Supertech directors face trial as Delhi High Court refuses to quash alleged ₹22.8-crore Hill Town homebuyer fraud case

The petitioners challenged criminal proceedings arising from FIR No. 105/2020 registered by the Economic Offences Wing concerning the “Hill Town” residential project developed by M/s Supertech Limited at Sector-2, Sohna, Haryana.

Homebuyers alleged that the company induced them to purchase flats under a subvention scheme by representing that they would pay only an initial 10% contribution, while the company would service the pre-EMIs until possession and complete the project within the stipulated period.

The project allegedly remained incomplete, pre-EMI payments were discontinued, and funds collected from homebuyers were allegedly diverted or misutilised.

During investigation, 38 complaints concerning the project were examined, involving an alleged loss of approximately Rs. 22.80 crores.

A chargesheet was filed alleging offences under Sections 406, 420 and 120B IPC against the company, its directors and other office-bearers.

The Trial Court took cognizance and summoned the accused by order dated 22.03.2025. The petitioners’ criminal revisions were dismissed by the Additional Sessions Judge on 30.03.2026.

The petitioners thereafter invoked the High Court’s inherent jurisdiction under Section 528 BNSS, contending that the dispute was civil in nature, that no specific role was attributed to them, and that the summoning order was cryptic.

The Court applied Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, holding that inherent jurisdiction at the quashing stage is limited and may be exercised where the proceedings disclose a patent illegality, jurisdictional defect, manifest perversity or abuse of process; the Court is not to conduct a mini-trial or assess evidence conclusively.

Sections 406, 420 and 120B IPC were considered in relation to criminal breach of trust, cheating and criminal conspiracy.

Under Sunil Bharti Mittal v. CBI, (2015) 4 SCC 609, and Maksud Saiyed v. State of Gujarat, (2008) 5 SCC 668, a director cannot be prosecuted solely because of the office held, but prosecution may continue where material prima facie indicates individual involvement.

V.Y. Jose v. State of Gujarat, (2009) 3 SCC 78, and Sushil Sethi v. State of Arunachal Pradesh, (2020) 3 SCC 240, establish that mere breach of contract does not constitute cheating unless dishonest intention existed at the inception.

Delhi Race Club (1940) Ltd. v. State of Uttar Pradesh, 2024 SCC OnLine SC 2248, recognises the distinct ingredients of Sections 406 and 420 IPC, while not precluding their simultaneous invocation where the facts prima facie support either or both offences.

Pepsi Foods Ltd. v. Special Judicial Magistrate, (1998) 5 SCC 749, requires judicial application of mind before issuing summons, although the summoning order need not contain a detailed evaluation of the evidence or defences.

Conspiracy may ordinarily be inferred from circumstances, as direct evidence of an agreement is rarely available.

The Court held that the prosecution was not based merely on delayed possession. The allegations concerned a common subvention scheme, representations regarding payment of pre-EMIs and timely possession, continued receipt of substantial booking amounts, subsequent discontinuance of pre-EMI payments, non-completion of the project and similar complaints by numerous homebuyers.

These circumstances prima facie required examination of whether dishonest intention existed at the inception, which could not be conclusively determined in quashing proceedings.

The simultaneous allegation of Sections 406 and 420 IPC was not, by itself, a ground for quashing because the precise nature of the transactions and the applicability of the distinct offences could be assessed at trial.

The Court further found that Sangita Arora was not sought to be prosecuted solely because she was a director. The prosecution material allegedly showed that she had been a director for several years, held approximately 34% shareholding, filed balance sheets, attended Board meetings and acted as an authorised signatory of the company’s bank account.

Whether that material ultimately established criminal liability was a matter for trial, but it was sufficient to establish a prima facie connection with the company’s affairs.

The cognizance and summoning order was also held not to be invalid merely because it did not discuss every document or defence; the Trial Court had the chargesheet and investigation material before it, and the proceedings had also been examined in revision.

No jurisdictional defect, patent illegality or manifest perversity was established in the revisional order.

The material concerning the petitioners’ roles, the company’s financial transactions and the alleged representations required adjudication at trial rather than detailed evaluation under Section 528 BNSS.

Accordingly, CRL.M.C. Nos. 4722, 4723 and 4724 of 2026 were dismissed; the orders dated 22.03.2025 and 30.03.2026 were left undisturbed, pending applications were disposed of, and any interim order was vacated.

The Court clarified that its observations would not prejudice the petitioners’ defence before the Trial Court.