- 1 - HC-KAR NC: 2025:KHC:29885 WP No. 29553 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 1ST DAY OF AUGUST, 2025 BEFORE THE HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM WRIT PETITION NO. 29553 OF 2024 (GM-RES) BETWEEN: SUKHI DEVI W/O SRI RAMESH KUMAR AGED ABOUT 62 YEARS, R/AT NO 46, S B ROAD, V.V. PURAM, BENGALURU - 560 004. …PETITIONER (BY SRI. SHASHANK REDDY, ADVOCATE FOR SRI. SAGAR. G NAHAR, ADVOCATE) AND: 1. STATE OF KARNATAKA REP. BY KALASIPALYAM POLICE POLICE STATION ROAD, PATNOOLPET, KALASIPALYAM, BENGALURU - 560 002. 2. SRI. M. DHANRAJ S/O MUNISWAMY AGED ABOUT 68 YEARS 3. SRI. D. GIRISH KUMAR S/O DHANRAJ AGED ABOUT 39 YEARS 4. SMT. D. MOHANA KUMARI Digitally signed by KAVYA R Location: High Court of Karnataka - 2 - HC-KAR NC: 2025:KHC:29885 WP No. 29553 of 2024 D/O SRI DHANRAJ AGED ABOUT 42 YEARS ALL ARE RESIDING AT PYRAMID PINNACLE APARTMENTS, FLAT NO 102, SITE NO 38/2, 17TH CROSS, 35TH MAIN, J P NAGAR, 6TH PHASE, BENGALURU - 560 078. …RESPONDENTS (BY SRI. M.R. PATIL, HCGP FOR R1; SRI. M.D. RAGHUNATH, ADVOCATE FOR R2) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA R/W SEC. 482 OF THE CR.P.C PRAYING TO QUASH THE PROCEEDINGS IN PCR NO.7280/2024 AT ANNEXURE-A AND CONSEQUENTLY QUASH THE FIR IN CRIME 120/2024 AT ANNEXURE-C PENDING ON THE FILE OF IV ADDITIONAL CHIEF METROPOLITAN MAGISTRATE, BANGALORE IN SO FAR AS PETITIONER CONCERNED AND ETC., THIS PETITION, COMING ON FOR ADMISSION, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM ORAL ORDER The captioned petition is filed seeking quashing of the proceedings pending in P.C.R.No.7280/2024 and Crime No.120/2024 for the offences punishable under Sections - 3 - HC-KAR NC: 2025:KHC:29885 WP No. 29553 of 2024 405, 406, 415, 418, 420, 383, 425, 463, 468, 469, 499, 503, 120B r/w Section 34 of the IPC. 2. Heard Sri.Shashank Reddy B.K., learned counsel for Sri.Sagar G Nahar, advocate for the petitioner, learned HCGP and learned counsel for respondent No.2. 3. The facts leading to the case are as under: Respondents No.2 to 4 have instituted a private complaint under Section 200 of the Code of Criminal Procedure alleging commission of offences punishable under Sections 405, 406, 415, 418, 420, 383, 425, 463, 468, 469, 499, 503, 120B read with Section 34 of the Indian Penal Code. The crux of the complaint is that the complainants had entered into a registered Joint Development Agreement (JDA) dated 03.10.2016 with the accused, who are developers, along with a registered General Power of Attorney (GPA) of even date. As per the JDA, the accused were obligated to develop the schedule property into a multi-storeyed residential building and share the - 4 - HC-KAR NC: 2025:KHC:29885 WP No. 29553 of 2024 developed property in the ratio of 50:50. In terms of the JDA, accused Nos.1 to 3 were also required to secure the sanctioned plan and license from BBMP. Additionally, the accused agreed to pay an advance sum of Rs.86,45,000/- to the complainants, which, as admitted, was paid in full. 4. The primary grievance raised in the complaint is that, after the complainants had evicted the existing tenants and handed over peaceful possession of the schedule property to the accused to enable them to initiate construction activities, the accused failed to complete the project within the stipulated period of 24 months, with a further grace period of six months, as agreed under the terms of the JDA. 5. Aggrieved by the inaction on the part of the accused, the complainants instituted a suit in O.S. No.5899/2023 on 11.09.2023 seeking cancellation of the Joint Development Agreement. Despite initiating civil proceedings, the complainants also proceeded to file the - 5 - HC-KAR NC: 2025:KHC:29885 WP No. 29553 of 2024 present private complaint alleging criminal breach of trust and cheating. The learned Magistrate, having perused the complaint, referred the matter for police investigation, pursuant to which a criminal case has been registered. The petitioner—accused No.3 has approached this Court under Section 482 of Cr.P.C., seeking quashing of the said criminal proceedings on the ground that the dispute is purely civil in nature and lacks the essential ingredients to constitute a criminal offence. 6. Learned counsel for the petitioner, referring to the averments in the complaint, would contend that the dispute essentially arises out of a contractual breach. He emphasizes that the complainants have admittedly received a substantial sum of Rs.86,45,000/- in advance from the accused, as reflected in the Joint Development Agreement. Drawing attention to paragraph 15 of the complaint, counsel submits that after having delivered possession of the property, the complainants themselves have allegedly re-inducted street vendors/hawkers and - 6 - HC-KAR NC: 2025:KHC:29885 WP No. 29553 of 2024 have permitted the use of a portion of the land for vehicle parking and income generation, which conduct negates the claim of criminal breach of trust. Hence, it is submitted that neither the offence under Section 406 nor under Section 420 IPC is made out. In the absence of fraudulent or dishonest intent at inception, the initiation of parallel criminal proceedings alongside a pending civil suit is clearly an abuse of process, warranting quashing of the proceedings. 7. Per contra, learned counsel for respondents No.2 to 4 would argue that the pendency of a civil suit does not preclude the initiation of criminal proceedings if the allegations prima facie disclose commission of cognizable offences. Relying on the judgment of the Hon’ble Apex Court in the case of S.N. Vijayalakshmi & Others v. State of Karnataka & Another, it is submitted that civil and criminal proceedings may co-exist if the allegations made disclose elements of criminality. Referring to the averments in the complaint and - 7 - HC-KAR NC: 2025:KHC:29885 WP No. 29553 of 2024 supporting material, it is argued that a prima facie case is made out against the petitioner and other accused. The learned counsel further places reliance on the decision in Kathyayini v. Sidharth P.S. Reddy & Others, to contend that remedies under civil and criminal law are not mutually exclusive. It is further urged that cheques issued by the accused were dishonoured, indicating fraudulent intent, and that the complainants were compelled to incur substantial costs to evict existing tenants before handing over possession. Accordingly, it is submitted that there is sufficient material to proceed with the criminal trial and no case is made out for quashing under Section 482 Cr.P.C. 8. This Court has carefully considered the submissions advanced by both sides and perused the record, including the detailed complaint filed under Section 200 Cr.P.C. and the judicial pronouncements relied upon. The key question that arises for consideration is whether the allegations in the complaint, taken at face value and accepted in entirety, disclose the commission of a - 8 - HC-KAR NC: 2025:KHC:29885 WP No. 29553 of 2024 cognizable offence, or whether the dispute is purely civil in nature, thereby attracting the inherent jurisdiction of this Court under Section 482 Cr.P.C. Before adjudicating on this issue, it would be apposite to extract the relevant portion of the complaint, which has a material bearing on the determination of criminal intent at the inception of the transaction. "6. the It is also imperative to mention herewith that as per Development Agreement dated 03.10.2016 the accused No. 1 to 3 being the joint developers are duty bound to secure the sanctioned plan and license from the BBMP authorities pertaining to schedule property. Hence, the accused No. 1 to 3 have agreed to pay a sum of Rs.86,45,000/- (Rupees Eighty six the lakhs forty five thousand only) to complainants for constructing the multi storied building in the schedule property. Out of Rs. 86,45,000/- payable by accused, a sum of Rs.33,00,000/- (Rupees Thirty three lakhs only) is non- refundable amount by the complainants" and the remaining amount of Rs. 53,45,000/-(Rupees Fifty three lakhs forty five thousand only) shall be paid by the accused to the complainants relating to schedule property. 7. It is further submitted that, as per the Development Agreement dated 03-10-2016, the accused have paid a sum of Rs. 50,00,000/- (Rupees Fifty lakhs only) as against Rs.86,45,000/- to the complainants relating to schedule property on 04-10-2016, by way of Cheques ie, Rs. 10,00,000 to complainant No. 1. Rs: 25,00,000/- to complainant No.2, and Rs. 15,00,000/- to complainant No.3, and thus totally Rs.50,00,000/- and the same has - 9 - HC-KAR NC: 2025:KHC:29885 WP No. 29553 of 2024 been acknowledged by the complainants. Thereafter, the balance amount of Rs. 36,45,000/- (Rs. Thirty six lakhs forty five thousand only) was paid by the accused to the complainants, after getting the tenants vacated by the complainants from the schedule property. The accused had inspected the schedule property and after confirmation that the same has been vacated by the tenants and by taking vacant possession of the schedule property, the Accused persons had demolished existing building occupied by the tenaments in the schedule property belonging to complainants. Thereafter only, the accused had paid a sum of Rs.36,45,000/- (Rupees Thirty six lakhs Forty Five Thousand only) to the complainants on 09-08-2017 as per the development agreement after obtaining vacant possession of the schedule property. Thus the complainants had received a sum of Rs.86,45,000/- from the accused which has been acknowledged which is an admitted fact. Prior to handing over vacant possession of the schedule property to the accused by the complainants, even the complainants had also amalgamated the schedule property as well as the adjoining and abutting property belonging to Sri. Devaraj and Lakshmi which is also incorporated in the JD agreement as per Amalgamation Deed dated 28.11-2016 to obtain the sanction plan and license by the accused in the name of complainants for construction of multi storied building in the schedulé property followed by Registered. GPA dated. 03.10.2016 relating to Schedule property. which is produced as DOCUMENT No.3. The 26 photographs (consisting of 13 sheets) disclosing the existing of old structures and demolition of entire building with structures in respect of schedule property belonging to complainants is produced as DOCUMENT No. 4 to 29. 8. It is further submitted that, as stated supra out of Rs 86,45,000/- Rs.33,00,000/- paid by accused to the complainants is a non-refundable amount relating schedule to property. Though the vacant possession of the schedule property after vacating the tenants was - 10 - HC-KAR NC: 2025:KHC:29885 WP No. 29553 of 2024 handed over to the accused by the complainants as per the Development Agreement, the accused were duty bound to complete the construction of the multi storied building in the schedule property by two years (ie., 24 months) with a grace period of further six months to do the needful on or before 03.04.2019 from the date of development agreement dated 03.10.2015. 9. It is further submitted that, as per the development Agreement dated 03.10.2016, neither the accused had commenced the work nor obtained sanctioned plan and license from BBMP authorities to construct the multi storied building in the schedule property within 30 months which had expired on 03.04.2019. Thus till today the accused have not commenced the project work of constructing the multi storied building in the schedule property belonging to the complainants though 7 years has lapsed which aptly proves that the accused Nos. 1 to 3 have committed breach of trust, fraud and cheating for non-complying the terms and conditions stipulated in the Registered Development Agreement dated 03.10.2016 followed by Registered GPA dated 03.10.2016 relating to schedule property." 9. On a plain reading of the extracted portions of the private complaint, what unmistakably emerges is that the complainants and the accused entered into a registered Joint Development Agreement dated 03.10.2016. In terms of this agreement, the accused, in their capacity as developers, undertook the obligation to construct a multi-storeyed building on the schedule - 11 - HC-KAR NC: 2025:KHC:29885 WP No. 29553 of 2024 property and thereafter distribute the developed property in the ratio of 50:50 between the landowners (complainants) and developers (accused). As part of this arrangement, the accused were also required to obtain sanctioned plans and construction licenses from the BBMP. Significantly, the complaint itself records that the accused paid an advance sum of Rs.86,45,000/- to the complainants, a fact which stands unambiguously acknowledged in the subsequent portions of the complaint already extracted hereinabove. 10. The acknowledgment of such a substantial financial transaction, and the absence of any allegation that the payment was made through fraudulent inducement at the inception of the agreement, substantially undermines the complainants' case of dishonest intention. The very basis of the Joint Development Agreement rests on mutual obligations, commercial terms, and reciprocal commitments, which are - 12 - HC-KAR NC: 2025:KHC:29885 WP No. 29553 of 2024 to be enforced in accordance with the terms agreed therein. 11. At this stage, this Court deems it relevant to focus on Paragraph No.15 of the complaint, as it has a direct and material bearing on the sustainability of the proceedings and the registration of crime for the offences alleged. Paragraph No.15, as pleaded by the complainants themselves, discloses subsequent developments concerning the possession of the property and the conduct of the complainants post-handover. This paragraph is crucial as it contains admissions that, even after handing over possession to the developers, the complainants appear to have re-inducted third parties onto the property and permitted commercial use of the same, thereby generating rental income. Such conduct appears inconsistent with their claim of complete transfer of possession and may have implications on the core allegation of criminal breach of trust or cheating. - 13 - HC-KAR NC: 2025:KHC:29885 WP No. 29553 of 2024 12. In view of its significance, this Court finds it appropriate to reproduce Paragraph No.15 of the complaint in its entirety for a more informed examination of the true nature of the dispute, particularly with regard to the element of mens rea, which is indispensable for prosecuting offences under Sections 406 and 420 of the Indian Penal Code. "15. It is further submitted that, on account of failure to commence the projeet work by the accused persons, during the year 2021 the complainants with no other alternate have put up temporary sheds in the portion of schedule property for street hawkers/vendors and the remaining portion is being used for parking of vehicle temporarily to augment/generate the income to maintain the family of complainants. But from March 2020 onwards due to pandemic Covid-19 the complainants did not have any pie for maintenance of family for almost two years and from April 2022 onwards the complainants are securing meager income from the 'temporary sheds and vehicle parking in portion of the schedule property which infact is totally insufficient to maintain their family on account of misdeeds and blunders committed by the Accused persons in non-performing their part of their contract which amounts to criminal breach of trust, cheating and fraud, so as to erisure that the Complainants shall suffer heavy loss and thereby the image and reputation of the Complainants have been lowered in the society and public at large as the relatives of the Complainants are giggling by bringing disgrace to the family members of complainants for non utilizing such a huge property in the heart of the city. Thus the Accused - 14 - HC-KAR NC: 2025:KHC:29885 WP No. 29553 of 2024 persons have also defamed the image and reputation of the Complainants which is irreparable in nature." 13. On a careful perusal of paragraphs 6 to 9 and paragraph 15 of the private complaint, what surfaces clearly is that the complainants have admittedly received a substantial sum of Rs.86,45,000/- from the accused, which was paid in terms of the Joint Development Agreement dated 03.10.2016. The grievance now raised by the complainants pertains to the alleged revenue loss suffered due to the accused’s failure to commence and complete the proposed development project within the agreed timeline. However, a closer examination of paragraph 15 of the complaint reveals a striking contradiction. While the complainants claim that possession was handed over to the developers in pursuance of the agreement, they have simultaneously averred that they are now in possession of the very same property. It is further admitted that the complainants are generating income from the property by reinducting street - 15 - HC-KAR NC: 2025:KHC:29885 WP No. 29553 of 2024 hawkers and utilizing a portion of the land for vehicle parking. The Court cannot ignore the fact that vehicle parking in a metropolitan city like Bengaluru is a highly lucrative activity and is known to generate substantial revenue. 14. This contradiction significantly weakens the complainants’ case. The core of the complaint is premised on the alleged financial loss and failure of the developers to fulfill their obligations. However, the fact that the complainants are presently enjoying possession and are deriving commercial benefit from the property, despite their earlier admission of having handed over possession, calls into question the very basis of the alleged breach. The complaint lacks any explanation as to how possession was regained in the absence of any cancellation or termination of the JDA by mutual consent or court order. This casts serious doubt on the bona fides of the complainants and the real intent behind the filing of the criminal complaint. - 16 - HC-KAR NC: 2025:KHC:29885 WP No. 29553 of 2024 15. The offence of criminal breach of trust under Section 406 IPC requires that the accused must be entrusted with property or dominion over it, and that he must have dishonestly misappropriated or converted the property to his own use in violation of such trust. Similarly, the offence of cheating under Section 420 IPC presupposes fraudulent or dishonest intention at the inception of the transaction. In the present case, there is no material placed on record to indicate that the accused had any dishonest intention at the inception of the agreement. The project admittedly has not taken off, and the reasons for such delay whether due to market conditions, regulatory hurdles, or other commercial factors are all questions of fact that are best adjudicated by a competent civil court. The complainants, having voluntarily entered into a commercial agreement and received the agreed advance, cannot now seek to criminalize a failed commercial transaction in the absence of any overt act suggesting mens rea. - 17 - HC-KAR NC: 2025:KHC:29885 WP No. 29553 of 2024 16. It is a settled proposition of law that mere non- performance of contractual obligations or delay in execution of contractual terms does not, by itself, constitute a criminal offence. Civil disputes clothed as criminal proceedings, without the essential elements of criminality, have repeatedly been deprecated by the Hon’ble Apex Court and this Court. Unless there is cogent material to demonstrate that the accused intended to deceive or misappropriate from the outset, invocation of the penal provisions of Sections 406 or 420 IPC is wholly unwarranted. In the present case, the complainants have not only received a large sum of Rs.86,45,000/-, but also now assert possession and commercial use of the property both of which fundamentally negate any claim of dishonest misappropriation or fraudulent inducement. In such a situation, the continuation of criminal proceedings would amount to misuse of criminal law machinery. 17. This Court is, therefore, of the considered view that the dispute between the parties is essentially civil in - 18 - HC-KAR NC: 2025:KHC:29885 WP No. 29553 of 2024 nature, arising out of a commercial contract. The complainants, recognising this, have already availed the appropriate civil remedy by instituting a suit seeking cancellation of the Joint Development Agreement in O.S. No.5899/2023. The subsequent attempt to initiate parallel criminal proceedings through the present private complaint under Section 200 Cr.P.C. is clearly a coercive tactic, intended to exert undue pressure on the accused. Such misuse of criminal law, if permitted to proceed, would not only prejudice the accused, who have already suffered monetary loss and dispossession, but would also amount to an abuse of the process of law. This is a fit case where the inherent powers under Section 482 of Cr.P.C. must be invoked to prevent miscarriage of justice and to secure the ends of justice. Accordingly, this Court finds that the proceedings in PCR No.7280/2024 are wholly unsustainable in law and deserve to be quashed. 18. For the foregoing reasons this court passes the following: - 19 - HC-KAR NC: 2025:KHC:29885 WP No. 29553 of 2024 ORDER i. The writ petition is allowed; ii. The proceedings pending in PCR.No.7280/2024 and FIR in Crime No.120/2024 pending on the file of IV Addl. Chief Metropolitan Magistrate, Bangalore are quashed. Sd/- (SACHIN SHANKAR MAGADUM) JUDGE HDK List No.: 1 Sl No.: 11 CT: BHK