A society-management dispute cannot constitute cheating absent deception and dishonest inducement at the transaction’s inception.

The petitioners and respondent No. 2 were members/office-bearers of Shri Mahesh Singh Memorial Shiksha Evam Samaj Kalyan Samiti, a society registered under the Madhya Pradesh Societies Registration Act, 1973. Respondent No. 2 claimed to be a founder/lifetime member and Treasurer of the society, and alleged that he had contributed substantial amounts towards its establishment and functioning.

He further alleged that he was unlawfully removed as Treasurer on 5 May 2021, petitioner No. 3 was appointed in his place, and the society’s bank accounts were thereafter operated on the basis of her signatures.

Respondent No. 2 approached the Assistant Registrar, Firms and Societies, in August 2024. An order under Section 32 of the 1973 Act was passed on 6 December 2024, against which the petitioners preferred an appeal before the competent authority; the appeal was pending.

Subsequently, on 17 July 2025, an FIR was registered as Crime No. 423/2025 at Police Station Dehat, District Bhind, for offences under Sections 420, 120-B and 506 of the IPC. The petitioners sought quashing of the FIR and consequential proceedings under Section 528 of the BNSS, 2023/Section 482 of the CrPC.

Whether the allegations in the FIR, even if accepted in their entirety, disclose the essential ingredients of cheating under Section 420 IPC, particularly deception and dishonest inducement at the inception of the transaction?

Whether the allegations disclose a specific agreement to commit an offence sufficient to constitute criminal conspiracy under Section 120-B IPC?

Whether the allegation of criminal intimidation under Section 506 IPC could sustain the prosecution in the context of the underlying society-management dispute?

Whether continuation of the criminal proceedings, arising substantially from an internal statutory dispute concerning the society, would constitute an abuse of the process of law warranting exercise of inherent jurisdiction under Section 528 of the BNSS?

The Court applied Section 528 of the BNSS, 2023, corresponding to Section 482 of the CrPC, which permits the High Court to prevent abuse of the process of law and secure the ends of justice.

It reiterated that quashing jurisdiction is extraordinary and should ordinarily not involve a mini-trial or appreciation of evidence, but may be exercised where the allegations, taken at face value, do not constitute the alleged offence.

For Section 420 IPC, deception and dishonest or fraudulent inducement must exist at the inception of the transaction; a subsequent failure to return money or later dispute does not retrospectively establish fraudulent intent.

Criminal conspiracy under Section 120-B IPC requires material indicating an agreement to commit an offence; mere association or participation in a disputed administrative act is insufficient.

The Court relied principally on State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335, including the principle that criminal proceedings may be quashed where the allegations do not constitute an offence or are manifestly attended with mala fides or an ulterior motive.

It also recognised that the existence of a civil or statutory remedy does not automatically bar criminal proceedings, but a civil/statutory dispute cannot be converted into a criminal offence merely by assigning it a criminal label.

The Court found that respondent No. 2’s own case was that he voluntarily collected and deposited money in the society’s bank account. There was no allegation that, when the contribution was made, any petitioner had deceived him or dishonestly induced him to part with the money.

The alleged dispute concerned the subsequent character of the contribution, the complainant’s entitlement to its return, his removal as Treasurer, the appointment of petitioner No. 3, and the authority to operate the society’s bank accounts.

No specific personal appropriation was alleged by identifying a particular petitioner, withdrawal, date, amount, or diversion for personal benefit.

The FIR also lacked factual material showing any prior agreement among the petitioners to commit cheating, making the conspiracy allegation merely inferential.

Although the Court ordinarily would not assess the truth of the alleged threats, it considered the Section 506 allegation in the context of the same continuing inter se dispute and held that it could not preserve a prosecution lacking the foundational offence of cheating.

The pending proceedings before the Registrar, the four-year delay between the alleged removal and registration of the FIR, and the nature of the controversy cumulatively showed that the dispute was predominantly civil/statutory and concerned the internal administration of the society.

The Court clarified that it was not determining the validity of the removal, appointment, resolutions, bank operations, or respondent No. 2’s monetary claim, all of which remained for adjudication by the competent forum.

Continuation of the criminal proceedings would amount to using the criminal process to adjudicate an internal society-management dispute and would constitute abuse of process.

The petition was allowed, and FIR Crime No. 423/2025 registered at Police Station Dehat, District Bhind, along with all consequential criminal proceedings, was quashed qua the petitioners under Section 528 of the BNSS.

The proceedings before the Registrar or other competent authority were left unaffected and were directed to be decided independently in accordance with law.