Flat Buyers Demand ₹25 Lakh Each During Settlement Talks; Bombay High Court Says Exorbitant Demand Without Threat or Fear Cannot Constitute Extortion Under Section 385
Can Demanding an Exorbitant Settlement Amount Amount to Extortion? Bombay High Court Says Section 385 Requires Intentional Threat and Fear of Injury
Facts
The applicants were seven flat purchasers residing in the B Wing of Mohak House No. 3 at Virar, while Respondent No. 2, Ashutosh Madhukar Joshi, was the real-estate developer responsible for the project. PAWAN SUBHASH
Disputes had arisen concerning several alleged deficiencies in the project, including non-registration of the co-operative society, non-execution of conveyance, failure to provide the promised garden and inadequate maintenance. The flat purchasers had pursued complaints before various authorities and before the State Consumer Disputes Redressal Commission. Their consumer complaints had been admitted on 10 January 2017. PAWAN SUBHASH
Against this background, a meeting took place on 9 May 2017 at Hotel Farm House, Vasai, purportedly to explore settlement. According to the developer, Applicant No. 1 proposed that he pay ₹25 lakh to each flat owner, after which they would cease creating obstacles to construction of the remaining A Wing. The developer alleged that he was told that if the demand was not accepted, his difficulties would increase and his life would be made difficult. PAWAN SUBHASH PAWAN SUBHASH
With seven applicants, the alleged demand aggregated to ₹1.75 crore.
The developer had recorded conversations between the parties. Those recordings and their transcripts eventually became crucial to the High Court’s determination.
The FIR resulted in prosecution for offences under Sections 385 and 34 IPC, and after investigation a charge-sheet was filed, culminating in S.C.C. No. 57 of 2021 before the JMFC, Vasai. The applicants approached the Bombay High Court under Section 482 CrPC, now Section 528 BNSS, seeking quashing of both the FIR and the criminal proceedings. PAWAN SUBHASH
Issues
The principal issue was whether demanding ₹25 lakh each during settlement negotiations, in the factual context of the parties’ existing disputes, constituted an attempt to commit extortion under Section 385 IPC.
The Court also considered whether:
- the applicants had intentionally put the developer in fear of injury;
- a disproportionately high settlement demand by itself could constitute extortion;
- stating that pending litigation would continue if settlement failed amounted to a threat;
- the recordings and transcripts contradicted the allegations contained in the FIR and witness statements;
- the High Court could quash proceedings after filing of the charge-sheet; and
- the proceedings attracted the principles in State of Haryana v. Bhajan Lal relating to absence of an offence and mala fide prosecution.
Applicants’ Arguments
The applicants argued that the criminal case arose out of an essentially civil and consumer dispute between flat purchasers and their developer.
They pointed out that consumer proceedings concerning the project had already been instituted and admitted before the FIR was registered. According to them, the criminal case was a counterblast intended to pressure them into abandoning their consumer proceedings. PAWAN SUBHASH
They contended that the meetings were genuine settlement negotiations. They never compelled, coerced or threatened the developer to accept their proposal.
The applicants relied heavily on the recorded conversations. According to them, the transcripts showed an ordinary discussion aimed at resolving disputes rather than any attempt to place the developer in fear of injury. PAWAN SUBHASH
They also highlighted the delay in lodging the FIR and discrepancies concerning the alleged meeting of 12 June 2017.
Their central submission was that even if the monetary demand was accepted at face value, a demand for money during settlement negotiations does not become extortion unless the statutory ingredients of intentional threat and fear of injury are independently established.
Respondent’s Arguments
The developer argued that the FIR and charge-sheet disclosed a clear prima facie offence under Sections 385 and 34 IPC.
He contended that the applicants had demanded ₹25 lakh each and threatened that if the money was not paid, they would continue obstructing his construction and subject him to further difficulties.
The respondent emphasised the magnitude of the demand: seven persons demanding ₹25 lakh each resulted in a total demand of ₹1.75 crore. According to him, such an astronomical demand undermined the applicants’ assertion that they were engaged in genuine settlement negotiations. PAWAN SUBHASH
He also relied on witness statements, including those of his Chartered Accountant and persons associated with the hotel where the meetings occurred.
Reliance was placed upon Rajesh @ Dharmesh v. State of Maharashtra to argue that actual payment is unnecessary for an offence under Section 385, and upon State of Odisha v. Pratima Mohanty to contend that criminal proceedings should not ordinarily be quashed after investigation and filing of a charge-sheet. PAWAN SUBHASH
Analysis of the Law
What Constitutes Extortion?
The Court examined Section 383 IPC, which defines extortion, and Section 385 IPC, which punishes putting or attempting to put a person in fear of injury for the purpose of committing extortion.
The Court identified two fundamental elements of extortion:
- Intentionally putting a person in fear of injury; and
- Dishonestly inducing that person, because of such fear, to deliver property or valuable security. PAWAN SUBHASH
For Section 385, actual delivery of property is unnecessary because the provision covers the attempt stage. But the element of fear of injury remains indispensable.
The Court explained that the threat must possess sufficient gravity or intensity to unsettle the person threatened and interfere with his ability to act voluntarily. A general or bare threat, without more, cannot automatically amount to extortion. PAWAN SUBHASH
₹1.75 Crore Demand Did Not By Itself Constitute Extortion
This is the most important proposition emerging from the judgment.
The respondent argued that because seven applicants demanded ₹25 lakh each—aggregating to ₹1.75 crore—the excessive nature of the demand itself demonstrated extortion.
The High Court expressly rejected that proposition.
It held that merely demanding an exorbitant or disproportionate amount does not attract Section 385 IPC.
The IPC does not prescribe any monetary threshold beyond which a demand automatically becomes extortion. The decisive question remains whether the demand was accompanied by the necessary intentional threat or fear of injury. PAWAN SUBHASH
Recorded Conversations Were Crucial
The recordings were particularly significant because they provided contemporaneous material showing what actually occurred during the meetings.
On examining the transcripts, the High Court found that they did not prima facie reveal threats or extortion.
Instead, the conversations showed that the parties had mutually met to explore an amicable settlement of their existing disputes. The discussions included the flat purchasers’ complaints about obstruction of air and light, project deficiencies, pending litigation and the stress allegedly suffered by them and their families. PAWAN SUBHASH
The applicants also discussed selling their flats, withdrawing consumer proceedings, abandoning the proposed society-related action and not pursuing other legal remedies as part of a settlement.
The developer himself negotiated the amount, referred to prevailing market conditions and made offers and counter-offers.
The Court therefore found that the conversation had the character of negotiation rather than coercion. PAWAN SUBHASH
Pursuing Lawful Litigation Is Not Extortion
Another significant proposition concerns threats to continue legal proceedings.
The Court held that a general statement that pending litigation would continue according to law—and that adverse orders in such proceedings might create obstacles for the opposite party—cannot ordinarily be characterised as a threat constituting extortion.
It observed that:
“Persuing litigation in accordance with law in the alternative to a settlement cannot be perceived as an act of extortion.”
Accordingly, a party does not commit extortion merely because it proposes:
settle the dispute, otherwise the pending proceedings will continue according to law. PAWAN SUBHASH
That is materially different from intentionally threatening unlawful injury to compel payment.
Contradictions in the Recording Evidence
The Court also noticed a material discrepancy concerning the completeness of the recordings.
In a supplementary statement, Respondent No. 2 stated that portions of the conversations had not been recorded because he could not ascertain whether the recording function was on or off.
However, in an affidavit dated 2 December 2019, he stated that the transcripts represented the entire recordings and that nothing had been added or excluded.
The High Court observed that these versions were prima facie materially at variance. PAWAN SUBHASH
Filing of Charge-Sheet Does Not Bar Quashing
The respondent argued that because investigation had concluded and a charge-sheet had already been filed, the High Court should not exercise its inherent jurisdiction.
The Court rejected any absolute proposition to that effect.
Relying upon Anand Kumar Mohatta v. State (NCT of Delhi), the Court held that Section 482 CrPC is not confined to the FIR stage.
The Supreme Court had specifically recognised that the High Court may examine whether an offence is prima facie made out even after the allegations have culminated in a charge-sheet. The filing of a charge-sheet does not restrict or extinguish the High Court’s inherent power to prevent abuse of process or secure the ends of justice. PAWAN SUBHASH
Bhajan Lal Principles
The Court then considered State of Haryana v. Bhajan Lal.
It particularly examined:
Category 1: where the allegations, even accepted at face value, do not prima facie constitute an offence.
Category 7: where criminal proceedings are manifestly attended with mala fides or maliciously instituted with an ulterior motive for wreaking vengeance or pursuing a private grudge. PAWAN SUBHASH
The Court also relied on Moh. Wajid v. State of Uttar Pradesh, which reiterates that where criminal proceedings are alleged to be frivolous, vexatious or vengeance-driven, the High Court need not mechanically confine itself to the drafting of the FIR. It may examine surrounding circumstances and material collected during investigation. PAWAN SUBHASH
Ultimately, the Court held that the present case fell within Categories 1 and 7 of Bhajan Lal. PAWAN SUBHASH
Precedent Analysis
State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335 — The Court applied Categories 1 and 7: absence of a prima facie offence and proceedings attended with mala fides/ulterior motive. PAWAN SUBHASH
Anand Kumar Mohatta v. State (NCT of Delhi), (2019) 11 SCC 706 — Filing of a charge-sheet does not deprive the High Court of its Section 482 jurisdiction. The Court can quash criminal proceedings even after investigation where continuation would constitute abuse of process. PAWAN SUBHASH
Moh. Wajid v. State of Uttar Pradesh, (2023) 20 SCC 219 — In allegedly frivolous or vengeance-driven prosecutions, the High Court may examine attending circumstances and investigative material instead of restricting itself mechanically to the allegations drafted in the FIR. PAWAN SUBHASH
Rajesh @ Dharmesh v. State of Maharashtra, 2017 SCC OnLine Bom 8411 — Cited by the complainant for the proposition that actual payment is unnecessary for Section 385. The High Court found the reliance misplaced in the factual circumstances of the present case. PAWAN SUBHASH
State of Odisha v. Pratima Mohanty, (2022) 16 SCC 703 — Relied upon by the respondent to argue against quashing after investigation and filing of a charge-sheet. The Court nevertheless held that the existence of a charge-sheet does not extinguish Section 482 jurisdiction. PAWAN SUBHASH
Court’s Reasoning
The Court’s reasoning ultimately turned on the difference between hard bargaining and criminal extortion.
The applicants unquestionably demanded substantial compensation. But Section 385 does not criminalise an excessive settlement proposal merely because the opposite party considers the amount unreasonable.
What the prosecution still had to establish was an intentional attempt to place the developer in fear of injury for the purpose of extortion.
The most significant contemporaneous evidence—the recorded conversations—did not support that allegation.
Instead, the transcripts showed:
- pre-existing civil and consumer disputes;
- mutually arranged settlement meetings;
- discussion of the applicants’ grievances;
- demands for compensation;
- negotiations over amounts;
- offers and counter-offers;
- discussion about sale of flats;
- proposed withdrawal of proceedings and undertakings; and
- the developer participating coherently in the negotiations.
The Court found no threat of sufficient gravity to place the developer in fear of injury.
It therefore concluded that not even a prima facie offence under Section 385 IPC was made out. PAWAN SUBHASH
The broader litigation history, the applicants’ pre-existing consumer proceedings and the circumstances surrounding initiation of the criminal prosecution also supported exercise of the High Court’s inherent jurisdiction.
Conclusion
The Bombay High Court allowed the Criminal Application and quashed the FIR as well as the resultant charge-sheet/proceedings.
The Court held that demanding ₹25 lakh each—even though the aggregate demand was ₹1.75 crore—could not by itself constitute extortion.
For Section 385 IPC, there must be material showing an intentional threat or attempt to put the complainant in fear of injury for the purpose of committing extortion. That essential ingredient was absent from the recorded conversations.
The judgment also makes an important distinction between lawful settlement pressure and criminal intimidation: informing an opposing party that pending legal proceedings will continue if settlement fails cannot, without the necessary unlawful threat or fear of injury, be transformed into an offence of extortion.
Finding that the case attracted Categories 1 and 7 of Bhajan Lal, the Court exercised its inherent powers under Section 482 CrPC to prevent abuse of process and secure the ends of justice. PAWAN SUBHASH
Case Details
Case: Pawan Subhash Sarkale & Ors. v. State of Maharashtra & Anr.
Court: Bombay High Court, Criminal Appellate Jurisdiction
Case No.: Criminal Application No. 722 of 2017 PAWAN SUBHASH
Neutral Citation: 2026:BHC-AS:39640-DB
Judge: Justice Ranjitsinha Raja Bhonsale
Reserved On: 10 July 2026
Pronounced On: 29 September 2026 PAWAN SUBHASH
FIR: C.R. No. 79 of 2017, Vasai Police Station (Vasai West)
Offences: Sections 385 and 34 IPC
Result: Criminal Application allowed; FIR and resultant charge-sheet/proceedings quashed under Section 482 CrPC.
