Buyers Pay ₹20 Lakh Against ₹9 Crore Property and Retain Possession Without Paying Balance; Delhi High Court Refuses to Quash Cheating and Trespass FIR
Initial Entry Into Property Was Lawful; Delhi High Court Says Continuing to Remain With Requisite Criminal Intent Can Constitute Trespass
Facts
The case arose from a proposed transaction concerning Property No. 117-A, Central Avenue, Sainik Farms, New Delhi, situated in Khasra No. 298, Village Khanpur and measuring approximately 1,320 square yards. The petitioners were Raj Kumar Chawla and his son Sanchit Chawla.
According to the asserted chain of title, the property originally belonged to Captain Mehar Singh, who bequeathed his estate to his daughter Rubinder Kaur under a registered Will dated 12 July 2005. After Rubinder Kaur died in June 2022, another Will dated 23 December 2020, allegedly executed by her in favour of Gautam Malhotra, was registered posthumously. That Will subsequently became the subject of probate proceedings.
In February 2023, the petitioners were introduced to complainant/respondent No. 2, Anuj Kumar Sharma, a property dealer. The parties disagreed on whether the arrangement initially contemplated tenancy or purchase, but it was common ground that the proposed sale consideration was fixed at ₹9 crore.
The petitioners transferred ₹11,000 as token money and issued two cheques for ₹10 lakh and ₹15 lakh, though those cheques were not presented. On 20 March 2023, ₹20 lakh was transferred through RTGS, which was subsequently transferred to Gautam Malhotra.
The petitioners obtained possession of the property around 21 March 2023 and continued occupying it. They additionally claimed to have paid consideration through diamonds, which the complainant disputed.
The complainant alleged that the petitioners obtained possession after representing that they would complete the transaction but subsequently neither paid the balance consideration nor vacated the property. He further alleged that threats were extended when payment or restoration of possession was demanded.
Consequently, FIR No. 414/2023 dated 6 July 2023 was registered at Police Station Neb Sarai under Sections 420, 448 read with Section 34 IPC.
The ₹4.5 Crore Deposit Direction
During the quashing proceedings, the petitioners expressed willingness to purchase the property for ₹9 crore provided the requisite title was established.
On 21 December 2023, the Delhi High Court directed them to deposit 50% of ₹9 crore — effectively ₹4.5 crore — with the Registrar General.
The petitioners approached the Supreme Court. On 9 February 2024, the Supreme Court granted them four weeks to deposit 50% of the consideration and further directed that if they intended to purchase the property, the remaining consideration could be deposited within four months. Otherwise, they were required to vacate the property and restore possession.
A further opportunity to comply was granted by the Supreme Court on 11 November 2025.
However, the petitioners did not make the directed deposit while continuing to occupy the property.
Petitioners’ Arguments
The petitioners argued that this was fundamentally a civil property transaction, not a criminal case.
They claimed that they had entered the property consensually pursuant to the proposed purchase and had made substantial payments, including ₹20 lakh through RTGS and alleged payments through diamonds.
Their principal contention was that the transaction could not be completed because the original title documents were not furnished and there were serious questions regarding the ownership of the property.
They pointed to competing testamentary proceedings involving different Wills and argued that the existence of a genuine title dispute explained their refusal to pay the balance consideration.
On Section 420 IPC, they argued that dishonest intention at the inception is indispensable for cheating. Their part-payment and continuing willingness to purchase the property, according to them, negated any such dishonest intention.
Regarding Section 448 IPC, they contended that their entry into the property was admittedly consensual and therefore could not constitute criminal trespass.
Accordingly, they sought quashing of the FIR as an attempt to criminalise what was essentially a civil dispute.
State’s Arguments
The State opposed quashing because the investigation was still pending and the FSL report was awaited.
It submitted that developments subsequent to the earlier Status Reports also required investigation and therefore the criminal proceedings should not be terminated prematurely.
Respondent No. 2’s Arguments
The complainant emphasised that the petitioners had remained in possession of a property valued at ₹9 crore since March 2023 after an admitted banking payment of only ₹20 lakh.
He argued that the petitioners could not retain possession while simultaneously questioning the title of the person from whom possession had been obtained.
According to him, the repeated demand for original title documents was being used as a device to continue occupying the property without paying the balance consideration.
He further argued that competing Wills and probate disputes had to be adjudicated by the competent civil/testamentary court and could not justify termination of the criminal investigation.
Issues
The principal question before the Court was whether, taking the FIR allegations at face value, a prima facie case under Sections 420 and 448 read with Section 34 IPC was disclosed or whether continuation of the investigation amounted to an abuse of process.
The Court expressly clarified that it was not adjudicating the competing Wills, ownership/title of the property, or the petitioners’ guilt.
Analysis of the Law
1. Breach of Contract and Cheating Are Distinct — But Intention Requires Investigation Here
The Court relied on Hridaya Ranjan Prasad Verma v. State of Bihar for the established principle that mere failure to fulfil a contractual promise does not constitute cheating.
For Section 420 IPC, fraudulent or dishonest intention must ordinarily exist at the inception of the transaction.
But that principle did not automatically entitle the petitioners to quashing.
The complainant’s allegations were that possession was delivered because the petitioners represented that the ₹9 crore transaction would be completed; two cheques aggregating ₹25 lakh were issued but subsequently requested not to be presented; only ₹20 lakh was paid through banking channels; and thereafter the petitioners allegedly neither paid the balance nor vacated.
The Court held that these allegations provided a sufficient prima facie foundation to investigate whether possession had been obtained on a representation that was never intended to be honoured.
2. Part-Payment Does Not Conclusively Negate Dishonest Intention
An important aspect of the judgment is that the Court did not hold that the petitioners had dishonest intention from inception.
Rather, it held that the issue required investigation.
The ₹20 lakh payment, alleged diamond payments, consensual initial possession and objections concerning title were all relevant circumstances capable of being raised in defence.
But they were not unimpeachable material conclusively destroying the allegations in the FIR at the quashing stage.
3. Failure to Deposit ₹4.5 Crore Was Material
The petitioners’ conduct during the proceedings became significant.
Despite expressing willingness to purchase the property and despite repeated opportunities from the Delhi High Court and Supreme Court, they did not deposit the directed 50% consideration.
At the same time, they continued to occupy the property.
The Court held that this materially weakened their contention that continuation of the investigation constituted an abuse of process.
This is an important factual feature of the decision: the Court did not refuse quashing merely because a contractual transaction had failed; it also considered the petitioners’ subsequent conduct during the judicial proceedings.
4. Civil Proceedings Do Not Automatically Exclude Criminal Liability
The Court relied upon the Supreme Court’s decision in Punit Beriwala v. State (NCT of Delhi).
The principle reiterated was that merely because a transaction gives rise to civil remedies does not mean that criminal proceedings must necessarily be quashed.
A commercial or property transaction can simultaneously have civil consequences and disclose a cognizable criminal offence, depending upon the allegations.
Therefore, the competing probate and title proceedings did not by themselves convert the FIR into a purely civil dispute.
Important Finding on Criminal Trespass
This is perhaps the most legally notable part of the judgment.
The petitioners argued that because their initial entry into the property was consensual, Section 448 IPC could not apply.
The High Court rejected that argument at the threshold.
Section 441 IPC includes not only unlawful entry but also a situation where a person lawfully enters property and subsequently unlawfully remains there with the intention prescribed by the provision.
Where such criminal trespass concerns a property used as a human dwelling, it may amount to house-trespass under Section 442 IPC.
Therefore, consensual initial possession does not automatically extinguish the possibility of subsequent criminal trespass.
Here, the FIR alleged that after being asked either to pay the balance sale consideration or vacate the property, the petitioners continued occupying it and threatened the complainant and the person claiming ownership.
Whether the continued occupation had become unlawful and whether the necessary criminal intention existed were disputed factual questions requiring investigation.
Precedent Analysis
Neeharika Infrastructure Pvt. Ltd. v. State of Maharashtra
Investigation into a cognizable offence ordinarily should not be obstructed. FIR quashing is an exceptional jurisdiction to be exercised sparingly.
State of Haryana v. Bhajan Lal
The Court applied the established exceptional categories governing exercise of the High Court’s inherent jurisdiction to quash criminal proceedings.
State of Karnataka v. Prabhu Shankar
The Supreme Court reiterated that while considering FIR quashing, the High Court cannot undertake a roving enquiry or mini-trial. Circumstances that may eventually support discharge or acquittal do not automatically justify quashing.
Hridaya Ranjan Prasad Verma v. State of Bihar
Mere breach of contract is not cheating. The crucial element is fraudulent or dishonest intention at the time of inducement.
Rajesh Bajaj v. State (NCT of Delhi)
A complaint need not mechanically reproduce every ingredient of an offence. If the factual foundation necessary for the alleged offence exists, criminal proceedings should not be prematurely quashed merely because particular ingredients are not expressly recited.
Punit Beriwala v. State (NCT of Delhi)
The existence of civil proceedings or civil remedies does not by itself justify quashing where the allegations independently disclose a cognizable offence.
Court’s Reasoning
The Court found that the case involved several seriously disputed factual questions:
the petitioners’ intention when they obtained possession; whether further consideration was actually paid through diamonds; whether the petitioners were justified in withholding payment because of the title dispute; whether the complainant had authority to deal with the property; whether continued possession subsequently became unlawful; and whether the requisite criminal intention accompanied that continued occupation.
These issues could not be conclusively resolved without weighing evidence.
The FSL report was also still awaited and the investigation remained incomplete.
The Court therefore held that interfering at this stage would effectively require it to determine disputed questions of fact before the investigating agency had completed the statutory process.
Consequently, the case did not fall within the exceptional categories warranting quashing.
Conclusion
The Delhi High Court refused to quash FIR No. 414/2023 under Sections 420, 448 and 34 IPC and dismissed the writ petition.
All pending applications were disposed of and interim orders, if any, were vacated.
Crucially, the Court clarified that its observations were confined to deciding the quashing petition and would not prejudice the investigation or the separate proceedings concerning title, probate, review, recall or contempt.
Case Details
Case: Raj Kumar Chawla & Anr. v. State (NCT of Delhi) & Anr.
Court: High Court of Delhi at New Delhi
Case No.: W.P.(CRL) 2519/2023
CNR: DLHC010348272023
Judge: Justice Madhu Jain
Reserved: 7 September 2026
Decided: 17 September 2026
Result: Petition dismissed; FIR under Sections 420, 448 read with Section 34 IPC not quashed; investigation permitted to continue.
