Delhi High Court Quashes FIR Alleging Cheating and Criminal Breach of Trust Amidst Amicable Settlement Between Homebuyers and Real Estate Company: “No Useful Purpose Will Be Served in Continuing with the FIR”

Court’s Decision

The Delhi High Court allowed the petition under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, and quashed FIR No. 0063/2023 registered at P.S. Economic Offences Wing under Sections 420, 409, and 120B IPC along with all proceedings emanating therefrom, holding that:

“No useful purpose will be served in continuing with the present FIR…”

The court noted that the parties had amicably resolved their disputes and complied with all conditions in their settlement deeds.

Facts

An FIR was registered on 14.08.2023 by certain homebuyers alleging cheating and criminal breach of trust with respect to project funds by a real estate development company. Parallelly, insolvency proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016, were admitted by the NCLT against the company on 12.10.2023.

Plan A of resolution was approved by the NCLT on 15.12.2023. The homebuyers, including the complainants, were bound by this plan. Since the complainants failed to pay as per the approved terms, the company cancelled their units. Later, the complainants expressed willingness to comply with the plan and requested revocation of cancellation.

Eventually, all parties entered into settlement deeds dated 22.04.2025 and withdrew all prior complaints and litigations.

Issues

1. Whether the FIR alleging cheating and criminal breach of trust under Sections 420/409/120B IPC can be quashed in light of the settlement between the parties.
2. Whether the continuation of criminal proceedings would amount to an abuse of process of law.

Petitioner’s Arguments

• The petitioners argued that disputes were purely civil in nature relating to contractual obligations under the real estate project.
• They highlighted the approval of Plan A by NCLT which governed obligations on both sides.
• They contended that after the cancellation of units for non-payment, the homebuyers chose to comply and subsequently, all disputes were settled through four settlement deeds dated 22.04.2025.
• All payments and other terms under the settlement deeds were fulfilled.
• In light of this amicable resolution, continuation of criminal proceedings was not warranted.

Respondent’s Arguments

• The complainants (Respondent Nos. 2 to 5) acknowledged that the settlement was reached voluntarily and without coercion.
• They confirmed compliance with the settlement terms and expressed no objection to quashing the FIR.
• The Additional Public Prosecutor for the State also did not oppose the quashing of the FIR.

Analysis of the Law

The Court considered the framework under Section 528 of the BNSS, 2023, for quashing of criminal proceedings in light of settlements. The decision revolved around whether such proceedings, once resolved amicably and fully, continued to serve the ends of justice or merely resulted in abuse of the process.

Precedent Analysis

The Court relied heavily on the Supreme Court’s decision in Gian Singh v. State of Punjab, (2012) 10 SCC 303, particularly the following observation:

“The High Court must consider whether it would be unfair or contrary to the interest of justice to continue with the criminal proceedings… and whether to secure the ends of justice, it is appropriate that criminal case is put to an end.”

The precedent supports the exercise of inherent powers to quash criminal proceedings when the parties have settled their dispute and continuation of proceedings would not serve justice.

Court’s Reasoning

• The parties resolved all disputes through mutual settlement, supported by four separate deeds, and complied with all their terms.
• Statements were recorded by the Joint Registrar to verify genuineness and voluntary nature of the settlements.
• The court verified the presence and identification of the parties and confirmed there was no coercion.
• The court held that, in view of the compromise and fulfilment of all conditions, no purpose would be served by continuing criminal prosecution.

Conclusion

The Court allowed the petition and held:

“In the interest of justice, the petition is allowed, and FIR No. 0063/2023… is hereby quashed.”

All pending applications were disposed of accordingly.

Implications

This judgment underscores the judiciary’s willingness to give legal recognition to amicable settlements in cases involving private disputes, particularly in the realm of commercial and contractual disagreements. It reinforces that criminal proceedings should not be pursued where they no longer serve justice and merely perpetuate unnecessary litigation.

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