A purchaser cannot be prosecuted for cheating without material showing dishonest intent.

The petitioners sought quashing of an FIR registered by Maddur Police for alleged offences under Sections 318(4) and 322 of the Bharatiya Nyaya Sanhita, 2023 (BNS).

The complainant alleged that the property was mortgaged in his favour on 6 April 2024 and later sold to the petitioner under a registered sale deed dated 16 July 2024.

The petitioner relied on a registered agreement of sale dated 22 September 2022, entered into before the mortgage and reflected in the encumbrance certificate.

The FIR was registered on 23 November 2024.

Whether the complaint and accompanying documents disclosed the ingredients of an offence under Section 318(4) of the BNS against the petitioner

Whether the allegations disclosed an offence under Section 322 of the BNS against the petitioner, warranting continuation of the criminal proceedings

The petition was brought under Section 482 of the Code of Criminal Procedure, 1973, corresponding to Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, seeking quashing of the criminal proceedings.

The Court considered Sections 318(4) and 322 of the BNS, which were the offences alleged in the FIR.

It held that a later sale of mortgaged property does not, by itself, establish cheating, and that criminal proceedings cannot continue against a purchaser where the complaint and documents disclose neither the requisite offence nor dishonest conduct by that purchaser.

The Court also treated the registered, earlier agreement of sale reflected in the encumbrance certificate as giving the complainant constructive notice of that transaction.

The petitioner’s registered agreement of sale predated the complainant’s mortgage, and its registration and appearance in the encumbrance certificate supported the conclusion that the complainant had constructive notice of it when accepting the property as security.

The Court found no material in the complaint or documents showing that the petitioner knew of the mortgage or acted dishonestly in completing the purchase.

Accordingly, the later sale did not, on its own, make out cheating under Section 318(4), and the allegations likewise failed to disclose the ingredients of Section 322 against the petitioner.

The complainant’s mortgage rights could be pursued through civil proceedings; continuing the criminal case against the petitioner would amount to an abuse of process.

It allowed the petition and quashed the FIR in Crime No. 261/2024, registered under Sections 318(4) and 322 of the BNS, insofar as the petitioner was concerned.