🏠 The Disputed Deal: Roti Godown in Kanpur
In June 2020, Rikhab Birani and Sadhna Birani entered into an oral agreement to sell Roti Godown No. 28/27 on Birhana Road, Kanpur, Uttar Pradesh, to Shilpi Gupta for ₹1.35 crore. Shilpi Gupta and her husband claim they paid ₹19 lakh between June and September 2020 as part of the sale consideration.
However, according to the sellers, Shilpi was required to pay 25% of the sale amount by 15.09.2020, but failed to do so. A ₹10 lakh cheque she issued bounced due to insufficient funds. Attempts were made via WhatsApp and other communications to remind her to complete the sale, but there was no resolution.
💸 Sale to Another Buyer at a Loss
A year later, on 03.09.2021, the Biranis sold the property to a different buyer for ₹90 lakh, claiming a loss of ₹45 lakh due to the failed earlier transaction. They argued they should not be liable to refund any amount to Shilpi Gupta.
⚖️ Legal Proceedings Take a Criminal Turn
Despite not initiating any civil suit, Shilpi Gupta filed criminal proceedings:
- April 2022: Magistrate dismissed her *Section 156(3) CrPC plea—held the dispute was civil.
- July 2023: A second criminal complaint was also dismissed for the same reason.
- July 2023: She directly filed FIR No. 78/2023 alleging offences under *Sections 420, 406, 354, 504, and 506 IPC.
- September 2023: Police filed a chargesheet.
- January 2024: Magistrate took *cognizance and summoned the Biranis.
- May 2024: High Court dismissed the Biranis’ *Section 482 CrPC petition.
🧑⚖️ Supreme Court Verdict: A Case of Civil Wrong, Not Crime
The Supreme Court quashed the FIR and chargesheet, holding that the case was purely civil in nature, lacking essential ingredients of cheating or criminal breach of trust.
The Court emphasized that no fraudulent or dishonest intention was shown at the time of the agreement—a key requirement for criminal charges under Sections 420 or 406 IPC. It strongly criticized the police and trial court for allowing a criminal case to proceed in what was clearly a contractual dispute.
💰 ₹50,000 Cost Imposed on Uttar Pradesh Government
The Court imposed a ₹50,000 penalty on the State of Uttar Pradesh for misusing criminal proceedings in a civil matter. The Chief Secretary has been directed to ensure payment within six weeks and may recover the amount from errant officers.
The Court refrained from penalizing Shilpi Gupta, acknowledging she may have been misled by poor legal advice.
🧭 Why This Matters for Property Buyers and Sellers
This case is a critical reminder that breach of contract alone doesn’t constitute a criminal offence. If you’re involved in a property transaction that fails, your legal remedy lies in the civil courts, not the police station.
Cognizance - judicial acknowledgment or formal awareness of an offence by a court.
CrPC - Code of Criminal Procedure
Section 156(3) CrPC – Allows a Magistrate to direct the police to register an FIR and investigate, if the complaint discloses a cognizable offence.
Section 420 IPC – Punishes cheating and dishonestly inducing someone to deliver property, requiring fraudulent intent at the outset.
Section 406 IPC – Deals with criminal breach of trust, where entrusted property is dishonestly misused or not returned.
Section 354 IPC – Punishes assault or criminal force on a woman with intent to outrage her modesty.
Section 504 IPC – Punishes intentional insult that provokes a person to break public peace.
Section 506 IPC – Punishes criminal intimidation, meaning threats intended to cause fear or force someone to act against their will.
Section 482 CrPC – Grants inherent powers to the High Court to quash criminal proceedings if they amount to an abuse of the legal process or don't disclose any offence.