Criminal proceedings cannot continue where a contractual property dispute lacks prima facie criminal intent.

The petitioners—father and son—were involved in the development of two plots of land at Adiganga Road, Kolkata. The owners executed development agreements dated 26 December 2005 and a General Power of Attorney dated 27 December 2005 in favour of Petitioner No. 1. Plot No. 3 was subsequently sold to Petitioner No. 2 under an Indenture of Sale dated 13 April 2011. In respect of Plot No. 43, the earlier authority was revoked and fresh development arrangements and powers of attorney were executed in 2011 in favour of Petitioner No. 1 and local developers

The opposite party alleged that 45% of the constructed area reserved for the owners had been fraudulently sold by Petitioner No. 1 to Petitioner No. 2, and that an authorization document shown to him on 23 September 2022 contained forged signatures. The complaint resulted in Bansdroni Police Station Case No. 172 of 2022 under Sections 120B, 420 and 406 of the IPC. The police subsequently filed Charge Sheet No. 94 of 2023 under the same provisions, although the allegations of forgery were not retained

The opposite party had also instituted consumer proceedings concerning the same property dispute. The petitioners therefore invoked the High Court’s inherent jurisdiction seeking quashing of ACGR Case No. 4235 of 2022, contending that the dispute was contractual and civil in nature, that there was no dishonest intention from inception or entrustment, and that the criminal case had been instituted to exert pressure upon them

Whether the allegations and materials on record prima facie disclosed the ingredients of offences under Sections 406, 420 and 120B of the IPC against the petitioners?

Whether the criminal proceeding was essentially a civil dispute arising from a property-development arrangement, given a criminal colour, and therefore liable to be quashed under the High Court’s inherent jurisdiction?

Whether continuation of the criminal proceeding would amount to an abuse of the process of law warranting interference under the principles in State of Haryana v. Bhajan Lal?

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

It relied on State of Haryana v. Bhajan Lal, which permits quashing where the allegations, even if accepted in their entirety, do not constitute an offence, or where the proceeding is manifestly mala fide and instituted to wreak vengeance

Relying on Paramjeet Batra v. State of Uttarakhand, Naresh Kumar v. State of Karnataka, and Indian Oil Corporation v. NEPC India Ltd., the Court reiterated that essentially civil disputes cannot be given a criminal cloak, although the mere availability or pursuit of a civil remedy is not by itself sufficient to quash a prosecution

Under Vesa Holdings (P) Ltd. v. State of Kerala, cheating requires fraudulent or dishonest intention at the inception of the transaction, and a mere breach of contract does not constitute cheating

The Court further relied on Delhi Race Club (1940) Ltd. v. State of Uttar Pradesh, which distinguished cheating under Section 420 from criminal breach of trust under Section 406 and held that the essential statutory ingredients must be disclosed by the complaint

The Court also recognised that, under Anukul Singh v. State of Uttar Pradesh, disputed factual matters ordinarily cannot be assessed in a Section 482 proceeding, but proceedings may be quashed where the allegations and unimpeachable material disclose no criminal offence

The Court found that the parties’ relationship arose from development agreements, powers of attorney, sale arrangements and construction of the concerned properties, demonstrating a business and contractual arrangement

The existence of consumer proceedings concerning the same subject matter further supported the conclusion that the dispute was predominantly civil. On the materials in the case diary, the Court found no prima facie evidence of the dishonest intention required for cheating under Section 420, nor of entrustment followed by dishonest misappropriation necessary for criminal breach of trust under Section 406

The alleged sale of the owners’ share and the competing interpretation of the development documents constituted matters arising from the parties’ contractual and property dealings.

Since the investigating material did not disclose the essential ingredients of the alleged offences or criminal intent, the prosecution was treated as an abuse of the criminal process. Consequently, the allegation of conspiracy under Section 120B also could not independently survive in the absence of a prima facie substantive offence

Applying the principles governing quashing under Section 482 CrPC, the Court allowed CRR 4719 of 2024 and quashed ACGR Case No. 4235 of 2022 arising from Bansdroni Police Station Case No. 172 of 2022, including the charge sheet, insofar as it concerned Gopinath Ganguly and Rajesh Ganguly

All connected applications were disposed of, and any interim order was vacated