False Allegations and Contract Breach: Apex Court Restores Closure in Mining Lease Dispute
In a complex legal confrontation that traces its roots back to a mining lease deal in Madhya Pradesh, the Supreme Court of India recently delivered a decisive judgment that brings to closure a long-standing criminal appeal involving business tycoon Suresh Kumar Agarwal and M/s. Haldia Steels Limited. The dispute revolved around an alleged breach of contract, accusations of criminal misappropriation, and fabricated evidence that took nearly a decade to escalate into a full-blown legal case. This narrative captures the chronology, arguments, and the final verdict that underscores the distinction between civil disagreements and criminal prosecution.
The origin of the case lies in a Memorandum of Understanding (MoU) executed between Suresh Kumar Agarwal, the appellant, and M/s. Haldia Steels Limited, the complainant company. Agarwal introduced himself as the proprietor of M/s. Haryana Minerals, an established mining business in Madhya Pradesh, claiming exclusive rights to a 20-year manganese mining lease granted by the Government of Madhya Pradesh. He proposed to transfer this mining lease to the complainant in exchange for a valid financial consideration, promising uninterrupted manganese supply and even securing Environmental Clearance using his alleged political influence.
To structure the deal formally, Agarwal proposed to convert his proprietary firm into a private limited company under the Companies Act, 1956. He further committed that the shares of the newly incorporated entity, Haryana Mineral Manganese Ore (P) Ltd (HMMOPL), would be handed over to the complainant company or their nominees in return for the agreed consideration amount. The complainant company accepted the proposal and began transferring money based on these assurances.
It was alleged that the appellant failed to fulfill the agreed terms. He did not secure the Environmental Clearance and did not supply any manganese ore despite receiving a sum of ₹96,20,350/-. Furthermore, the complainant claimed that only 28% of the shares in HMMOPL were transferred to them, which left them without administrative control or access to the company’s mining operations. They asserted that Agarwal had handed over a fraudulent letter dated December 29, 2008, which supposedly showed that the lease had been transferred to HMMOPL by the Mines and Minerals Department of Madhya Pradesh.
Believing themselves to be duped, the complainant filed a criminal complaint in 2014, a full six years after the original MoU. This delay, however, would become one of the most significant observations by the judiciary. The complaint was forwarded to the police, and a First Information Report (FIR) was registered under Sections 120B, 406, and 420 of the Indian Penal Code. After thorough investigation, the police filed a closure report in 2015, concluding that the matter was civil in nature, arising from a contractual disagreement, not a criminal offence.
The police investigation revealed substantial inconsistencies in the complainant’s case. It was found that the complainant failed to provide any valid purchase orders or supporting documents showing that the ₹50 lakh was paid specifically for manganese ore. In fact, the police concluded that the agreement between the parties was centered around the conversion of the firm into a private limited company and the transfer of shares—not about manganese ore supply directly.
Interestingly, the investigating officer discovered that the complainant had failed to pay the remaining balance of ₹2.70 crore as per the MoU terms. Despite this, they were appointed as directors in the newly formed company, HMMOPL. These facts suggested that the dispute was more about financial disagreements under a contract rather than any criminal deception.
The closure report dated April 1, 2015, specifically concluded:
“The dispute was of civil nature arising out of the breach of contract and that no offence was made out against the accused appellant from the material collected during investigation.”
Subsequently, the complainant filed a protest petition challenging the closure, now introducing for the first time the claim that the letter transferring the mining lease to HMMOPL was fabricated. However, the Chief Metropolitan Magistrate rejected this petition, maintaining that the initial complaint itself was an afterthought and that the real issue was the unpaid financial commitment under the MoU.
The High Court later reversed this decision, allowing a criminal revision plea filed by the complainant and directing the police to conduct further investigation under Section 173(8) of the Code of Criminal Procedure. This order formed the basis of the appeal to the Supreme Court by Suresh Kumar Agarwal.
In its ruling, the Supreme Court meticulously dissected the entire chain of events, placing substantial emphasis on the unexplained delay in filing the complaint, the absence of any criminal intent demonstrated through evidence, and the manipulation of facts in the protest petition to sustain a complaint that lacked merit.
“We have no hesitation in holding that the admitted allegations as set out in the complaint do not disclose the necessary ingredients of any offence whatsoever, what to say, of a cognizable offence. Directing further investigation into such a frivolous complaint, filed after gross, undue and unexplained delay of six years, is nothing but a sheer abuse of the process of law.”
Addressing the issue of forged documents alleged by the complainant, the court held:
“Once the investigation had been completed, the complainant-Company tried to take a new stance claiming that the order whereby the State Government had approved the transfer of the mining lease in favour of the appellant, was forged. However, not even prima facie evidence was provided by the complainant-Company in support of such allegation.”
Eventually, the Supreme Court quashed the High Court’s order dated October 17, 2023, restoring the closure report and dismissing all protest petitions. The judgment serves as a powerful reaffirmation of the principle that criminal law should not be misused to pressure the other party in contractual disputes, especially when those disputes are not supported by concrete evidence and are initiated after unjustified delays.
“The complainant-Company twisted the facts by claiming that the advance amount of Rs. 50,00,000/- was paid to the appellant for supply of manganese ore. This allegation was totally false and concocted and could not be substantiated by any purchase order, etc.”
The verdict effectively brings the protracted dispute to an end, shielding the appellant from a prolonged and unjustified criminal prosecution. This ruling is also a stern warning against attempts to criminalize civil disputes, particularly in high-stakes commercial agreements where failure to fulfill financial obligations can often lead to sour litigation strategies.
The judgment by Justices Vikram Nath and Sandeep Mehta not only brings closure to the involved parties but also reinforces the sanctity of due process and the need to maintain a clear demarcation between civil and criminal jurisdictions.
Petitioner Name: Suresh Kumar Agarwal.Respondent Name: M/s. Haldia Steels Limited & Anr..Judgment By: Justice Vikram Nath, Justice Sandeep Mehta.Place Of Incident: Chhindwara, Madhya Pradesh.Judgment Date: 15-04-2025.Result: allowed.
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