A delayed contractual dispute without dishonest intent or entrustment cannot sustain criminal prosecution.

Respondent No. 2 alleged that he entered into an agreement to purchase 2 acres and 29 guntas of land from petitioner Nos. 1 and 2 in 2007, paid advance consideration, and later obtained an endorsement acknowledging further payment.

The petitioners did not execute the sale deed or return the money.

Respondent No. 2 filed a civil suit for specific performance in 2021; he subsequently alleged that the property was sold to petitioner No. 4 and filed a private complaint.

On reference under Section 156(3) CrPC, Mulbagal Town Police registered Crime No. 125/2023 for offences under Sections 406, 463, 420, 471 and 120B IPC.

The petitioners sought quashing under Section 482 CrPC, contending that the dispute was civil, the complaint was delayed, and the criminal process was being used to give the contractual dispute a criminal colour.

1. Whether the allegations arising from the sale agreement and non-execution of a sale deed disclosed offences under Sections 406, 463, 420, 471 and 120B IPC, or were essentially civil in nature.

2. Whether the criminal proceedings should be quashed under Section 482 CrPC in light of the pending specific-performance suit and the delay in filing the complaint.

Section 482 CrPC empowers the High Court to quash criminal proceedings where their continuation would amount to an abuse of the process of court.

For cheating under Sections 415 and 420 IPC, dishonest or fraudulent intent must exist when the representation or promise is made; mere subsequent failure to perform a contract is insufficient.

Criminal breach of trust under Sections 405 and 406 IPC requires entrustment and dishonest misappropriation or conversion.

The Court relied on Arshad Neyaz Khan v. State of Jharkhand, 2025 SCC OnLine SC 2058, including its discussion of the distinction between cheating and criminal breach of trust, delay, and the impermissibility of using criminal proceedings to pursue a contractual dispute or personal vendetta.

The Court considered the transaction to arise from an agreement of sale, with a civil suit for specific performance already pending.

It held that the effect of the alleged subsequent sale to petitioner No. 4 was a matter for determination by the civil court.

The agreement dated 2007, civil suit filed in 2021, and criminal complaint filed in 2023 supported the Court’s view that the complaint sought to give a civil dispute a criminal colour.

Applying Arshad Neyaz Khan, the Court concluded that continuation of the prosecution would be an abuse of process.

It clarified that its observations would not affect disposal of the pending suit for specific performance, O.S. No. 79/2021.