Court’s Decision:
The Supreme Court allowed the criminal appeal challenging the Telangana High Court’s refusal to quash an FIR filed against a 70-year-old woman and her daughter in a property transaction dispute. The Court not only quashed the FIR and the consequential proceedings but also imposed a cost of ₹10,00,000 on the complainant for misusing the criminal justice system, declaring:
“This is a classic case of misuse of police investigation to entangle the accused in a false and frivolous prosecution.”
The Court further directed the State of Telangana to provide police protection to the appellants whenever they visit Hyderabad to manage their properties.
Facts:
The appellants are a 70-year-old widow of a retired Army Major General and her daughter, residents of New Delhi. The elder appellant owns a 500 sq. yd. land parcel in Gachibowli, Telangana. In 2020, an oral agreement was reached with a prospective buyer, allegedly an agent of a real estate company—M/s Sandhya Constructions & Estates Pvt. Ltd.—to sell the land for ₹5.75 crore, subject to full payment by stipulated dates.
₹4.05 crore was paid by bank transfers, and the buyer alleged that ₹75 lakh was paid in cash. When the deal fell through, an FIR was lodged alleging that the appellants fraudulently induced the buyer and refused to execute the sale or refund the money. The FIR also made exaggerated claims involving another property in Delhi and alleged criminal intimidation by the appellants. The elder appellant was arrested, jailed for 8 days, and later released on bail.
A civil suit for specific performance was already pending before a Telangana civil court.
Issues:
- Whether the FIR disclosed any prima facie cognizable criminal offence under Sections 406 and 420 of the Indian Penal Code?
- Whether the matter was purely civil in nature and thus not amenable to criminal proceedings?
- Whether the High Court erred in dismissing the petition for quashing the FIR in a cursory manner?
Petitioner’s Arguments:
The appellants contended that the entire dispute was civil in nature, arising from a failed oral agreement to sell property. They argued that the complainant, acting through an influential builder, misused the criminal process to harass them. The same dispute was already the subject of a civil suit for specific performance, and the allegations in the FIR and civil suit were contradictory.
They denied any cash payment of ₹75 lakh and maintained that they received only ₹4.05 crore through bank transfers, which they were willing to refund provided the civil suit was withdrawn. The arrest and continued prosecution, especially of the elderly woman, were termed malicious, oppressive, and an abuse of process.
Respondent’s Arguments:
The State and the complainant opposed the appeal, asserting that the appellants acted with fraudulent intent from the beginning. They contended that the appellants falsely promised to execute the sale deed and even misled the complainant by claiming they could influence neighboring landowners.
They further argued that the FIR contained sufficient material to constitute offences of cheating and criminal breach of trust. They were open to settling the matter if the amount of ₹4.05 crore was repaid with interest.
Analysis of the Law:
The Court analyzed the allegations and juxtaposed the FIR with the civil pleadings. It observed glaring contradictions—particularly that while the FIR claimed the agreement covered multiple properties for ₹5 crore (with ₹75 lakh paid in cash), the civil suit described only a single property valued at ₹5.75 crore with no mention of other lands or cash.
The Court emphasized that when civil disputes are deliberately clothed as criminal cases to pressurize the opposite party, such prosecution amounts to an abuse of process. It reiterated that criminal proceedings cannot be used as a tool for arm-twisting or to settle scores in civil disputes.
Precedent Analysis:
The Court relied on several precedents:
- Rikhab Birani v. State of Uttar Pradesh (2025 SCC OnLine SC 823): Reiterated the need to quash criminal proceedings where civil disputes are falsely presented as criminal.
- Paramjeet Batra v. State of Uttarakhand (2013) 11 SCC 673: Held that breach of contract does not by itself constitute cheating unless fraudulent intent exists at inception.
- Sachin Garg v. State of UP (2024 SCC OnLine SC 82), A.M. Mohan v. State (2024) 3 SCR 722, Lalit Chaturvedi v. State of UP (2024 SCC 171): All these cases supported the principle that frivolous criminal complaints arising from civil disagreements should be quashed at the threshold.
Court’s Reasoning:
The Court found that the complainant had distorted facts to criminalize a contractual dispute. It ruled that no offence under Sections 406 (criminal breach of trust) or 420 (cheating) was made out. The FIR, in its view, was a vindictive tool, driven by the complainant’s influence in the local police. The Court found the High Court’s order dismissing the quashing petition as “perfunctory” and “pedantic” and criticized it for failing to even consider the merits.
Conclusion:
The Court quashed the FIR and all proceedings arising from it, imposed ₹10 lakh in exemplary costs on the complainant for abusing criminal law, and directed police protection for the appellants during their visits to Telangana.
“Rather than awarding interest to the complainant, it is a fit case where he should be penalised for misusing the process of criminal law.”
Implications:
- Reinforces that civil disputes should not be criminalized to pressure the other party.
- Establishes that courts must examine quashing petitions on merits rather than dispose of them summarily.
- Signals to law enforcement that arrests based on flimsy complaints, especially of senior citizens, will be scrutinized.
- Encourages litigants to seek remedies under proper legal forums instead of resorting to coercive tactics.
FAQs:
1. When can a criminal case be quashed in a property dispute?
A criminal case may be quashed when it is evident that the dispute is civil in nature and the complaint lacks ingredients of any cognizable offence like cheating or criminal breach of trust.
2. Can a civil suit and criminal case proceed together?
Yes, but if the allegations in the FIR are inconsistent with the civil pleadings or appear fabricated to pressurize the accused, courts can quash the criminal proceedings.
3. Is a cash payment in an oral property agreement enforceable in criminal law?
No, unless there is clear proof of fraudulent intent at the inception. Mere failure to honor an oral agreement does not amount to a criminal offence.
