Holding

The Supreme Court held that the FIR and subsequent criminal proceedings were an abuse of process and forum‑shopping, and therefore quashed the FIR and set aside the High Court order.

Summary

The complainant, Karan Gambhir, filed a police complaint in Gautam Budh Nagar alleging that the promoters of three Delhi‑based companies had induced his firm to give short‑term loans which were later converted into equity. The FIR, registered on 29 July 2018, listed the accused companies and promoters with incomplete addresses suggesting they were residents of Noida, thereby creating jurisdiction in Gautam Budh Nagar. The appellants sought quashing of the FIR and the summoning order under Section 482 CrPC, arguing that the dispute was purely commercial and that the complaint was a case of forum‑shopping and abuse of process. The Supreme Court found that the complainant deliberately misrepresented addresses, concealed material facts about a merger, and delayed litigation to manufacture a criminal case, constituting malicious prosecution. Consequently, the Court set aside the High Court order, quashed the FIR and all subsequent proceedings, and imposed costs of ₹25 lakhs on the complainant.

Issues considered

Whether the High Court was justified in refusing to quash the FIR and the summoning order.
Whether the FIR registered in Gautam Budh Nagar was proper given the territorial jurisdiction of the parties.
Whether the complaint constitutes an abuse of process of law and forum‑shopping.
Whether the dispute is civil/commercial in nature and therefore not amenable to criminal prosecution.
Whether the magistrate exercised jurisdiction and applied mind while issuing summons.

Legislation cited

Code of Criminal Procedure, 1973s. 482
Indian Penal Code, 1860s. 120-B, s. 420, s. 467

Subjects

Commercial disputeAbuse of process of lawForum shoppingQuashing of FIRUnscrupulous litigantsTerritorial jurisdictionInappropriate use of jurisdictionMisuse of criminal justice systemPrinciples of fairnessConcealmentFalsehoodMaterial facts concealedCostsAbuse of judicial remedies

Judgment

[2024] 1 S.C.R. 390 : 2024 INSC 32

Dinesh Gupta
v.
The State of Uttar Pradesh & Anr.
(Criminal Appeal No(s). 214 of 2024)
11 January 2024
[Vikram Nath* and Rajesh Bindal,* JJ.]

Issue for Consideration
Despite the commercial nature of the dispute involved, criminal
complaint was filed and an FIR was registered against the
appellants. Whether, the High Court was justified in refusing to
quash the FIR and the summoning order.

Headnotes
Administration of Justice – Abuse of process of law – Forum
shopping – Financial transactions between parties based in
New Delhi – On the basis of complaint filed by respondent-
complainant, FIR was registered in Gautam Budh Nagar against
three companies, appellants-promoters of the companies and
other accused persons – Summons issued by Chief Judicial
Magistrate, Gautam Budh Nagar – Appellants sought quashing
of the FIR and the summoning order, petitions dismissed by
High Court – Correctness:
Held: The registration of FIR at Noida despite companies in question
having registered offices at Delhi shows a wishful forum shopping
by the Complainant – Though the complainant had invested crores
of rupees in equity of the companies based at Delhi, knowing well
their place of business, yet their incomplete addresses showing
them at Gautam Budh Nagar, was deliberately mentioned to
falsely create jurisdiction in Gautam Budh Nagar which did not
actually lie there – Also, though address of the respondent was
mentioned to be of Noida, his residential address was not given
– Order of CJM shows no application of mind, as no reasons
were assigned – Magistrate did not take into consideration the
address of the complainant and the accused companies as also
the addresses of their Directors – Further, claim of the respondent
that the appellants had induced the complainant to advance loan
* Author
[2024] 1 S.C.R. 391

Dinesh Gupta v. The State of Uttar Pradesh & Anr.

and later on converted the loan into equity is false – It was a plain
and simple transaction between the corporates – Even as per the
complainant’s case, the short-term loan was advanced in the year
2010 for a period of one year – However, when the same was not
returned, no steps were taken by the complainant to recover the
same until the FIR in question was registered on 29.07.2018 i.e.
8 years & 7 months later – Furthermore, on facts, the complainant
concealed material facts which were within his knowledge at the
time of filing of complaint as regards the merger of the companies
– Entire factual matrix and the time lines clearly reflects that the
complainant deliberately and unnecessarily caused substantial
delay and was waiting for opportune moment for initiating false
and frivolous litigation – Impugned order set aside – FIR and all
subsequent proceedings qua the appellants, quashed – Costs of
₹25 lakhs imposed on the respondent. [Paras 38, 23, 25-28, 32,
34, 37 and 39]
Administration of Justice – Abuse of process of law – Misuse
of criminal proceedings – Civil matter turned into criminal
case – Practice deprecated – Unscrupulous litigants should
not be allowed to go scot-free and be put to strict terms and
conditions including costs – Litigation laced with concealment,
falsehood, and forum hunting – State actions or conduct of
government servants being party to such malicious litigation
should be seriously reprimanded. [Paras 2, 38]

Case Law Cited
Randheer Singh v. The State of U.P. & others 2021
INSC 440: (2021) 14 SCC 626 – referred to.

List of Acts

Penal Code, 1860, Code of Criminal Procedure, 1973.

List of Keywords
Commercial dispute; Abuse of process of law; Forum shopping/
hunting; Quashing of FIR; Unscrupulous litigants; Territorial
jurisdiction; Inappropriate use of jurisdiction; Abuse of criminal
justice system; Principles of fairness; Misuse of criminal
proceedings; Concealment, Falsehood; Material facts concealed;
Costs; Abuse of judicial remedies.
392 [2024] 1 S.C.R.

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Case Arising From
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.214
of 2024
From the Judgment and Order dated 17.02.2022 of the High Court
of Judicature at Allahabad in A482 No.29852 of 2021
With
Criminal Appeal No.215 of 2024
Appearances for Parties
Nakul Dewan, Kapil Sibal, Anjana Prakash, Vikas Singh, Sr. Advs.,
Harsh Sethi, Anant Nigam, Neil Chatterjee, Shantanu Parashar,
Raghav Luthra, Nitin Bajaj, Shaurya Chaurasiya, Yash Saini, Avneesh
Arputham, Mahesh Agarwal, Rishi Agrawala, Ms. Niyati Kohli, Pranjit
Bhattacharya, Ms. Anju Prakash, Akhil Sachar, E. C. Agrawala,
Saurabh Soni, Akshay Girish Ringe, Nikhil Kohli, Gaurav Gupta, Ms.
Megha Mukerjee, Ms. Mannat Singh, Sanjeet Thakur, Ms. Deepika
Kalia, Keshav Khandelwal, Garvesh Kabra, Mrs. Pooja Kabra, Ms.
Shweta Yadav, Ahmer Shaikh, Advs. for the appearing parties.
Judgment / Order of the Supreme Court
Judgment
Vikram Nath, J. & Rajesh Bindal, J.
1. Leave granted.
2. Unscrupulous litigants should not be allowed to go scot-free. They
should be put to strict terms and conditions including costs. It is
time to check with firmness such litigation initiated and laced with
concealment, falsehood, and forum hunting. Even State actions
or conduct of government servants being party to such malicious
litigation should be seriously reprimanded. In the instant case, we
find initiation of criminal proceedings before a forum which had
no territorial jurisdiction by submitting incorrect facts and giving
frivolous reasons to entertain such complaints. A closer look at the
respondent’s actions reveals more than just an inappropriate use of
jurisdiction. The core issue of the dispute, which involves financial
transactions and agreements, clearly places it in the realm of civil
and commercial law. Yet, the respondent chose to pursue criminal
[2024] 1 S.C.R. 393

Dinesh Gupta v. The State of Uttar Pradesh & Anr.

charges in a quest to abuse the criminal justice system with a motive
to seek personal vengeance rather than seeking true justice. This
unnecessary turning of a civil matter into a criminal case not only
overburdens the criminal justice system but also violates the principles
of fairness and right conduct in legal matters. The apparent misuse
of criminal proceedings in this case not only damages trust in our
legal system but also sets a harmful precedent if not addressed.
3. A common order1 passed by the High Court2 dismissing the petitions
filed by the appellants seeking quashing of the summoning order3
has been impugned in the present appeals.
FACTUAL MATRIX –
4. Karan Gambhir, who owns M/s D.D. Global Capital Pvt. Ltd.
(hereinafter referred to as ‘the Company’) is the complainant in the
FIR4 which was registered against Sushil Gupta, Rajesh Gupta, Dinesh
Gupta, Baljeet Singh & others. Three private limited companies had
also been arrayed as accused i.e. BDR5, Gulab Buildtech6 and Verma
Buildtech7. The individuals, namely, Sushil Gupta, Rajesh Gupta
and Dinesh Gupta are stated to be the promoters of the aforesaid
three companies.
5. Only two of the accused persons, i.e. Dinesh Gupta and Rajesh Gupta
approached the High Court seeking quashing of the summoning
order and the FIR. Nothing was pointed out at the time of hearing
that any matter filed by any other accused is pending either in this
Court or High Court.
6. It is alleged by the complainant that his company was induced to
extend short-term loans of ₹ 5,16,00,000/- to Gulab Buildtech and
₹ 11,29,50,000/- to Verma Buildtech respectively. Later, the said loan
was converted into debt equity allegedly promising high returns from
real estate business to the complainant. The shares were allotted

1 Dated 17.02.2022 in Applications under Section 482 Cr.P.C. No(s).29852 of 2021 & 25990 of 2021
2 High Court of Judicature at Allahabad
3 Dated 15.02.2021 in Case No.2828 of 2021 (re-numbered as 4084 of 2021)
4 FIR No.1271 of 2018 dated 29.07.2018 registered at Gautam Budh Nagar Police Station, NOIDA
5 M/s BDR Builders and Developers Pvt. Ltd. (hereinafter referred to as ‘BDR’)
6 M/s Gulab Buildtech Pvt. Ltd. (hereinafter referred to as ‘Gulab Buildtech’)
7 M/s Verma Buildtech and Promoters Pvt. Ltd. (hereinafter referred to as ‘Verma Buildtech’)
394 [2024] 1 S.C.R.

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at an exorbitant price. The complainant acquired 21% shareholding
in Verma Buildtech, whereas, in Gulab Buildtech, the shareholding
was to the tune of 4.53%. A share pledge agreement was forged,
allegedly to have been executed in favour of Sushil Gupta, one of the
accused (not before this Court). Some scheme of amalgamation was
made by Gulab Buildtech and Verma Buildtech to amalgamate the
aforesaid companies with BDR, as a result of which, the percentage
of shareholding of the company reduced considerably. No notice
was served on the company of the proposed amalgamation. The
amalgamation was got approved from the Delhi High Court. The
share certificates were allegedly never physically handed over to
the complainant.
7. The complainant further alleged that when he asked the accused to
return the loan with interest, initially time was sought stating that there
is slump in the real estate market and thereafter, the accused started
ignoring the complainant. That is when the complainant decided to
take legal recourse against the accused. Prayer was made in the
police complaint for registration of a case of cheating and forgery
against the accused. While filing the complaint, the complainant had
given his address as ‘C/o A & A Earth Movers, D-9, Sector-2, Noida
Sector-20, Gautam Budh Nagar, U.P.’
8. After investigation, the police found that a case was made out against
the accused under Sections 420, 467 and 120-B of the IPC. A
charge-sheet was filed on 29.12.2020. Accordingly, the Chief Judicial
Magistrate, Gautam Budh Nagar, vide order dated 15.02.2021 took
cognizance and issued summons to the accused.
9. The appellants filed petitions under Section 482 of the Cr.P.C. before
the High Court seeking quashing of the FIR and the summoning
order dated 15.02.2021. The petitions having been dismissed by
the composite order passed by the High Court, the same are under
challenge in the present appeals.
ARGUMENTS OF THE APPELLANTS –
10. Mr. Kapil Sibal, Mr. Nakul Dewan and Ms. Anjana Prakash, learned
senior counsels for the appellants submitted that the complainant
who owns the company invested a sum of ₹5,16,00,000/- in Gulab
Buildtech and ₹11,29,50,000/- in Verma Buildtech by acquiring equity
shares thereof. Prior to the investment, a resolution was passed
by the company in the meeting of the Board of Directors held on
[2024] 1 S.C.R. 395

Dinesh Gupta v. The State of Uttar Pradesh & Anr.

25.03.2011, approving investment of ₹11,29,50,000/- in the equity
shares of Verma Buildtech. Similarly, by a resolution dated 26.08.2011,
investment in the equity shares of ₹5,16,00,000/- was approved in
Gulab Buildtech. Hence, the complainant’s case that it was a short-
term loan given by the company, was totally contrary to the record
since a conscious decision had been taken by the company to make
investments in the equity shares of Gulab Buildtech and Verma
Buildtech. The above two resolutions are reproduced hereunder:
First Resolution:
“AUTHORIZATION TO INVEST INTO THE EQUITY
SHARES OF M/S VERMA BUILDTECH & PROMOTORS
PRIVATE LTD.
The Chairman apprised the Board of Directors of the
Company about the benefit of investment into the equity
shares of M/s Verma Buildtech & Promoters Private
Ltd offered by way of private placement. The Directors
discussed about the same at length and the following
resolutions were passed.
“RESOLVED THAT the company be and is herewith
authorized to make an investment of Rupees Eleven
Crore Twenty Nine Lacs and Fifty Thousand only
(Rs.11,29,50,000/-) in pursuance of the provision of the
companies Act, 1956.”
“RESOLVED FURTHER THAT Mr. Narender Kumar and Mr.
Tarun Kumar Director of the company be and are hereby
severally authorized to do the necessary act including the
signing of the documents, deed and agreement and other
necessary paper which are incidental and consequential
to give effect to the above said resolution and collect the
Share certificates.”
Second Resolution:
AUTHORIZATION TO INVEST INTO THE EQUITY
SHARES OF M/S GULAB BUILDTECH PRIVATE LIMITED.
The Chairman apprised the Board of Directors of the
Company about the benefit of investment into the equity
shares of M/S GULAB BUILDTECH PRIVATE LIMITED
396 [2024] 1 S.C.R.

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offered by way of private placement. The Directors
discussed about the same at length and the following
resolutions were passed.
“RESOLVED THAT the company be and is herewith
authorized to make an investment of Rupees Five Crores
Sixteen Lacs only (Rs.5, 16,00,000/-) in pursuance of the
provision of the companies Act, 1956.”
“RESOLVED FURTHER THAT Mr. Narender Kumar and Mr.
Tarun Kumar Director of the company be and are hereby
severally authorized to do the necessary act including the
signing of the documents, deed and agreement and other
necessary paper which are incidental and consequential
to give effect to the above said resolution and collect the
Share certificates.”
11. In 2012, when the petition8 was filed seeking amalgamation of Gulab
Buildtech and Verma Buildtech with BDR, the Delhi High Court,
as per requirements, had issued notice to all the shareholders of
the two companies on 09.07.2012. No objection was raised by the
complainant or the company at that stage. On 20.02.2013, the scheme
of amalgamation was approved by the Delhi High Court in terms of
which the company became entitled to 3,74,280 shares of BDR.
On 08.03.2013, a letter was written by Gulab Buildtech and Verma
Buildtech to the complainant to surrender original share certificates
of Gulab Buildtech and Verma Buildtech to facilitate issuance of
new certificates.
12. Nearly one year after the amalgamation, on 31.01.2014, DD
Global Capital Limited, the company of the complainant filed an
application9 before the Delhi High Court seeking recall of the order of
amalgamation passed by the High Court as it was without any notice
to the company. Other grounds were also raised in this application
for recalling the order of amalgamation. The aforesaid application
was dismissed by the High Court on 15.03.2016 by a detailed order

8 Company Petition No.287 of 2012
9 Company Application No.321 of 2014
[2024] 1 S.C.R. 397

Dinesh Gupta v. The State of Uttar Pradesh & Anr.

dealing with all the issues raised. The order attained finality as the
company did not challenge the same any further. In the aforesaid
proceedings, a letter dated 08.10.2014, allegedly written by Sushil
Gupta, one of the accused (not before this Court), claiming that the
shares of the company with Verma Buildtech were pledged to him,
was also placed on record. This issue was also dealt with by the
High Court.
13. More than two years after the application filed by the company was
dismissed by Delhi High Court, the instant complaint was filed with
the police at Gautam Budh Nagar, on the basis of which FIR in
question was registered on 29.07.2018.
14. It is the appellants’ submission that a purely civil dispute with
reference to financial transactions between corporates is sought to
be given colour of a criminal case. Though the company does not
have any connection whatsoever with Gautam Budh Nagar and all
the transactions were held at New Delhi between the parties, which
are based in New Delhi, yet the complaint was filed at Gautam Budh
Nagar. Even the address of the complainant given in the complaint
is ‘C/o A & A Earth Movers, D-9, Sector-2, Noida Sector-20, Gautam
Budh Nagar, U.P.’ which neither belongs to the complainant nor his
company. The aforesaid facts clearly establish that the idea was
only to harass the appellants.
15. In fact, the dispute amongst the parties has already been referred to
Arbitration by the Delhi High Court vide order dated 15.05.2019 and
the company has already filed its claim before the sole Arbitrator.
16. The aforesaid facts clearly establish that no case was made out
against the appellants. Further, there is no allegation pertaining to
forging of any documents against them. It was a simple business
transaction. Arm-twisting method to recover any dues cannot be
permitted to be used. In support of the appellants’ arguments, reliance
was placed on the judgment of this Court in Randheer Singh v. The
State of U.P. & others10.

10 2021 INSC 440: (2021) 14 SCC 626.
398 [2024] 1 S.C.R.

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17. It was submitted that there was total non-application of mind by
the Trial court while passing summoning order, which is entirely
non-speaking in nature. Even the High Court failed to consider the
arguments raised by the appellants.
ARGUMENTS OF THE RESPONDENT – COMPLAINANT
18. On the other hand, Mr. Vikas Singh, learned senior counsel for
the respondent-complainant, submitted that solely on persuasion
of the accused, huge amount of short-term loan was advanced.
Subsequently, shares were allotted, which were never handed over
to the complainant. The companies whose shares were allotted,
namely, Gulab Buildtech and Verma Buildtech were amalgamated
with BDR. During the process of amalgamation, despite being a
shareholder, the complainant was not issued any notice. As a result
of amalgamation, the percentage of shareholding of the company
was reduced considerably.
19. The letter conveying that the company had pledged its shares to
Sushil Gupta shows that certain documents had been forged. He
further referred to the order dated 20.02.2013 passed by the High
Court in Co. Pet. No. 287 of 2012, showing that the accused persons
are connected with each other. He also referred to the Balance
Sheet of Gulab Buildtech and Verma Buildtech to show that the
amount advanced by the complainant was shown in the column of
‘current liabilities’. Indian Accounting Standards have been referred
to show the meaning of ‘current liabilities’ which is in the form of
short-term loan.
20. The argument is that the accused persons in connivance with each
other have cheated the complainant for crores of rupees by making
false promise of higher returns. There is no error in the order passed
by the High Court. The appeals deserve to be dismissed.
FINDINGS –
21. We have heard learned counsel for the parties and perused the
material on record.
22. On a complaint filed by the respondent no.2, FIR in question was
registered on 29.07.2018. The address of the company D.D. Global
was mentioned as ‘C/o A & A Earth Movers, D-9, Sector-2, Noida
Sector-20, Gautam Budh Nagar, U.P.’ to be the present as well as
the permanent address. This is the first misleading statement made
[2024] 1 S.C.R. 399

Dinesh Gupta v. The State of Uttar Pradesh & Anr.

by the complainant. From a copy of the resolution passed by the DD
Global dated 25.03.2011, it is evident that the registered office of the
DD Global is located at F-1/9, Okhla Industrial Area, Phase-I, New
Delhi. Even at the time of hearing, it remained undisputed that DD
Global is not carrying on any business at Noida, nor has it rented the
place mentioned above. Further, the firm ‘A & A Earth Movers’ whose
c/o address has been given is not the sister concern of DD Global.
23. Similar was the case with reference to the accused nos. 2 & 3,
namely, Rajesh Gupta and Dinesh Gupta, appellants before this
Court. Their incomplete addresses have been mentioned reflecting
them to be the residents of Sector 20, Gautam Budh Nagar. The
position is same in the case of Gulab Buildtech and Verma Buildtech.
Though the complainant had invested crores of rupees in equity
of the aforesaid two companies based at New Delhi, knowing well
their place of business, yet in those cases, incomplete addresses
showing them at Sector 20, Gautam Budh Nagar, was deliberately
mentioned. It is sufficiently clear that the idea was to falsely create
jurisdiction in Gautam Budh Nagar which did not actually lie there.
24. The falsehood in the complaint, filed with reference to the addresses
of the accused, was established at the time of filing of charge-sheet.
Whereas in the FIR, the addresses of all the accused given were
incomplete merely mentioning the address as ‘Sector 20, Gautam
Budh Nagar’, in the charge-sheet addresses of not only the appellants,
namely, Rajesh Gupta and Dinesh Gupta, were found to be ‘D-393,
New Friends Colony, New Delhi, even Sushil Gupta and Baljeet
Singh were also found to be residents of New Delhi. The following
are the addresses of the parties involved in the matter:

Sr. Party Party Name Address
No.
1. Complainant Karan N-56, Panchsheel Park,
Gambhir New Delhi, 110017.
2. Supporting Sanjay N-56, Panchsheel Park,
Witness Gambhir New Delhi, 110017.
3. Supporting Tarun Kumar 65/21, New Rohtak Road,
Witness New Delhi-110005
4. Complainant’s M/s DD Global 226, Basement Cabin Number
Company Capital Ltd. 11, Right Side, Sant Nagar,
East of Kailash, New Delhi,
110065.
400 [2024] 1 S.C.R.

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5. Accused No. 1 Sushil Gupta D-247, IInd Floor, Defence
Colony, New Delhi, 110024.
6. Accused No. 2 Rajesh Gupta 3/41, Shanti Niketan, New
Delhi, 110021.
7. Accused No. 3 Dinesh Gupta B-393, New Friends
Colony, New Delhi, 110014.
8. Accused No. 4 Baljeet Singh B-363, New Friends
Colony, New Delhi, 110014.
9. Accused M/s Gulab 31, Jangpura Road Bhogal,
Company (Later Buildtech Pvt. Northeast, New Delhi,
amalgamated in Ltd. 110014.
BDR Builders)
10. Accused M/s Verma R-6A, IInd Floor, Green
Company (Later Buildtech and Park Extension, South
amalgamated in Promoters Pvt. Delhi, New Delhi, 110016.
BDR Builders) Ltd.
11. Accused M/s BDR C 43, Jangpura Extension,
Company Builders and New Delhi, 110014.
Developers
Pvt. Ltd.

25. Though address of Karan Gambhir who was signatory of the complaint
on the basis of FIR in question registered, was mentioned to be of
Noida, same as was given in the complaint. However, his residential
address was not given. His parentage was also not mentioned. The
second person shown in the chargesheet is a supporting witness,
Sanjay Gambhir, who has shown his present and permanent address
of ‘P.S. Hauz Khas, N-58, Panchsheel Marg, New Delhi’. The same
is the position with reference to Tarun Gambhir, who also is claimed
to be a supporting witness. All other witnesses were officials who
were involved in the investigation of the case.
26. The Chief Judicial Magistrate, Gautam Budh Nagar, vide order dated
15.02.2021 took cognizance thereof and issued summons to the
accused. The order shows no application of mind, as no reasons have
been assigned. The Magistrate also did not take into consideration
the address of the complainant and the accused companies as
also the addresses of their Directors. There was complete lack of
application of mind while taking cognizance and issuing summons.
[2024] 1 S.C.R. 401

Dinesh Gupta v. The State of Uttar Pradesh & Anr.

27. Coming to the allegation of the complainant being misled for advancing
loan, which was later on converted into equity, the appellants placed
on record two resolutions dated 25.03.2011 and 26.08.2011 passed
by the company vide which decision was taken by the complainant
to invest in the equity of Gulab Buildtech and Verma Buildtech to
the tune of ₹5,16,00,000/- and ₹ 11,29,50,000/- respectively. The
said resolutions passed by the complainant have not been denied.
Hence, the claim that the appellants had induced the complainant to
advance loan and later on converted the loan into equity, is totally
false. It was rather a deliberate decision taken by the Board founded
on above-mentioned company resolutions.
28. Further, it is apparent that the complainant had concealed material
facts which were within his knowledge at the time of filing of complaint.
These facts pertained to the complainant’s knowledge of the merger
of Gulab Buildtech and Verma Buildtech with BDR, details whereof
are noted hereinafter.
29. A Company Petition No.287 of 2012 was filed in the High Court for
merger of the Gulab Buildtech and Verma Buildtech with BDR. As
required, due notice was issued to all the concerned stake holders
including all the shareholders and creditors. The same was published
in the newspapers also. The complainant neither raised any objection
nor appeared before the High Court. After considering the material
placed on record, the High Court allowed the merger application on
20.02.2013, as a result of which Gulab Buildtech and Verma Buildtech
were merged into BDR. Nearly, one year thereafter on 31.01.2014,
the complainant company filed a Company Application No. 321 of
2014 for recall of the order dated 20.02.2013. The grievance raised
was that the order of merger was passed without notice to the
company, which held substantial percentage of shares in both the
companies. The aforesaid application was dismissed by the High
Court vide order dated 15.03.2016. The same was not challenged
by the company any further and, hence, attained finality.
30. It would be relevant to note that in the application filed for recall of
the merger order by the complainant, it was nowhere mentioned
that initially the complainant had advanced loan, which was later on
converted into debt equity. It only mentioned that the complainant was
a shareholder of the transferor company and as a result of merger
402 [2024] 1 S.C.R.

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their percentage of shareholding and value of shares decreased. It
was also nowhere pleaded in the application that the shares held
by the company were mortgaged to Sushil Gupta by forging the
documents. The new story of forging documents was built up in the
complaint filed with the police only to give a criminal colour which
actually was commercial in nature.
31. Not only this, despite dismissal of the application filed by the
complainant for recall of the merger order by the High Court vide
order dated 15.03.2016, in the complaint made to the police on
29.07.2018 i.e. more than two years and four months later, still the
complainant did not furnish complete details thereof, especially the
filing and dismissal of the application for recall of the merger order.
Rather, it merely stated that he got the documents from the High
Court which were filed along with the amalgamation application and
came to know about certain facts therefrom but did not mention
about the application filed for recall of the order of amalgamation
and the result thereof. Non-disclosure of such relevant facts was a
deliberate and mischievous attempt on the part of the complainant
to maliciously initiate criminal proceedings for ulterior motives.
32. Most importantly, it needs to be noticed that it was a plain and simple
transaction between the corporates. Even as per the complainant’s
case, the short-term loan was advanced in the year 2010 for a period
of one year. However, when the same was not returned, no steps
were taken by the complainant to recover the same until the FIR in
question was registered on 29.07.2018 i.e. 8 years & 7 months later.
33. Further, the complainant came to know about the merger of the
Gulab Buildtech and Verma Buildtech with BDR in the year 2013
itself. However, even after dismissal of the application filed for recall
of the merger order passed by the High Court on 15.03.2016, no
steps were taken to recover the amount, except getting the FIR
registered more than two years later. All these facts clearly reflect
upon the ill designs of the complainant.
34. The entire factual matrix and the time lines clearly reflects that the
complainant deliberately and unnecessarily has caused substantial
delay and had been waiting for opportune moment for initiating false
and frivolous litigation.
[2024] 1 S.C.R. 403

Dinesh Gupta v. The State of Uttar Pradesh & Anr.

35. Further, it has been noticed by the High Court in the impugned
order that on an application filed by the appellants, an Arbitrator
was appointed by the Delhi High Court vide order dated 15.05.2019
to settle the dispute amongst the parties and the said matter was
still pending.
36. In view of the aforesaid discussion, we find that the FIR in question,
if proceeded further, will result in absolute abuse of process of
court. It is a clear case of malicious prosecution. Hence, the same
is required to be quashed.
37. The appeals are accordingly allowed. The impugned order passed by
the High Court is set aside. FIR No.1271 of 2018 dated 29.07.2018
registered with Gautam Budh Nagar Police Station, Noida, and all
subsequent proceedings thereof qua the appellants are quashed.
38. Before parting with the judgement, we are reminded of the opening
remarks. The respondent Karan Gambhir having misused the legal
system by lodging false and frivolous complaint with non-disclosure
of necessary facts must bear its costs. The registration of FIR at
Noida despite having registered offices of companies in question at
Delhi shows a wishful forum shopping by the Complainant, casting
serious doubts on their bona fides. The Complainant had already
sought remedy against amalgamation order before the High Court
and the High Court had dismissed the same. However, Complainant
chose to again use judicial mechanisms to raise his grievances. A
criminal complaint was filed and FIR was registered against appellants
despite the commercial nature of dispute. Such ill intended acts of
abuse of power and of legal machinery seriously affect the public
trust in judicial functioning. Thus, we find ourselves constrained to
impose cost on Complainant with a view to curb others from such
acts leading to abuse of judicial remedies.
39. Considering the above facts and circumstances of the case, we
impose costs of ₹25 lakhs on the respondent Karan Gambhir to be
deposited within four weeks from today with the Registry of this Court.
Upon receipt of the said amount, the same will be transmitted in equal
amount to the SCBA & SCAORA to be utilised for the development
and benefit of their members.

Headnotes prepared by: Divya Pandey Result of the case: Appeals allowed.