Criminal proceedings against landowners quashed where the broker alone received money and acknowledged refund liability.

In August 2015, Opposite Party No. 2 was informed that a plot with a constructed building owned by the petitioners was available for sale. Accused No. 3, Rajeev Ranjan Sinha, allegedly acted as the broker and intermediary.

On the basis of agreements shown and prepared by him, the complainant paid various amounts towards the proposed sale, including approximately ₹40 lakhs, allegedly on behalf of the petitioners. The petitioners subsequently sold the property to third parties, and allegedly returned ₹3 lakhs to the complainant, while the remaining amount was not refunded.

Accused No. 3 thereafter executed an undertaking acknowledging liability of ₹40 lakhs and promising repayment. Upon failure to repay, he issued three cheques of ₹10 lakhs each to the complainant. The cheques were dishonoured on 9 May 2016, following which a legal notice was issued.

The complainant filed Complaint Case No. 2150(C) of 2016 alleging offences under Sections 420, 34, 120-B, 467, 384, 468, 386, 406 and 422 of the IPC and Section 138 of the Negotiable Instruments Act.

After recording the complainant’s solemn affirmation and examining two witnesses, the Additional Chief Judicial Magistrate-XI, Patna, took cognizance under Section 406 IPC and Section 138 of the Negotiable Instruments Act against the accused, including the petitioners, by order dated 25 January 2018.

The petitioners invoked the High Court’s inherent jurisdiction to quash the cognizance order and consequential proceedings.

Whether the complaint, even if accepted at face value, disclosed the commission of offences under Section 406 IPC or Section 138 of the Negotiable Instruments Act against the petitioners, who were the owners of the property but were not alleged to have issued the dishonoured cheques?

Whether continuation of the criminal proceedings against the petitioners amounted to an abuse of the process of court warranting exercise of inherent jurisdiction under Section 482 CrPC?

The Court exercised its inherent jurisdiction under Section 482 of the Code of Criminal Procedure to prevent abuse of process and secure the ends of justice.

It applied the principles in State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335, particularly the categories permitting quashing where the allegations, even taken at face value, do not constitute an offence; where the uncontroverted allegations and supporting material do not disclose commission of an offence; or where the proceeding is manifestly attended with mala fides or instituted for an ulterior purpose.

The cognizance allegations concerned Section 406 IPC and Section 138 of the Negotiable Instruments Act; the latter provision was invoked in relation to cheques allegedly issued and dishonoured by accused No. 3.

The Court also noted the petitioners’ reliance on Rikhab Birani v. State of Uttar Pradesh, 2025 SCC OnLine SC 823.

The Court found that the complaint itself attributed the acknowledgement of liability, undertaking to repay, and issuance of the dishonoured cheques to accused No. 3, Rajeev Ranjan Sinha.

The petitioners’ alleged role was limited to being landowners whose property was proposed to be sold; the material indicated that accused No. 3 acted as the broker, received the substantial amount from the complainant, and subsequently accepted personal liability for repayment.

The petitioners had also allegedly returned ₹3 lakhs after the proposed sale failed.

On these allegations, the Court held that the dispute was primarily between the complainant and accused No. 3 regarding repayment of money, and that no prima facie criminal case was disclosed against the petitioners.

Their implication appeared to arise from an alleged ulterior motive connected with their refusal to sell the property to the complainant and their subsequent sale to another purchaser.

The case therefore fell within Categories 1, 3 and 7 of Bhajan Lal.

Applying Categories 1, 3 and 7 of Bhajan Lal, the Court quashed the cognizance order dated 25 January 2018 in Complaint Case No. 2150(C) of 2016, along with all consequential proceedings, insofar as they concerned Shekhar Verma and Sanjay Verma.

The criminal miscellaneous petition was accordingly allowed, and the trial court was directed to be informed of the judgment.