[Cites 14, Cited by 0]
Madras High Court
L.Jai Sankar vs State Of Tamilnadu Rep By Inspector Of ... on 30 April, 2026
Crl.OP(MD)No.21195 of 2025
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.
1/27
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Crl.OP(MD)No.21195 of 2025
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
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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.
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5. As security for the said transaction, a mortgage deed was
executed 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
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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
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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.
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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
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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
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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.
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17. It was further submitted that Section 406 IPC is not
attracted, 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
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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,
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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.4, 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
4 (2024) 10 SCC 690
5 (2024) 10 SCC 690
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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?
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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
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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
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33. The law is well settled that every breach of contract does
not 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
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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
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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.
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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 Maharashtra9, 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.
9 AIR 1965 SC 1433
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45. In Delhi Race Club (1940) Ltd. v. State of U.P.10,
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.
10 (2024) 10 SCC 690
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48. The foundation for Section 420 IPC is that the complainant
was 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.
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52. The FIR does not disclose any independent material
showing 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.
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55. Considerable delay and counterblast are many times
relevant 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
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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
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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
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To
1. The Inspector of Police,
DCB, Madurai District.
2. The Additional Public Prosecutor,
Madurai Bench of Madras High Court,
Madurai.
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L.VICTORIA GOWRI, J.
Sml
30.04.2026
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