Nagaland Police has directed all police stations across the state not to register FIRs in cases involving loan defaults, business dues, contractual breaches and other purely civil disputes unless there is prima facie evidence of fraudulent or dishonest intention at the inception of the transaction.
The directive, issued by the Police Headquarters (PHQ) on June 10 based on a series of judgments and directions of the Supreme Court of India, seeks to prevent the misuse of criminal law in matters that are essentially civil or commercial in nature.
According to the circular, police stations will no longer entertain criminal proceedings in disputes relating to recovery of business dues, trade credits, pending loans or contractual obligations merely because one party has failed to fulfil its commitments. The PHQ stated that criminal law and police machinery cannot be used as tools to pressure parties into settling civil claims.
The circular noted that the Supreme Court has repeatedly held that non-payment of dues, breach of contract or failure to repay loans in ordinary business transactions do not, by themselves, constitute offences such as cheating or criminal breach of trust under the Bharatiya Nyaya Sanhita (BNS).
To ensure compliance, Station House Officers (SHOs) and Officers-in-Charge have been instructed to personally scrutinise complaints involving loans, business transactions and contractual matters. Where criminality is not apparent from the complaint, police are required to conduct a Preliminary Enquiry under the Bharatiya Nagarik Suraksha Sanhita (BNSS) to ascertain whether a cognisable offence exists.
The PHQ further directed that no FIR should be registered if the dispute is found to be purely civil in nature and lacks prima facie evidence of dishonest intention from the beginning of the transaction. In such cases, complainants are to be advised in writing to seek remedies before competent civil courts.
Copies of the circular are also to be displayed prominently at police stations for public information.
The directive warns that any SHO or police officer found registering FIRs in purely civil matters in violation of the instructions may face disciplinary action, including major penalty proceedings.
The police advised members of the public to pursue appropriate legal remedies such as suits for recovery of money, summary suits under Order 37 of the Code of Civil Procedure, arbitration proceedings, consumer forum complaints, debt recovery proceedings and cases under the Negotiable Instruments Act for dishonoured cheques.
The circular also addressed disputes arising out of private lending arrangements. It stated that non-payment of loans or instalments between private parties is fundamentally a civil matter governed by contract law. While the Nagaland Money Lenders Act, 2005 regulates money lending activities and prescribes penalties for unlicensed lending and charging excessive interest, non-payment by a borrower does not constitute a criminal offence under the Act.
According to the PHQ, the measure is intended to protect bona fide businessmen, borrowers and citizens from harassment through frivolous criminal cases, while ensuring that police resources remain focused on genuine criminal offences involving fraud, deception or dishonest intention.
District police chiefs have been directed to circulate the instructions widely and submit compliance reports to the Police Headquarters.