Court Exercises Inherent Powers to Quash FIR Alleging Property Fraud Following Mediated Settlement Agreement

The petitioners (builders) entered into a collaboration agreement with the complainants (Respondent Nos. 2 & 3) for the development of property at New Rohtak Road, Karol Bagh.

The complainants alleged that the petitioners demolished their home, illegally occupied the site, and sold the second floor without consent.

Consequently, FIR No. 100/2024 was registered at PS DBG Road for offences under Sections 420/406/120B/506 IPC following directions from a Magisterial Court.

During the pendency of investigation and anticipatory bail proceedings, the matter was referred to mediation.

On 13.03.2026, the parties executed a settlement agreement under the Delhi High Court Mediation and Conciliation Centre, wherein the complainants received ₹79,00,000/- and regained vacant possession of the property.

The petitioners subsequently moved the High Court to quash the FIR based on this compromise.

1. Whether the High Court should exercise its inherent powers to quash the FIR and consequential proceedings on the ground that the parties have amicably settled their private matrimonial/commercial disputes.

The Court primarily exercised its inherent jurisdiction under Section 528 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023 (formerly Section 482 of the CrPC), which empowers the High Court to pass orders necessary to secure the ends of justice.

The court relied on the principle that where offences are predominantly private or civil in nature and the parties have reached a voluntary settlement, the High Court may quash the proceedings to prevent the abuse of the process of law.

The Court observed that while the FIR alleged serious criminal offences including cheating and criminal breach of trust, the core of the dispute was a commercial disagreement arising from a collaboration agreement.

The Court noted that the parties had successfully resolved all grievances through the mediation process, with the complainants confirming the receipt of ₹79,00,000/- and the restoration of their property.

During video conferencing, the complainants (including a senior citizen) explicitly stated that the settlement was voluntary and they no longer wished to pursue the prosecution.

The Court reasoned that since the arbitration proceedings were withdrawn and no-objection affidavits were filed in accordance with the settlement terms, continuing the criminal proceedings would serve no fruitful purpose and would be an unnecessary burden on the judicial machinery.

The Court ordered the quashing of FIR No. 100/2024 and all consequential proceedings.

The petitioners were directed to submit the original affidavits and Memorandum of Understanding (MoU) to the concerned SHO/IO within four weeks and the petition was accordingly disposed of.