“An open secret”: the Supreme Court has remarked on how often litigants colourize civil disputes into criminal offences, as it quashed a cheating FIR against a power of attorney holder.
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New Delhi: Quashing an FIR and all consequential proceedings against a power of attorney holder in a land sale dispute, the Supreme Court has held that a purely civil dispute cannot be turned into a criminal prosecution unless the foundational ingredients of the alleged offences are made out [Sudha Rakesh v. The State of Karnataka and Another].
Justice Satish Chandra Sharma and Justice Nongmeikapam Kotiswar Singh allowed the petitioner’s Special Leave Petition and set aside the Karnataka High Court’s judgment of September 19, 2022, which had declined to quash the proceedings.
Where the Bench started
Before turning to the facts, the Bench commented on the misuse of criminal process in general:
The tendency of litigants to colourize civil disputes into criminal offences is an open secret in the present times.
It added that courts have tried to maintain the distinction between the two kinds of proceedings:
The courts have tried to put their foot down to prevent the litigants from obliterating the fine distinction between the two. We have done so to prevent the abuse of criminal process.
The operative order
The Court allowed the petition and set aside the High Court’s judgment in Criminal Petition No. 9470/2017:
Accordingly, the instant petition is allowed. The impugned judgment dated 19.09.2022 passed by the High Court of Karnataka in Criminal Petition No. 9470/2017 is set aside. Consequently, the proceedings in FIR/Crime No. 121/2016 PS Kadugodi, along with all consequential proceedings, stand quashed.
How a land deal became an FIR
The complainants were prospective purchasers of land in Karnataka. They had agreed to buy the property but did not complete the transaction within the agreed time, and the landowners later sold the land to a third party. The prospective purchasers filed a civil suit for specific performance, and also set criminal law in motion against the landowners and their power of attorney holder, the petitioner, under Sections 420, 423, 120-B and 34 of the Indian Penal Code. The result was FIR No. 121/2016 at Kadugodi police station. The allegations in the complaint were untested, and the Supreme Court’s order turns on whether the ingredients of the offences were disclosed at all.
Why cheating was not made out
The Court stated what the charge of cheating requires and found it missing on the facts. It noted that the consideration had been paid in 2012, while the sale to the third party took place in 2016, so deception and dishonest inducement did not exist at the time the complainants parted with their money.
The offence of cheating requires a deceptive act which leads to inducement for delivery of property/money.
Thus, the foundational ingredient of cheating is missing.
The power of attorney holder’s position
The sale deed in favour of the third party was executed by the landowners themselves, with the petitioner only confirming it, the Court noted. The case against the petitioner could therefore not stand on its own footing.
If no criminality could be attributed to the landowners by virtue of the execution of sale deed, it cannot be sustained against the petitioner as well.
Why the judgment matters
The ruling reaffirms that the criminal process is not a tool for pressing commercial or property claims. Where the complaint itself shows that money or property was handed over without any deception at the inception, a breach of an agreement to sell is a matter for civil remedies such as a suit for specific performance.
It also shows how the absence of criminality against the principal parties undermines a prosecution of an agent or attorney who merely acted in the transaction. The Court expressed a view only on whether the ingredients of the offences were disclosed. The parties’ civil rights remain to be decided by the civil court.
Case Title: Sudha Rakesh v. The State of Karnataka and Another [SLP (Criminal) No. 12638 of 2022]
Bench: Justice Satish Chandra Sharma and Justice Nongmeikapam Kotiswar Singh, Supreme Court of India
Date of Order: October 5, 2026
Appearances: For the Petitioner: Dr. Aditya Sondhi, Senior Advocate, with Advocates Naveen Chawla, Nayanatara BG, Bedotroyi Gupta, Anubhav Kumar, Vaishnavi Soni and T. Mahipal. For the Respondents: Advocates Sanchit Garga, Kunal Rana, Shashwat Jaiswal, Diksha Arora, Vijender Kumar, Bhanu Pratap Singh, Oorja Goel and Charulata Chaudhary.