Criminal Proceedings Quashed in Contractual Payment Dispute During CIRP

The Orissa High Court quashed an FIR registered under Sections 418, 420 and 34 IPC against the Resolution Professional/Liquidator and former officials of Punj Lloyd Ltd., holding that the dispute arose from alleged non-payment of contractual dues under a subcontract executed during the Corporate Insolvency Resolution Process (CIRP). 

The Court observed that the allegations essentially related to recovery of outstanding payments, GST adjustments and financial reconciliation between contracting parties, and did not disclose the essential ingredient of cheating, namely fraudulent or dishonest intention at the inception of the transaction. 

Consequently, the Court held that the criminal proceedings constituted an abuse of process and amounted to an attempt to convert a commercial dispute into a criminal prosecution.