CRM(M) No.532/2025 IN THE HIGH COURT OF JAMMU & KASHMIR AND LADAKH AT SRINAGAR Reserved on: 28.10.2025 Pronounced on: 08.11.2025 Uploaded on: 08.11.2025 Whether the operative part or full judgment is pronounced: Full CRM(M) No.532/2025 MUKHTAR AHMAD DAR ...PETITIONER(S)/APPELLANT(S) Through: - Mr. Altaf Haqani, Sr. Advocate, with Mr. Shakir Haqani and Mr. Asif Wani, Advocate. Mr. Sheikh Mushtaq, Advocate. Vs. UT OF J&K AND ANOTHER ...RESPONDENT(S) Through: - Mr. Bikramdeep Singh, Dy. AG-for R1. Mr. Jahangir Iqbal Ganai, Sr. Advocate with Mr. Suhail Mehraj, Advocate-for R2. CORAM: HON’BLE MR. JUSTICE SANJAY DHAR, JUDGE JUDGMENT 1) The petitioner, through the medium of present petition filed under Section 528 of BNSS, has challenged FIR No.228 of 2025 for offence under Section 318(4) of BNS registered with Police Station, Budgam. 2) The impugned FIR has been lodged on the basis of a complaint dated 9th August, 2025, made by complainant/ CRM(M) No.532/2025 respondent No.2 with Police Station, Budgam. In the complaint it is stated that the complainant, who is a resident of Thane Mumbai, Maharashtra, is carrying on business operations in Dubai United Arab Emirates (UAE). It has been further stated that the petitioner is also engaged in business activities in Dubai, operating two commercial shops over there. According to the complainant, during his stay in Mumbai in March 2025, the petitioner offered to sell to him his two shops located in Al-Jaddaf, Dubai, UAE, for a total sale consideration of Rs. 20 crores, and for this purpose he proposed a meeting for finalizing transaction at Budgam near International Airport. 3) It has been further averred in the complaint that pursuant to the aforesaid proposal and after several telephonic and WhatsApp communications with the petitioner, the complainant came to Srinagar where he met the petitioner at FM Residency Hotel owned by the petitioner which is located outside Srinagar Airport. It is alleged that in the meeting held between the petitioner and the complainant at Humhama Budgam, it was agreed that the total sale consideration for two shops would be Rs.20.00 crores, out of which Rs.5.00 crores would be paid as an advance. It is further alleged in the complaint that during CRM(M) No.532/2025 the meeting itself, the complainant paid an amount of Rs.2,50,000/ to the petitioner as token money. 4) It is the further case of the complainant that in March, 2025, when he returned to Dubai, he paid an amount of Rs.5.00 crores towards the part sale consideration to the petitioner and this transaction was duly attested by a Magistrate at Dubai. However, upon repeated requests by the complainant for transfer of ownership of two shops, the petitioner avoided the same on one pretext or the other. The petitioner, however, handed over a security cheque for the entire amount assuring the complainant that the transfer of property would take place shortly. 5) It is further alleged in the complaint that on 29th April, 2025, the petitioner called the complainant for registration of property but on very next day, the complainant came to know that the petitioner had already sold the said property to a third party on 29th April, 2025, without knowledge or consent of the complainant. Thus, according to the complainant, the petitioner, by dishonestly transferring the property to a third person, fraudulently and dishonestly induced the complainant to part with Rs.5.00 crores. 6) It has been alleged that on 30th April, 2025, the petitioner sent a voice message to the complainant asking CRM(M) No.532/2025 him to present the security cheque on the assurance the same would be honoured but the cheque was dishonoured due to insufficiency of funds 7) On the basis of the aforesaid facts, it has been alleged that the petitioner has committed the offence of cheating by dishonestly inducing the complainant to deliver a large sum of money and thereafter fraudulently dispose of the property to another person thereby causing wrongful loss to the complainant and wrongful gain to himself. 8) On the basis of the aforesaid complaint, the impugned FIR came to be registered by the police and investigation of the case was set into motion. However, vide interim order dated 03.09.2025, the investigation in the impugned FIR was stayed by this Court. 9) The petitioner has challenged the impugned FIR on the grounds that the same does not disclose commission of a cognizable offence. It has been contended that the contents of the impugned FIR make it evident that there was a contractual relationship between the petitioner and respondent No.2 without there being any element of animus to cheat on the part of the petitioner. Thus, offence under Section 318 of BNS is not made out. It has been submitted that a perusal of the allegations made in the impugned FIR CRM(M) No.532/2025 would reveal that the transaction between the petitioner and respondent No.2 is purely civil in nature. Thus, lodging of FIR is an abuse of process of law. 10) It has been submitted that the petitioner is engaged in the business activities in UAE and has immovable property in the shape of residential flat at Binghati Avenue 3rd Floor, Al-Jaddaf, Dubai UAE, and shops etc. According to the petitioner, in the month of March, 2025, respondent No.2 agreed to advance a loan amount of 16,50,000/ Dirhams with an understanding that the same would be returned along with 9% interest. It has been submitted that in this behalf respondent No.2 has already approached the court of law at Dubai and a notice has been issued to the petitioner specifically mentioning the terms of understanding between the parties. Thus, according to the petitioner there is a commercial transaction between the parties and there is no element of criminality involved in the transaction. 11) It has been submitted that respondent No.2 has already approached the competent court at Dubai UAE and obtained an order of status quo in respect of residential flat of the petitioner and the case is pending before the competent court in Dubai UAE. It has been submitted that the petitioner has been banned to travel to Dubai on account CRM(M) No.532/2025 of the complaint made by respondent No.2 with the sole motive to grab his property situated at Dubai. It has been further averred that the impugned FIR has been lodged with an ulterior motive to malign the petitioner and to pressurize him to yield to the illegal demand of respondent No.2 who even held a press conference on 7th/8th August at Srinagar. It has been contended that the whole exercise is being conducted by respondent No.2 with the sole aim of harassing the petitioner and defaming him. 12) Respondent No.1 in its objections to the petition has narrated the contents of the impugned FIR and has claimed that the offence of cheating is clearly disclosed against the petitioner. It has been contended that the transaction was not civil in nature as the petitioner never intended to honour the agreement and instead, he dishonestly induced respondent No.2 to part with his money. It has been contended that the petitioner is avoiding the process of law and is making attempts to dispose of his property in Srinagar and leave the Country. 13) Respondent No.2, in his application for vacation of interim order dated 03.09.2025, has submitted that the order of status quo has not been obtained by him from any court at Dubai and only a legal notice was served upon the petitioner. It has been contended that the intention to CRM(M) No.532/2025 deceive respondent No.2 fraudulently and with dishonest intention was existing from the very inception when the petitioner approached respondent No.2 and offered to sell his two shops for a consideration of Rs.20.00 crores. It has been submitted that in the month of March, 2025 itself, respondent No.2 paid an amount of Rs.5.00 crores and a sum of Rs.2.50 lacs to the petitioner but within a period of one month thereafter, he sold the property on 29th April, 2025, which shows that intention of the petitioner was fraudulent from the very inception. According to respondent No.2 it is not a case of pure and simple breach of contract but it is a case which has a criminal colour to it. 14) It has been contended that the police has a statutory right and duty to investigate cognizable offences and the said right of the police cannot be curtailed by this Court, particularly when the allegations made in the impugned FIR disclose commission of a cognizable offence. 15) I have heard learned counsel for the parties and I have also gone through the material on record including the Case Diary. 16) Before dealing with the rival contentions of the parties, it would be apt to understand the scope and power of this Court under section 482 Cr.P.C.(now section 528 BNSS) to CRM(M) No.532/2025 quash criminal proceedings. It is to be borne in mind that in the instant case, the investigation has been stayed at the initial stage itself. The legal position is well settled that when the prosecution at initial stage is asked to be quashed, the test to be applied by the court is as to whether the uncontroverted allegations prima facie establish the offence. The Court can also take into consideration any special feature which appears in a particular case so as to arrive at a conclusion as to whether it is expedient and in the interest of justice to permit a prosecution to continue. Thus, if uncontroverted allegations made in the impugned FIR do not establish commission of any offence by the petitioner, then only this Court would be within its jurisdiction to quash the prosecution against the petitioner. In this regard, I am supported by the view expressed by the Supreme Court in the case of Madhavrao Jiwaji Rao Scindia and another vs. Sambhajirao Chandrojirao Angre, (1998) 1 SCC 692. 3) The contention of the petitioner is that the contents of the impugned FIR do not disclose commission of any offence him, inasmuch as the transaction between him and respondent No.2 is purely of civil nature which has been given a criminal flavour by respondent No.2 by lodging the impugned FIR. CRM(M) No.532/2025 4) On the other hand, the respondents have contended that the conduct of the petitioner has remained deceitful and fraudulent right from the inception, therefore, he is not only accountable under civil law but he is also criminally liable. 5) In order to test the merits of the aforesaid contentions, the legal position on the subject needs to be noticed and appreciated. The petitioner is alleged to have committed offence under Section 318(4) of BNS. Section 318 (1) of BNS defines the offence of 8cheating9. It reads as under: “318.Cheating.(1)Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to <cheat=. 6) From a plain reading of afore-quoted provision, it is clear that in order to constitute offence under Section 318(1), there must be a fraudulent or dishonest inducement on the part of a person and thereby the other party must have parted with his property. To establish an offence under Section 318 BNS, it must be shown that there was a fraudulent and dishonest intention at the time of commission of the offence and that the person practicing deceit had obtained the property by fraudulent inducement and willful representation. Mere breach of contract cannot CRM(M) No.532/2025 give rise to a criminal prosecution for cheating unless fraudulent, dishonest intention is shown at the beginning of the transaction i.e., at the time when the offence is alleged to have been committed. 7) <Dishonestly= has been defined in Section 2(7) of BNS to mean doing anything with the intention of causing wrongful gain to one person or wrongful loss to another person whereas Section 2(9) of BNS defines <fraudulently= to mean doing anything with the intention to defraud. Thus, unless it is shown that there was a deliberate intention on the part of the accused to cause wrongful loss or wrongful gain and such intention has resulted in inducement regarding delivery of property, it cannot be stated that the intention was dishonest or fraudulent. 8) The Supreme Court has in the case of Hridaya Ranjan Prasad Verma v. State of Bihar and another, (2000) 4 SCC 168, after noticing the definition of <cheating= given in Section 415 of IPC, explained the said offence in the following manner: 14. On a reading of the section it is manifest that in the definition there are set forth two separate classes of acts which the person deceived may be induced to do. In the first place he may be induced fraudulently or dishonestly to deliver any property to any person. The second class of acts set forth in the section is the doing or omitting to do CRM(M) No.532/2025 anything which the person deceived would not do or omit to do if he were not so deceived. In the first class of cases the inducing must be fraudulent or dishonest. In the second class of acts, the inducing must be intentional but not fraudulent or dishonest. 15. In determining the question, it has to be kept in mind that the distinction between mere breach of contract and the offence of cheating is a fine one. It depends upon the intention of the accused at the time of inducement which may be judged by his subsequent conduct but for this subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, that is the time when the offence is said to have been committed. Therefore, it is the intention which is the gist of the offence. To hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise. From his mere failure to keep up promise subsequently such a culpable intention right at the beginning, that is, when he made the promise cannot be presumed. 9) Again, in Alpic Finance Ltd vs P. Sadasivan and Anr., (2001) 3 SCC 513, the Supreme Court has held that an honest man entering into a contract is deemed to represent that he has the present intention of carrying it out but if, having accepted the pecuniary advantage involved in the transaction, he fails to pay his debt, he does not necessarily evade the debt by deception. Thus, it is necessary to show that a person had fraudulent or dishonest intention at the time of making of promise, to say that he committed an act of cheating. CRM(M) No.532/2025 10) In Hira Lal Hari Lal Bhagwati v. CBI, (2003) 5 SCC 257, the Supreme Court analyzed the ingredients of cheating and observed as under: “40. It is settled law, by a catena of decisions, that for establishing the offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. From his making failure to keep promise subsequently, such a culpable intention right at the beginning that is at the time when the promise was made cannot be presumed. It is seen from the records that the exemption certificate contained necessary conditions which were required to be complied with after importation of the machine. Since the GCS could not comply with it, therefore, it rightly paid the necessary duties without taking advantage of the exemption certificate. The conduct of the GCS clearly indicates that there was no fraudulent or dishonest intention of either the GCS or the appellants in their capacities as office-bearers right at the time of making application for exemption…...= 11) Again in S. V. L. Murthy v. State represented by CBI, (2009) 6 SCC 77, the Supreme Court, after analyzing the provisions contained in Section 415 of IPC, explained the ingredients of offence of cheating in the following manner: 41. An offence of cheating cannot be said to have been made out unless the following ingredients are satisfied: <(i) deception of a person either by making a false or misleading representation or by other action or omission; (ii) fraudulently or dishonestly inducing any person to deliver any property; or (iii) to consent that any person shall retain any property and finally intentionally inducing that CRM(M) No.532/2025 person to do or omit to do anything which he would not do or omit.= For the purpose of constituting an offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. Even in a case where allegations are made in regard to failure on the part of the accused to keep his promise, in the absence of a culpable intention at the time of making initial promise being absent, no offence under Section 420 of the Penal Code can be said to have been made out. 42. We may reiterate that one of the ingredients of cheating as defined in Section 415 of the Penal Code is existence of an intention to cheat at the time of making initial promise or existence thereof from the very beginning of formation of contract. 12) Let us now examine and analyze the facts of the present case in the light of the legal position stated hereinbefore. In the present case, it is alleged by the complainant that he had entered into an agreement with the petitioner for purchasing his two shops located at Dubai for a sale consideration of Rs.20.00 crores. It is the further case of the complainant that out of sale consideration, he had paid an amount of Rs.2.50 lacs to the petitioner at Budgam and another sum of Rs.5.00 crores in the presence of a Magistrate at Dubai. A copy of the certificate issued by the Magistrate has been annexed with the complaint lodged before the police, which confirms the fact that the petitioner has received an amount of Rs.5.00 crores from the complainant. In the certificate of the Magistrate, there is no mention of the transaction regarding sale of shops. It is further case of the complainant that all CRM(M) No.532/2025 these events took place in the month of March, 2025 and on 29th April, 2025, the petitioner proceeded to sell the two shops to another person and at the same time he called upon respondent No.2 to get the sale deed executed. It is also alleged that the petitioner issued a cheque for the advance amount in favour of respondent No.2 which got dishonoured. 13) In the light of the aforesaid facts, it has to be seen whether the petitioner has committed any act of deception or fraud against respondent No.2. As already stated, in order to commit an act of deception or fraud, which is gist of offence of cheating, the complainant must have been dishonestly induced to deliver the property. To deceive is to induce a man to believe that a thing is true which is false and which the person practicing the deceit knows or believes to be false. This intension of deception or fraud must be existent at the time of commission of the offence. 14) In the present case, the petitioner claims that the amount of Rs.5.00 crores that was received by him from respondent No.2 was on account of loan for which he had issued the security cheque and that there was no transaction regarding sale of property, whereas respondent No.2 claims that the amount was advanced by him as part sale consideration in respect of two shops owned by the CRM(M) No.532/2025 petitioner but instead of honouring his commitment to execute the sale deed in his favour, the petitioner proceeded to sell these two shops to a third person, that too within a period of one month of entering into agreement with respondent No.2. If we have a look at the contents of the complaint, on the basis of which the impugned FIR has been lodged, it is not even alleged therein that the petitioner had dishonest intention at the inception of the transaction. 15) As per the contents of the complaint, the petitioner is stated to have dishonestly transferred the property to someone else, whereafter he is stated to have absconded from Dubai. This, according to the complainant, amounts to act of deception on the part of the petitioner. Learned Senior Counsel appearing for respondent No.2 has argued that dishonest intention of the petitioner can be inferred from the subsequent events, particularly the event regarding sale of property to a third person, that too within one month of entering into transaction with respondent No.2. 16) The aforesaid argument appears to be attractive at its first blush but when it is examined closely, it does not carry any merit for the reason that the document executed by the parties before the Magistrate at Dubai, which forms part of the impugned FIR, does not anywhere mention anything CRM(M) No.532/2025 about the alleged transaction regarding sale of property. It may be apt to reproduce the contents of the said document: Acknowledgment with Debt I, the undersigned, Mr. Mukhtar Ahmad Dar Ghulam Rasool Dar, Nationality: India, holding EID No. 784197730705304, hereby acknowledge and confirm that I have received from: Mr. Anil Bhagwandas Karamchandani Bhagwandas Dayaldas, Nationally: India, holding EID Non. 784197654258744, the sum of (AED 1,650,000), one million six hundred fifty thousand dirhams only. Hereby I undertake to pay this amount on 05/04/2025. And in case I fail to pay this amount, the creditor shall have the right to claim for paying the amount completely with the legal fine and take all legal actions to maintain his right, including filing lawsuit to issue an order for payment. In addition, in case with the legal fine and take all legal actions to maintain his right, including filing law suit to issue an order for payment. In addition, in case of our failure to pay this amount, I shall bear the full civil liability in this regard. 17) From a perusal of the aforesaid document, which is a document admitted by respondent No.2, it appears that the petitioner had taken loan in the amount of 16,50,000/ Dirham from respondent No.2 and he had undertaken to repay this loan on 05.04.2025 with a further undertaking that if he fails to pay this amount, respondent No.2 will have a right to claim the said amount along with legal fine and to take all legal actions including filing of law suit and to bear full civil liability. CRM(M) No.532/2025 18) It is admitted case of respondent No.2 that the petitioner also issued a cheque as security for the amount paid by him to the petitioner which got dishonoured later on. When these facts are analyzed together, it comes to the fore that it was a case of loan transaction between the petitioner and respondent No.2 whereby respondent No.2 had advanced an amount of 16,50,000/ Dirham as loan to the petitioner who had secured it by issuing a cheque in favour of respondent No.2. This fact gets further confirmed from the notice of demand served by respondent No.2 upon the petitioner, a copy whereof has been placed on record by the petitioner along with his petition. It is pertinent to mention here that the authenticity of the said document has been admitted by respondent No.2 in his reply. 19) From the aforesaid facts, which have come to the fore on the basis of admitted documents, the story of respondent No.2 with regard to sale transaction pertaining to two shops and subsequent refusal of the petitioner to honour the said commitment appears to be an attempt on the part of respondent No.2 to give a criminal colour to a purely civil dispute relating to recovery of loan amount. 20) The Supreme Court in the case of M/S Indian Oil Corporation v. M/S NEPC India Ltd & Ors. (2006) 6 SCC CRM(M) No.532/2025 736, has laid down the principles which guide the Courts in ascertaining as to whether allegations regarding a commercial dispute would give rise to a criminal action apart from the civil remedy. These principles are reproduced as under: (i) A complaint can be quashed where the allegations made in the complaint, even if they are taken at their face value and accepted in their entirety, do not prima facie constitute any offence or make out the case alleged against the accused. For this purpose, the complaint has to be examined as a whole, but without examining the merits of the allegations. Neither a detailed inquiry nor a meticulous analysis of the material nor an assessment of the reliability or genuineness of the allegations in the complaint, is warranted while examining prayer for quashing of a complaint. (ii) A complaint may also be quashed where it is a clear abuse of the process of the court, as when the criminal proceeding is found to have been initiated with malafides/malice for wreaking vengeance or to cause harm, or where the allegations are absurd and inherently improbable. (iii) The power to quash shall not, however, be used to stifle or scuttle a legitimate prosecution. The power should be used sparingly and with abundant caution. (iv)The complaint is not required to verbatim reproduce the legal ingredients of the offence alleged. If the necessary factual foundation is laid in the complaint, merely on the ground that a few ingredients have not been stated in detail, the proceedings should not be quashed. Quashing of the complaint is warranted only where the complaint is so bereft of even the basic facts which are absolutely necessary for making out the offence. (v) A given set of facts may make out : (a) purely a civil wrong; or (b) purely a criminal offence; or (c) a civil wrong as also a criminal offence. A commercial transaction or a contractual dispute, apart from furnishing a cause of action for seeking remedy in CRM(M) No.532/2025 civil law, may also involve a criminal offence. As the nature and scope of a civil proceedings are different from a criminal proceeding, the mere fact that the complaint relates to a commercial transaction or breach of contract, for which a civil remedy is available or has been availed, is not by itself a ground to quash the criminal proceedings. The test is whether the allegations in the complaint disclose a criminal offence or not. 21) From the foregoing enunciation of law on the subject, it is clear that the mere fact that complaint relates to a commercial transaction or breach of contract, for which a civil remedy is available, is not by itself a ground to quash the criminal proceedings. It is only if it is shown that the complaint, even if taken at its face value does not disclose commission of any offence or if it is found that criminal proceedings have been initiated with malafides/malice for wreaking vengeance that the same can be quashed. 22) In the light of the aforesaid legal position, when the facts of the present case are considered, it appears to be a case where respondent No.2 has advanced loan to the petitioner, who, it seems, has failed to repay the said amount as per the terms agreed before the Magistrate at Dubai. In terms of the said agreement, the petitioner was required to repay the loan on 05.04.2025 and when he asked respondent No.2 to present the security cheque for payment, the same was dishonoured. Had it been a case of agreement to sell regarding two shops belonging to the petitioner, there CRM(M) No.532/2025 was no need for the petitioner to issue the cheque as security in respect of the advance received by him from respondent No.2, as has been claimed by the said respondent. It seems that the impugned FIR is an attempt on the part of respondent No.2 to find a shortcut for recovery of his dues from the petitioner. The transaction between the petitioner and respondent No.2 is purely of civil nature and does not have any criminal colour to it and it appears to be more a case of recovery of money than a case of cheating. 23) The Supreme Court in the case of M/S Indian Oil Corporation (supra) has deprecated the tendency of business circles to convert civil disputes in criminal cases. Again, in the case of Mitesh Kumar J. Shah vs. The State of Karnataka & Ors. 2021 SCC Online SC 936, the Supreme Court has expressed its disapproval for imparting criminal colour to a civil dispute merely to take advantage of a relatively quick relief granted in a criminal case in contrast to a civil dispute. The Court further went on to observe that such an exercise is nothing but an abuse of the process of law which must be discouraged in its entirety. 24) In view of the forgoing discussion, it is clear that the present case is a fit one where this Court should exercise its powers under Section 528 of BNSS to prevent the abuse of CRM(M) No.532/2025 process of law and to secure the ends of justice. This is so because the transaction between the petitioner and respondent No. 2 appears purely of civil nature with no criminal colour to it. 25) Accordingly, the petition is allowed and the impugned FIR bearing No.228 of 2025 for offence under Section 318(4) of BNS registered with Police Station, Budgam, and the proceeding emanating therefrom are quashed. 26) The Case Diary be returned to learned counsel for respondent No.1. (SANJAY DHAR) JUDGE Srinagar 08 .11.2025 <Bhat Altaf= Whether the Judgment is speaking: Yes Whether the judgment is reportable: Yes