Supreme Court Quashes Criminal Proceedings in Property Dispute After Settlement; Civil Dispute Cannot Be Given Criminal Colour

Case Name: Bhagaban Gantyayat v. The State of Orissa & Anr.
Citation: 2026 INSC 183; Criminal Appeal arising out of SLP (Crl.) No. 2641 of 2021
Date of Judgment/Order: 13 February 2026
Bench: Hon’ble Mr. Justice Vikram Nath and Hon’ble Mr. Justice Sandeep Mehta

Held: The Supreme Court held that where a dispute between parties, though clothed in criminal allegations, essentially bears a civil character relating to property transactions, continuation of criminal proceedings after full and final settlement would not be expedient in the interest of justice. The Court observed that once substantial compensation has been paid and accepted, and the dispute inter se the parties stands resolved, permitting criminal prosecution to continue would amount to abuse of process. Accordingly, the Court exercised its jurisdiction to set aside the cognizance order and quash all consequential criminal proceedings.

Summary: The appellant and the respondent-complainant were brothers by birth, though the respondent had been adopted by another individual and inherited his properties. The appellant claimed that the respondent had executed a gift deed in 1992 in his favour, pursuant to which portions of the land were sold between 1997 and 2005. In 2009, relations between the parties deteriorated and the respondent lodged a complaint alleging forgery of signatures on a fabricated notarized gift deed and fraudulent sale of property, leading to registration of FIR No. 55 of 2009 for offences under Sections 420, 423, 468/469, 471 and 201 IPC. After investigation, a chargesheet was filed and the learned S.D.J.M., Berhampur took cognizance on 24 December 2011, which was affirmed by the High Court of Orissa on 16 December 2020 in revision. Before the Supreme Court, the appellant contended that the dispute was purely civil in nature and lacked the essential ingredients of cheating or forgery, especially as the admitted signatures were never sent for expert comparison. Considering the familial relationship, the Court appointed a mediator. Though mediation initially failed, the Court facilitated a negotiated resolution. The appellant agreed to pay Rs. 60 lakhs, which was paid in six instalments and acknowledged by the respondent.

Decision: The Supreme Court allowed the appeal, set aside the orders dated 24 December 2011 and 16 December 2020, and quashed all criminal proceedings arising out of FIR No. 55 of 2009 and Chargesheet No. 133 of 2011. The Court held that in light of the settlement and payment of Rs. 60 lakhs as compensation, continuation of prosecution would not serve the ends of justice. It further directed that no other civil or criminal proceedings shall be instituted by the parties in relation to the disputed lands, and disposed of all pending applications.