Nagaland Police has barred FIRs in civil loan and contract disputes unless fraud is evident from the outset.
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DIMAPUR — Nagaland Police has directed all police stations across the state not to register FIRs in disputes involving loan recovery, business dues, trade credits and contractual breaches unless there is clear evidence of dishonest or fraudulent intention at the very beginning of the transaction.
The directive warns that police officers who register FIRs in purely civil or commercial disputes in violation of the instructions will face disciplinary action, including major penalty proceedings.
In a circular issued on Thursday, Nagaland Police said the move was in line with a series of Supreme Court judgments aimed at preventing the misuse of criminal law in civil and commercial disputes.
According to the circular, non-payment of dues, failure to repay loans or breach of contract arising out of ordinary business transactions do not, by themselves, amount to offences such as cheating or criminal breach of trust under the Bharatiya Nyaya Sanhita (BNS).
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It stated that criminal law and police machinery should not be used to pressure parties into settling civil claims.
Under the new instructions, Station House Officers (SHOs) and Officers-in-Charge have been directed to personally examine complaints involving business transactions, loans and contractual disputes.
Where criminality is not immediately apparent, police must first conduct a Preliminary Enquiry under the Bharatiya Nagarik Suraksha Sanhita (BNSS) to determine whether a cognisable offence exists.
If a complaint reveals only a civil dispute and there is no prima facie evidence of dishonest intention at the outset of the transaction, police have been directed not to register an FIR. Instead, complainants are to be informed in writing to seek remedies before the appropriate civil court.
Nagaland Police said the measure was intended to protect bona fide businessmen, borrowers and citizens from harassment through frivolous criminal cases, while ensuring that criminal investigations are reserved for genuine offences involving fraud or dishonest intent.
The circular further stated that disputes arising from non-payment of loans or instalments between private parties are civil in nature and governed by the Indian Contract Act, 1872.
Referring to the Nagaland Money Lenders Act, 2005, the police noted that money lending is regulated through a licensing system and that non-payment by a borrower does not constitute a criminal offence under the Act.
While violations such as unlicensed money lending or charging excessive interest are punishable, the circular said enforcement rests primarily with inspectors appointed under the Act and civil courts.
Police, it added, have only a limited supportive role and cannot initiate criminal cases on their own for routine debt recovery.
It advised citizens seeking recovery of money or enforcement of contracts to pursue civil remedies through courts, arbitration, consumer forums or other mechanisms, while cases involving allegations of cheating or criminal breach of trust with evidence of dishonest intention will continue to be investigated after due preliminary enquiry.