Suits wrapped in vengeance

A look at the dirty tricks they don't teach you at law schools...

Law is a many-edged weapon. Bad rulers can issue decrees to suppress civil rights. Roman tyrant Caligula placed ordinances so high on marble columns that no one could read them and escape punishments. Citizens can snatch justice from the powerful by invoking a benevolent Constitution. Law can also be used to harass and ruin opponents. That has been going on for ages. An ancient Chinese curse says, "Let you be caught in a suit in which you are innocent!"

Courts often come across such misuse of law. In the 1990s, two famous liquor barons fought nearly a hundred suits in various courts in the country and finally reached the Supreme Court (SC). Some weeks ago, the Delhi High Court quashed a slew of criminal cases against 22 directors - several of them foreigners - of Sony India. Referring to such instances, the SC once remarked that the abuse of process of law could become a "ruthless destroyer of personal freedom".
 

Last month, the SC discussed this phenomenon in a case where multiple suits and criminal cases were filed in several fora involving a joint venture agreement (Ratnaswami vs Palaniswamy). The thick plot involved several companies (some based in Mauritius), non-resident Indians (NRIs) and local firms. The Company Law Board, the Madras High Court and the SC itself have seen the case coming and going several times in the last decade. Each time the courts tried to close the case, fresh life was blown into it. Being NRIs, the criminal cases deprived their freedom of movement within and outside the country.

Very often, civil disputes are turned into criminal cases to get quick results. It is generally believed that the latter takes less time to conclude and the torture is more severe. Civil law remedies are time-consuming and do not adequately protect the interests of lenders or creditors. There are no fast-track routes in civil cases, and they still suffer from maladies of the Dickensian era. Therefore, the SC cautioned in the case, Indian Oil vs NEPC India Ltd (2006), about "a growing tendency in business circles to convert purely civil disputes into criminal cases". The court stated that any effort to settle civil disputes and claims by applying pressure through criminal prosecution should be deprecated and discouraged by courts.

In one leading case decided by the SC, a person accused another of agreeing to pay half of the insurance amount after a consumer forum decision, but later reneged from it. A criminal case of cheating was filed. The judgment clarified: "Every breach of contract would not give rise to an offence of cheating. Only in those cases... where there was any deception played at the very inception. If the intention to cheat has developed later on, the same cannot amount to cheating... This is a purely civil dispute. Allowing police investigation to continue would amount to an abuse of process of the court." (Uma Shankar vs State of Bihar, 2005).

The persecutor often takes unfair advantage of legal technicalities that abound in procedural laws. Or delaying stratagems are adopted to make a fair trial impossible. In such cases, the courts are enjoined to exercise their inherent powers to quash the prosecution. The SC stated in the judgment, State of Karnataka vs Muniswamy (1977), that "a court proceeding ought not to be permitted to degenerate into a weapon of harassment or persecution. The ends of justice are higher than the ends of mere law, though justice has got to be administered according to laws made by the legislature".

In the case of a famous politician standing trial, the SC stated that "where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused person and with a view to spite him due to private and personal grudge", such prosecution must be quashed by the courts (State of Haryana vs Bhajan Lal, 1992). However, the SC acknowledged that it may not be possible to lay down any "precise, clearly defined and sufficiently channelised and inflexible guidelines to give an exhaustive list to myriad kinds of case where such power should be exercised".

That's the rub. The cases mentioned above travelled to the apex level because even at the high court level, judges had missed the wood for the trees. They could not discern the motivation of the accusers, which is mostly to wreak vengeance on rivals. Since the police are involved in investigation and setting the criminal prosecution rolling, the miasma of corruption also pervades such cases. For example, in the Ratnaswami case, the senior SP barely escaped censure for being liberal in registering FIRs and reopening dead files.

The most effective antidote for abuse of process of law is to lift the veil of criminality and see whether it is a civil dispute. The next step is to use the court's discretion vigorously, to save the time and energy of judges and the businessmen involved. Neither judiciary nor commerce can afford luxury litigation.