Appeal
2. This appeal impugns the judgment and order of the High Court of Judicature at Allahabad1 dated 30.07.2021 passed in Misc. Bench No. 16314 of 2021 whereby the writ petition of the appellants seeking quashing of FIR 2 No.0112 of 2021, dated 14.03.2021, lodged at Police Station (for short, P.S.) Hazratganj, District Lucknow, under Sections 406, 420, 467, 468 and 471 of the Indian Penal Code, 18603, has been dismissed.
Facts
Appellants and respondent no.2 are parties to the agreement in which appellants to provide lands and the respondent to construct residential units
3. Vandana Jain (appellant no. 1), Divya Bhatia, Siddharth Jain (appellant no.2) and Kanishk Jain (appellant no.3), described as first party, entered into a joint venture agreement dated 16.08.2010 with Motor General Sales Ltd. (Respondent No.2), described as second party. As per the terms and conditions of the JVA, the first party gave development rights to the second party for developing land i.e., Plot No. 61 (Old No. 276A), admeasuring 1500 Square Yards, bearing Municipal No. 3A/207 & 208, Azad Nagar, Kanpur. Under the agreement, the second party was required to construct residential units/apartments over the land at its own cost. The capital contribution of the first party was the land which was valued at Rupees Two Crores Fifty Lacs Only. The project was to come up as a single unit in which both first and second party had 50% share.
4. Under the JVA, the second party undertook to complete the project within two years, upon fulfillment of certain conditions such as (i) sanction of plan by Kanpur Development Authority5; and (ii) handing over of vacant possession of the site to the second party.
Appellants are accused respondents no.2 is the informant
7. For certain reasons, not necessary to be disclosed in these proceedings, the JVA could not materialize, resulting in dispute between the parties. In consequence, on 14.03.2021, the second respondent lodged the impugned FIR implicating the appellants along with Divya Bhati as accused.
The First Information Report: Despite received security amount the appellants did not hand over the possession of lands to the respondent
8. In the FIR it was, inter-alia, alleged: (a) that despite receiving Rs. 1 Crore as security for due compliance of the JVA, the accused did not hand over possession of the land; (b) that despite repeated demands for return of the advance money, the accused did not return the same; (c) that the accused made a false promise that the land was free from litigation; (d) that the accused had forged documents to deceive the complainant; (e) that, later, it was discovered that in respect of the land concerned, the accused were in litigation with one Indira Devi Kanodia and the said litigation had been pending since before the date of the agreement, therefore, by suppressing this fact, the accused cheated the complainant. On these allegations, the FIR was registered under Sections 406, 420, 467, 468 and 471 I.P.C.
Appellants preferred W.P before High Court: High Court’s dismissal Order
11. High Court dismissed the writ petition in limine, vide impugned order, without considering whether the facts spelt out in the FIR disclosed a pure civil cause of action as also whether the allegations made, make out an offence qua preparation of a false document.
12. We have heard learned counsel for the parties and have perused the record.
Discussion
Whether Quash petition screens criminal offence or FIR amounts to abuse of process of law to be examine?
15. At the outset, we may observe that while considering a prayer to quash an FIR, ordinarily the allegations made therein are to be taken at their face value to assess whether prima facie commission of a cognizable offence is made out or not. However, where the cause espoused in the FIR is essentially of a civil nature, while addressing a quashing petition, the Court must have regard to the attending circumstances and assess whether it has been given cloak of criminal offence and whether proceeding further on the FIR would amount to the abuse of the process of the court/ law. In making such assessment, the Court may consider not only the contents of the FIR but also the admitted facts / documents recited therein.
16. In the case on hand, a perusal of the FIR would indicate that existence of JVA is admitted. The thrust of the allegations is on: (a) false representation by the appellants about their title to the property/land including suppression of litigation pending in respect thereof; (b) non-fulfilment of contractual obligations; (c) non-refund of security money; (d) furnishing false document. We shall deal with each of the above allegations.
The Joint Venture Agreement
17. There is no dispute between the parties that they had executed a JVA dated 16th August 2010. The dispute between the parties have arisen from the said JVA. In such circumstances, as it is part of the record, it would be useful to refer to its relevant clauses. The said agreement introduces the property in question in the following manner:
“……………..”
Clauses in JVA
19. A careful reading of the aforesaid clauses would reflect that the first party, which means the appellants herein, had assured — (a) that the premises is not attached in Banks or Government Department for Income Tax demand, Sales Tax dues etc. nor it will be attached for any financial liability in future; (b) that if any financial liability demand, taxes, etc. of first party arises it will be realized from the portion of the land and building of first party’s share only and will not be recoverable from the share of the second party; and (c) that the first party would indemnify the second party in all respect with regard to perfect and good marketable title over the subject land and assure that the first party has not been restrained by any court order or income tax or other government department or otherwise to enter into this JVA.
Assurance of appellants regarding court matters in respect of the land
20. It is clear from the afore-extracted clauses that there is no specific statement by the first party as regards no litigation pending. The representation of the first party is about there being no restraint order of any court or income tax or other government department on dealing with the land. What is clear from the agreement is that the appellants had assured the complainant party (a) that there was no attachment or demand against the property; (b) that there is no restraint order operating on them to deal with the property; and (c) that they will indemnify the second party in all respect with regard to perfect, good and marketable title over the subject land. Therefore, the allegation that the accused had falsely represented about there being no litigation qua the land/ property is unfounded.
Security clause: This clause does not say about refund of security money but speaks of adjustment of the same in the share
21. Clause 5 provides for giving of security by the second party for due compliance of the agreement. What is important is that clause 5 does not envisage refund of the security money. Rather, it speaks of adjustment of the security deposit from the share of the first party derived from sale proceeds of the proposed flats in the complex. Interestingly, the expression “respective share of the parties” is defined in the definition clause of the agreement as follows:
“That the entire project will be a single unit however for safe consideration in case of any disputes the ratio of both parties in constructed portion of the project shall be 50% each. Immediately after sanction of the map and before commencement of construction work, both the parties shall decide their respective portions in the map. The share shall be: 50% to First Party 50% to Second Party”.
Since the clause is for adjustment the allegation of security money not refunded would nto make out a criminal offence
22. Therefore, the deposit of security money is nonrefundable. The object of it was to ensure fulfilment of contractual obligations. In lieu of refund, the security amount had to be adjusted from the share of the first party derived from sale proceeds. In such circumstances, the allegation about security money being not refunded would not make out a criminal offence though it may give rise to a civil cause of action.
Letter written by Tehsildar is not traced in the Tehsildar office hence false document
23. During arguments, we had put a specific question to the learned counsel for the respondent as to which document is alleged to have been forged by the accused to disclose their title. In response thereto, the learned counsel for the complainant placed before us a letter written by Tehsildar (Judicial), Sadar, Kanpur, U.P. which disclosed that plot no. 61 (Old Plot No. 276A) area 1500 Sq. Yds. bearing Municipal No. 3A/207 and 208, Azad Nagar, Kanpur is the ancestral property of Shri Siddharth Jain and others regarding which there is no dispute. According to the complainant, this letter is not traceable in the office from which it is purported to have been issued therefore, it is a false document.
Merely a document is not traceable in the records it cannot be said to be forged
24. In our view, merely because a document is not traceable in the records after several years of its issuance, it cannot be said that the document is forged. It is a matter of common knowledge that certificate/letters, such as the one in question, are not maintained in perpetuity. Therefore, if, after 10 or 11 years, merely because the office reports that such letter/ certificate is not traceable in the records of the office, it cannot be said that it is forged. A document would be considered forged document only when the allegations are to the effect that it is a false document within the meaning of section 464 of the I.P.C.
There appears no allegations that title documents submitted by the accused were forged. In such circumstances, the allegation that false document has been submitted is baseless.
Non-fulfilment of contractual obligations only civil remedy is required
25. Insofar as the allegation regarding non-fulfillment of contractual obligations is concerned, recourse to appropriate civil remedy was required. Moreover, this is not a case where something emerged quickly after the agreement to indicate that dishonest intention existed from the beginning. The JVA is dated 16th August 2010 whereas the FIR was lodged in 2021. If there was something stark about the dishonest intention on part of one of the parties to the agreement, it would have been reported promptly and not after 10 years. This clearly indicates that the dispute between the parties was purely of a civil nature.
26. No offence of cheating is made out because, as discussed above, there is no false representation in the JVA. As far as the allegation of false representation about the title is concerned, there is nothing to indicate that what the appellants had stated in the JVA was false. Further, there is no allegation that history of title of the property/land narrated in the JVA contains any false statement. Moreover, the JVA nowhere states that there is no litigation or dispute pending, rather it speaks of indemnifying the complainant party in case of any loss on account of any dispute. The statement in the JVA that there was no restraint order of any court or Government department in respect of dealing with the land is not alleged or shown to be false or incorrect.
27. As far as non-fulfillment of contractual obligations are concerned, recourse can be had to civil remedies. On facts, recourse to criminal proceedings, in our view, is nothing but abuse of the process of law/ court. More so, when there is nothing to show that the accused had harbored a dishonest intention from inception.
No criminal breach of trust offence made out
28. There is no criminal breach of trust because the security amount was not refundable, rather it was adjustable against the share of the first party derived from sale proceeds. Thus, in the event of breach of any of the conditions of the agreement, the appropriate course was to take recourse to civil remedies.
29. For the foregoing reasons, we are of the considered view that dispute between the parties is essentially of a civil nature arising from the JVA. Further, a complete reading of the FIR along with admitted documents, does not disclose commission of offence of either cheating or criminal breach of trust much less creation or using of a false document.
FIR only discloses civil cause of action thus case quashed
30. We are therefore of the considered view that the impugned first information report only discloses a civil cause of action. The High Court, unfortunately, did not take pains to carefully read the FIR and consider the admitted documents including the JVA to find out whether, prima facie, cognizable offence was made out or not. The appeal is, therefore, allowed. The judgment and order of the High Court is set aside. The impugned FIR and all proceedings emanating therefrom are hereby quashed.
Resources
Judgments that are involved or cited
- Vandana Jain & Ors. v. The State of Uttar Pradesh & Ors. (2026 INSC 192): This is the primary judgment of the Supreme Court of India that quashed the FIR and set aside the previous order of the High Court of Judicature at Allahabad.
- High Court of Judicature at Allahabad, Misc. Bench No. 16314 of 2021: This is the impugned judgment dated July 30, 2021, which had originally dismissed the appellants’ petition to quash the FIR.
- Paramjeet Batra v. State of Uttarakhand and others, (2013) 11 SCC 673: Cited by the Supreme Court to support the principle that when an FIR’s cause is essentially civil in nature, the Court must assess if it has been given a “cloak of criminal offence” to ensure the process of law is not abused.
Indian Penal Code (IPC), 1860
- Section 406: Relating to criminal breach of trust; the Court held this was not made out as the security money was adjustable, not refundable.
- Section 420: Relating to cheating and dishonestly inducing delivery of property.
- Section 464: Defines the making of a “false document,” which is a prerequisite for forgery.
- Section 467: Forgery of valuable security, will, etc..
- Section 468: Forgery for the purpose of cheating.
- Section 471: Using as genuine a forged document.
Other Statutory References
- Arbitration Act: Referenced regarding Clause 7 of the JVA, which mandated that disputes be referred to arbitration rather than civil courts.
- Indian Registration Act, Section 32: Cited in Clause 6.9 of the JVA regarding the right of the second party to execute and register sale deeds.
Party
Vandana Jain & Ors. versus The State of Uttar Pradesh & Ors - Criminal Appeal No. 1127 of 2026 - 2026 INSC 192 - February 25, 2026 – Hon’ble Mr. Justice Pamidighantam Sri Narasimha, J. and Hon’ble Mr. Justice Manoj Misra, J.
