Supreme Court Quashes Cheating FIR Arising from Joint Venture Agreement, Holding Pure Civil Dispute Cannot Be Given Criminal Colour

Summary: The appeal arose from the Allahabad High Court’s refusal to quash an FIR lodged in 2021 in respect of a Joint Venture Agreement dated 16 August 2010 between the appellants and the complainant for development of land at Kanpur; the FIR alleged that despite receiving Rs. 1 crore as security, the appellants failed to hand over possession, suppressed pending litigation relating to the land, failed to refund the security deposit, and furnished false documents; the Supreme Court examined the Joint Venture Agreement in detail and found that it contained no representation that no litigation was pending, but only assurances regarding absence of attachment or restraint orders and indemnity in respect of title; the Court noted that the security deposit was expressly non-refundable and adjustable against the first party’s share, thereby negating the allegation of criminal breach of trust; as regards forgery, the Court held that mere non-traceability of a revenue letter after several years does not make it a “false document” under Section 464 IPC, and there was no allegation of fabrication of title deeds; further, the eleven-year delay in lodging the FIR indicated absence of dishonest intention from inception; holding that the dispute was fundamentally contractual and civil, the Court reiterated that criminal law cannot be used as a pressure tactic in commercial disputes.

Decision: The appeal was allowed; the judgment and order of the Allahabad High Court dated 30.07.2021 were set aside; FIR No. 0112 of 2021 registered at Police Station Hazratganj, District Lucknow under Sections 406, 420, 467, 468 and 471 IPC and all consequential proceedings were quashed; pending applications, if any, stood disposed of.