Criminalisation of Civil Disputes in India Introduction 

• The recent remarks by Chief Justice of India (CJI) Sanjiv Khanna have brought attention to a growing concern in India’s legal system—the increasing practice of converting civil disputes into criminal cases. 
• CJI Sanjiv Khanna strongly condemned the rising trend where civil issues such as cheque bounce cases, contractual disputes, and money recovery cases are being transformed into criminal offenses. These cases, which were traditionally handled under civil law, are now being framed as criminal charges, with defendants facing serious offenses like breach of trust, intimidation, and criminal conspiracy.
• This issue has particularly been observed in states like Uttar Pradesh, where routine civil matters are being escalated into criminal charges, creating a significant disruption in the legal process. 
• CJI Khanna’s disapproval highlights the urgent need to address this trend and ensure that justice is delivered fairly and in accordance with the law.

Misuse of Criminal Law in Civil Matters

• The growing misuse of criminal law in civil matters has raised alarm among legal experts and civil society. 
• Cheque bounce, money recovery, and other commercial or contractual disagreements are increasingly being framed as criminal offenses, often leading to unnecessary pressure on the opposing party.
  • Cheque Bounce: Where a failure to repay a loan or honor a contract leads to accusations of cheating (Section 420 of IPC).
  • Contractual Disagreements: Disputes over money recovery or business agreements are often framed as cases of criminal breach of trust (Section 406 of IPC).
  • Property Disputes: Family and inheritance-related issues being presented as criminal offenses.
•  The real concern lies in the fact that such cases are often used to pressurize the other party to settle disputes quickly, even if no criminal intent exists.
• For example, a simple loan agreement that turns into a dispute due to non-repayment is being framed as cheating (Section 420) under the Indian Penal Code (IPC). This tactic not only escalates the issue unnecessarily but also leads to the potential criminalization of what should be a civil matter.

How Civil Disputes are Transformed into Criminal Cases? 

• One common tactic to escalate civil matters into criminal cases involves accusing the opposing party of dishonest intentions right from the start. For instance:
  • Mr. A lends money to Mr. B under a civil agreement.
  • Mr. B fails to repay the loan as per the agreement.
  • Mr. A, feeling aggrieved, accuses Mr. B of never intending to repay the loan and claims that Mr. B deceived him.
  • The matter, which would normally fall under civil law, gets criminalized, and Section 420 (cheating) of the IPC is invoked.
  • This process shifts the focus from resolving the financial dispute to a criminal case, raising the stakes for both parties and undermining the spirit of justice.

Why Is There a Shift Towards Criminal Cases?

• Inefficiency of Civil Law: Civil litigation in India has long been plagued by delays and backlogs, causing many individuals to feel that civil law is an ineffective remedy. 

• According to the National Judicial Data Grid (2023), there are over 1.08 crore civil cases pending in District Courts across India, with 68% of these cases being older than a year.

•  The prolonged nature of civil proceedings often pushes people to seek quicker solutions through criminal cases, hoping for faster resolutions. This inefficiency in the civil justice system often leads to frustration and a lack of faith in the judicial process, resulting in people seeking to bypass the system by turning civil matters into criminal cases.

• Quicker Settlements in Criminal Cases: One of the key factors contributing to the conversion of civil disputes into criminal cases is the perception that criminal cases often lead to faster resolutions. 

• For instance, the 2019 NCRB report highlighted a 12% increase in the number of cheque bounce cases filed as criminal complaints. The perception that the fear of criminal consequences—such as arrest, reputation damage, or even legal sanctions—can push the opposing party to settle quickly encourages some individuals to frame civil issues, such as money recovery or breach of contract, as criminal offenses. 

• Family Disputes: In family disputes, the inefficiency of civil courts is most evident. Family matters, such as divorces, inheritance disputes, and property divisions, often take years to resolve through the civil process. For example, divorce cases in India can drag on for years—with some lasting over 5-7 years due to the backlog in courts. This delay causes emotional distress and family breakdowns, pushing individuals to resort to criminal complaints in order to expedite matters. The fear of criminal consequences such as domestic violence charges, dowry harassment, or criminal breach of trust often forces the other party into compromise. The family court system in India alone has more than 12 lakh cases pending, exacerbating the delay in settling family-related disputes.

• • Backlog: The National Judicial Data Grid highlights the massive backlog of cases in India’s judicial system:
    • 1.08 crore civil cases are pending in district courts, with 68% of these cases being over one year old.
    • The total number of pending cases in India exceeds 4.52 crore, with 76% of them being criminal cases.
    • This massive backlog further complicates the issue of converting civil disputes into criminal cases, as the judicial system is already overwhelmed by pending cases. The shift of civil matters to criminal cases only adds to the strain on an already struggling system.

• Power Dynamics and Influence: Political influence or financial clout plays a significant role in misusing criminal law for personal advantage. A 2023 report by Transparency International highlighted corruption and abuse of power within the law enforcement system as significant challenges. Wealthy or politically influential individuals may have the means to pressure law enforcement officers to file First Information Reports (FIRs) under criminal laws. Financial influence enables individuals to control or manipulate the police force or even the judiciary, thereby gaining an undue advantage in legal disputes. 

Legal Precedents and Recommendations

• • The Supreme Court of India has issued several judgments over the years, cautioning against the misuse of criminal law for civil matters.

• G. Sagar Suri vs. State of UP (2000): In this case, the Court emphasized that criminal proceedings should not be used as a shortcut to achieve civil remedies. The Court urged criminal courts to be cautious before issuing processes that could impact the accused’s reputation and freedom.

• C. Subbiah @ Kadambur Jayaraj vs. The Superintendent of Police (May 2024): The Court made a clear observation: “It cannot be doubted that a dispute which is purely civil in nature has been given a colour of criminal prosecution alleging fraud and criminal breach of trust by misusing the tool of criminal law.

 Way Forward

• Holding Complainants Accountable: In cases like Indian Oil Corporation vs. NEPC India Ltd. (2006), the Court suggested that complainants who initiate unwarranted criminal proceedings should face legal consequences. If a criminal case is found baseless, complainants should be held accountable for their frivolous actions.

• Using Section 250 Cr.P.C.: To address malicious prosecutions, the Court recommended using Section 250 of the Criminal Procedure Code (Cr.P.C.), which empowers the courts to order compensation for individuals subjected to frivolous criminal cases. This provision serves as a deterrent against unnecessary litigation and helps protect innocent individuals.

• Ensuring Fairness in Legal Proceedings: The Court emphasized that judges should scrutinize criminal complaints thoroughly before issuing orders. Courts should ensure that criminal charges are not used as a tool to harass or coerce the other party in civil disputes.