Quashing warranted where allegations disclose neither dishonest intent at inception nor entrustment of property.

The applicant, allegedly acting as power-of-attorney holder of the developer, dealt with Plot No. 53 at Khambhaliya.

The plot had earlier been sold to Jyotsanaben by a registered sale deed dated 13 April 2012. Despite that transaction, the applicant subsequently sold the plot to the de facto complainant in 2016 for ₹38,000, allegedly representing that he was authorised to sell it on behalf of the owner.

On discovering the prior sale, the applicant procured a Cancellation Deed from Jyotsanaben dated 8 December 2016.

The complainant thereafter lodged FIR C.R. No. I-56 of 2017 at Khambhaliya Police Station on 29 March 2017 for offences under Sections 406, 420 and 114 of the IPC.

The applicant invoked Section 482 CrPC seeking quashing of the FIR and all consequential proceedings.

Whether the allegations in the FIR, taken at face value, disclosed the essential ingredients of criminal breach of trust under Section 406 IPC, cheating under Section 420 IPC, or abetment under Section 114 IPC against the applicant?

Whether the subsequent Cancellation Deed dated 8 December 2016, the absence of any claim by the prior purchaser or original owner, and the delay in lodging the FIR justified exercise of inherent jurisdiction under Section 482 CrPC?

The Court applied Section 482 CrPC and the illustrative categories in State of Haryana v. Bhajan Lal, AIR 1992 SC 604, particularly where the FIR, even if accepted in its entirety, does not disclose an offence or where continuation of proceedings would constitute abuse of process.

It relied on S.W. Palanitkar v. State of Bihar, (2002) 1 SCC 241, and Delhi Race Club (1940) Ltd. v. State of Uttar Pradesh, 2024 (0) AIJEL-SC 73929, for the distinction between Sections 406 and 420 IPC: criminal breach of trust requires entrustment followed by dishonest misappropriation or disposal, while cheating requires deception, dishonest or fraudulent inducement, delivery or retention of property, and dishonest intention from inception.

The Court further relied on State of Gujarat v. Jaswantlal Nathalal, (1968) 2 SCR 408, and CBI v. Duncans Agro Industries Ltd., (1996) 5 SCC 591, holding that a mere sale does not constitute entrustment for Section 405 IPC.

Kishan Singh v. Gurpal Singh, (2010) 8 SCC 775, was cited on the relevance of unexplained delay in lodging an FIR, and Madhavrao Jiwaji Rao Scindia v. Sambhajirao Chandrojirao Angre, AIR 1988 SC 709, was relied upon for quashing proceedings where the allegations predominantly disclose a civil dispute and the chances of conviction are bleak.

The Court held that the alleged transaction did not disclose criminal breach of trust because there was no entrustment of property to the applicant in the fiduciary sense required by Section 406 IPC; the dispute arose from competing sale transactions concerning the plot.

As to cheating, the Court found that the applicant’s conduct in cancelling the earlier sale deed before registration of the FIR indicated an absence of dishonest intention from the inception of the transaction.

The prior purchaser, Jyotsanaben, and the original owner had not approached the Court with any grievance, and the sale in favour of the complainant was therefore treated as having become effective.

The Court also considered the delay between the 2016 sale/cancellation and the FIR lodged on 29 March 2017, finding that, in the circumstances, it supported the conclusion that continuation of the prosecution would be abusive and futile.

Applying the Bhajan Lal and Madhavrao principles, the Court concluded that the FIR did not warrant continuation under the criminal process.

Exercising jurisdiction under Section 482 CrPC, it allowed the application and quashed FIR C.R. No. I-56 of 2017 registered with Khambhaliya Police Station, District Devbhoomi Dwarka, together with all consequential proceedings, qua the applicant.

Rule was made absolute.