Madras HC Refuses To Quash Woman’s Cheating Case Over Alleged ₹9.7-Crore Finance Investments, Sets Six-Month Trial Deadline

In brief

The question

1. Whether the criminal proceedings under Section 420 IPC should be quashed under Section 528 BNSS on the ground that the transaction was purely civil in nature.

The court held

The Court declined to quash C.C. No. 3594 of 2026, holding that the allegations made out a prima facie case under Section 420 IPC and that the petitioner’s factual and evidentiary grounds should be raised before the trial court.

It also directed

The petition was dismissed; the connected miscellaneous petitions were closed.

The trial court was directed to complete the trial within six months of receiving a copy of the order.

01Facts

The prosecution alleged that the petitioner and her father induced the de facto complainant and his mother to invest in their finance business by promising repayment with interest.

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The alleged investments and advances included sums paid by the complainant, his mother, and a company of which he was Joint Managing Director; the total was stated to be approximately Rs.9.7 crore.

p. 2

After initially paying interest, the accused allegedly stopped paying interest or returning the principal.

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The police registered a case under Sections 406 and 420 IPC and, after investigation, filed a final report on which the Magistrate took cognizance under Section 420 IPC in C.C. No. 3594 of 2026.

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The petitioner sought to quash the proceedings under Section 528 BNSS, contending that the dispute was purely civil and that the complainant’s allegation of a promised 60% return was false.

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02Issues

i.1. Whether the criminal proceedings under Section 420 IPC should be quashed under Section 528 BNSS on the ground that the transaction was purely civil in nature.

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ii.2. Whether the petitioner’s challenges to the allegations and evidence could be determined at the quashing stage, or should be left for trial.

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03Law Applied

Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, confers inherent jurisdiction to quash proceedings, but that jurisdiction is not a basis for deciding disputed questions of fact or assessing the sufficiency of witness evidence at the quashing stage.

pp. 5–6

Section 420 IPC concerns cheating and dishonestly inducing a person to deliver property.

p. 4

Relying on Devendra Prasad Singh v. State of Bihar & Anr., 2019 (4) SCC 351, and Central Bureau of Investigation v. Arvind Khanna, 2019 (10) SCC 686, the Court stated that a High Court should not resolve inconsistencies in witness statements or disputed factual defences when considering a quashing petition.

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Relying also on M. Jayanthi v. K.R. Meenakshi & Anr. (Crl.A. No. 1817 of 2019, dated 2 December 2019), the Court stated that the inquiry is whether the allegations, taken at face value, disclose the offence—not whether the evidence is ultimately sufficient to prove it.

p. 5

Provisions in the judgment · 3 · Linked ones open on LawLens

Bharatiya Nagarik Suraksha Sanhita, 2023 Section 528

Indian Penal Code, 1860 Section 406 Section 420

04Reasoning

The final report and witness statements contained specific allegations that the petitioner participated in obtaining substantial investments, assured repayment with interest, and later failed to pay the agreed interest.

pp. 5–6

The Court considered those allegations sufficient, prima facie, to attract Section 420 IPC.

pp. 5–6

Whether the promised return was 60% or 18%, whether the payments were made as alleged, and whether the dispute was merely civil involved contested facts and could not be resolved by evaluating the defence or evidence in the quashing proceedings.

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