Supreme Court restores FIR in gold loan fraud case, holding that the Patna High Court wrongly quashed proceedings under Section 482 CrPC. Read the full case analysis and implications.
In a significant ruling concerning the abuse of process and limits of judicial discretion under Section 482 of the Criminal Procedure Code, the Supreme Court in Abhishek Singh v. Ajay Kumar & Ors. (2025 INSC 807) reversed the Patna High Court’s order quashing a criminal case arising from a gold loan dispute, underscoring the need for evidence-based determination before dismissing serious allegations of fraud and misappropriation.
Background of the Dispute
Abhishek Singh, a businessman, had availed a gold loan of ₹7.7 lakhs from Bank of India’s Motijhil Branch in July 2020 by pledging 254 grams of 22-carat gold ornaments. Although the loan was repaid in March 2023, a dispute arose after the bank revalued the gold and allegedly discovered that the ornaments were counterfeit—merely gold-plated articles. This led to an FIR against Singh under Sections 420 and 379 IPC.
In retaliation, Singh filed a complaint under Section 156(3) CrPC, which resulted in an FIR against the bank officials, particularly the Branch and Credit Manager at the time of revaluation, alleging misappropriation and foul play in the handling and revaluation of the pledged gold.
High Court’s Reasoning for Quashing
The Patna High Court, in its order dated 12 November 2024, allowed the respondents’ application under Section 482 CrPC and quashed the FIR against bank officials. It characterized Singh’s complaint as:
- A “counterblast” to the bank’s FIR,
- An “afterthought” to mislead authorities,
- Lodged with an ulterior motive, and
- Unsustainable due to lack of affidavit compliance as per Priyanka Srivastava v. State of UP.
Supreme Court’s Reversal
Delivering the judgment, Justices Sanjay Karol and Manoj Misra restored the FIR, holding that the High Court had overstepped the boundaries of quashing jurisdiction. Key findings include:
- Prima Facie Case Exists: The FIR did disclose a cognizable offence. The High Court erred in concluding mala fide intent without appreciating evidence.
- Disputed Questions of Fact: The genuineness of the pledged gold and the possibility of misappropriation post-pledge are matters of trial. The bank never proceeded to auction the gold even after receiving repayment, raising legitimate suspicion.
- Limitations of Section 482 CrPC: Citing Rajeev Kourav v. Baisahab (2020) and Naresh Aneja v. State of UP (2025), the Court reiterated that quashing at the threshold is impermissible where allegations warrant further investigation or trial.
- Affidavit Requirement Contested: Contrary to the High Court’s conclusion, Singh had filed the necessary affidavit with his Section 156(3) CrPC application, making the quashing unsustainable on procedural grounds.
Conclusion and Implications
This decision reinforces the principle that courts must exercise extreme caution while quashing criminal proceedings, especially where the allegations require evidentiary scrutiny. The Supreme Court made it clear that the criminal justice process must be allowed to proceed unless the complaint is manifestly frivolous or malicious—conditions not met in this case.
The judgment provides a cautionary note to banks and borrowers alike, emphasizing transparency in loan security management and the legal consequences of bypassing due process.
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