Outstanding loan liability alone does not establish criminality absent dishonest intent or borrower participation.

The petitioner was accused No. 1 in a private complaint filed by an SBI official alleging offences under Sections 406, 408, 417, 418, 419, 420, 423, 465, 467, 468, 471, 504 and 506 IPC.

The Magistrate referred the complaint for investigation under Section 156(3) CrPC, following which the police registered an FIR.

The petitioner had obtained a ₹39,92,000 loan to purchase an apartment under a tripartite agreement with the Bank and the developer.

The agreement required the developer to repay specified amounts to the Bank if the project was shelved or not completed, and restricted transfer of the apartment without the Bank’s consent.

The project was not completed, no sale deed was executed in the petitioner’s favour, and the developer later sold the apartment to a third party.

The loan remained unpaid.

The petitioner sought quashing of the complaint proceedings and FIR insofar as they concerned him.

1. Whether the complaint’s allegations, taken at face value, disclosed the commission of any alleged criminal offence by the petitioner.

2. Whether continuation of the criminal proceedings against the petitioner would amount to an abuse of process where the project was incomplete and the developer had sold the apartment to a third party.

The petition invoked the High Court’s inherent jurisdiction under Section 482 CrPC (identified in the petition heading as filed under Section 528 BNSS) to seek quashing of the proceedings.

The complaint alleged offences under Sections 406, 408, 417, 418, 419, 420, 423, 465, 467, 468, 471, 504 and 506 IPC.

The Court applied the principle that an outstanding contractual or financial liability, without material disclosing the ingredients of a criminal offence, does not by itself justify criminal prosecution; criminal proceedings cannot be used as a substitute for recovery remedies.

No judicial precedents were cited.

The Court considered the tripartite agreement, which placed on the developer the obligation to repay the Bank in the specified circumstances, and found no corresponding obligation on the petitioner to repay amounts that the developer was required to return under that agreement.

The petitioner never acquired title to the apartment, did not participate in its subsequent sale, and was not shown to have benefited from it or acted in concert with the developer.

In the absence of material showing dishonest intention, deception, misappropriation, or other criminal conduct by the petitioner, the unpaid loan and failed property transaction did not establish criminal liability against him.

It allowed the petition and quashed the proceedings in PCR No. 8789/2024 and the consequential FIR in Crime No. 55/2024 insofar as the petitioner/accused No. 1 was concerned, without expressing an opinion on the allegations against accused Nos. 2 to 5.