Karnataka HC Quashes Cheating Case Against Mother-Daughter Homebuyers Over Alleged Double-Numbered Flat, Finding No Material They Knew of the Fraud

The petitioners, mother and daughter, were accused Nos. 1 and 2 in a case arising from a housing loan of ₹38 lakh obtained from Karnataka Bank for the purchase of Flat No. 300 in Keerthana Enclave.

The bank alleged that the flat did not exist and that the petitioners had colluded with the vendors to obtain loans against properties bearing different flat numbers.

The petitioners maintained that they were bona fide purchasers, had paid a down payment and several EMIs, and were themselves victims of the vendors’ alleged fraud.

After investigation, the police filed a charge sheet alleging offences under Sections 120B and 420 read with Section 34 of the IPC. The petitioners sought to quash the proceedings under Section 482 Cr.P.C.

Section 482 of the Cr.P.C. empowers the High Court to quash criminal proceedings where their continuation would amount to an abuse of the process of the court.

Sections 120B and 420 read with Section 34 of the IPC require material supporting, respectively, an agreement to commit an unlawful act and the elements of cheating, including dishonest intention.

Relying on Mohammad Wajid v. State of U.P., 2023 SCC OnLine SC 951, the Court stated that, when quashing is sought on the ground that proceedings are frivolous or vexatious, the court may examine the FIR, attending circumstances and investigation material, rather than confining itself to the complaint’s averments

The Court considered the petitioners’ payment of the down payment and EMIs, the bank’s verification of the title and property documents before sanctioning the loan, and the charge-sheet account that the vendors had allegedly assigned different flat numbers and obtained loans from multiple banks.

It found no specific material, beyond bald and omnibus allegations, showing that the petitioners knew of the alleged fraud or conspired with the vendors to cheat the bank.

On the record before it, the essential ingredients of cheating were not prima facie established against the petitioners; continuation of the proceedings would therefore constitute an abuse of process

It quashed the proceedings against accused Nos. 1 and 2 in C.C. No. 35983/2022, arising from Crime No. 105/2020, for offences under Sections 120B and 420 read with Section 34 of the IPC