Mere existence of civil proceedings does not bar prosecution if the criminal allegations disclose a cognizable offence: Telangana High Court

"Prima Facie Cheating Allegations Cannot Be Quashed Solely Due to Civil Dispute" – Telangana High Court dismissed a criminal petition filed under Section 482 CrPC, refusing to quash proceedings for offences under Sections 406, 420, and 120B IPC, despite the pendency of a civil suit on the same transaction. The Court reiterated that criminal proceedings cannot be stifled merely because a civil remedy is also being pursued.

“Disputed Facts Cannot Be Adjudicated in a Petition Under Section 482 CrPC”

Justice J. Sreenivas Rao emphasized that the High Court, while exercising its inherent powers, cannot act as a trial court to weigh evidence or determine disputed questions of fact such as genuineness of agreements or actual monetary transfers.

"Whether the amounts transferred through RTGS pertain to the agreement of sale dated 12.03.2013, and whether the documents relied upon are genuine, are disputed facts... The same has to be decided by the trial Court after full-fledged trial only."

The Court noted that respondent No.2 (complainant) had alleged that the developers received ₹1.65 crores towards sale consideration but fraudulently failed to register the plots, instead selling them to third parties. Though the developers contended the agreement was forged and backed their defence with a Forensic Science Lab report, the Court held that such defences are matters of trial.

“Criminal Courts Cannot Be Used for Settling Civil Scores” — But Civil Nature Alone Doesn’t Nullify Cognizable Offence

The petitioners argued that the allegations were purely civil, especially since a civil suit for specific performance (O.S. No. 223 of 2023) was already pending. They cited the FSL report, which concluded that the signatures on the agreement of sale did not match the known signatures of the petitioners.

However, the Court reiterated the settled law: "It is trite law that mere pendency of civil cases between the parties does not bar invoking criminal jurisdiction provided the allegations disclose the commission of a cognizable offence."

Citing landmark Supreme Court decisions including Kamaladevi Agarwal v. State of W.B. and Trisuns Chemical Industry v. Rajesh Agarwal, the Court emphasized: "Many acts of cheating occur in the context of commercial or financial transactions, and such a ‘civil profile’ does not strip the act of its ‘criminal outfit.’"

Magistrate’s Order of Cognizance Found to Be Valid; No Need to Record Detailed Reasoning at Preliminary Stage

The Court upheld the Magistrate’s order dated 19.11.2019, which took cognizance based on the protest petition filed by the complainant and held that a prima facie case was made out under Sections 420, 406, and 120B IPC.

“By considering the sworn statements of PWs 1 and 2 and documents Exs.P1 to P13, a prima facie case was found… Cognizance was rightly taken against A1 to A3.”

It also affirmed the Sessions Judge’s order dated 19.02.2020, which found no procedural error and clarified that the question of whether the sale agreement was fabricated could not be adjudicated at this stage.

"Not the Rarest of Rare Case" — No Interference Warranted Under Section 482

Relying on multiple precedents including Sonu Gupta v. Deepak Gupta (2015) 3 SCC 424 and Kamal Shivaji Pokarnekar v. State of Maharashtra (2019) 14 SCC 350, the Court held:

"At the stage of cognizance and summoning, the Magistrate is required only to ascertain whether a prima facie case exists for proceeding against the accused; not to evaluate the merits or sufficiency of the material."

Thus, the petition was dismissed, with a liberty to the petitioners to appear through counsel, unless their personal presence was specifically required.

Telangana High Court Reaffirms That Criminal Trials Must Proceed If Prima Facie Offence Exists

This judgment reinforces the principle that criminal proceedings must not be quashed merely due to parallel civil disputes, especially when the allegations prima facie disclose elements of cheating or criminal breach of trust. The Court emphasized the sanctity of trial procedures and refused to pre-judge the facts under the guise of inherent jurisdiction.

Date of Decision: 18 September 2025