent that illegal contracts or agreements, even if executed, cannot form the foundation of a criminal case.
- It highlights the cautious approach courts must adopt before allowing prosecution in civilly recoverable disputes.
- Litigants must refrain from using criminal law as a tool for recovery in matters rooted in illegality.
Referred Cases & Their Relevance
- Mohd. Ibrahim v. State of Bihar (2009) – Clarified the definition of “false document” under forgery provisions.
- Vijay Sharma v. State of Bihar (2011) – Held that a person cannot invoke criminal law for an illegal transaction.
- State of Haryana v. Bhajan Lal (1992) – Applied to assess whether FIR amounts to abuse of process.
- Spring Field Financial Services v. State of A.P. – Reinforced that no legal remedy arises from an illegal contract.
FAQs
1. Can a criminal case be filed for recovery of money given for an illegal purpose?
No. If the object of the payment itself was illegal (like obtaining a licence through unofficial channels), criminal law cannot be invoked for recovery.
2. What if someone fabricated a document in such a case?
Unless specific and verifiable allegations of making a “false document” are made, charges under forgery-related sections (467, 468 IPC) will not stand.
3. Can a civil suit still be filed in such cases?
Yes. While the criminal complaint may fail, the aggrieved party may pursue a civil money recovery suit, though enforceability could still be contested due to illegality.