Karnataka HC Quashes Cheating FIR Against Company Directors In ₹1.3 Crore Land Deal, Finding No Distinct Criminal Act Beyond Sale-Deed Dispute

Respondent No. 2 alleged that the petitioners agreed to sell him property for ₹3.30 crore under an agreement of sale dated 16 May 2024, and that he paid ₹1.30 crore. He complained that the petitioners failed to execute the sale deed despite his requests, leading to registration of an FIR under Sections 406 and 420 IPC

The petitioners sought to quash the FIR, contending that the dispute was contractual and civil in nature. Respondent No. 2 had filed a suit for specific performance, O.S. No. 352/2025; the petitioners had also instituted O.S. No. 690/2024

The petition was brought under the High Court’s inherent jurisdiction under Section 482 of the CrPC, stated in the petition to be filed under Section 528 of the BNSS. The FIR alleged offences under Sections 406 and 420 IPC

The Court stated that the existence of a civil dispute does not, by itself, bar criminal proceedings where the allegations disclose the ingredients of an offence; however, criminal proceedings may be quashed where the complaint, read as a whole, discloses no distinct criminal act beyond an alleged breach of contractual obligations

The complaint’s substance was that, after receiving part of the sale consideration, the petitioners did not execute the sale deed. The Court noted that respondent No. 2 was pursuing that same grievance through a suit for specific performance

It found no distinct criminal act in the complaint, apart from the alleged failure to perform the contractual obligation, that would prima facie constitute the offences alleged. In those circumstances, continuation of the criminal proceedings would serve no useful purpose and would amount to an abuse of process

It clarified that its observations were confined to the petition and would not influence the adjudication of either civil suit; the parties’ contentions in those proceedings were left open. Any pending application was disposed of