Karnataka HC Refuses To Quash FIRs Over Prakyath Edifice Deals, Says Buyers’ Cheating Allegations Need Investigation

In brief

The question

1. Whether the FIRs and consequential investigations should be quashed at the crime stage when the complaints allege that the petitioners induced the complainants to part with money for property that was not delivered and the money was not repaid?

The court held

The High Court rejected all four criminal petitions and permitted investigation to continue.

It also directed

It reserved liberty to the petitioners to approach the appropriate forum if a final report was filed against them.

01Facts

The petitioners sought to quash four criminal cases arising from dealings connected with the “Prakyath Edifice” real-estate project.

pp. 10–12, 16–27 · ¶ 3–11

The complainants alleged that they were induced to pay substantial sums or obtain loans for flats or property, but received neither the promised property nor repayment; some also alleged threats or fraudulent conduct involving loan arrangements.

pp. 10–12, 16–27 · ¶ 3–11

The cases included Crime No. 192/2025, registered for offences under Sections 420 and 506 read with Section 34 IPC, and other cases registered under Section 318 BNS after Magistrates referred private complaints to the police for investigation under Section 175(3) BNSS.

pp. 10–11, 16–24

The petitioners relied, among other things, on delay, absence of the ingredients of cheating, alleged repayment efforts and settlement of other matters; the complainants opposed quashing, alleging inducement and loss.

pp. 11–12 · ¶ 5–6

02Issues

i.1. Whether the FIRs and consequential investigations should be quashed at the crime stage when the complaints allege that the petitioners induced the complainants to part with money for property that was not delivered and the money was not repaid?

pp. 28–32 · ¶ 12–12.3

ii.2. Whether the High Court should assess the truth or merits of those allegations before investigation is completed?

pp. 28–32 · ¶ 12.1–12.3

03Law Applied

The petitions invoked the High Court’s inherent jurisdiction under Section 528 BNSS; the private complaints sought police investigation under Section 175(3) BNSS.

pp. 2–8, 16–24

Relying on Neeharika Infrastructure (P) Ltd. v. State of Maharashtra, (2021) 19 SCC 401, the Court reiterated that an FIR is not an encyclopaedia and that courts should ordinarily not assess the merits of allegations while investigation is in progress.

p. 28 · ¶ 12.1

Under State of Madhya Pradesh v. Kunwar Singh, 2021 SCC OnLine SC 3668, a High Court exceeds its quashing jurisdiction by scrutinising allegations as though conducting a trial.

pp. 29–30 · ¶ 12.2

Under Somjeet Mallick v. State of Jharkhand, (2024) 10 SCC 527, allegations and materials are taken at face value at the threshold; where they disclose a prima facie cognizable offence, investigation should not be thwarted, and dishonest intent may be inferred from conduct and surrounding circumstances.

pp. 30–32 · ¶ 12.3

Provisions in the judgment · 12 · Linked ones open on LawLens

Bharatiya Nagarik Suraksha Sanhita, 2023 Section 528 Section 223 Section 175

Indian Penal Code, 1860 Section 34 Section 406 Section 420 Section 506

Bharatiya Nyaya Sanhita, 2023 Section 316 Section 318

Code of Criminal Procedure, 1973 Section 200 Section 482 Section 173

04Reasoning

The complaints, taken at face value, alleged that the petitioners induced the complainants to pay substantial sums for flats or property and that the promised property or repayment was not provided.

pp. 28–32 · ¶ 12–12.3

The Court considered these allegations sufficient to warrant investigation; determining their truth, the petitioners’ intent, or the precise offence would be premature at the crime stage.

pp. 28–32 · ¶ 12–12.3

The petitioners’ arguments about delay, repayment and the merits of the transactions did not justify terminating the cases before investigation.

pp. 11–12, 31–32 · ¶ 5, 12.3

The Court therefore held that these particular cases could not be quashed at that stage.

pp. 11–12, 31–32 · ¶ 5, 12.3