Supreme Court Quashes FIR In ₹3.5 Crore Land Deal | Says Criminal Case Cannot Proceed When Civil Dispute Is Pending And Criminality Is Absent
Kiran Raj
The Supreme Court of India Division Bench of Justice Sudhanshu Dhulia and Justice Ahsanuddin Amanullah quashed the criminal proceedings arising from FIR No. 260/2023, holding that "the ingredients of offences apropos which cognizance was taken by the ACMM are not made out." The Court allowed the appeal and concluded that the charges under Sections 406, 420, and 120B IPC were unsustainable in law and fact. All consequential proceedings, including the Chargesheet dated 28.08.2024 and the cognizance order dated 30.08.2024, were also set aside.
The Court observed that the dispute between the parties arose from an Agreement to Sell (ATS) entered into on 30.11.2015 and the alleged breach of subsequent obligations. However, upon detailed review of the material, the Court determined that the allegations did not establish the foundational ingredients necessary to sustain charges under the invoked criminal provisions. The FIR and subsequent criminal case were found to lack any "overwhelming element of criminality" and were deemed to constitute an abuse of process. The Court further clarified that, in such circumstances, a civil suit alone may proceed in the matter and imposed a restriction on creation of third-party rights pending further judicial consideration.
The case arises from a private complaint filed by respondent no.2, alleging offences against four appellants and other accused individuals, related to properties in Survey No. 20 and 21 located in Bhoopasandra Village, Bangalore North Taluk. According to the complaint, these properties were previously owned jointly by K.V. Jayalakshmamma, K.V. Srinivasa Murthy, and K.V. Prabhakar. The appellants are the family members of the deceased owners.
The complainant alleged that Sale Deed dated 19.10.1967 was executed by D. Muniswamy in respect of Sy. No. 20 in favour of Lakshminarasimhaiah, who purchased the land in trust for K.V. Srinivasa Murthy and K.V. Prabhakar. A declaratory suit (O.S. No. 907/1975) followed, which was decreed in favour of the original owners in 1975/76. In respect of Sy. No. 21, occupancy rights were granted in 1994 via Form 10 issued to K.V. Jayalakshmamma and K.V. Srinivasa Murthy.
In 1978 and 1982, preliminary and final notifications were issued by the Bangalore Development Authority (BDA) to acquire the land. In 1992, the Government de-notified the property, which led to multiple writ petitions by allottees challenging the action. A mutual agreement dated 06.09.1996 was executed between the litigating parties and arbitrated by Ravishankara Shetty, who allegedly took possession of the subject property. This agreement marked the beginning of the complainant's association with the dispute.
On 30.11.2015, the appellants entered into an Agreement to Sell with the complainant, represented as the nominee of Ravishankara Shetty, for a total consideration of Rs. 3.5 crore. The complainant paid Rs. 2 lakhs to the fourth appellant, and a General Power of Attorney was executed in the complainant's favour. It is claimed that time was not made the essence of the contract due to unresolved title issues.
Subsequently, in February 2016, Writ Petitions filed by the original owners succeeded, and the land acquisition was declared as lapsed. Appeals filed by BDA and allottees were withdrawn or disposed of with liberty to initiate fresh proceedings.
On 10.12.2016, a Memorandum of Understanding was signed between the accused family and M/s Legacy Global Realty, and a sum of Rs. 2 crore was paid into the account of K.V. Prabhakar. One crore was later transferred to the account of the fourth appellant.
A conversion order for the subject property was issued by the Deputy Commissioner on 22.04.2020. Upon allegedly being refused further transaction by the appellants, the complainant claimed to have issued a legal notice dated 14.06.2022 seeking execution of the Sale Deed and offering the balance amount of Rs. 1.48 crore.
However, the complainant learned that the GPA had been revoked, and a Release Deed and Gift Deed were executed in favour of appellant no. 4. A civil suit (O.S. No. 4780/2022) was filed on 22.07.2022, followed by a private complaint (PCR No. 12357/2022) on 20.07.2022 alleging cheating, criminal breach of trust, and conspiracy.
The FIR was registered under Sections 405, 406, 415, 417, 418, 420, 504, 506, 384, and 120B read with Section 34 IPC. The appellants challenged the FIR before the High Court under Section 482 CrPC, but the petition was dismissed by the Single Judge via the impugned judgment dated 03.06.2024.
The appellants argued that essential ingredients of cheating and criminal breach of trust were absent and that the dispute was purely civil in nature. They contended that inducement, entrustment, or dishonest intention at the inception was not pleaded. They submitted that they had issued a legal notice to the complainant prior to cancellation of the GPA and had no criminal intent.
On the other hand, the complainant submitted that money was paid based on assurances of sale, and subsequent conduct of the appellants amounted to fraudulent misappropriation and cheating. The complainant relied on statements by witnesses, including family members of K.V. Prabhakar and employees of the developer company, to corroborate payment and intent.
The State submitted that cognizance had already been taken and that the Chargesheet supported the allegations. The complainant filed an affidavit under Priyanka Srivastava v. State of U.P. and asserted compliance with procedural requirements under Section 154 CrPC.
The Court observed that "purely from a legal lens, it is now settled that the same person cannot be simultaneously charged for offences punishable under Sections 406 and 420 of the IPC with regard to one particular transaction." Referring to Delhi Race Club (1940) Ltd. v. State of Uttar Pradesh, and V D Raveesha v. State of Karnataka, the Bench distinguished situations where offences against different persons may warrant charges under both provisions.
"Here, it is not a case where the accused were entrusted with the subject property. The subject property belongs to them and they had rights over it as owners with title. Thus, the very foundation for invoking Section 406 of the IPC falls to the ground."
Addressing Section 415 IPC, the Court noted that: "We do not find that by deceiving the complainant, the appellants had fraudulently or dishonestly induced him to deliver the property to them or to any other person... Section 420 of the IPC would not be attracted, regard being had to the definition in Section 415 of the IPC."
The Bench observed contradictions in the complainant's version, particularly regarding possession: "Clause 6 of the ATS concerning possession... postulated that possession of the subject property would be handed over in ready condition upon execution of the Sale Deed by the vendors. This version of events... falsifies the claim of Ravishankara Shetty to have taken over possession... on 06.09.1996."
"From the own pleadings of the complainant, it emerges that possession of the subject property was never given to the complainant..."
On the maintainability of parallel civil and criminal proceedings, the Court stated: "There is no bar to simultaneous civil and criminal proceedings... The fact that a civil remedy has already been availed... is not sufficient ground to quash an FIR... The obvious caveat being that... must prima facie disclose an overwhelming element of criminality."
It concluded that: "In the absence of the element of criminality... it will definitely amount to abuse of the process of the Court... the prosecution in question would have to be quashed."
On the procedural compliance under Priyanka Srivastava: "The High Court has taken a view that this is a curable defect since before the referral order on the PCR by the ACMM for registering an FIR... the required formalities were done. In our considered opinion, this approach cannot be labelled erroneous."
Summarising the legal position, the Court held: "(i) Directions issued in Priyanka Srivastava (supra) are mandatory; (ii) Guidelines operate prospectively; (iii) Non-filing of the supporting affidavit is a curable defect, but must be cured before the Magistrate passes any substantive order..."
It concluded: "Our interference with the Impugned Judgment is necessitated as the ingredients of offences apropos which cognizance was taken by the ACMM are not made out."
The Court quashed FIR Crime No. 260/2023 along with all consequential orders: "FIR Crime No.260/2023 along with all consequential orders including the Chargesheet dated 28.08.2024 and the cognizance order dated 30.08.2024 stand quashed qua the appellants."
Though co-accused Vidyasree V.S. was not a party to the appeal, the Court extended benefit: "As all the accused stand on the same footing and we have already quashed the proceedings against the appellants, in the interest of justice, the benefit of the quashing supra will enure to the benefit of Vidyasree V.S. also."
"The appeal is allowed. Costs made easy."
The Court, invoking its jurisdiction under Article 142 of the Constitution, raised concerns over collusive conduct of the BDA: "We have no hesitation in saying so, what could only be termed as collusive litigation between the BDA and the appellants... This Court cannot, and would not, turn a blind eye to such blatant misuse of the law."
It directed: "The Registry is directed to place a copy of this Judgment on the record of SLP (C) Nos.10134-10135/2025."
Pending the outcome of the connected matter: "Till such time, the Court takes a view on the matter in SLP (C) Nos.10134-10135/2025, no third-party rights will be created or given effect to in the subject property by the appellants."
It further clarified: "The civil suit filed by the complainant can also proceed in the interregnum, subject to orders as may be passed in SLP (C) Nos.10134-10135/2025."
Advocates Representing the Parties:
For the Petitioners: Mr. Abhishek Manu Singhvi, Sr. Adv.; Mr. Shoeb Alam, Sr. Adv.; Mr. Anil C. Nishani, Adv.; Mr. P. Prasanna Kumar, Adv.; Mr. Meenesh Dubey, Adv.; Mr. Krishna M. Singh, Adv.; Mr. Amit Bhandari, Adv.; Mr. Vishwesh R. Murnal, Adv.; Mr. Gaurav Chavan, Adv. – For M/s. Krishna & Nishani Law Chambers, AOR
For the Respondents: Mr. Mahesh Thakur, AOR; Mrs. Geetanjali Bedi, Adv.; Mr. Ranvijay Singh Chandel, Adv.; Ms. Vedika Singh, Adv.; Mr. D. L. Chidananda, AOR.
Case Title: S. N. Vijayalakshmi & Ors. vs. State of Karnataka & Anr.
Neutral Citation: 2025 INSC 917
Case Number: SLP (Crl) No. 8626 of 2024
Bench: Justice Sudhanshu Dhulia, Justice Ahsanuddin Amanullah
