In the result, this Criminal Original Petition is allowed. The FIR in Crime No.39 of 2025 on the file of the Inspector of Police, District Crime Branch, Madurai District, registered for the offences under Sections 406, 420 and 120-B IPC, corresponding to Sections 316(2), 318(4) and 61(2) BNS, 2023, is quashed as against the petitioners. Consequently, connected miscellaneous petitions are closed. The interim stay already granted stands made absolute. 30.04.2026 NCC : Yes / No Index : Yes / No Internet : Yes/ No Sml To 1. The Inspector of Police, DCB, Madurai District. 2. The Additional Public Prosecutor, Madurai Bench of Madras High Court, Madurai. L.VICTORIA GOWRI, J.
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
RESERVED ON : 27.02.2026
PRONOUNCED ON : 30.04.2026
CORAM
THE HONOURABLE MRS.JUSTICE L.VICTORIA GOWRI
Crl.O.P.(MD).No.21195 of 2025 and
Crl.M.P.(MD)No.418 of 2026
1. L. Jaisankar
2. Manimegalai
3. Vinothraja
… Petitioner/Accused No.
Vs.
1. The State of Tamilnadu,
Rep by the Inspector of Police, DCB, Madurai District.
(Crime No.39/2025)
…. Respondent / Complainant
2. Agilandeeswari …. Respondents /
Defacto Complainant
Prayer : Criminal Original Petition is filed under Section 528 of
BNSS, 2023, to call for the entire records pertaining to the case in
Crime No. 39 of 2025 on the file of the Inspector of Police, District
Crime Branch, Madurai District and quash the same.
For Petitioners : Mr.G.Karthikeyan,
Senior counsel for Mr.R. Anand
For R-1 : Mr.M.Sakthi Kumar,
Government Advocate (Crl. side)
For R-2 : Mr.T.Lajapathiroy,
Senior counsel,
For Mr.D.S.Haroon Rasheed
ORDER
Preface:
The present Criminal Original Petition presents yet another instance where a monetary transaction secured by registered instruments is sought to be examined through the lens of criminal law. The boundary between a civil wrong and a criminal offence is sometimes thin, but never invisible. The Court, while exercising jurisdiction under Section 528 of BNSS, is required to examine whether the allegations, even if taken at their face value, disclose the foundational ingredients of the offences alleged, or whether the criminal process has been set in motion as a coercive instrument to settle a civil score.
2. The inherent jurisdiction of this Court is not intended to conduct a mini trial. Equally, it is not powerless where the complaint, read as a whole, is demonstrably attended by delay, improvements, civil antecedents and absence of essential criminal ingredients. The Court is therefore required to separate the substance of the accusation from its embellishment.
Case of the prosecution:
3. The prosecution case, as projected in the FIR and in the counter affidavit of the second respondent / defacto complainant, is that the petitioners, who are husband, wife and son, were known to the second respondent through business acquaintance. According to the second respondent, in the year 2017, the petitioners approached her seeking financial assistance of Rs.1 crore for their business needs and for the marriage expenses of the third petitioner / A3.
4. It is alleged that, believing the representation of the petitioners, the second respondent arranged funds through her father-in-law and others, and a total sum of Rs.1.10 crore was advanced to the petitioners.
5. As security for the said transaction, a mortgage deed wasexecuted in respect of immovable property situated at Kodikulam, Madurai. A registered Power of Attorney in Document No.778 of 2017 dated 27.04.2017 was also executed in favour of the second respondent.
6. The grievance of the second respondent is that though the actual transaction was for Rs.1.10 crore, the mortgage deed was deliberately made to reflect only Rs.5 lakhs, allegedly at the instance of the petitioners, to avoid higher stamp duty.
7. It is further alleged that after receiving the money, the petitioners cancelled the Power of Attorney on 11.05.2017 and failed to repay the amount. According to the defacto complainant, such immediate cancellation of the Power of Attorney discloses dishonest intention from inception.
8. The second respondent would further state that after remaining evasive for several years, the petitioners issued a legal notice dated 26.07.2025 expressing willingness to discharge the mortgage only by paying Rs.5 lakhs. Therefore, she lodged the complaint on 15.10.2025, which culminated in registration of FIR in Crime No.39 of 2025 for the offences under Sections 406, 420 and 120(B) IPC.
Grounds for quash:
9. The petitioners seek quashing of the FIR on the following grounds:
9.1. Firstly, it is submitted that the alleged transaction is dated 27.04.2017, whereas the complaint was lodged only on 15.10.2025, after an unexplained delay of nearly eight years.
9.2. Secondly, the petitioners contend that the entire dispute arises out of a loan transaction secured by a registered mortgage deed and therefore the remedy, if any, lies before the civil Court.
9.3. Thirdly, it is submitted that the petitioners had issued a legal notice in July 2025 expressing readiness to redeem the mortgage and thereafter filed O.S.No.552 of 2025 before the learned Principal District Judge, Madurai, for redemption of mortgage. Only thereafter, the present FIR came to be registered. Therefore, according to the petitioners, the FIR is a counterblast.
9.4. Fourthly, it is contended that an earlier complaint had been given before the Trichy Superintendent of Police on 23.06.2025, wherein the allegation was confined to a mortgage transaction involving Rs.50 lakhs. When the police did not intervene, the present complaint was lodged at Madurai by improving the allegations and increasing the amount to Rs.1.10 crore.
9.5. Fifthly, the petitioners submit that Sections 406 and 420 IPC cannot be mechanically invoked together, since cheating requires dishonest inducement at inception, while criminal breach of trust requires entrustment followed by subsequent misappropriation.
9.6. Sixthly, it is contended that no specific overt act has been attributed to each of the petitioners and that all family members have been roped in only to pressurise them in a civil dispute.
Gist of counter affidavit:
10. The second respondent, in her counter affidavit, has opposed the quash petition by contending that the petitioners induced her to part with Rs.1.10 crore by falsely projecting themselves as persons engaged in business and by offering property security. According to her, the mortgage deed and Power of Attorney were executed only to gain her confidence. The undervaluation of the mortgage deed to Rs.5 lakhs was allegedly done at the instance of the petitioners.
11. It is further contended that the cancellation of the Power of Attorney within a short span after execution would clearly show that the petitioners never intended to honour their commitment. The second respondent also contends that delay cannot be a ground to quash the FIR, since the offence of cheating is not barred by limitation and the petitioners had been continuously evading repayment.
12. It is further stated that civil and criminal proceedings can co-exist where the allegations disclose dishonest inducement and criminal breach of trust. The second respondent therefore seeks dismissal of the quash petition and vacation of the interim stay granted earlier.
Arguments on either side:
13. The learned counsel for the petitioners submitted that the entire prosecution is founded upon a monetary transaction of the year 2017 and that the FIR has been registered only on 15.10.2025, after nearly eight years. It was contended that the petitioners had executed a registered mortgage deed in respect of their property and that the dispute, even according to the complaint, relates only to the amount payable under the mortgage transaction. Therefore, the matter is purely civil in nature.
14. The learned counsel submitted that the petitioners issued a legal notice dated 25.07.2025 expressing their willingness to redeem the mortgage by paying the amount reflected in the mortgage deed. Since there was no response, the petitioners instituted O.S.No. 552 of 2025 on 06.10.2025 for redemption of mortgage. It was further submitted that the FIR was registered only after the said civil proceedings, and therefore the criminal case is nothing but a counterblast.
15. The learned counsel also relied upon the earlier complaint dated 23.06.2025 given before the Trichy Superintendent of Police, wherein the allegation was only with respect to a mortgage transaction and receipt of Rs.50 lakhs. According to the petitioners, the later complaint at Madurai contains improved allegations by increasing the amount to Rs.1.10 crore.
16. It was contended that the bank transactions would show only Rs.25 lakhs and that the remaining allegations relating to cash payment are unsupported. It was also submitted that the BMW car of the petitioners was in the hands of the defacto complainant’s side and that a complaint had been given in that regard. The learned counsel submitted that the essential ingredients of Section 420 IPC are absent, since there is no material to show dishonest intention at the inception of the transaction.
17. It was further submitted that Section 406 IPC is notattracted, since a loan transaction secured by mortgage does not amount to entrustment in the sense required under Section 405 IPC.
18. The learned counsel relied upon the judgments of the Hon’ble Supreme Court in Mahmood Ali and others v. State of U.P. and others1, Achin Gupta v. State of Haryana2, and Mohammad Wajid and another v. State of U.P. and others3, to contend that the Hon’ble High Court can look into the overall circumstances, delay, counterblast nature of prosecution, vague allegations and criminal antecedents cannot be the sole reason to refuse quash.
19. The learned counsel for the second respondent submitted that the allegations clearly attract Section 420 IPC, since the petitioners dishonestly induced the complainant to part with Rs.1.10 crore. It was submitted that the petitioners represented themselves as entrepreneurs and induced the second respondent to advance the amount. According to the second respondent, the petitioners were
1 2023 LiveLaw (SC) 613 / 2023 INSC 684
2 2024 SCC OnLine SC 759 / 2024 INSC 369
3 2023 LiveLaw (SC) 624 / 2023 INSC 683
not genuine entrepreneurs and had no real business as represented by them. These aspects, according to the learned counsel, can be tested only through investigation.
20. It was further submitted that the petitioners executed both a mortgage deed and a Power of Attorney as security for the loan amount and thereafter cancelled the Power of Attorney shortly after receiving the money. Such cancellation, according to the defacto complainant, would indicate dishonest intention from inception.
21. The learned counsel submitted that the mortgage deed was shown for a lesser amount only at the instance of the petitioners, and the real transaction was for a much higher amount. It was argued that the existence of civil remedy or pendency of civil proceedings does not bar criminal prosecution where the allegations disclose cheating.
22. The learned counsel also submitted that there are three other similar cases against the petitioner involving allegations of cheating, including matters relating to medical seat procurement, and therefore the antecedents of the petitioners also require investigation.
23. The learned counsel placed reliance upon the principles stated in Delhi Race Club (1940) Ltd. v. State of U.P. , wherein the distinction between criminal breach of trust and cheating has been considered, and submitted that even if Section 406 IPC does not ultimately survive, Section 420 IPC requires investigation. The Hon’ble Supreme Court in Delhi Race Club (1940) Ltd. v. State of U.P.5, has reiterated that the offences of criminal breach of trust and cheating have distinct ingredients, and that dishonest intention at inception is central to cheating, whereas entrustment followed by misappropriation is central to criminal breach of trust. It was therefore submitted that at the FIR stage, this Court ought not to interdict the investigation.
24. The learned Government Advocate (Crl. Side) submitted that the FIR was registered on the basis of a complaint disclosing cognizable offences. It was submitted that immediately after registration of the FIR, this Court granted interim stay and therefore investigation could not proceed. The State submitted that the allegations involve substantial monetary transactions and that investigation is necessary to ascertain the truth regarding payment, mortgage, Power of Attorney, cancellation and alleged antecedents.
25. It was further submitted that, as per police instructions, three similar cases are stated to be pending against the petitioners in other districts, but the same can be verified only during
investigation.
Point for consideration:
26. The point that arises for consideration is whether the FIR in Crime No.39 of 2025 registered for the offences under Sections 406, 420 and 120-B IPC, corresponding to Sections 316(2), 318(4) and 61(2) BNS, 2023, discloses the essential ingredients of the alleged offences, or whether the same is liable to be quashed as an abuse of process of law under Section 528 BNSS?
Analysis:
27. Section 528 BNSS preserves the inherent jurisdiction of this Court to prevent abuse of process of any Court and to secure the ends of justice. The provision is in pari materia with Section 482 Cr.P.C., 1973.
28. The Hon’ble Supreme Court in Mahmood Ali and others v. State of U.P. and others6, has held that while considering a petition for quashing, the Hon’ble High Court is not expected to read the FIR mechanically. In frivolous or vexatious proceedings, the Court is empowered to look into the overall circumstances leading to the registration of the case and to read between the lines where necessary.
29. In Achin Gupta v. State of Haryana7, the Hon’ble Supreme Court again emphasised that where allegations are vague, omnibus and appear to have been instituted as a counterblast, the Hon’ble High Court must exercise its jurisdiction to prevent abuse of criminal process.
6 2023 LiveLaw (SC) 613
7 2024 SCC OnLine SC 759
30. In Mohammad Wajid and another v. State of U.P. and others8, the Hon’ble Supreme Court held that antecedents of an accused cannot be the sole consideration to decline quashing if the FIR itself does not disclose the commission of any offence.
31. Therefore, the mere registration of an FIR does not foreclose the jurisdiction of this Court. If the complaint, even when taken at its highest, does not disclose the essential ingredients of the offences alleged, the Court is duty-bound to interdict the prosecution.
32. Section 420 IPC punishes cheating and dishonest inducement to deliver property. The corresponding provision under
BNS is Section 318(4). The essential ingredients are:
i) deception of a person;ii) fraudulent or dishonest inducement; iii) delivery of property or making, altering or destroying valuable security; and iv) dishonest intention at the very inception of the transaction.
8 2023 LiveLaw (SC) 624 / 2023 INSC 683
33. The law is well settled that every breach of contract doesnot amount to cheating. To constitute cheating, the complainant must show that the accused had fraudulent or dishonest intention at the time when the promise or representation was made.
34. In the present case, the transaction admittedly arose in the year 2017. The parties executed registered documents, namely, a mortgage deed and a Power of Attorney. The complaint itself proceeds on the footing that the money was advanced as a loan and that documents were executed as security. The allegation that the mortgage deed reflected only Rs.5 lakhs though the actual amount was Rs.1.10 crore is a matter arising from the terms, validity, enforceability and evidentiary value of the registered mortgage deed. Such a controversy is essentially civil in complexion.
35. The second respondent’s grievance is that the petitioners did not repay the loan and later offered to redeem the mortgage only for Rs.5 lakhs. Such conduct may give rise to civil remedies, but non-payment of money or assertion of a lower liability in a mortgage transaction, by itself, cannot establish dishonest intention at inception.
36. The cancellation of Power of Attorney on 11.05.2017 is relied upon as the principal circumstance to infer initial fraudulent intention. However, a Power of Attorney is, by its very nature, an authority capable of revocation, subject of course to civil consequences if coupled with interest. Whether such cancellation was valid, invalid, enforceable, or contrary to the understanding between parties is again a matter suited for adjudication before the civil Court.
37. The fact that the petitioners had issued a legal notice and thereafter filed a suit for redemption of mortgage before registration of the FIR is a relevant circumstance. The FIR came to be registered only after the petitioners had invoked civil remedies.
38. The delay of nearly eight years assumes significance. No convincing explanation is forthcoming as to why, if the petitioners had cheated the complainant in 2017 itself, the criminal law was set in motion only in October 2025. The earlier complaint dated 23.06.2025, as pointed out by the petitioners, referred to the mortgage transaction and a lower amount. The later complaint enlarges the amount and widens the allegations. Such improvement, coupled with the timing of the FIR after civil proceedings, cannot be ignored while exercising jurisdiction under Section 528 BNSS.
39. In the considered view of this Court, the materials placed do not disclose the indispensable ingredient of dishonest intention at inception. Therefore, the offence under Section 420 IPC / Section 318(4) BNS is not made out.
40. Section 406 IPC punishes criminal breach of trust as defined under Section 405 IPC. The corresponding provision under
BNS is Section 316(2). The essential ingredients are:
i) entrustment of property or dominion over property;ii) dishonest misappropriation or conversion to own use; or iii) dishonest use or disposal in violation of law or legal contract.
41. Entrustment is the heart of criminal breach of trust.
Without entrustment, Section 406 IPC cannot stand.
42. In the present case, the allegation is not that the complainant entrusted money to the petitioners to hold it in fiduciary capacity or for a specific purpose on behalf of the complainant. The allegation is that the complainant advanced money as a loan to the petitioners, secured by mortgage.
43. Once money is advanced as a loan, the borrower receives it not as trustee but as debtor, subject to an obligation to repay. Failure to repay may constitute breach of contractual obligation, but it does not ipso facto constitute criminal breach of trust.
44. The Hon’ble Supreme Court in Velji Raghavji Patel v. State of Maharashtra , held that to establish criminal breach of trust, entrustment or dominion over property in a fiduciary capacity must be shown. Mere failure to account or pay money in a civil relationship would not automatically attract Section 406 IPC.
45. In Delhi Race Club (1940) Ltd. v. State of U.P. ,
Criminal Appeal No.3114 of 2024, decided on 23.08.2024, the
Hon’ble Supreme Court reiterated the distinction between Section 406 and Section 420 IPC. Criminal breach of trust requires entrustment followed by misappropriation, whereas cheating requires deception and dishonest inducement at inception.
46. Applying the above principles, this Court finds that the allegation of lending money under a mortgage arrangement does not constitute entrustment. Therefore, the offence under Section 406 IPC / Section 316(2) BNS is not attracted.
47. The learned counsel for the second respondent submitted that even if Section 406 IPC is not ultimately sustained, the allegation under Section 420 IPC must be investigated. There may be cases where alternative allegations are permissible at an initial stage. However, the present FIR does not merely present alternative legal characterisation. It arises from a single loan-cum-mortgage transaction.
48. The foundation for Section 420 IPC is that the complainantwas deceived into parting with money. The foundation for Section 406 IPC is that the property was entrusted and thereafter misappropriated. These two mental elements stand on different legal foundations.
49. Where the gravamen of the complaint is loan, mortgage, non-payment and redemption dispute, both provisions cannot be mechanically pressed into service to convert a civil money claim into a criminal prosecution.
50. In the present case, neither dishonest inducement at inception nor entrustment in fiduciary capacity is disclosed. Hence, both Sections 420 and 406 IPC fail on their own ingredients.
51. Section 120-B IPC, corresponding to Section 61(2) BNS, punishes criminal conspiracy. The essence of conspiracy is an agreement between two or more persons to commit an illegal act or a legal act by illegal means.
52. The FIR does not disclose any independent materialshowing meeting of minds between the petitioners to commit an illegal act. The petitioners are family members. Merely because husband, wife and son are parties to a transaction or are arrayed as accused, conspiracy cannot be presumed.
53. When the principal offences under Sections 406 and 420 IPC are not made out on the face of the complaint, the allegation of conspiracy cannot survive in the absence of specific factual foundation. Therefore, Section 120-B IPC / Section 61(2) BNS is also not attracted.
54. The transaction is of the year 2017. The complaint was lodged only on 15.10.2025. The delay is not of a few months but nearly eight years. Delay by itself may not always be fatal. However, unexplained delay assumes significance where the transaction is document-based, civil remedies were available throughout, and the FIR is lodged only after the accused issued legal notice and instituted civil proceedings.
55. Considerable delay and counterblast are many timesrelevant circumstances in quashing criminal proceedings where the prosecution appeared to be retaliatory.
56. The Hon’ble High Court may look into the surrounding circumstances and is not bound to accept a prosecution narrative in a mechanical manner where the proceedings appear vexatious. In the present case, the sequence is material. The petitioners issued legal notice. They filed a civil suit for redemption of mortgage. Thereafter, the FIR was registered. The criminal process therefore bears the colour of pressure litigation.
57. The learned counsel for the defacto complainant and the learned Government Advocate submitted that there are three similar cases against the petitioners.
58. Such a submission cannot, by itself, sustain the present FIR. In Mohammad Wajid and another v. State of U.P. and
others11,, the Hon’ble Supreme Court held that criminal antecedents
11 2023 LiveLaw (SC) 624 / 2023 INSC 683
cannot be the sole consideration to refuse quashing if the FIR under examination does not disclose the commission of an offence.
59. Every FIR must stand or fall on its own allegations. Antecedents may be relevant for bail, sentencing or investigation in a proper case, but they cannot supply missing ingredients of the offences alleged in the present FIR.
Epilogue:
60. Criminal law is a potent instrument of public justice. It is not intended to become an instrument of private recovery. When a transaction is embodied in registered documents, when the grievance is essentially one of repayment and redemption, and when the criminal complaint is lodged after a long silence of eight years following initiation of civil proceedings, the Court cannot remain a silent spectator.
61. The inherent jurisdiction of this Court exists precisely to prevent the criminal process from being employed as a lever in civil disputes. The allegations in the present case may give rise to civil adjudication regarding the mortgage, redemption, quantum payable, validity of cancellation of Power of Attorney and other incidental reliefs. But the materials do not disclose the foundational ingredients of cheating, criminal breach of trust or conspiracy.
62. Therefore, allowing the FIR to continue would amount to permitting the criminal process to be used for a purpose for which it was never designed.
63. In the result, this Criminal Original Petition is allowed. The
FIR in Crime No.39 of 2025 on the file of the Inspector of Police, District Crime Branch, Madurai District, registered for the offences under Sections 406, 420 and 120-B IPC, corresponding to Sections 316(2), 318(4) and 61(2) BNS, 2023, is quashed as against the petitioners. Consequently, connected miscellaneous petitions are closed. The interim stay already granted stands made absolute.
30.04.2026
NCC : Yes / No
Index : Yes / No
Internet : Yes/ No
Sml
To
1. The Inspector of Police, DCB, Madurai District.
2. The Additional Public Prosecutor, Madurai Bench of Madras High Court, Madurai.
L.VICTORIA GOWRI, J.
Sml
CRL OP(MD)No.21195 of 2025
30.04.2026
