Bombay High Court

DALICHAND G. SHAHversusTHE STATE OF MAHARASHTRA AND ORS

Decided: 20 August 2026
Disposal: Disposed Off

Holding

The Court held that the criminal proceedings were untenable as the dispute pertained to civil liability and therefore quashed the charge‑sheet(s) and allowed the writ petition.

Summary

Dalichand G. Shah, a consultant, was charged under IPC sections 420, 120B and later 465, 468 in FIR No. 258 of 2015 for alleged bogus vouchers and bills related to a de‑silting contract with the Bombay Municipal Corporation (BMC). He was blacklisted from 2016 to 2021 and sought to quash the FIR, arguing that the dispute was essentially civil and that the BMC was aware of the sub‑contractor’s involvement, making any claim of vicarious liability a civil matter. The Court examined the prosecution’s reliance on an audit report showing a loss of about Rs. 44 lakhs and noted that the BMC had not pursued civil remedies or arbitration. It held that converting civil liability into criminal prosecution was inappropriate and that the petitioner could not be held criminally liable for the alleged loss. Consequently, the Court quashed the charge‑sheet(s) and allowed the writ petition, directing that the matter be dealt with in civil forums.

Issues considered

Whether the FIR and charge‑sheet(s) filed against the petitioner can be quashed on the ground that the alleged loss is a civil dispute.
Whether vicarious liability of the municipal corporation can be invoked to sustain criminal charges.
Whether the petitioner is liable for cheating and forgery under Sections 420, 465, 468 of the IPC.
Whether the petitioner’s prior blacklisting amounts to double jeopardy if criminal proceedings continue.

Legislation cited

Indian Penal Code, 1860 — s. 120B, 420, 465, 467, 468, 471

Subjects

criminal law
cheating
forgery
vicarious liability
quash FIR
blacklisting
civil vs criminal jurisdiction
municipal corporation
double jeopardy
procurement fraud

Judgment

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Urmila Ingale

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
Digitally signed
by URMILA
CRIMINAL APPELLATE JURISDICTION
URMILA PRAMOD
INGALE
PRAMOD Date:
INGALE 2026.08.24
12:31:38
+0530 WRIT PETITION NO. 5128 OF 2019

Dalichand G. Shah .. Petitioner
Versus
The State of Maharashtra and ors. .. Respondents

....................
 Mr.Prashant B. Pawar a/w Mr. Viraj Maniar, Mr. Sunda Kharde i/b
AKS Legal Consultant, Advocates for Petitioner.
 Mr. P.P. Chovhan i/b Ms. Komal Punjabi, for Respondent No.3-
BMC.
 BMC Officer- Mr. Vinay More, Executive Engineer, present.
 PSI- Ms. Payal Pardeshi, EOW, Mumbai, present.
 Mr. Sukanta Karmarkar, APP for Respondent-State.
...................

CORAM : MILIND N. JADHAV, J.
DATE : AUGUST 20, 2026
P.C.:

1. Heard Mr.Pawar, learned Advocate for Petitioner, Mr. P.P.

Chouhan, learned Advocate for the Respondent No.3 and Mr.

Karmarkar, learned APP for Respondent-State.

2. On 13th August 2026, the following order was passed.

“1. Heard Mr. Badheka, Senior Advocate for the Petitioner, Mr.
Konde-Deshmukh, learned APP for the Respondent No.1-State and
Mr. Chavhan, learned Advocate for Respondent Nos. 2 and 3.
2. With the able assistance of the learned Advocate for the parties, I
have perused the record in the present case. The Petitioner is charge-
sheeted in connection with FIR No. 258 of 2015, registered with
Azad Maidan Police Station, Mumbai, under Section 420 read with
Section 120 B of the Indian Penal Code (IPC), and subsequently
transferred to the Economic Offence Wing, General Cheating, Unit-I,
whereupon it came to be registered being CR No. 79 of 2015. This
Petition seeks quashing of the same.
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3. Briefly stated, and as argued by Mr. Badheka, learned Senior
Advocate appearing for the Petitioner, the Petitioner is one of the
seven consultants against whom the present crime is registered on
19th September, 2015. The Petitioner subsequently being blacklisted
vide order dated 19th January, 2016, and has undergone the
consequences thereof until 2021 having been so black listed. Insofar
as the criminality is concerned, case of the prosecution rests on the
Petitioner having submitted certain bogus and fabricated vouchers
and bills with regard to the de-silting work done and with regard to
procurement of the material/vehicles for de-silting work. Most
interestingly, the Petitioner, was not charge sheeted initially when
first charge sheet was filed on 23 rd November, 2017, but, in the
supplementary charge sheet filed on 20 th February, 2019, charge-
sheeted for additional offences punishable under Sections 465 and
468 of the IPC are stated against the Petitioner.
4. The prosecution, and more specifically, the complainant, who is
the Bombay Municipal Corporation have relied heavily on an audit
report, a copy of which is appended to the Petition. The financial
outlay and loss attributed to the Petitioner is approximately Rs. 44
lakhs, as stated therein. However, Mr. Badheka, has thrown light on
an important aspect with regard to the case of the prosecution based
on vicarious liability. He would submit that the complainant (BMC)
was fully aware about the appointment of a sub-contractor with
whom the BMC had interacted and dealt with while accepting the
work done as against the bills which were submitted. He would
submit that the private complainant, therefore, cannot plead to not
having any privity of contract with the sub-contractor, especially in
view of the fact that the sub-contractor and the Petitioner were in a
joint venture, for being appointed as consultants for the work of de-
silting according to the tender conditions. He would submit that even
according to the BMC, if their financial loss is to the extent of Rs.44
lakhs, the Petitioner need be put to appropriate terms to deposit the
said money, since what is observed in the present case is that civil
liability is attempted to be converted into criminality thereby
virtually ousting the Petitioner out of the ecosystem forever.
5. The submission made by Mr. Badheka, prima facie, appears to
Court to have merits. Considering that though the FIR is registered
on 19th September, 2015, under Section 420 of the IPC, the BMC has
added the charges of forgery and fabrication under Section 465 and
468 on 20th February, 2019, which itself goes to show the laxity on
the part of the Corporation. Insofar as the issue of vicarious liability
is concerned, that would undoubtedly be a civil cause of action, if at
all the BMC has to raise the same. However, since the BMC was fully
aware of the sub-contractor," the BMC cannot treat non-privity of
contract with the sub-contractor, as criminality. Considering that the
Petitioner has already undergone the indignity of being blacklisted,
and being kept out of the system for more than five years, the

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Petitioner's case deserves to be considered as he has been penalised
from more than he deserved.
6. Mr. Chavhan, learned Advocate enters appearance for the BMC.
He would submit that he will take appropriate instructions on the
submissions which are made by Mr. Badheka, and accordingly
apprise the Court on the adjourned date. Subject to hearing the
BMC, appropriate orders will be passed to dispose of the present
Petition on the next date in accordance with law.
7. Mr. Chavhan, will take appropriate instructions and accordingly
apprise the Court so as to enable the Court to determine the present
Writ Petition.
8. Ad-interim relief granted earlier shall continue to operate till the
next date.
9. List the matter on 20th August, 2026.”

3. Today when the matter has been listed, Mr. Chavhan learned

Advocate appearing for the Mumbai Municipal Corporation submits

that the Court may pass appropriate orders in accordance with law.

The issue as also the submissions on merits have already been

delineated hereinabove in the above order. Further reiteration of the

same is not required. The Petition is filed for quashing of the FIR. The

Petitioner had also suffered the ignominy of being blacklisted and

suffered the consequences thereof. Insofar as the complaint raised by

the Corporation is concerned, it is with regard to certain unfinished

work, inter alia, qua the sub-contractor and it is the case of the

prosecution that the Corporation has suffered financial loss of almost

Rs. 44 lakhs. Though it would be otherwise in the fitness of thing to

direct the Petitioner to deposit Rs. 44 lakhs either with the

Corporation or with the Court and quash the present proceedings, in

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my opinion, passing such an order would be in the nature of double

jeopardy to be effected upon the Petitioner who has already suffered

the consequences of the blacklisting and has remained out of the

ecosystem for the past more than 7 years. Equally, considering the fact

that if there is a dispute about the running bills which are submitted by

the sub-contractor, who was accepted by the Corporation and with

whom the Corporation had a relationship with regard to the de-silting

contract undertaken by the Petitioner, the Petitioner cannot be held

responsible. In the case of a tender of such a nature, joint venture is

preferred by the Corporation itself for the purpose of qualifying for the

technical as well as the financial bids. In that view of the matter, if the

Corporation feels that they have incurred any loss to the extent of Rs.

44 lakhs as opined and stated in the complaint which has been filed, it

is the lookout of the Corporation to deal with the same in accordance

with law by approaching the appropriate Civil Court/forum and/or

even arbitration proceedings for that matter in accordance with the

terms and conditions of the works contract and in accordance with

law. That not having been done, filing a criminal complaint in the

manner and nature in which it has been filed in the present case, is not

sustainable. Notwithstanding the fact that a without prejudice offer

was also discussed with the Petitioner across the bar on the previous

occasion in the presence of counsel for the Corporation that if the

Petitioner shows his bonafides by taking instructions to deposit the

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amount of Rs. 44 lakhs, the criminal complaint can be quashed.

However, Corporation Counsel is unable to concede at all. Hence, in

view of my aforesaid observations and findings as also the findings

returned in the previous order, I am not inclined to put the Petitioner

to any further financial loss. It is prima facie and clearly seen by the

Court that a civil liability is attempted to be converted into criminality

by the Municipal Corporation is the present case. The dispute with

regard to non-performance of the work under the works contract

awarded to the Petitioner is to be dealt with in terms of the conditions

of the contract itself rather than to invoke criminality in the present

case. The invocation of criminality in the present case is also qua the

bills rather running bills raised by the sub-contractor with regard to the

work plan. Such a matter can never be determined in the criminal

Court as no element of cheating is seen since substantial work has been

done and accepted by the Corporation.

4. In that view of the matter and in view of the aforesaid

reasons, the criminal Petition deserves to be allowed. The issue of

vicarious liability is well documented and well settled and is no longer

res integra. Whenever vicarious liability is required to be applied and

recoveries are required to be made under works contract, the correct

course of action is to approach the civil courts as also as per the

agreement before the Tribunal if there is any arbitration clause.

Invocation of criminal liability in order to settle scores and effect
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recoveries in this fashion is something which is required to be frowned

upon by the Courts and therefore this order is passed.

5. The criminal Writ Petition is therefore allowed in terms of

prayer clause (a) which reads thus:

“a) be pleased to quash and set aside Charge-sheet bearing CC.
No. 190/PW/2019 dated 20.02.2019 pending before the Ld.
Addl. Chief Metropolitan Magistrate, 47 th Court, Esplanade -
Mumbai and CR. No. 79 of 2015 (FIR No. 258 of 2015)
registered by the Economic Offence Wing, General Cheating,
Unit-I, Mumbai under section 420, 465, 467, 468, 471, 120-B of
the Indian Penal Code, qua the Petitioner;”

6. Learned Advocate for the Petitioner informs that after filing

of the charge-sheet which is stated in the Petition, the prosecution has

filed the supplementary charge-sheet and the entire offence is now

merged into charge-sheet no. 825/PW/2017 qua M/s. Naresh Traders

of which the Petitioner – Dalichand G. Shah is the proprietor. In that

view of the matter, the charge-sheet no. 825/PW/2017 is also directed

to quashed and set aside.

7. The Petition is allowed and disposed of in the above terms.

Urmila Ingale [ MILIND N. JADHAV, J. ]

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