S.N. VIJAYLAKSHMI & ORS. versus STATE OF KARNATAKA & ANR. (31/07/2025) — Supreme Court headnote

AI-generated headnote. Verify against the judgment before relying on it. Paragraph numbers refer to the judgment.

Summary

An FIR for cheating, criminal breach of trust and conspiracy arising from an agreement to sell land in Bengaluru was quashed. The accused were owners of the property, so there was no entrustment for Section 406; on the complainant's own case possession was to pass only on execution of the sale deed, so no deception-induced delivery under Sections 415/420 was made out; and with a civil suit for specific performance pending, continuing a prosecution lacking any element of criminality would be an abuse of process. The Court also laid down that the Priyanka Srivastava affidavit requirement is mandatory but curable before the Magistrate passes a substantive order, extended the quashing to a non-appealing co-accused, and, noting prima facie collusive litigation over the earlier BDA acquisition, restrained creation of third-party rights pending BDA's SLP.

Issues

Whether, on the complainant's own allegations arising from an agreement to sell, the FIR and chargesheet disclosed offences of criminal breach of trust and cheating under Sections 406 and 420 IPC read with Section 120B.
Whether civil and criminal proceedings may continue simultaneously on the same facts, and when criminal proceedings should be quashed as an abuse of process.
Whether non-compliance with the procedure in Priyanka Srivastava (affidavit supporting an application under Section 156(3) CrPC) is a curable defect.
Whether the benefit of quashing should extend to a co-accused who was not before the Court.
Whether the Court should exercise its powers under Article 142 or take suo motu cognizance of the alleged collusive litigation over the BDA acquisition of the subject property.

Provisions considered

Sections 405 and 406, Indian Penal Code, 1860Criminal breach of trust under Section 405 arises only where the accused has been entrusted with property or dominion over it and dishonestly misappropriates, converts, uses or disposes of it. The accused were not entrusted with the subject property; it belonged to them as owners with title, so the very foundation for invoking Section 406 fell to the ground. (¶¶ 35, 36, 38, 39)
Sections 415 and 420, Indian Penal Code, 1860Cheating requires that the accused, by deceiving a person, fraudulently or dishonestly induce him to deliver property, consent to its retention, or do or omit something causing harm. On the complainant's own pleadings and Clause 6 of the agreement to sell, possession was never given to the complainant and was to be handed over only on execution of the sale deed, which also falsified the claim that possession had passed in 1996; Section 420 was therefore not attracted. (¶¶ 35, 36, 38, 40, 41)
Sections 120A and 120B, Indian Penal Code, 1860Cognizance had been taken under Section 120B along with Sections 406 and 420; the definitions and penal provision were set out, and the proceedings were quashed with the rest since no criminal aspect appeared in the allegations. (¶¶ 35, 36, 41, 47)
Sections 154(3), 156(3) and 200, Code of Criminal Procedure, 1973The complainant filed a private complaint under Section 200, later approached the Deputy Commissioner of Police under Section 154(3) and filed the affidavit required by Priyanka Srivastava before the Magistrate referred the complaint to the police under Section 156(3). The Court held the requirement mandatory and prospective, but the defect of non-filing curable if cured before the Magistrate passes a substantive order; here it was cured in time. (¶¶ 3, 10, 23, 44, 45, 46)
Section 482, Code of Criminal Procedure, 1973The appellants had sought quashing of the FIR before the High Court under Section 482, which was refused; the Supreme Court interfered on the ground that the ingredients of the offences on which cognizance was taken were not made out, applying Bhajan Lal, Vesa Holdings and Gulam Mustafa. (¶¶ 10, 46)
Article 142, Constitution of IndiaFinding that the interest of common citizens had been compromised by what appeared to be collusive litigation between the BDA and the appellants over the acquisition, the Court considered exercising its power to do complete justice and taking suo motu cognizance, but for reasons of judicial propriety left the issue to be examined in BDA's pending SLP before a coordinate bench. (¶¶ 54, 55, 56, 57, 58)

Held

The same person cannot be simultaneously charged for offences under Sections 406 and 420 IPC in respect of one transaction (Delhi Race Club); V.D. Raveesha, where both charges were upheld, involved separate offences against different persons. (¶ 37)
Criminal breach of trust presupposes entrustment of property or dominion over it; where the accused are the owners of the property said to be the subject of the agreement to sell, Section 406 has no foundation. (¶ 39)
Cheating requires deception inducing delivery of property or some act or omission causing harm. Where the complainant's own case and the agreement show that possession was never delivered and was to be handed over only after the sale deed, no inducement to deliver property is made out and Section 420 is not attracted; the allegations disclosed no criminal aspect ex facie, and the complainant had already sued for specific performance. (¶¶ 40, 41)
There is no bar to simultaneous civil and criminal proceedings and the availing of a civil remedy is not by itself a ground to quash an FIR; but the allegations must prima facie disclose an overwhelming element of criminality. Absent that element, allowing both to continue where civil proceedings on the same issue are already instituted amounts to abuse of process and the prosecution must be quashed (Paramjeet Batra; Usha Chakraborty). (¶¶ 42, 43)
On the Priyanka Srivastava procedure: (i) the directions are mandatory; (ii) they operate prospectively; (iii) non-filing of the supporting affidavit is a curable defect, but it must be cured before the Magistrate passes any substantive order on the complaint or application; and (iv) if the Magistrate proceeds without the requisite affidavit, the order and all consequential proceedings can be quashed on that sole ground. The High Court's view that the defect here was cured before the referral order was not erroneous. (¶¶ 44, 45, 46)
Where all accused stand on the same footing, the benefit of quashing enures also to a co-accused not before the Court, in the interest of justice and parity (Pawan Kumar; Javed Shaukat Ali Qureshi). (¶ 48)
The Court recorded that the subject property had been acquired by the BDA in 1978-1982 and allotted, the challenge to the acquisition came only in 2015 after the de-notification had been quashed up to the Supreme Court, and the BDA withdrew its own appeals against the order declaring the acquisition lapsed; this prima facie collusive litigation denied the benefits of the acquisition to common citizens. For judicial propriety the matter was left to BDA's pending SLP, with a direction that no third-party rights be created in the subject property until that SLP is decided. (¶¶ 50, 51, 52, 53, 54, 58, 59, 60)

Result

Appeal allowed; FIR Crime No. 260/2023 and all consequential orders including the chargesheet dated 28.08.2024 and the cognizance order dated 30.08.2024 quashed qua the appellants and also the non-appealing co-accused; Registry to place a copy of the judgment on record in SLP (C) Nos. 10134-10135/2025; the appellants not to create or give effect to third-party rights in the subject property until that SLP is decided; the complainant's civil suit may proceed in the interregnum subject to orders in that SLP; costs made easy.