Karnataka HC Quashes Cheating And Forgery Case Against 3 Accused, Finding No Material Of Intent To Cheat At The Deal’s Inception

The petitioners, arrayed as accused Nos. 7 to 9, sought to quash the charge-sheet and proceedings in C.C. No. 12820/2020 for offences under Sections 415, 420, 468 and 471 read with Section 34 IPC.

The case originated in a private complaint referred for investigation under Section 156(3) CrPC.

The petitioners argued that the complaint was accompanied only by a verifying affidavit, not the affidavit required by Priyanka Srivastava, and that the investigation disclosed no material establishing their involvement in cheating.

The State relied on a co-accused’s voluntary statement and bank records concerning payments to the petitioners.

Section 482 CrPC empowers the High Court to quash criminal proceedings where their continuation would amount to an abuse of process or cause a miscarriage of justice.

Under Priyanka Srivastava v. State of Uttar Pradesh, an application under Section 156(3) CrPC should be supported by an affidavit, with the requirement intended to deter frivolous applications; the judgment also refers to compliance with Sections 154(1) and 154(3) CrPC.

For cheating under Sections 415 and 420 IPC, the Court stated that material must disclose dishonest intention to defraud at the inception of the transaction.

The Court noted that the private complaint lacked an affidavit beyond the verifying affidavit, as contemplated in Priyanka Srivastava.

It also considered the investigation material: the alleged payments of ₹25 lakh in 2016 and ₹20 lakh in 2018 to petitioners Nos. 1 and 2 were made before the agreement, and the Court found no material showing that they had the requisite dishonest intention at the transaction’s inception.

As to petitioner No. 3, no witness spoke to his involvement; the material relied upon was a bank statement recording payments of ₹50,000 each after the agreement.

The Court held that the payments and the co-accused’s statement, in the circumstances, did not establish the ingredients of cheating against the petitioners.

It allowed the petition and quashed the proceedings against the petitioners in C.C. No. 12820/2020.