SRINAGAR: The High Court of Jammu Kashmir and Ladakh has quashed an FIR and the charge sheet against threepersons, including two members of the Beigh family, in a dispute arising out of the sub-contract for construction of anunderground railway tunnel at Banihal, observing that the investigating agency had given a criminal colour to what wasessentially a commercial dispute.
The Court held that the allegations concerning withheld payments, termination of the sub-contract, bank guarantee andsubsequent settlement agreements did not disclose the commission of the offences alleged against the petitioners. Itobserved that the investigating agency appeared to have converted the commercial dispute into a criminal case byassuming the role of a recovery agent on behalf of the complainant.
“However, the investigating agency, it seems, has converted this purely commercial dispute into a criminal case byassuming the role of a recovery agent on behalf of the complainant,” Justice Sanjay Dhar observed, adding that a bareperusal of the charge sheet revealed that it appeared to be “a claim petition on behalf of the complainant in the guise of acharge sheet”.
Allowing two petitions under Section 528 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), the Court quashed FIR No.0051/2022, dated August 23, 2022, registered at Police Station Crime Branch, Economic Offences Wing, Jammu, alongwith the charge sheet arising from it.
The judgment was pronounced on November 5, 2026, after being reserved on October 21, 2026, and uploaded onNovember 6, 2026.
The petitions, CRM(M) No. 198/2025 and CRM(M) No. 1129/2025, were filed by Mohd Ashraf Beigh and Imran Beighand Abid Beigh, respectively. The FIR invoked Sections 379, 419, 420, 465, 467, 468, 471 and 120-B of the Indian PenalCode (IPC).
Senior Advocate P N Raina, assisted by advocates Deeksha Handoo, Sandeep Gupta and Zulker Nain Sheikh, appearedfor the petitioners. Senior Additional Advocate General Monika Kohli, along with advocates Malvika Gupta, FarhanMirza and Vastav Sharma, represented the respondents.
The case originated from a complaint lodged by Waseem Wani, following which the investigating agency conducted apreliminary verification and registered the FIR. A Special Investigation Team (SIT) was constituted, and the investigationwas entrusted to an officer of the rank of Deputy Superintendent of Police. The agency subsequently seized relevantdocuments, recorded witness statements and filed a charge sheet against the petitioners during the pendency of thequashing petitions.
According to the prosecution, the dispute arose in May 2020 when Imran Beigh, Managing Director of M/s BeighConstruction Company Private Limited (BCC), approached Ghulam Rasool Wani, father of the complainant, and offeredto sublet to him the work of excavating underground railway tunnel T-77D using a roadheader at Banihal.
The principal contract had been allotted to BCC by IRCON International Private Limited. The prosecution alleged thatBCC had not been authorised to sublet the work without obtaining prior written consent from IRCON.
Despite this condition, Imran Beigh issued a work order in favour of Ghulam Rasool Wani on August 20, 2020. Anagreement was subsequently executed on December 20, 2020, with retrospective effect from September 27, 2020. Underits terms, Wani furnished a bank guarantee of Rs 1 crore, with the amount transferred from his account to that of BCC anda portion paid in cash.
The prosecution stated that Wani executed work worth approximately Rs 3.78 crore between September 27, 2020, andMarch 5, 2021, and submitted bills to IRCON through BCC’s project manager.
However, instead of being routed through the designated escrow account opened with HDFC Bank’s Narwal branch, thepayments released by IRCON were credited directly to BCC’s account. Imran Beigh allegedly withheld Wani’s agreed 76per cent share of the released amount.
The prosecution further alleged that Imran Beigh terminated the sub-contract on March 13, 2021, without prior notice orclearing the outstanding liabilities. Subsequently, he allegedly offered to return 70 per cent of the bank guarantee amount,while proposing a 30 per cent partnership in the ongoing project in lieu of the remaining amount.
On the basis of these assurances, Wani allegedly invested another Rs 31 lakh and resumed work. A bill exceeding Rs 1crore was submitted to IRCON, but the payment was credited to BCC’s account without releasing Wani’s share. Theaccused, according to the prosecution, returned only 57.50 per cent of the bank guarantee amount.
The prosecution also relied upon an agreement dated October 16, 2021, executed by Ashraf Beigh on behalf of BCC,under which the company allegedly undertook to pay Rs 42 lakh either directly to Wani or to the vendors from whom hehad procured material and equipment on credit.
It was alleged that the agreement was fabricated because Ashraf Beigh did not possess the authority to execute it onbehalf of the company. The prosecution further alleged that, despite the agreement, the petitioners obtained an interiminjunction from the Sub-Judge, Ramban, on October 18, 2021, and subsequently removed machinery and equipmentworth lakhs of rupees from the site.
The investigating agency also alleged that BCC produced falsified records claiming that Wani owed the company Rs 1.24crore. However, on May 5, 2022, the company allegedly acknowledged its liability and expressed willingness to pay Rs1.10 crore. According to the investigating agency, the actual liability was approximately Rs 82 lakh in favour of Wani.
During the investigation, the parties also entered into settlement agreements dated September 17, 2022. Under theseagreements, Imran Beigh allegedly undertook to pay Rs 1.50 crore out of a total liability of Rs 2.25 crore in instalmentswithin four months and settle the remaining amount within 15 days through mutual understanding.
He also agreed to hand over possession of a house situated at Bhatindi, Jammu, falling under Khasra No. 225 and ownedby his father, Mohd Ashraf Beigh, as security for repayment.
The prosecution stated that possession of the house had been handed over to the complainant and that the accused hadissued cheques worth Rs 1.50 crore. However, only Rs 50 lakh were realised, while cheques amounting to Rs 1 crore weredishonoured.
The investigating agency treated the successive settlement agreements as further acts of cheating, alleging that thepetitioners had repeatedly made commitments without fulfilling them and had thereby deprived the complainant of hismoney.
Opposing the petitions, the petitioners argued that the FIR was an abuse of the process of law and that the dispute waspurely commercial, arising out of disagreements over the execution of the sub-contract and outstanding payments.
They maintained that the complainant had failed to execute the work in accordance with the contractual conditions,leading to termination of the arrangement. They also alleged that the FIR had been lodged at the instance of thecomplainant’s brother, who was serving as an Inspector in the Crime Branch, Jammu, to pressurise them into entering intoa settlement favourable to the complainant.
The petitioners further pointed out that they had instituted a civil suit seeking a permanent prohibitory injunctionconcerning the Bhatindi house, which was pending before the competent court.
The private respondents opposed the petitions, maintaining that the investigation had established the offences and that thecommercial nature of the original transaction could not be a ground for quashing criminal proceedings once criminalityhad emerged during the investigation. They also alleged that Imran Beigh had been involved in several other criminalcases and cited FIRs registered against him at Banihal, the Crime Branch Jammu and the Economic Offences Wing,Delhi.
The High Court first rejected the respondents’ preliminary objection that the petitions had become infructuous followingthe filing of the charge sheet.
Referring to the Supreme Court’s judgment in Anand Kumar Mohatta and Another v. State (Government of NCT ofDelhi), the Court held that its inherent jurisdiction under Section 528 of the BNSS did not cease merely because theinvestigating agency had completed its investigation and filed the charge sheet.
It observed that the Court remained competent to examine whether the alleged offences were prima facie disclosed by theFIR, charge sheet and accompanying documents, even after the investigation had concluded.
On the substantive dispute, Justice Dhar referred to the Supreme Court’s ruling in Indian Oil Corporation v. NEPC IndiaLtd., which laid down that a commercial transaction or breach of contract could give rise to both civil and criminalproceedings, depending on whether the allegations disclosed the ingredients of a criminal offence.
“The test is whether the allegations in the complaint disclose a criminal offence or not,” the High Court noted whilereferring to the principles laid down by the Supreme Court.
The Court examined each of the offences invoked by the investigating agency and found that the allegations did notsatisfy their essential legal ingredients.
Regarding the charge of theft under Section 379 IPC, the Court observed that the machinery and equipment at the projectsite belonged to BCC under the original agreement between the parties. It also took note of two judicial orders, includingan order passed by the Munsiff, Banihal, on February 1, 2022, restraining the defendant from forcibly taking back themachinery provided to the complainant without following due process of law.
The Court held that any removal of the machinery in violation of the judicial order could attract consequences fordisobedience of the order but could not, in the circumstances, constitute theft.
” A person cannot be prosecuted for having committed theft of his own property,” Justice Dhar observed, holding that thecomplainant had no contractual lien over the machinery and equipment.
On the allegation of impersonation against Ashraf Beigh, the Court noted that the agreement dated October 16, 2021,clearly identified him as the father of Imran Beigh, who was the Managing Director of BCC. It did not contain anyrepresentation that Ashraf Beigh was holding written or other authority from the company.
The Court, therefore, held that he had neither impersonated another person nor made a false representation regarding hisidentity. It also pointed out that Waseem Wani had executed the same agreement on behalf of his father, Ghulam RasoolWani, although the special power of attorney authorising him had been executed only on September 17, 2022, almost ayear after the agreement.
The Court observed that if the investigating agency’s reasoning regarding the absence of written authority was accepted,the complainant’s representative would also face the same allegation.
Examining the charge of cheating under Section 420 IPC, the Court emphasised that dishonest intention must exist fromthe very inception of a transaction and that subsequent failure to honour contractual commitments, by itself, could notconstitute cheating.
Referring to the Supreme Court judgments in R K Vijayasarathy and Another v. Sudha Setharam and Another and A MMohan v. State, the Court reiterated that cheating requires deception, fraudulent or dishonest inducement and a resultingdelivery of property or other act causing harm.
The Court found that the allegations concerning BCC’s lack of permission from IRCON to sublet the contract did notestablish cheating against Wani. It observed that the principal contract between IRCON and BCC was a separatearrangement and that there was no material to show that the alleged violation of its conditions had adversely affected thesub-contract with Wani.
It further noted that even after Wani’s sub-contract was terminated, BCC continued executing work under its subsistingcontract with IRCON.
Regarding the escrow account, the Court observed that the agreement required BCC to make an endeavour to open suchan account, rather than imposing an absolute obligation to route all payments through it.
The Court also took note of the payments made to Wani during the transaction. According to the investigation records, hereceived Rs 60 lakh against the first running account bill dated December 10, 2020, although his calculated share was Rs1,12,18,476.
Against the second bill dated February 22, 2021, a further payment of Rs 80 lakh was made in May 2021, leaving abalance of Rs 81,51,322.
The Court also noted that BCC had returned approximately 57 per cent of the bank guarantee amount and that thepetitioners had handed over possession of their Bhatindi house to the complainant as security for repayment of theoutstanding amount.
“It is improbable that a person intending to cheat would pay more than Rs.1.50 crores and hand over possession of hishouse situated in a prime location in Jammu as guarantee for repayment of outstanding amount to the person intended tobe cheated,” the judgment observed.
It concluded that the material indicated that the parties had entered into a commercial arrangement in which substantialpayments had been made, but subsequent disagreements over outstanding liabilities and execution of work had led to thedispute.
The Court also rejected the allegation of forgery against Ashraf Beigh, holding that the agreement dated October 16,2021, could not be treated as a false document merely because questions had been raised about his authority to representthe company.
Referring to the Supreme Court’s judgment in Mohd Ibrahim v. State of Bihar, Justice Dhar explained that forgeryrequires the making of a false document within the meaning of Section 464 IPC. The mere execution of a document inone’s own capacity, even where the claim or representation may subsequently be disputed, does not automaticallyconstitute forgery.
Since Ashraf Beigh had signed the agreement in his own capacity and had not impersonated another person or falselyclaimed to be acting under the authority of someone else, the Court held that the ingredients of forgery were notestablished. Consequently, the charges under Sections 465, 467, 468 and 471 IPC were also found unsustainable.
The Court additionally considered communications exchanged between BCC and Ghulam Rasool Wani concerningalleged breaches of the work order, lack of progress and the quality of work executed by the subcontractor. Wani, in turn,had responded by asserting that the outstanding payments had not been released to him.
Observing that the central issue was which party had breached the contractual arrangement and was consequently liable topay the outstanding amount, the Court held that such questions were matters for determination through civil remedies.
It reiterated that criminal proceedings could not be used as a means of exerting pressure to settle monetary claims arisingout of commercial transactions.
Referring again to the Supreme Court’s observations in Indian Oil Corporation and subsequent rulings, includingBhikhubhai Govindbhai Patel and Another v. State of Gujarat and Another, the Court said efforts to settle civil disputes through criminal prosecution, where no criminal offence was disclosed, deserved to be deprecated and discouraged.
Holding that the continuation of the criminal proceedings would amount to an abuse of the process of law, the Court exercised its inherent jurisdiction under Section 528 of the BNSS to secure the ends of justice.
“Accordingly, the petitions are allowed, and the impugned FIR No. 0051/2022 dated 23.08.2022, including the charge sheet arising therefrom, is quashed,” the Court directed.
The judgment was delivered by Justice Sanjay Dhar at Jammu on November 5, 2026.
