Financial transactions involving repayment of substantial consideration through banking channels reflect civil disputes, precluding criminal prosecution for cheating.

The applicants, partners of "Bhakti Developers," were engaged in a construction project named "Valentina Business Hub"

The Respondent No. 2 (complainant) alleged that he paid ₹1,73,08,200 for Shop Nos. UG-4, UG-5, and UG-6, for which registered Agreements to Sell were executed in 2017-2018

The complainant later discovered that these shops were sold to third parties in late 2018 using allegedly altered descriptions

He filed an FIR under Sections 420, 120(B), 506(2), and 114 of the IPC

The applicants contended the transactions were actually loans where the shops served as collateral

Bank records demonstrated that between October and December 2019, the applicants returned ₹99,33,415 to the complainant

A prior police inquiry by the ACP concluded the dispute was civil in nature

1. Whether the allegations disclose a prima facie case of criminal cheating and breach of trust or a purely commercial/civil dispute

2. Whether the dispute can be characterized as a criminal offense if a substantial portion of the consideration was returned through banking channels

3. Whether the continuation of criminal proceedings constitutes an abuse of the process of law under Section 482 CrPC

The Court applied Section 482 of the CrPC to prevent the abuse of the process of the court

It relied on the distinction between "mere breach of contract" and "cheating" established in Hridaya Ranjan Prasad Verma v. State of Bihar, holding that fraudulent intent must exist at the inception of the transaction

The Court invoked G. Sagar Suri v. State of U.P. to emphasize that civil matters should not be given a "criminal cloak"

For criminal breach of trust under Section 406 IPC, the court followed Delhi Race Club (1940) Ltd. v. State of U.P., requiring proof of "entrustment" and "dishonest misappropriation"

Finally, it applied the guidelines from State of Haryana v. Bhajan Lal, specifically regarding proceedings instituted with malicious ulterior motives

The Court found that the relationship between the parties was a prolonged commercial engagement, not an isolated incident of fraud

The decisive factor was the banking evidence showing the reversal of ₹99,33,415 (approx. 86% of the consideration) to the complainant shortly after the alleged "fraudulent" third-party sales

The Court rejected the complainant’s belated explanation that these were unrelated loans, noting his silence during the preliminary inquiry

It reasoned that a developer returning nearly the entire principal through legitimate channels lacks the mens rea for cheating or misappropriation

The Court determined that a commercial advance for a property does not constitute "entrustment" under Section 406

Any remaining disputes regarding interest or accounting were deemed strictly civil, necessitating resolution in a civil court rather than through criminal prosecution

It concluded that invoking criminal sections was an "opportunistic embellishment" to exert commercial pressure

The Court allowed the application and quashed FIR No. 1121000320279 of 2022 and all consequential proceedings

The request for a stay on the judgment was denied, as the applicants had been protected since 2022 and the matter was decided on full merits