Cheating FIR Quashed Against Property Dealer Who Neither Received Sale Consideration Nor Benefited From Transaction; Mere Role as Property Dealer and Witness to Agreement to Sell Not Enough to Sustain Cheating Case: Punjab & Haryana High Court
Case Name: Praveen Chanda @ Pravin Chanda v. State of Haryana and Others
Date of Judgment: 4 August 2026
Citation: CRM-M-20834-2022
Bench: Hon’ble Mr. Justice N.S. Shekhawat
Held: The Punjab and Haryana High Court held that criminal proceedings for cheating and criminal breach of trust cannot be continued against a property dealer who was neither the owner/seller of the property nor a recipient or beneficiary of the sale consideration and had merely signed the agreement to sell as a witness.
The Court held that the High Court cannot remain a “helpless spectator” where a criminal prosecution is shown to be mala fide or an abuse of the process of court. Its inherent powers under Section 482 CrPC carry a corresponding duty to prevent abuse of judicial process and secure the ends of justice. In the present case, the petitioner had only witnessed the agreement to sell and had received no money from the complainants.
Significantly, the Court further held that a simple civil dispute cannot be converted into a criminal prosecution to wreak vengeance against an accused. Since the substantive property dispute had already been settled with the principal accused and the FIR stood quashed against their legal representative, continuing the prosecution against the property dealer alone would amount to an abuse of process.
Summary: The petitioner approached the Punjab and Haryana High Court under Section 482 CrPC seeking quashing of FIR No. 0427 dated 13 October 2019, registered under Sections 406 and 420 read with Section 120-B IPC at Police Station DLF, Phase-I, Gurugram, along with all consequential proceedings.
The FIR arose from a property transaction. According to the complainant, Kshama Puri and R.B. Puri were introduced to her through the petitioner, who was acting as a property dealer. The owners agreed to sell their house for ₹4 crore. The property was subject to an outstanding loan of approximately ₹69.53 lakh, which was required to be discharged before execution of the sale deed.
The complainant made payments to the proposed sellers and also paid approximately ₹69.53 lakh to DHFC Limited by demand draft towards the loan account relating to the property. The sale deed was to be executed by 30 April 2019. When the sellers allegedly failed to appear and execute the sale deed, the complainant treated the transaction as cheating and the FIR came to be registered.
The petitioner contended that his role had been fundamentally different from that of the sellers. He was neither the owner nor seller of the property, had not received the ₹77.53 lakh alleged to have been paid in connection with the transaction, and was not a beneficiary of the agreement. His involvement was limited to acting as a property dealer and signing the agreement to sell dated 13 February 2019 as a witness.
The Court was also informed that the complainants had instituted a civil suit seeking specific performance and permanent injunction against Kshama Puri and R.B. Puri. Subsequently, the complainants entered into a compromise dated 16 February 2023 with the principal accused. Their legal representative, Varun Puri, thereafter executed the sale deed in favour of the complainant. The FIR had also already been quashed qua Varun Puri by a Coordinate Bench of the High Court.
Importantly, even the counsel appearing for the complainants could not dispute that the petitioner was merely the property dealer in the transaction, had received no amount from the complainant and had signed the agreement to sell only as a witness. It was further acknowledged that no other civil or criminal proceedings concerning the subject matter remained pending except the criminal trial arising from the FIR.
The High Court examined the principles governing its inherent jurisdiction under Section 482 CrPC and relied upon Ajay Mitra v. State of M.P., (2003) 3 SCC 11, along with the principles laid down in State of Haryana v. Bhajan Lal. The Court reiterated that where an FIR does not disclose the essential ingredients of the penal provision or fails to disclose a cognizable offence against an accused, criminal proceedings can be quashed even at the initial stage.
The Court also referred to R. Kalyani v. Janak C. Mehta, (2009) 1 SCC 516, including the principle that one of the paramount duties of superior courts is to ensure that an apparently innocent person is not subjected to persecution and humiliation on the basis of a false or wholly untenable complaint. The judgment further reiterated the principle that criminal vicarious liability cannot be imposed unless the governing statute specifically provides for it.
Applying these principles, the High Court found that the agreement to sell was actually between the complainants and Kshama Puri and R.B. Puri. The petitioner had signed only as a witness and received no portion of the consideration. The principal accused had since died, their legal representative had amicably resolved the entire dispute with the complainants, and the FIR had already been quashed against him.
The Court consequently concluded that continuing the criminal proceedings against the petitioner alone would amount to an abuse of the process of court.
More importantly from the standpoint of the civil-criminal distinction, the Court observed that the contents of the FIR demonstrated that a simple civil dispute had been converted into a criminal offence, which was impermissible. A complainant cannot be permitted to transform a civil dispute into criminal prosecution merely as a means of wreaking vengeance upon an accused.
Decision: The Punjab and Haryana High Court allowed the petition and quashed FIR under Sections 406, 420 and 120-B IPC, along with all consequential proceedings qua the petitioner Praveen Chanda @ Pravin Chanda.