There is a contract between A and contractor B. There is another contract between B and sub-contractor C to execute same work. On completion of work C demanded money from B. On non-payment C filed a criminal complaint ag

The fact of the given situation is similar to a case U. Dhar v. State of Jharkhand, (2003) 2 SCC 219 , decided by the Supreme Court. In this case, there were two contracts - one between the principal and contractor and another between contractor and sub-contractor. On completion of work sub-contractor demanded money or completion of work and on non-payment filed a criminal complaint alleging that contractor having received the payment from principal had misappropriated the money. The magistrate took cognizance of the case and High Court refused to quash the order of magistrate. On appeal to the Supreme Court, it was held that matter was of civil nature and criminal complaint was not maintainable and was liable to be quashed. The Supreme Court also observed that money paid by the principal to the contractor was not money belonging to the complainant, sub-contractor, hence there was no question of misappropriation. In the present case the contract between B and C is an independent contract regarding execution of certain works and even assuming the case of the complainant to be correct, at best it is a matter of recovery of money on account of failure of B to pay the amount said to be due under the contract. The dispute between the parties is of a purely civil nature arising out of a contract. Hence C cannot file case against A for misappropriation of money. B may be guilty of breach of contract.