Borrower Says Lender Misused Power Of Attorney To Encumber Property; Madras HC Refuses To Quash FIR Against Him

In brief

The question

Whether the allegations in Crime No. 9 of 2026 disclosed a prima facie cognizable offence warranting investigation, such that the FIR should not be quashed at the threshold.

The court held

The Court held that it was not inclined to quash the FIR in Crime No. 9 of 2026 and dismissed the Criminal Original Petition.

It also directed

The connected miscellaneous petition was also closed.

01Facts

The petitioner sought to quash Crime No. 9 of 2026, registered by the District Crime Branch, Kanchipuram, under Sections 336(2), 336(3), 340(2), 318(4) and 3(5) of the Bharatiya Nyaya Sanhita, 2023.

p. 2

The complaint alleged that the petitioner lent the second respondent ₹1,00,000, received property documents as security, and arranged for a power of attorney to be executed in favour of his driver.

p. 2

It was further alleged that, when the second respondent attempted to repay the loan with interest, the petitioner refused and misused the power of attorney to create an encumbrance over the property.

p. 2

The petitioner denied the allegations and sought quashing; the prosecution submitted that the investigation was almost complete.

pp. 2–3

02Issues

i.Whether the allegations in Crime No. 9 of 2026 disclosed a prima facie cognizable offence warranting investigation, such that the FIR should not be quashed at the threshold.

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ii.Whether the Court should quash the FIR at the investigation stage, including on the basis that the dispute arose from a loan and property transaction.

pp. 2, 4–6

03Law Applied

Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, invoked in the petition, provides the basis for the High Court’s inherent jurisdiction to consider quashing.

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The Court applied the principle that, at the FIR stage, the question is whether the allegations disclose a cognizable offence; the Court should not assess the merits or likelihood of conviction, and should ordinarily allow the investigation to proceed.

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Relying on Sau. Kamal Shivaji Pokarnekar v. State of Maharashtra (2019 (14) SCC 350), it noted that proceedings may be quashed where the allegations disclose no offence or are frivolous, vexatious or oppressive, but should not be stifled where the alleged offence’s ingredients are prima facie disclosed.

pp. 3–4

It also relied on M/s. Neeharika Infrastructure Pvt. Ltd. v. State of Maharashtra (2021 SCC OnLine SC 315), including the principles that quashing is exceptional, an FIR need not contain every detail, and courts should generally permit an ongoing investigation to be completed.

pp. 4–6

Provisions in the judgment · 6 · Linked ones open on LawLens

Bharatiya Nagarik Suraksha Sanhita, 2023 Section 528

Bharatiya Nyaya Sanhita, 2023 Section 336 Section 340 Section 318 Section 3

Code of Criminal Procedure, 1973 Section 482

04Reasoning

The Court found that the FIR contained specific allegations against the petitioner which, on a prima facie reading, disclosed cognizable offences requiring investigation.

p. 3

Applying the authorities, it declined to evaluate the evidentiary merits or determine whether the allegations would ultimately result in conviction.

p. 3, 6

The asserted loan and property context did not justify quashing at this stage, because the allegations of misuse of the power of attorney and creation of an encumbrance required investigation.

p. 3, 6

The Court also noted that the investigation was almost complete, with only the filing of the final report remaining.

p. 3, 6