Availability of civil or arbitral remedies does not bar criminal prosecution if factual allegations disclose the offense of cheating.

The Petitioners, acting as "property aggregators," invoked the High Court's inherent jurisdiction to quash FIR No.3/2025 registered by the Economic Offences Cell (EOC).

The Complainants (Respondent No. 3 and others) alleged that the Petitioners induced them into six fraudulent property transactions by falsely claiming clear and marketable titles while suppressing pending inventory proceedings, tenancy disputes, and lack of authority to sell.

Relying on these representations, the Complainants paid approximately ₹3.70 Crores.

Investigation revealed the Petitioners used manipulated documents to hide identity details and entered into overlapping MOUs with different buyers for the same properties.

The Petitioners argued the dispute was commercial, subject to arbitration, and that they acted as mandates for owners.

1. Whether the allegations in the FIR and the material collected during the investigation disclose a prima facie offence of cheating and criminal conspiracy under Sections 420 and 120-B of the IPC.

2. Whether the existence of a commercial dispute and pending arbitration proceedings warrant the quashing of criminal prosecution.

3. Whether the continuation of the proceedings against the Petitioners amounts to an abuse of the process of law.

The Court applied Section 415 and 420 of the IPC regarding cheating, noting that the gist of the offence is fraudulent intention at the inception of the transaction.

It relied on State of Haryana v. Bhajan Lal, which establishes the parameters for quashing an FIR when allegations do not disclose a cognizable offence.

The Court further cited M/s. Indian Oil Corporation v. M/s. NEPC India Ltd., holding that a commercial transaction may involve both a civil wrong and a criminal offence, and the availability of a civil remedy does not bar criminal prosecution.

Reference was also made to K. Jagadish v. Udaya Kumar G.S. regarding concurrent civil and criminal remedies and M/s Neeharika Infrastructure Pvt. Ltd. v. State of Maharashtra, which cautions against scuttling investigations at the initial stage.

The Court observed that the distinction between a breach of contract and cheating depends on the accused's intention at the time of inducement.

Here, the investigation yielded evidence that the Petitioners made deceitful representations regarding their authority to sell and the status of the titles while suppressing legal encumbrances.

The court noted that the Petitioners allegedly manipulated documents and executed multiple MOUs for the same properties with different parties, which points toward fraudulent intent from the inception.

The Court rejected the Petitioners' defense that it was a purely commercial dispute, stating that if the factual allegations disclose a criminal offence, the availability of civil or arbitration remedies is irrelevant.

Following the Neeharika principles, the Court held it could not conduct a mini-trial or examine the reliability of allegations at the FIR stage, especially when the investigation is at a nascent stage involving over sixty property owners.

The Petition for quashing was rejected, the rule was discharged, and the Investigating Agency was permitted to complete the probe.