SC Quashes Proceedings in Chennai Cheating Case

New Delhi:  The Supreme Court on Friday quashed the proceedings in a cheating case lodged in Chennai, saying the allegations point to a purely civil dispute between the parties.

A bench of justices B V Nagarathna and Ujjal Bhuyan observed that the complainant in the case has sought to give a "criminal colour" to a purely civil dispute, and the continuation of criminal proceedings would be nothing but a sheer abuse of the process of law.

The apex court delivered its verdict on an appeal filed by two appellants who had challenged a March 2025 order of the Madras High Court.

The high court had refused to quash the proceedings pending before a trial court against the appellants.

The top court said the appellants were alleged to have committed offences, including those punishable under sections 406 (punishment for criminal breach of trust) and 420 (cheating and dishonestly inducing delivery of property) of the erstwhile Indian Penal Code.

Referring to a previous judgement of the apex court, the bench noted it was held that offences of cheating and criminal breach of trust cannot be sustained on the same set of allegations.

"On a careful perusal of both the provisions as well as the aforesaid dictum of this court, we find that with regard to the same property and on the same set of facts, the offences of criminal breach of trust and cheating cannot be sustained as against the accused," the bench said.

It said the dispute between the parties was essentially civil in nature.

"... We hold that continuation of criminal proceedings instituted against the accused by the complainant would be nothing but a sheer abuse of the process of law inasmuch as on a consideration of the allegations, none of the offences invoked in the FIR as well as the charge sheet appear to be made out against the accused," it said.

The bench said the high court erred in dismissing the quashing petition filed by the accused and it overlooked the fact that allegations in FIR and the charge sheet did not prima facie make out the offences under sections 406 and 420 of the IPC.

"In fact, the allegations on the face of it point to a purely civil dispute between the parties," it said.

While setting aside the high court's order, the bench quashed all consequential proceedings emanating from the FIR, including the charge sheet, against the appellants.

The complainant had alleged that the appellants, with a dishonest intention of cheating him, had illegally cancelled the General Power of Attorney (GPA) regarding a vacant land and executed a sale deed in favour of a third party.

While the complainant was the joint managing director and authorised representative of a firm involved in the business of property development, the

appellants were the owners of the land.

It was claimed that in May 2012, an unregistered joint development agreement was executed between the parties for construction, development and promotion of the land into residential flats, and the appellants had executed a GPA in favour of the

complainant.

It was alleged that later, it came to light that the property formed part of an unapproved layout plan and suffered from legal flaws which the appellants had suppressed at the time of execution of agreement.