Simplified Explanation of the Judgment:

In this case, the Patna High Court considered a dispute between a pharmaceutical manufacturing company based in Gujarat and a Patna-based firm that had licensed its brand name for medicine production. The Patna-based company (complainant) had alleged that the Gujarat-based company (petitioner) manufactured sub-standard medicines, leading to significant financial and reputational loss. As a result, a criminal complaint was lodged, and the local Magistrate took cognizance under Sections 417 and 418 of the Indian Penal Code, which deal with cheating.

The petitioners challenged this cognizance in the High Court, arguing that the issue was purely civil in nature and should be resolved through arbitration as per the agreement signed between the parties in 2013. They highlighted that the complainant had accepted their products without objection for years, and the quality issues were raised only after several years of smooth business transactions.

The Court examined the terms of the agreement, the allegations in the complaint, and the history of business relations. It observed that the dispute stemmed from alleged breach of contract rather than a criminal intent to cheat. Hence, the matter was better suited for civil or arbitration proceedings, not criminal litigation.

Significance of the Judgment:

This judgment serves as a vital precedent for distinguishing between civil and criminal disputes in commercial transactions. It protects businesses from unwarranted criminal prosecution where the essence of the disagreement lies in contractual obligations. For the common citizen, this decision reinforces that civil remedies must be exhausted before invoking criminal law in commercial matters. For the government, it promotes judicial economy by discouraging frivolous criminal complaints meant to pressurize business counterparts.

Legal Issues Decided and the Decision of the Court:

• Whether a contractual dispute involving alleged sub-standard goods amounts to a criminal offence — Held: No
• Whether the arbitration clause in the agreement covers this dispute — Held: Yes
• Whether the Magistrate’s order taking cognizance was justified — Held: No, it was quashed
• Whether the continuation of criminal proceedings would be an abuse of the court’s process — Held: Yes

Judgments Referred by Parties:

• A.M. Mohan v. State (2024 SCC OnLine 339)
• Madhavrao Jiwaji Rao Scindia v. Sambhajirao Chandrojirao Angre (1988 (1) SCC 692)
• Indian Oil Corpn. v. NEPC India Ltd. (2006 (6) SCC 736)

Judgments Relied Upon by the Court:

• International Advanced Research Centre v. Nimra Cerglass Technics (2016 (1) SCC 348)
• S.W. Palanitkar v. State of Bihar (2002) 1 SCC 241
• Anil Mahajan v. Bhor Industries Ltd. (2005) 10 SCC 228

Case Title: Jaswinder Singh & Ors. Vs The State of Bihar & Ors.

Case Number: CRIMINAL MISCELLANEOUS No.32095 of 2023

Citation(s): 2025 (1) PLJR 1

Coram and Names of Judges: Hon’ble Mr. Justice Sandeep Kumar

Names of Advocates:

• For the Petitioner: Mr. Rajesh Kumar Sharma, Mr. Yash Anand
• For the State: Mr. Binod Kumar, APP
• For the Opp. Party No.2: Mr. Sunil Kumar, Mr. Pankaj Kumar

Link to the Judgment:–

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