Absence Of Registration Of Sale Agreement Does Not Neutralize Allegations Of Fraud; Supreme Court Cancels Anticipatory Bail In Property Fraud Case

"Nature or form of the agreement does not, by itself, determine the existence or otherwise of a criminal offence. The allegation is not merely of breach of contract, but of fraudulent inducement and subsequent conduct inconsistent with the representations made. The absence of registration does not, therefore, neutralize the criminality alleged," Supreme Court, in a significant ruling dated May 26, 2026, held that the existence of a civil remedy or the mere non-registration of a sale agreement does not preclude criminal proceedings where ingredients of cheating and fraud are prima facie evident.

A bench of Justice Prashant Kumar Mishra and Justice N.V. Anjaria observed that in cases involving large-scale economic fraud, courts must prioritize the requirements of a fair investigation over peripheral considerations.

The case involves a large-scale financial fraud regarding a residential property in Lucknow. The complainant, Saurabh Agrawal, alleged that he entered into a notarized agreement to sell with Respondent No. 2, Monika Dwivedi, and paid a substantial sum of Rs. 3,55,00,000/- out of a total consideration of Rs. 4,30,00,000/-. However, despite receiving the amount, the accused allegedly executed a sale deed in favor of a third party, leading to an FIR under Sections 406, 420, 467, 468, 471, 506, 120-B, and 34 of the IPC.

The primary question before the Court was whether the High Court was justified in granting anticipatory bail by treating the matter as a civil dispute due to the non-registration of the sale agreement. The Court also examined whether the failure to consider the criminal antecedents of the accused rendered the exercise of judicial discretion unsustainable.

Form of Agreement Does Not Negate Criminal Intent

The Supreme Court scrutinized the High Court’s reasoning that because the agreement was notarized and not registered, it indicated a dispute of a civil nature. The bench clarified that the focus of criminal law in such matters is on the "deception at the inception" rather than the technicalities of the contract.

Allegation Of Fraudulent Inducement Is Key

The Court noted that the gravamen of the accusation was that the complainant was led to believe all necessary parties would join the transaction, causing him to part with a massive sum of money. The bench observed that whether or not all co-owners actually executed the agreement is a matter of evidence to be determined during the trial.

"Whether or not all co-owners actually executed the agreement is a matter of evidence; at this stage, the focus is on the allegation of deception at the inception," the bench held.

Civil Remedy No Bar To Criminal Prosecution

The bench rejected the High Court’s observation that the complainant’s prayer for a refund in the FIR suggested a purely civil dispute. It reiterated the settled legal position that criminal proceedings are not precluded simply because a civil remedy, such as restitution or a suit for specific performance, is available to the aggrieved party.

Restitution Demands Do Not Efface Cheating

The Court emphasized that the mere fact that a victim seeks the return of their money does not wash away the allegations of fraud. Where the ingredients of a criminal offence are prima facie made out, the criminal justice machinery must be allowed to take its course without being hindered by the labels of "civil dispute."

"The mere fact that the complainant seeks restitution of the amount paid does not efface the allegations of cheating or fraud," the Court remarked.

Failure To Consider Criminal Antecedents

A major point of contention was the High Court's silence regarding the criminal history of the accused. The Supreme Court pointed out that previous orders by the High Court itself, while dismissing a quashing plea, had recorded the existence of multiple criminal antecedents of a similar nature against the respondent.

Relevant Factors Overlooked In Bail Discretion

The bench noted that the Sessions Court had also rejected the bail application earlier based on these antecedents and the seriousness of the allegations. The Supreme Court found the High Court's omission to consider these factors, especially in an economic offence involving a substantial sum, as a failure of proper application of mind.

"The omission to consider such relevant factors, particularly in a case involving allegations of economic fraud, renders the exercise of discretion by the High Court unsustainable," the bench observed.

"The High Court has thus proceeded on considerations which are peripheral to the issue at hand, while overlooking the factors that are germane to the exercise of discretion for grant of anticipatory bail."

Need For Effective Investigation In Economic Offences

The Court highlighted that the accused had been absconding and coercive steps were previously required to secure their presence. Given the premeditated nature of the inducement and the subsequent alienation of the property to a third party, the bench concluded that this was not a fit case for the protection of anticipatory bail.

The Supreme Court set aside the impugned order of the High Court, emphasizing that the grant of protection was unwarranted given the magnitude of the transaction and the requirements of an effective investigation. Consequently, the anticipatory bail granted to Monika Dwivedi was cancelled, though the Court clarified that these observations would not influence the trial on merits.

Date of Decision: May 26, 2026