Civil Dispute Cannot Wear Criminal Colour: Supreme Court Quashes Cheating FIR Against Power-of-Attorney Holder

Landowners executed a sale agreement and a general power of attorney in favour of the petitioner in 2012. Acting as their attorney, the petitioner agreed on 19 November 2012 to sell the land to respondent no. 2 and another, who had to pay the balance and take the sale deed within seven months but never did (paras 2-3). In February 2016 the land was sold to a third party. The prospective buyers then sued for specific performance and lodged an FIR under Sections 420, 423 and 120-B IPC (paras 3-4). The Karnataka High Court quashed the FIR for the landowners in 2017 but, in 2022, another Bench refused to quash it for the petitioner (paras 5-6).

The Court held that the High Court had fallen into "a grave" error (para 14). The allegation rested on the sale deed, which the landowners executed and to which the petitioner was only a confirming party; if no criminality attached to them, none could attach to the petitioner (para 14). Receiving the money on everyone's behalf, or signing the 2012 agreement as their attorney, did not set the petitioner apart (para 14). That the land later fetched a lower price was speculative and would equally have implicated the landowners (para 15). Whether the petitioner passed the money on to the landowners was not even within the allegations (para 16). Cheating needs a deception inducing delivery of property, but the money was paid in 2012, when the land could legitimately have been transferred; the sale came four years later (para 17). Section 423 was also misapplied, as there was no false statement about consideration (para 17). The High Court should have kept to judicial consistency and propriety (para 18).