Inherent powers permit quashing of cheating and misappropriation proceedings after complete settlement and repayment.

The petitioners, Mr. Tarun Kapoor and Ms. Pawan Kapoor, sought quashing of FIR No. 0031/2022 registered at Police Station Economic Offences Wing for offences under Sections 409, 420 and 120-B IPC.

Mr. Tarun Kapoor was stated to be the proprietor of M/s Sterling Motor Company, while Ms. Pawan Kapoor was the proprietor of M/s Automobile Sterling; Mr. B.L. Passi was alleged to be their guarantor.

The complainant, M/s Tata Financial Services Ltd., had extended inventory-funding/channel-financing facilities to the petitioners for purchasing vehicle inventory.

The complainant alleged that the funds were dishonestly siphoned off, resulting in registration of the FIR in 2022.

During the pendency of the proceedings, the parties entered into a Settlement Agreement dated 19 June 2026, under which the complainant received the entire outstanding amount.

The complainant’s authorised representative confirmed the settlement, stated that it was voluntary and without coercion, and expressed no objection to quashing the FIR.

One of the alleged accused, Mr. B.L. Passi, had died on 12 May 2021, before registration of the FIR.

The petitioners also sought early hearing because the investigating agency had issued notices under Section 41A Cr.P.C. notwithstanding the settlement.

Whether the High Court should exercise its inherent jurisdiction under Section 528 of the BNSS to quash an FIR alleging offences under Sections 409, 420 and 120-B IPC on the basis of an amicable settlement between the accused and the complainant.

Whether, in light of full repayment of the outstanding amount and the complainant’s unwillingness to pursue the prosecution, continuation of the criminal proceedings would serve any useful purpose.

The Court applied Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, which preserves the High Court’s inherent powers to pass orders necessary to give effect to the BNSS, prevent abuse of the process of court, or secure the ends of justice.

The Court also considered the offences alleged under Sections 409, 420 and 120-B IPC, namely criminal breach of trust by a person in a position of trust, cheating, and criminal conspiracy.

The governing principle applied was that, where the dispute has been genuinely and voluntarily settled, the complainant has received the agreed amount, and continuation of the prosecution would serve no useful purpose, the High Court may quash the criminal proceedings in exercise of its inherent jurisdiction to secure the ends of justice.

The Court verified that the settlement was recorded in a written agreement, that the complainant had received the entire outstanding amount, and that its authorised representative had expressly confirmed the settlement and consented to quashing of the FIR.

Since the complainant no longer wished to pursue the allegations and the underlying financial dispute had been fully resolved, the Court concluded that continuing the prosecution would serve no useful purpose.

Exercising its inherent jurisdiction under Section 528 BNSS, the Court held that quashing the FIR was appropriate to secure the ends of justice.

The quashing was made subject to the petitioners depositing a total cost of ₹25,000 with the Delhi High Court Legal Services Committee within four weeks.

The petitioners were further directed to submit the original affidavits and proof of deposit of costs to the concerned SHO/Investigating Officer within an additional two weeks.