CRM-M-15152-2022 (O&M) 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CRM-M-15152-2022 (O&M) Reserved on: 16.07.2026 Pronounced on: 27.07.2026 Uploaded on: 29.07.2026 SUBASH CHAND ...PETITIONER VERSUS STATE OF PUNJAB AND OTHERS ...RESPONDENTS CORAM: HON'BLE MS. JUSTICE SHALINI SINGH NAGPAL Argued by: Mr. Nitin Kaushal, Advocate for the petitioner. Mr. Sukhbeer Singh, DAG Punjab. Mr. Arav Gupta, Advocate and Ms. Ashmeet K. Shah, Advocate for respondent No.2. *** Shalini Singh Nagpal, J. 1. Petitioner seeks quashing of order dated 16.03.2022 of learned Sessions Judge, Patiala in criminal revision bearing No. CRR-468-2018 setting aside order dated 20.09.2018 of learned Judicial Magistrate Ist Class, Rajpura vide which petitioner was discharged and directing petitioner to appear before learned Magistrate on 01.04.2022. 2. The facts as per FIR: Complainant-Madan Gopal alleged that his brother Lalit Kumar s/o Mehar Chand was resident of House No.4813, Old Mirch Mandi, Rajpura, Tehsil Rajpura, District Patiala. In the year 1990, Subhash Chand took plot No.35, Timber Shop, New Lakkar Mandi, through auction. He initially deposited ₹42,000/- out of the auction price of ₹1,68,000/-. Unable to deposit rest of the installments, he executed agreement to sell dated 24.04.1994 in favour of his brother Lalit Kumar and delivered possession of the plot to him after receiving AJAY GOSWAMI 2026.07.29 13:18 I attest to the accuracy and integrity of this document CRM-M-15152-2022 (O&M) 2 ₹42,000/- in cash. As per terms and conditions of the agreement to sell, rest of the amount and interest was to be deposited by Lalit Kumar. On acquiring ownership rights, Subhash Chand was bound to transfer the plot in the name of his brother. In this regard, one General Power of Attorney dated 25.04.1994 was also executed. Original papers of the plot were given to his brother and Subhash Chand gave in writing that he would have no concern with the plot. After his brother deposited installments of the plot, he was informed that Punjab Mandi Board had already registered sale deed of the plot in the name of Subhash Chand in 2010. Subhash Chand willfully and intentionally did not inform them of the sale to cheat them. When he was confronted, he told that original sale deed of the plot had been misplaced and he could use the General Power of Attorney to sell out the plot. His brother, on the basis of the General Power of Attorney, executed sale deed of the plot in favour of Manju Rani and Savita Rani on 18.03.2013. After registration of the sale deed, when Lalit Kumar, Manju Rani and Savita Rani reached there for construction, one Suresh Kumar claimed that there was a registered sale deed of the plot in the name of his wife, Kiran and Asha Rani w/o Ravi Kumar dated 14.10.2010. Said sale deeds in favour of Asha Rani and Kiran were challenged in the competent Court by Manju Rani and Savita Rani and the Civil Court case was pending. Lalit Kumar, Manju Rani and Savita Rani moved an application dated 29.05.2013 against Subhash Chand for cheating and deceiving them, on which no action was taken. His brother also filed an application under Section 156(3) Cr.P.C. in the Court of learned Sub Divisional Judicial Magistrate, Rajpura. When his brother initiated criminal proceedings against Subhash Chand, FIR No.315 dated 14.12.2013 was falsely registered against him only to exert pressure. It was requested that proper investigation of FIR No.315 dated 14.12.2013 registered against his brother be AJAY GOSWAMI 2026.07.29 13:18 I attest to the accuracy and integrity of this document CRM-M-15152-2022 (O&M) 3 done and the FIR be cancelled. After conducting inquiry, FIR No. 32 dated 26.02.2014 under Sections 406 and 420 Indian Penal Code, Police Station City Rajpura, District Patiala was registered against Subhash Chand. 3. Learned counsel for the petitioner submits that petitioner was allotted timber shop No.35 at Rajpura Mandi by the Punjab Mandi Board vide allotment letter dated 10.07.1990. On 26.04.1994, he entered into sale agreement with Lalit Kumar s/o Mehar Chand and also executed General Power of Attorney dated 25.04.1994 for the purpose of obtaining documents with regard to the shop. As per General Power of Attorney, Lalit Kumar was not given any rights to transfer or sell the property. From 1994 till 2009, Lalit Kumar failed to pay the remaining money to Punjab Mandi Board and did not act upon the sale agreement. Petitioner, on receiving a number of reminders for payment, deposited the remaining amount as well as the penalty of ₹2,17,200/- with Punjab Mandi Board in 2010 and thereafter, No Due Certificate and conveyance deed was duly executed in his favour. He became the owner in possession of the property and executed sale deeds dated 14.09.2010 and 18.03.2013 in favour of Kiran w/o Suresh Kumar and Asha Rani w/o Ravi Kumar. Thereafter, in 2012, Lalit Kumar deposited ₹84,000/- with Punjab Mandi Board even though there was nothing outstanding and soon thereafter, executed sale deed in favour of his wife Manju Rani and sister-in-law Savita Rani w/o Madan Gopal. A civil suit dated 06.09.2013 was filed by Manju Rani and Savita Rani for declaration that they were owners in possession of the timber shop. FIR No.315 dated 14.12.2013 under Section 420 IPC was registered on complaint of the petitioner against Lalit Kumar, Manju Rani and Savita Rani. Lalit Kumar filed a complaint under Section 156(3) Cr.P.C. for registration of FIR, which, vide order dated 17.05.2014 was ‘dismissed for non-prosecution’ and later on, vide order dated AJAY GOSWAMI 2026.07.29 13:18 I attest to the accuracy and integrity of this document CRM-M-15152-2022 (O&M) 4 26.03.2014 was ‘dismissed as withdrawn being fully satisfied’. Thereafter, Lalit Kumar started acting through his brother Madan Gopal (respondent No.2) and filed complaint on the same cause of action, even though Madan Gopal had no locus. Thereafter, FIR No.32 dated 26.02.2014 was lodged under Section 420 and 406 IPC against the petitioner. 4. Learned counsel further submits that Madan Gopal was a third- party, neither victim nor aggrieved in any manner. After preliminary investigation, the State filed challan in the Court. However, on further investigation, supplementary challan was presented, recommending closure of the case as the dispute was civil in nature and the parties had availed civil remedies. In the civil suit, sale deeds dated 14.09.2010 executed by the petitioner were upheld. Manju Rani and Savita filed a Civil Revision in this Court, which was dismissed as withdrawn on 20.12.2016. Appeal of Manju Rani and Savita was pending before District Judge, Patiala. Madan Gopal filed a protest petition in the cancellation report. Vide order dated 20.09.2018, learned Judicial Magistrate Ist Class, Rajpura cancelled the FIR observing that no ingredients of Section 406 and 420 IPC were made out and the matter was of civil nature. A criminal revision was filed by Madan Gopal before learned Sessions Judge, Patiala, who erroneously set aside order dated 20.12.2018 of learned Judicial Magistrate Ist Class, Rajpura and directed the petitioner to face trial. FIR No.32 dated 26.02.2014 and order dated 16.03.2022 of learned Sessions Judge, Patiala were illegal and arbitrary as respondent No.2-Madan Gopal was neither an aggrieved party nor a victim and had no locus standi file the complaint. Moreover, the dispute was purely of civil nature, given a wrong interpretation. There was neither any breach of trust nor cheating. Therefore, order dated 16.03.2022 of learned Sessions Judge, Patiala deserved to be quashed. AJAY GOSWAMI 2026.07.29 13:18 I attest to the accuracy and integrity of this document CRM-M-15152-2022 (O&M) 5 5. Per contra, learned counsel for respondent No.2 submits that after thorough and complete investigation, police submitted challan against the petitioner on 06.06.2014. Before charges could be framed, de novo investigation was illegally done and cancellation report was presented. Learned Judicial Magistrate Ist Class, Rajpura treated the protest petition as a complaint, recorded preliminary evidence and dismissed the protest petition accepting the cancellation report vide order dated 20.09.2018, which was challenged in revision. Though, the revisional Court held that no offence under Section 420 IPC was made out, it was correctly observed that the offence of criminal breach of trust was prima facie made out as petitioner had converted the property in question to his own use and disposed of the property in violation of the contract with the complainant. The revision petition was rightly allowed and the matter remitted to the Court of learned Judicial Magistrate Ist Class, Rajpura to pass fresh orders at the stage of charges. Relying upon the judgment of Hon’ble Supreme Court in ‘Vinay Tyagi Vs. Irshad Ali and Others (2013) 5 SCC 762, Neetu Kumar Nagaich Vs. The State of Rajasthan and Others 2020(4) RCR (Criminal) 289, judgments of this Court in CRM-M-38492-2020 titled Sohan Lal and Another Vs. State of Haryana and Others decided on 04.1.2023, CRM-M-16103-2020 titled Pankaj Kumar @ Panki Vs. State of Punjab and Another decided on 18.03.2021, Parmod Kumar and Others Vs. State of Uttar Pradesh and Others 2026 INSC 120, Som Mittal Vs. State of Karnata AIR 2008 SC 1126 and Kewal Krishan Vs. Rajesh Kumar and Others 2022(1) RCR (Civil) 207, it was argued that once, challan had been presented, police could not re-investigate the case without permission of the Court and the filing of cancellation report was bad in law. AJAY GOSWAMI 2026.07.29 13:18 I attest to the accuracy and integrity of this document CRM-M-15152-2022 (O&M) 6 6. It was further submitted that the cancellation report should not have been considered by learned Judicial Magistrate Ist Class, Rajpura and it was a fit case to frame charges under Sections 406 and 420 IPC against the petitioner, who despite executing agreement to sell dated 26.04.1994 in favour of Lalit Kumar, fraudulently and dishonestly transferred the property to third parties, Kiran Devi wife of Suresh Kumar and Asha Rani wife or Ramesh Kumar. He thus prayed for dismissal of the petition. 7. Undisputedly, petitioner Subhash Chand executed an agreement dated 24.09.1994 in favour of Lalit Kumar, brother of complainant Madan Gopal, in respect of plot No. 35, Timper Shop, New Lakkar Mandi, Rajpura, which was auctioned in his favour for Rs.1,68,000/- out of which he had paid 25% i.e. Rs. 42,000/-. By virtue of the agreement Annexure P-1, petitioner agreed that the remaining amount of Rs.1,26,000/- shall be paid by Lalit Kumar, who would thereafter deposit all the installments, take possession and petitioner would have no concern with the plot. A general power of attorney dated 25.04.1994, Annexure P-2, was also executed in favour of Lalit Kumar authorizing him to obtain documents from the department, complete them, make statement, execute affidavit and in case any case was filed by him or against him in Punjab, to pursue that case, file appeal, revision or carry out other legal proceedings if need be, to receive documents of plot from the department. It was agreed by petitioner that acts done by his attorney shall be binding on him and he could take possession as well. Noticeably, the General Power of Attorney did not authorize Lalit Kumar to sell the shop in question. 8. For as long as 16 years, the agreement was not acted upon by Lalit Kumar, who failed to pay up the amount of Rs.1,26,000/- to Timber Mandi Township. On receiving notices from Mandi Board, petitioner Subhash Chand AJAY GOSWAMI 2026.07.29 13:18 I attest to the accuracy and integrity of this document CRM-M-15152-2022 (O&M) 7 deposited a sum of Rs.2,17,200/- on 22.07.2010, obtained No-Dues Certificate and Conveyance Deed was executed in his favour on 26.07.2010, whereafter, vide two sale deeds dated 14.09.2010 and 18.03.2013, he transferred ownership of the property in favour of Kiran Devi wife of Suresh and Asha Rani wife of Ramesh Kumar. After the transfer, when Lalit Kumar learnt of the sale deeds executed by the petitioner, he deposited Rs.84,000/- in the account of Punjab Mandi Board on 16.03.2012, when there were no dues left to be paid. It appears that soon thereafter, vide sale deed No. 7091 dated 18.03.2013, Lalit Kumar transferred the property in favour of his wife Manju Rani and sister-in-law Savita Rani (wife of respondent No. 2), in equal shares. Regarding these facts, no dispute has been raised. 9. The FIR in the case has been lodged by respondent No. 2-Madan Gopal, brother of Lalit Kumar, who is neither a party to the agreement dated 26.04.1994, nor the transferee of the sale deed executed by Lalit Kumar. It transpires from the record that a civil suit Annexure P-6 for declaration was filed by Manju Rani and Savita, in whose favour, Lalit Kumar executed sale deed dated 18.03.2013, claiming a decree for declaration that they are owners in possession of timber shop No. 35 and sale deeds dated 14.09.2010, executed by petitioner Subhash Chand in favour of Asha Rani and Kiran Devi are illegal, null and void. Relief of permanent injunction was also sought. The suit was dismissed by the Court and appeal filed against the judgment and decree is pending before the Appellate court. 10. FIR No. 315 dated 14.12.2013 was also lodged by the petitioner against Lalit Kumar, which ended in his acquittal. Lalit Kumar too filed an application under Section 156(3) Cr.P.C., which he did not opt to pursue and the AJAY GOSWAMI 2026.07.29 13:18 I attest to the accuracy and integrity of this document CRM-M-15152-2022 (O&M) 8 same was dismissed for non prosecution vide order dated 17.05.2014 (Annexure P-7) 11. FIR No. 32 dated 26.02.2014 under Sections 406 and 420 Indian Penal Code, Police Station City Rajpura, District Patiala was investigated by the police and final report under Section 173 Cr.P.C. was presented against the petitioner under Sections 406 and 420 IPC. Petitioner Subhash Chand moved an application to Senior Superintendent of Police, Patiala for cancellation of the FIR, wherein an inquiry was conducted and petitioner was found innocent. Police authorities then filed cancellation report on 10.07.2014 (Annexure P-10). Upon notice, complainant Madan Gopal filed a protest petition, which learned Judicial Magistrate Ist Class, Rajpura treated as a private complaint and directed complainant to lead preliminary evidence. Five witnesses were examined in preliminary evidence. After hearing both sides, the Court of learned Judicial Magistrate Ist Class, Rajpura found no grounds to summon the petitioner on the protest petition. Cancellation moved by the police authorities was accepted and protest petition was dismissed. Accused (petitioner) Subhash Chand was discharged. 12. Aggrieved with the order of learned Judicial Magistrate Ist Class, Rajpura, the complainant/respondent No. 2 filed a revision petition, which learned Sessions Judge, Patiala, vide impugned order dated 16.03.2022, determined holding that no offence under Section 420 IPC was made out as there was nothing to show dishonest intention of accused (petitioner) from the very beginning. It was further held that ingredients required to make out the offence of criminal breach of trust under Section 406 IPC existed. The revision petition was allowed. Order of learned Judicial Magistrate Ist Class, Rajpura was set aside. The matter was remanded to the court of learned Judicial Magistrate Ist AJAY GOSWAMI 2026.07.29 13:18 I attest to the accuracy and integrity of this document CRM-M-15152-2022 (O&M) 9 Class, Rajpura to procure presence of the accused (petitioner) and pass fresh orders, after hearing the parties as per law. 13. This order of learned Sessions Judge, Patiala, has been challenged in the petition. 14. Learned Sessions Judge, Patiala, has recorded an observation in the impugned order that no offence under Section 420 Indian Penal Code was prima facie made out against the petitioner. The Court is, thus, left to determine whether the ingredients of the offence under Section 406 IPC are attracted in the given facts and circumstances of the case. 15. Hon’ble Supreme Court in Radheyshyam & Ors. Vs. State of Rajasthan & Anr. 2024 SCC Online SC 2311 has ruled that mere non- performance of an agreement to sell, by itself, does not amount to cheating or breach of trust when the complainant has adequate remedy of filing a civil suit for relief of specific performance of contract, which he has already availed and the suit is still pending. It was further observed that: “11. For an offence punishable under Section 406, IPC, the following ingredients must exist: i. The accused was entrusted with property, or entrusted with dominion over property; ii. The accused had dishonestly misappropriated or converted to their own use that property, or dishonestly used or disposed of that property or wilfully suffer any other person to do so; and iii. Such misappropriation, conversion, use or disposal should be in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract which the person has made, touching the discharge of such trust.” AJAY GOSWAMI 2026.07.29 13:18 I attest to the accuracy and integrity of this document CRM-M-15152-2022 (O&M) 10 16. The above leaves no manner of doubt that the basic ingredients essential to constitute an offence under Section 406 IPC would be entrustment of property. In the instant case, the FIR does not allege that any entrustment of property was made by Lalit Kumar to the petitioner. The only delivery made was of part payment towards an agreement to sell dated 26.04.1994. The amount paid towards consideration cannot be said to have been entrusted with the petitioner by Lalit Kumar. Merely, because petitioner failed to execute sale deed in favour of Lalit Kumar, it does not amount to mis-appropriation of advance payment. Since there was no entrustment of property, the offence of mis-appropriation of such property and thereby criminal breach of trust would not be made out. (vide Radheyshyam’s case (supra)). 17. In Sharif Ahmed and Another Vs. State of Uttar Pradesh and Another 2024 INSC 363, the precise issue was discussed by the Apex Court in the following terms: “36. An offence under Section 406 of the IPC requires entrustment, which carries the implication that a person handing over any property or on whose behalf the property is handed over, continues to be the owner of the said property. Further, the person handing over the property must have confidence in the person taking the property to create a fiduciary relationship between them. A normal transaction of sale or exchange of money/consideration does not amount to entrustment.24 Clearly, the charge/offence of Section 406 IPC is not even remotely made out.” 18. From the sequence of events narrated hereinabove, it comes out that at best, the case put forth by the complainant/respondent No.2 Madan Gopal is one of subsequent breach of contract and not one of cheating or criminal breach AJAY GOSWAMI 2026.07.29 13:18 I attest to the accuracy and integrity of this document CRM-M-15152-2022 (O&M) 11 of trust. As rightly noticed by learned Sessions Judge, Patiala, there was no intention on part of petitioner to deceive Lalit Kumar in the first instance i.e. at the inception of the transaction. Subsequent conduct of the petitioner executing sale deed in favour of third party, as per settled law, does not attract culpability either under Section 420 Indian Penal Code or Section 406 Indian Penal Code 19. In the case of Joseph Salvaraja A v. State of Gujarat (2011) 7 SCC 59 it is observed and held by Hon’ble Supreme Court that when dispute between the parties constitutes only a civil wrong and not a criminal wrong, the courts would not permit a person to be harassed although no case for taking cognizance of the offence has been made out. 20. In the case of Inder Mohan Goswami v. State of Uttaranchal, (2007) 12 SCC 1: 2007(4) RCR (Criminal) 548, the Apex Court observed that the Court must ensure that criminal prosecution is not used as an instrument of harassment or for seeking private vendetta or with an ulterior motive to pressurize the accused. It was further observed that it is neither possible nor desirable to law down an inflexible rule that would govern the exercise of inherent jurisdiction. It is further held that inherent jurisdiction of the High Courts under Section 482 Cr.P.C., 1973 though wide has to be exercised sparingly, carefully and with caution and only when it is justified by the tests specifically laid down in the statute itself. 21. Examining the facts of the case on the touchstone of the well- established principles of law enunciated hereinabove, the Court finds that the dispute is entirely with respect to buying and selling of property, regarding which a civil suit already stands filed, pending determination in appeal. Criminal colour has unjustifiably been given to a civil issue. AJAY GOSWAMI 2026.07.29 13:18 I attest to the accuracy and integrity of this document CRM-M-15152-2022 (O&M) 12 22. It would be relevant to notice that respondent No. 2/complainant is not affected by the transfers made by the petitioner. The aggrieved person i.e. Lalit Kumar, brother of respondent No. 2 pursued his remedy before learned Sub Divisional Judicial Magistrate, Rajpura by filing an application under Section 156(3) Cr.P.C. which was later dismissed for non-prosecution vide order dated 17.05.2014 (Annexure P-7). The aggrieved person has not opted to pursue his complaint against the petitioner and the proxy prosecution, on complaint of his brother Madan Gopal, who happens to be husband of the subsequent transferee, is a clear abuse of the process of law, intended only to harass the petitioner, despite civil remedy available. 23. Much emphasis has been laid by learned counsel for the complainant/respondent No. 2 on the subsequent cancellation of the FIR, in pursuance of inquiry initiated on an application moved by the petitioner and numerous judgments have been cited in this regard. No doubt, “fresh investigation”, “re-investigation” and “de-novo investigation” cannot be initiated by the police of its own, without a definite order of the Court. The primary issue before the Court, however, is not regarding the illegal cancellation of the FIR by the police, after filing report under Section 173 Cr.P.C. The core issue is resort to criminal prosecution for a dispute, which is entirely civil in nature. Even though, the police did commit illegality in conducting fresh investigation without seeking orders from the competent Court, allowing the criminal case to proceed, when neither offence under Section 420 IPC is made out nor Section 406 IPC, would be against the interest of justice. In a catena of judgments, the Apex Court has laid down that efforts to settle civil disputes by exerting pressure through criminal prosecution needs to be deprecated and discouraged. Section AJAY GOSWAMI 2026.07.29 13:18 I attest to the accuracy and integrity of this document CRM-M-15152-2022 (O&M) 13 482 Cr.P.C., therefore, must be invoked to prevent the criminal proceedings being used as a weapon of harassment. 24. Following observations of Hon’ble Supreme Court in 'Paramjeet Batra v. State of Uttrakhand' (2013) 11 SCC 673 are relevant in this context: "7. While exercising its jurisdiction under Section 482 of the Code the High Court has to be cautious. This power is to be used sparingly and only for the purpose of preventing abuse of the process of any court or otherwise to secure ends of justice. Whether a complaint discloses a criminal offence or not depends upon the nature of facts alleged therein. Whether essential ingredients of criminal offence are present or not has to be judged by the High Court. A complaint disclosing civil transactions may also have a criminal texture. But the High Court must see whether a dispute which is essentially of a civil nature is given a cloak of criminal offence. In such a situation, if a civil remedy is available and is, in fact, adopted as has happened in this case, the High Court should not hesitate to quash criminal proceedings to prevent abuse of process of court." 25. The aggrieved person not having chosen to come forward, dispute between the parties being civil in nature, regarding which a civil suit already stands filed, continuation of the criminal proceedings by way of FIR No. 32 dated 26.02.2014 would be a sheer abuse of the process of court, despite the illegality committed by the police in conducting de-novo investigation without order of the competent Court. Order dated 20.09.2018 of learned Judicial Magistrate Ist Class, Rajpura, is thus based on correct appreciation of law and facts and is hereby upheld. AJAY GOSWAMI 2026.07.29 13:18 I attest to the accuracy and integrity of this document CRM-M-15152-2022 (O&M) 14 26. The petition is allowed. Order dated 16.03.2022 of learned Sessions Judge, Patiala in criminal revision No. CRR-468-2018 and all subsequent proceeding arising therefrom are set aside/quashed. 27. Pending CRM(s), if any, also stands disposed of. (SHALINI SINGH NAGPAL) JUDGE Reserved on: 16.07.2026 Pronounced on: 27.07.2026 Ajay Goswami Whether speaking/reasoned Yes/No Whether reportable Yes/No AJAY GOSWAMI 2026.07.29 13:18 I attest to the accuracy and integrity of this document