Supreme Court’s Recent Ruling & Its Far-Reaching Impact.
Table of Contents
Introduction
In a landmark judgment delivered on 31st July 2025, the Supreme Court of India strongly reiterated that criminal proceedings must not be used to settle the scores in civil disputes and/or to gain an undue advantage thus using the criminal proceedings as a tool for wrongful gains. In the case titled Yash Mittal v. State of Karnataka, the apex court quashed an FIR filed for cheating and criminal breach of trust where a civil suit for specific performance over a property transaction was already pending. The Court ruled that when no criminal intent is evident from the outset, allowing criminal proceedings to continue amounts to an abuse of the process of law.
This ruling is especially important for Non-Resident Indians (NRIs), who are often dragged into false/frivolous criminal cases in India stemming from business rivalries, partnership, or property disputes or landlord tenant disputes or fraudulent use of power of attorney. Due to their absence from the country, relying on local/relatives advise and delays in legal coordination, NRIs become soft targets, while getting entangled in the vicious circle of never ending litigation, including FIRs, Lookout Circulars, and even warrants issued in matters that are entirely civil in nature.
Over the years, a disturbing trend has emerged where civil issues or matters, particularly those involving contracts or agreements, property, or inheritance are intentionally converted into criminal cases. Allegations of cheating or criminal breach of trust are slapped on NRIs in a mechanical manner simply to pressurize them or gain advantage in a parallel civil dispute. The recent Supreme Court judgment puts a firm end to this misuse and sends a clear message to both complainants and the police authorities who tend use criminal proceedings in a civil matter as a tool to fulfil their unlawful deeds.
Case Law:
In the case ofYash Mittal v. State of Karnataka, the Hon’ble Supreme Court observed that:
“In the absence of the element of criminality, if both civil and criminal cases are allowed to continue, it will definitely amount to abuse of the process of the Court…”
The FIR in question was filed even as a civil suit over the same property transaction was pending. The Hon’ble Court held that the High Court erred in refusing to quash the FIR and emphasized that civil disputes should not be given the colour of criminal proceedings or wrongdoings merely to harass the other party.
Reverse Scenario: When Criminality Exists But Civil Action Is Taken instead.
It is also important to highlight the reverse case scenario, where the ingredients of a criminal offence are actually present from the very beginning, for example, clear cases of fraudulent use of power attorney, dishonest inducement, criminal breach of trust, illegal occupation of the land and/or forgery but the aggrieved NRI or their counsel files only a civil suit or pursues civil remedies like recovery or partition. It is imperative to note here that the proceedings that are initiated from the very beginning lay the foundation of the case which in turn can make or destroy the entire case.
In such cases, the failure to initiate criminal proceedings promptly or the choice to pursue only civil remedies can legally impair or even bar future criminal action. Courts may view the conduct of the complainant as indicative of a lack of criminal intent or urgency, and such delay or inaction could weaken the credibility of any later FIR that too if an FIR is somehow registered. As a result the dispute which could have been solved in a timely manner by way of registration of an FIR is dragged on for years in certain cases.
For example, if an NRI investor has been deliberately defrauded in a land deal through forged documents or false promises, but instead of reporting the fraud, files a civil suit for recovery or specific performance, it may later become difficult to opt for criminal proceedings, as courts might presume it was purely a contractual matter. As much as it has been seen in many cases that when a civil dispute is pending between the two parties and although criminal ingredients are present in the complaint, the police often tends to take no action on the said complaint terming the dispute to be of a “Civil nature”. Thus it is imperative to understand that the nature of the dispute is to be strictly identified at the outset and further appropriate legal remedies are to be sought.
Early legal advice and due diligence are key to choosing the right remedy and avoiding costly legal pitfalls.
These contrasting situations reveal that NRIs must act with precision and legal clarity at the very first stage of any dispute. Whether to file a civil case, a criminal complaint, or both, this is a strategic decision that must be guided by experienced legal professionals.
Whether dealing with a family inheritance issue or a property fraud, NRIs must avoid the twin traps of either:
- Allowing a civil dispute to be maliciously converted into a criminal case against them, or
- Failing to opt for criminal proceedings when ingredients of criminality are clearly present at the very outset, thereby weakening their position by taking only civil remedies.
The Supreme Court’s ruling in Yash Mittal v. State of Karnataka reinforces that misusing criminal law is not permissible in case of civil disputes but it also implies that if ingredients of criminality are present, it must be acted upon promptly and not camouflaged as a mere civil wrong.
Conclusion
Disputes, especially involving family or business ties, often carry emotional baggage. However, legal remedies must be pursued with a cool head and strategic planning. For NRIs dealing with cross-border legal issues, choosing the wrong legal pathor worse, relying on local advice without understanding long-term consequencescan be disastrous. The cost of legal missteps is far too high, especially for those living thousands of miles away. Let this be a strong reminder to act smart, act early, and act with professional guidance.