After Buyer Paid ₹55 Lakh For An Undelivered, Allegedly Resold Flat, Karnataka HC Quashes Case, Finding No Fraudulent Intent Shown At The Deal’s Start

Respondent No. 2 complained that he had entered into agreements for the purchase and construction of an apartment in a project promoted by a company of which the petitioner was stated to be a director.

He alleged that he paid ₹55,00,000 of the stated ₹64,00,000 consideration, but the apartment was not delivered, was sold to another person, and the amount was not refunded.

The complaint led to registration of Crime No. 154/2019 and proceedings in C.C. No. 8837/2021 for alleged offences under Sections 420, 504, 506 and 34 IPC; the petitioner sought quashing under Section 482 CrPC, corresponding to Section 528 BNSS.

Section 415 IPC defines cheating by requiring deception and consequent inducement to deliver property, consent to its retention, or do or omit an act causing or likely to cause harm; Sections 417 and 420 prescribe punishment for forms of cheating, with Section 420 requiring dishonest inducement to deliver property.

Cheating depends on the accused’s intention at the time of inducement: subsequent non-performance alone does not establish that a promise was made dishonestly from the outset, though later conduct may be considered.

Section 418 requires cheating with knowledge that wrongful loss may ensue to a person whose interests the accused is bound by law or legal contract to protect.

Section 504 requires intentional insult and the requisite intention or knowledge that it may provoke a breach of peace or another offence; Sections 503 and 506 require a threat of injury made with the intention of causing alarm or compelling or restraining conduct.

Section 34 IPC provides for joint liability where a criminal act is done by several persons in furtherance of their common intention; it does not create a separate offence.

A civil remedy does not bar criminal proceedings where the allegations independently disclose an offence, but a contractual dispute cannot be converted into a criminal prosecution merely because of non-performance.

The Court found no specific allegation that, when the agreements were made or payment received, the petitioner knowingly made a false representation or had already decided not to perform.

The alleged non-delivery, subsequent sale and failure to refund, without material showing dishonest intention at inception, did not establish cheating under Sections 417 or 420; nor were the additional requirements of Section 418 shown.

The complaint also did not set out a specific intentional insult likely to provoke a breach of peace, or a specific threat made with intent to cause alarm, as required for Sections 504 and 506.

Since the basic offences were not disclosed, Section 34 could not sustain the prosecution. The dispute, on the allegations before the Court, was contractual and amenable to civil remedies.

It allowed the petition and quashed the proceedings in C.C. No. 8837/2021 arising from Crime No. 154/2019 before the II Additional CJM, Bengaluru, while reserving Respondent No. 2’s liberty to pursue appropriate proceedings for specific performance and/or recovery of money.