CRLP/3965/2024 of K.BAL REDDY Vs The State of Telangana on 20 February 2026

ORDER:

This criminal petition is filed by the petitioners-accused Nos.1 to 6 seeking to quash the proceedings against them in c.c.No.218 of 2024 pending on the file of the tearned lll Additional Junior civil Judge-cum-lll Additional Metropolitan Magistrate, cyberabad at Kushaiguda, registered for the offences under sections 420 and 406 of the lndian penat Code (for short'tpC'). Y

02,HeardMr.GaddamSrinivas,learnedcounselfor the petitioners-accused, Ms' Laxmi Reddy Byreddy' learned counsel 'ior the respondent No'2 and Mr' M'Ramachandra Reddy,lr3arh€dAdditionalPublicProsecutorfortheState. respondt:nt No.1. Perused the record' 03Thebrieffactsofthecasearethatthefatherof the accused No.1 had purchased land admeasuring Acs.5-00 inSy.N,c.244situatedatYadgarpallyVillageandwasin possess,ionandenjoymentofthesame.ltisallegedthatK. Anji Reddy, father of the accused No'1' entered into an agreement of sate dated 12'02'1998 with P' Madhav Yadav and A. t3alesh Yadav in respect of Acs'3-30 guntas out of the said survey number, and later certain supplementary agreerTlentswereexecutedon05.02.200l.Disputesarose betwee'ntheparties,resultingincivillitigationino.S.No.3oT of 2oo1, which urtimately ended in a compromise said to havelreenrecordedbyfilingajointmemo.Duringthe pendency of the said proceedings' K' Anji Reddy died on oS.0g.20l5.ltisfurtherallegedthatthevendeespursued proceedings in c.R.P.No.5196 of 2013 and writ Appeal

1/ No.281 of 2021 and pursuant to certain directions, approached the Tahsildar, Keesara [t{andal, for mutation of their names in the Dharani portal and issuance of pattadar passbooks. A passbook is stated to have been issued in respect of Acs.3-30 guntas in Sy.No:2441AN2. The prosecution case further refers to another agreement of sale dated 29.08.2003 said to have been executed by the father of the accused No.1 in favour of one Bandari Lali Yadav for Acs.3-00 in Sy.No.244. lt is also alleged that accused No.1 entered into a separate agreement with the said person on 08.09.2003 asserting his share to an extent of Acs.1-33 guntas. According to the prosecution, though Acs.3-30 guntas had already sold out to P. Madhav Yadav, the accused persons, with knowledge of the earlier transactions, entered into another agreement of sale with possession in favour of respondent No.2 on 03.08.2020 for Acs.2-39 guntas and received a sum of Rs.8,17,00,000/-, but failed to deliver possession or execute a registered sale deed 04(a). Learned counsel for the petitioners submits that the petitioners have absolutely no involvement in the alleged offences and that there was no dishonest or fraudulent intention on the paft of the petitioner-accused Nos.1 to 6 to cheat the respondent No.2. lt is contended that the respond'3nt No.2 herself failed to pay the balance sale consideration and, after a lapse of nearly three years, instead of initiating appropriate civil proceedings, lodged the present false complaint. According to the learned counsel, as on the date of the agreement of sale, no litigation was pending in respect of the subject property. The criminal complaint has been filed only to exert pressure on the petitioners and to give a criminal colour to what is essentially a civil dispute. lf the respondent No.2 has any grievance, the remedy available to her is to file a suit for specific performance and not to sert the crimina! law into motion. It is further contended that, in tl.R.P.No.5196 of 2013, a compromise was entered into behueen the sisters of the petitioner No.1 and Madhav Yadav. However, the said sisters are not the owners of the subject property. The compromise was allegedly recorded behind the back of the petitioner No.1 and without affording him an ,lpportunity of being heard. Petitioner No.1 came to j know about the said compromise only in the year 2022 and is taking steps to have the compromise order recalled in accordance with law 04(b). With the above submissions, learned counsel while praying for the quashment of criminal proceedings relied upon a decision of the Hon'ble Supreme Court in G. Sagar Suri and another v. Sfate of ll.P. and othersl wherein it was held at Paragraph Nos.8 and 9 that: "8. Jurisdiction under Section 482 of the Code has to be exercised with a great care. ln exercise of its jurisdiction High Court is not to examine the matter supefficially. lt is to be seen if a matter, which is essentially of civil nature, has been given a cloak of criminal offence. Criminal proceedings are not a short cut of other remedies available in law. Before issurng process a criminal court has to exercise a great deal of caution. For the accused it is a serious matter. This Court has laid ceftain principles on the basis of which High Court is fo exercise its jurisdiction under Secfion 482 of the Code, Jurisdiction- under fhis Section has to be exercised to prevent abuse of the process of any court or otherwise to secure the ends of justice. t IZOoO; 2 Supreme Court Cases 636

r ! I i

9. ln Sfafe of Karnataka v. L. Muniswamy and Otlhers, this Couft said that in the exercr'se of thet wholesome power under Secfion 482 of thet Code High Court is entitled to quash a prctceeding if it comes to the conclusion that allowing the proceeding to continue would be an abuse of the process of the Coutt or that thet ends of iustice require that the proceedings are to be quashed-" 4(c). Further, he relied upon a decision in the case of Ashok Kumar v. State of llttarakhand and othersz wherein the High Court of Uttarakhand at Nainital at Paragraph Nos.14lo 16 held that: "14 Simitarly, in Anil Kapoor v. Ramesh Chandra, (2012) 10 SCC 348, the Hon'ble Supreme Court reiterated that: "A civil dispute st,,ould not be given the cloak of a criminal offence merely to arm-twist the other party in,fo compliance. The criminal process cannof bet permitted to degenerate into a tool for hitrassment in civil disPutes." 1li. tn the present case, the transaction relates to an agreement for the sale of immovable poperty, a subiect governed by the provisions ol' the Transfer of Property Act, 1882, and the S,oecific Retief Act, 1963. The proper remedy fc,r the informant, if aggrieved by the non- e:<ecution of the sale deed, lies in filing a civil ' tvtRt tulUc;lo 185t2o25 '

suit for specific performance or for recovery of money, and not by invoking the criminal process.

16. The State, has primarily relied upon the receipt of Rs.2,50,000/- and the statemenfs of the informant and wifnesses recorded under Secfion 161 Cr.P.C. However, the fact that there r's a written receipt does not by itself esfab/r'sh an offence of cheating. The receipt evidences the transaction but does not, without more, prove a dishonesf or fraudulent intention from the inception. The applicant's denial of the signature on the receipt, though inconsistent, is a matter to be tested in civil proceedings, if necessary." 4(d). Further, he relied upon a decision of the Hon'ble Supreme Court in G.Pankajakshi Amma and others v. Mathai Mathew (dead) through LRs and anothef wherein if was held at Paragraph No.10 that: "70. There is any reason a/so why the impugned judgment cannot be upheld. According to the 7sf respondent fhese transactions were to be unaccounted transactions. According to the 7sf respondent, all these amounts are paid in cash. lf these are unaccounted transactions then they are illegal transactions. No court can come to the aid of the party in an illegal transaction. lt is 3 (20041 12 Supreme Court Cases 83 )

r I

seff/ed law that in such cases fhe /oss must be allowed to lie where it falls. ln this case as these are unaccounted transactions, the Court could not have lent its hands and passed a decree. For these reasons a/so the suit was required to be dr'smissed. "

05. On the other hand, learned Additional Public Prosecutor appearing for the State-respondent No.1 contended that there are triable issues and factual aspects to be exanrined by the learned tria! Court and it is not a fit case to quash the proceedings against the petitioners at this juncture and the matter is to be decided after conducting trial by the lr3?rned trial Court and prayed to dismiss this Criminal Petition

06. Learned counsel for respondent No.2 contended that the, respondent No.2 entered into an agreement of sale with possession with petitioner Nos.1 to 5 on 03.08.2020 in respect of the subject land. lt is submitted that respondent No.2 paid a total sale consideration of Rs.8,17,00,000/- to the peltitioners. ln spite of receiving the entire sale consideration, the petitioners failed to register the land in her ir ti;r lt I

i favour and went on postponing the matter on one pretext or the other. lt is further contended that, upon enquiry, respondent No.2 came to know that the father of petitioner No.1, during his lifetime, had entered into an agreement of sale dated 12.02.1998 with one Madhav Yadav and A. Balesh Yadav in respect of the very same land, and a supplementary agreement of sale was also executed on 05.02.2001. As the father of petitioner No.1 failed to execute the sale deed, the said persons filed a suit for specific performance in O.S.No.309 of 2007. During the pendency of the suit, the matter was compromised and the parties agreed to have the subject land registered in their favour. While the matter stood thus, the father of petitioner No.1 died, leaving behind the present petitioners as his lega! heirs. lt is further contended that, after the death of the father of petitioner No.1, the petitioners suppressed the said facts and entered into the agreement of sale with possession with respondent No.2 on 03.08.2020 by receiving the entire sale consideration from her. Thereafter, when respondent No.2 demanded either registration of the land or return of the II i i :

amount paid, the petitioners avoided the matter. Hence, it is prayed lo dismiss the criminal petition O7'. Having heard the submissions made by the learned counsel on either side, and upon a perusar of the record, it is apparent that the allegation against the petitionr:rs is that they entered into an agreement of sale with possess;ion with the respondent No.2 on 03.08.2020 and received an amount of Rs.8,17,00,000/-, but faited to execute the sal,e deed. The entire dispute thus arises out of a transaction relating to immovable property, founded on contracllual obligations between the parties. ' 0t]. A perusal of the complaint would show that the foundation of the claim of the respondent No.2 is the enforcement of the agreement of sale and recovery of the amount said to have been paid. lt is to be noted that, during the course of submissions, upon a specific query by this court, the learned counse! for the respondent No.2 admitted that no suit for recovery or suit for specific performance was filed by the respondent No.2 seeking repayment of the sale il l: I i i consideration or execution of a registered sale deed in terms of the agreement. This statement gives rise to doubt regarding the veracity of the allegations levelled in the charge sheet for the offences punishable under Sections 420 and 406 of the !PC. Even according to the respondent No.2, the dispute pertains to title over the property, alleged earlier agreements, and the effect of compromise in civil proceedings. These are essentially matters which require adjudication by a competent Civil Court upon appreciation of oral and documentary evidence

09. To constitute an offence of cheating, fraudulent or dishonest intention must be present at the very inception of the transaction. The complaint, however, does not prima facie disclose that, at the time of entering into the agreement dated 03.08.2020, the petitioners had any such dishonest or fraudulent intention. Mere failure to honour the terms of an agreement or inability to execute a sale deed would not automatically attract criminal liability for cheating. )

!'

10 Further, the record indicates the existence of long-standing civil disputes, multiple agreements, suits for specific performance, compromise memoranda, mutation proceedrngs, and rival claims over the subject property When the matter is predominantly civi! in nature, initiation of criminal proceedings would amount to giving a criminal colour to a purely civil dispute. lt is well settled that criminal law cannot be set in motion as a shortcut for enforcing contractual rights or for recovery of money. The appropriate remedy available to the respondent No.2 is to approach the competent Civil Court for specific performance or other approprlate civi! reliefs

11. lt is also a settled principle of law that, although the offences of crimina! breach of trust and cheating both involve dishonest intention, they are distinct and mutually exclusiv'e in their basic legal concept. ln appropriate cases, both of[ences may not co-exist simultaneously where the factual foundation required to establish each offence is inconsis;tent with the other. ln such circumstances, they \

cannot ordinarily be invoked together on the same set of facts

12. lt is apposite to refer a decision in Delhi Race Ctub (1940) Ltd., v State of lJl, wherein it was held at Paragraph No.30 that: .30. . . . ..There is a distinction between criminal breach of trust and cheating. For cheating, criminal intention is necessary at the time of making a false or misleading representation i.e., since inception. ln criminal breach of trust, mere proof of entrustment is sufficient. Thus, in case of criminal breach of trust, the offender is lawfully entrusted with the property, and he dishonestly misappropriated the same. Whereas, in case of cheating, the offender fraudulently or dishonestly induces a person by deceiving him to deliver any property. ln such a situation, both the offences cannot co- exr'sf si m ultaneously. " o zoz4 rNSc 626 \*-

t t l

13. Further, in Rikhab Birani and another v Sfafe of Uf it was hetd by the Honourable Supreme Court at Paragraph Nos.2, 6, 12, 13, 1 4,20 that: "2. The appellants, Rikhab Birani and Sadhna Bi.rani, had entered into an oral agreement to sell Roti Godown No. 28/27, Birhana Road, Kenpur, Uttar Pradesh, to respondent No.2, Slrilpi Gupta, for a consideration of {1,35,00,000/- (Rupees one crore thirty five takhs only) in June, 2020. O. lt is the case of the appellants, Rikhab Biruni and Sadhna Birani, that they had suffered /osses of 745,00,000/- (Rupees forty five lakhs only) on account of the failure of re:;pondent No. 2, Shilpi Gupta, and her husband, in paying the sa/e consideration antount and abiding by the oral agreement; hence, they are not liable to refund or pay any antount to respondent No.2, Shilpi Gupta. /f ,b thr> accepted position that neither the appellants, Rikhab Birani and Sadhna Birani, nor respondent No. 2, Shilpi Gupta, initiated any civil proceedings. On the other hand, s zozs sCC r]nline sC 823

't5 respondent No.2, Shilpi Gupta, approached the Court of the Metropolitan Magistrate, Kanpur Nagar, for registration of a First lnformation Reportl by taking recourse to the provisions of Secfion 156(3) of the Code of Criminat Procedure, 1973. Howevei, by the detailed and reasoned order dated 26.04.2022, the Metropolitan Magistrate, Kanpur Nagar, dr'smr'ssed the application under Section 156(3) of the Cr.p.C. hotding that this is a civil matter and no criminal offence is made out.

12. Thereupon, the appellants, Rikhab Birani and Sadhna Birani, preferred a petition under Secfion 482 of the Cr.P.C. before the High Court, which was dismr'ssed by the High Court, vide the impugned order dated 09.05.2024, notwithstanding the aforesaid facts, stating that at that stage, only a prima facie case was to be seen in the tight of the law laid down by this Court.

13. We are constrained to pass this detaited speaking order, as it is noticed that, notwithstanding the law clearly laid down by this Court on the difference between a breach j of contract and the criminal offence of ch,eating, we are continuousty flooded with cases where the police register an FlR, conduct investigation and even file ch argesheet(s) in u ndese rui ng cases. 14i,.. During the /asf couple of months, a nu,mber of judgments/orders have been pr,cnounced by this Court, especially in cases arising from the Sfafe of Uttar Pradesh, deprecating the sfance of the police as well as the courts in failing to distinguish between a ci,ril wrong in the form of a breach of contract, non-payment of money or disregard to and vi'clation of contractual terms; and a criminal olfence under Secfions 420 and 406 of the IF'C, the ingredients of which are quite different and requires mens rea at the time when the contracf rb entered into itself to not abide by the terms thereof. 2'Q. ln yet another case, again arising from criminal proceedings initiated in the Sfafe of Uttar Pradesh, this Court was constrained to note recurring cases being encountered vtherein pafties repeatedly attempted to irrvoke the jurisdiction of criminal courts by filing vexatious complaints, camouflaging allegations that are ex facie outrageous or are pure civil claims. Ihese attempts must not be enteftained and should be dismissed at the threshold. Reference was made to a judgment of this Court in Thermax Limited and Others v K.M. Johny and Others, which held that courts should be watchful of the difference between civil and criminal wrongs, though there can be situations where the allegation may constitute both civil and criminal wrongs. Further, there has to be a conscious application of mind on these aspecfs by the Magistrate, as a summoning order has grave consequences of setting criminal proceedings in motion. Though the Magistrate is not required to record detailed reasons, there should be adequate evidence on record fo sef criminal proceedings into motion. The Magistrate should carefully scrutinize the evidence on record and may even put questions to the complainanUinvestigating officer etc. to elicit answers to find out the truth about the altegations. The summoning order has to be passed when the complaint or chargesheet dr'sc/oses an offence and when there /b material that supports and constitutes essenfial ingredients of the offence. The ,--J

T i I

summoning order should not be passed lighily or as a mafter of course." 1,4. ln view of the aforesaid facts and circumstances, and herving regard to the well-setfled principres of taw enunci:rted by the Hon'ble supreme court in the decisions referrecl supra, this court is of the considered opinion that the essenti;al ingredients required to constitute the offences under Sections 406 and 420 of the IPC are not prima facie made out agarinst the petitioners-accused Nos.1 to 6. Therefore, the cc,ntinuation of criminal proceedings against the petitionr-"rs-accused Nos.1 to 6, and subjecting them to the rigor of trial, would amount to an abuse of the process of taw, and the same are liable to be quashed.

15. Accordingly, this Criminal petition is allowed and the crirninal proceedings against the petitioners-accused Nos.1 to 6 in c.c.No.218 of 2024 pending on the fire of the learned lll Additional Junior civil Judge-cum-lll Additional Metropolitan Magistrate, Cyberabad at Kushaiguda, are hereby quashed. I

As a sequel, pending miscellaneous applications, if any, shall stand closed. SD'. A.H.S.GOWRI SHANKAR ' lSsrsrANT REGISTRAR \

,,TRUE COPY" SECTION OFFICER ,o,.,. ,n. llt Additionat Junigl civil Judge cum ,,t Additional Metropolitan , Yrii Wi"?t",j::3: "5ffi:?ln'iX"'"'" Porice station' Rachakonda , ffiTts:1l"Fl?ric prosecutor, Hish court for the state of relansana' at HYderabad IOUTI

4. One CC to iii-Cioo"m Srinivas' Advocate [OPUCI 5 one cc to ili; L;;;iReddy Byreddy, Advocate [oPuc]

6. Two CD CoPies SaiPSL L{*

'*h" {\\ I I HIGH COURT DATED: 2010212026

ORDER

CRLP.No.3I965 ot 2024 ALLOWIN(3 THE CRLP. JKS r"[rfre t.o. -. 1 2 lli,d rt TtIE t * t nq \-) c.) S