IN THE HIGH COURT AT CALCUTTA

CRIMINAL REVISIONAL JURISDICTION

APPELLATE SIDE

Present:

The Hon’ble Justice Ajay Kumar Gupta

C.R.R. No. 1788 of 2025

With

CRAN 2 of 2025 & CRAN 3 of 2026

Vikas S. Rathee & Anr.

Versus

The State of West Bengal & Anr.

For the Petitioners : Mr. Meghajit Mukherjee, Adv.

Ms. Sonia Das, Adv.

For the IIFL : Mr. Debangan Bhattacharjee, Adv.

Mrs. Tutul Das, Adv.

Mr. Ranjit Singh, Adv.

Mr. Amar Singh, Adv.

Ms. Alivia Bhattacharjee, Adv.

Ms. Shweta Bali, Adv.

Heard on : 14.09.2026

Judgment on : 05.10.2026

Uploaded on : 05.10.2026

2

Ajay Kumar Gupta, J.: -

1. The instant Criminal Revisional application under Section 528 of the

Bharatiya Nagarik Suraksha Sanhita, 2023 (in short, ‘BNSS’) has

been preferred by the petitioners/accused persons seeking quashing

of the proceedings being Case No. CS/195772/2024 (corresponding

to TR Case No. 14605 of 2024) pending before the Learned Judicial

Magistrate, 16

th

Court, Calcutta under Section 318 of the Bharatiya

Nyaya Sanhita (in short, ‘BNS’) and all orders passed therein,

including the orders dated 13.11.2024, 04.01.2025 and 07.03.2025

passed in connection with the said proceeding.

2. The facts leading to the filing of this instant Criminal Revisional

application are that in 2013, the petitioners , searching for a

residential flat in Mumbai for their personal use, were approached by

Pashmina Realty Private Limited (in short, ‘PRPL’), developer of the

"Pashmina Lotus" project at Chandivali.

3. PRPL represented that it had a tie-up with India Infoline Finance

Limited (in short, ‘IIFL’) under a subvention scheme, where the

petitioners would pay only 20% of the consideration upfront, with the

balance 80% disbursed by IIFL as a home loan. Under the scheme,

PRPL alone was liable to service interest on the disbursed loan until

the possession was handed over.

3

4. On this basis, the petitioners executed a registered Agreement for

Sale dated 08.11.2013 with PRPL for the purchase of a residential flat

bearing No. 802, Wing 'C' (8

th

floor, 1436 sq. ft.), with two car-parking

spaces, in "Pashmina Lotus", for total consideration of Rs.

3,35,70,000/-, payable in the following manner as under:

i. Rs. 16,25,718/- (Rupees Sixteen Lakh Twenty-Five Thousand

Seven Hundred Eighteen only) as part consideration, paid prior

to the execution of the Agreement;

ii. Rs. 31,52,891/- (Rupees Thirty-One Lakh Fifty-Two Thousand

Eight Hundred Ninety-One only) as part consideration, paid on

or before the date of execution of the Agreement;

iii. The balance amount of Rs. 2,87,91,391/- (Rupees Two Crore

Eighty-Seven Lakh Ninety-One Thousand Three Hundred

Ninety-One only) was to be paid in the manner and in

instalments as stipulated under the terms and conditions of the

said Agreement for sale.

5. The Petitioners additionally paid Rs. 53,14,000/- to PRPL on

20.08.2013. As per the Agreement dated 08.11.2013, PRPL was to

hand over possession by September 2016 or on receipt of the

Occupation Certificate, failing which, under Clause 6.3, which

expressly provided that in the event PRPL failed to deliver possession

within the stipulated time, the Agreement would stand terminated,

4

and PRPL would be obligated to refund the entire amount received

with applicable interest calculated from the date of receipt of such

payments. Clause 6.3 of the aforesaid agreement has been set out

hereinbelow:-

“6.3 Consequences of delay in handing over possession:

If the Promoters fails or neglect to give possession of the

Premises to the Purchaser/s on the aforesaid date and/or on

such date as may be extended automatically pursuant to the

reasons setout in Clause 6.2 hereinabove, then the

Purchaser/s shall have the option to terminate this Agreement

after giving 30 days notice in writing, whereupon the

Promoters shall be liable on demand to refund to the

Purchaser/s amounts already received by it in respect of the

Premises (save and except service tax, VAT) alongwith simple

interest @ 9% per annum from the date of the receipt of the

respective amounts by the Promoters till payment. It is agreed

that, upon the termination of this Agreement by the

Purchaser/s, the claim of the Purchaser/s shall be restricted to

refund of monies paid with simple interest @ 9% р.а. thereon

and that the Purchaser/s shall not be entitled to claim for loss

and/or damages and/or mental trauma or otherwise

howsoever. Till the entire amount alongwith interest thereon is

refunded by the Promoters to the Purchaser/s the same shall

subject to prior encumbrance if any, be a charge on the

Premises but only to the extent of the amount so due to the

Purchaser/s and the Promoters shall be entitled to allot, sell

and/or deal with and dispose off the Premises to any third

party without reference or recourse to the Purchaser/s. The

amount so refunded shall be in full and final ender this

Agreement. The Purchaser/s agrees that receipt of the said

satisfaction and final settlement of all the claims of the

Purchaser/s registered post acknowledgement due at the

address given by the refund by cheque from the Promoters by

the Purchaser/s by Purchaser/s in these presents whether the

Purchaser/s accepts or encashes the cheque or not, will

amount to the said refund.”

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6. As construction deviated from approved plans and possession was

not delivered, the petitioners emailed PRPL on 15.02.2016 raising

these concerns. Petitioners had also issued post-dated cheques to

IIFL as security for the loan; despite PRPL's obligation to service the

interest, IIFL informed petitioners that PRPL had defaulted and that

IIFL was presenting the security cheque for encashment. Petitioners

issued stop-payment instructions to their bank, and their 15.02.2016

email had also called upon PRPL to refund all amounts paid with

interest and clear all dues owed to IIFL.

7. On 24.06.2019, PRPL sent an email to the petitioners with an

undertaking to refund Rs. 76,26,037/- directly to the petitioners by

14.09.2019, and Rs. 1,80,81,348/- directly to IIFL, after which IIFL

would issue a “No Dues” Certificate and a Deed of Cancellation would

be executed. However, PRPL failed to honour this undertaking and

instead made frivolous alternative proposals, all rejected by

petitioners. IIFL, despite being asked, never furnished petitioners a

copy of the loan agreement.

8. Subsequently, with no other alternative, the Petitioners issued a

demand notice dated 25.01.2024 to PRPL and a copy of the same to

IIFL through learned counsel, seeking refund of the payment toward

the consideration amount and also to clear the entire loan

outstanding of IIFL as agreed and undertaken under the Cancellation

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letter issued by PRPL under the Agreement for Sale dated 24.06.2019

within a period of seven days from the receipt of this notice. Despite

receipt of the said demand notice, PRPL deliberately failed to take any

steps in furtherance thereof.

9. The Petitioners then filed a complaint before MahaRERA, Bandra,

Mumbai (Complaint No. CC006000000570811), impleading PRPL as

Respondent No. 1 and IIFL as Respondent No. 2; the said proceeding

is still pending adjudication.

10. During this pendency, IIFL, allegedly suppressing the existence of the

subvention scheme and PRPL's exclusive liability for interest, filed a

complaint before the learned CJM, Calcutta on 01.10.2024, alleging

offences under Sections 316(2)/318/61(2) BNS against the

petitioners (Case No. CS/195772/2024), alleging that petitioners had

obtained a housing loan of Rs. 2,98,59,000/- on false representations

and defaulted, evidencing dishonest intent to cheat IIFL and

misappropriate public funds.

11. On 01.10.2024, the CJM transferred the case to the learned Judicial

Magistrate, 16

th

Court, Calcutta. By order dated 13.11.2024, the

Magistrate issued a pre-cognizance notice, fixing 04.01.2025 for the

petitioners' appearance. On 04.01.2025, the Magistrate issued

process and took cognizance without following the mandatory

procedure under Section 225 BNSS.

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12. On the next date, i.e., on 07.03.2025, despite no service return being

received, the Magistrate issued a bailable warrant of arrest against

the petitioners solely on counsel's submission, fixing 24.06.2025 for

the execution return. As such, the petitioners were compelled to file

this Revisional application seeking aforesaid reliefs.

SUBMISSION ON BEHALF OF THE PETITIONERS: -

13. Learned counsel for the petitioners submitted that the petitioners are

absolutely innocent and have been falsely implicated in the instant

case. The impugned proceedings are an out-and-out abuse of the

process of criminal law and have been initiated with an ulterior

motive to coerce and harass the petitioners, despite the existence of

undisputed and documented facts to the contrary and despite the

dues handed over in the present case being wholly civil in nature and

to give colour to a criminal offence for the purpose of recovery of loan

amount. The petitioner did not purchase the property and

subsequently approached for cancellation of the agreement for sale to

the PRPL. PRPL acknowledged such cancellation of the deals by and

between the Petitioners and PRPL as well as IIFL.

14. It was further submitted that considering the allegation made by the

IIFL, on its face value and going through the line in between the

complaint, it is an admitted fact that the actual loan amount was Rs.

2,98,59,000/-.

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15. Learned Counsel submitted that the question of mala fide/dishonest

intention of the accused persons/ petitioners herein, since inception,

to cheat and defraud the company does not and cannot arise. The

Petitioners paid a huge sum of money to purchase the said flat.

However, PRPL did not hand over the said flat to the petitioners as

agreed in agreement for sale. Accordingly, they sent an email to PRPL

for cancellation of the agreement for sale. No agreement for sale has

been cancelled; neither was the flat handed over to the petitioners nor

was sale deed executed between the parties. Therefore, the petitioners

are not liable for commission of any offence alleged by the

complainant.

16. It was further submitted that IIFL only accused the present

petitioners without handing over the flat. Accordingly, the

proceedings is an absolute abuse of the process of law and to secure

the ends of justice, the instant proceedings is liable to be quashed,

and impugned orders passed by the learned Magistrate are also liable

to be set aside.

17. Finally, the learned counsel submitted that both the Petitioners

reside outside the territorial jurisdiction of the learned Magistrate.

However, process was issued by the learned Magistrate without

complying with the mandatory provision of Section 225 of the BNSS,

and a bailable warrant of arrest was issued against the petitioners.

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So, this non-compliance with the provision stipulated u/s 225 of

BNSS, this proceeding is liable to be quashed.

18. Learned counsel placed reliance on two judgments passed in the

cases of Hridaya Ranjan Prasad Verma and Ors. v. State of

Bihar and Anr.

1

to highlight the provisions of cheating. i.e., sections

415 and 420 thereof. He has further relied on the decision in the case

of Satishchandra Ratanlal Shah v. State of Gujarat and Anr.

2

,

on the same contention, which has, in turn, relied upon Hridaya

Ranjan Prasad Verma (Supra).

SUBMISSION ON BEHALF OF THE OPPOSITE PARTY NO. 2/IIFL : -

19. Learned counsel appearing on behalf of the IIFL, on the other hand,

vehemently opposed the prayer of the learned counsel appearing on

behalf of the petitioners and submitted that a Tripartite Agreement

was executed by and between the petitioners, the Opposite Party No.

2, and PRPL, the Developer, for the purpose of availing the credit

facility in question. Under the said Agreement, the Opposite Party No.

2 was obligated to disburse a sum of Rs. 1,80,81,348/- (Rupees One

Crore Eighty Lakh Eighty-One Thousand Three Hundred Forty-Eight

only), out of the total sanctioned amount, directly to the Developer on

behalf of the petitioners, which obligation stood duly discharged.

1

(2000) 4 SCC 168;

2

(2019) 9 SCC 148.

10

20. It has been contended that the petitioners/borrowers thereafter failed

to make timely payments towards servicing the loan and breached

the covenants of the Loan Documents, resulting in default in the loan

account. On account of such continued non-payment, a

communication for 'Cancellation of Allotment' was issued to the

Developer on 18.11.2024, wherein it was explicitly recorded that the

petitioners had intentionally breached the terms of the Loan

Agreement and had deliberately failed to clear the outstanding dues

payable to the Opposite Party No. 2.

21. It has further been submitted that the loan account was classified as

a Non-Performing Asset (NPA) on 03.01.2025.

22. The Opposite Party No. 2 has contended that the petitioners

possessed sufficient repayment capacity, having regard to the income

declarations furnished at the time of sanction, the monthly income of

Petitioner No. 1/Borrower being Rs. 8.79 lakh and that of Petitioner

No. 2/Co-Borrower being Rs. 1.90 lakh, reflecting a combined

household income of Rs. 10.69 lakh per month. Despite such

financial standing, it is submitted that the petitioners committed a

critical default, with total outstanding dues of Rs. 2,04,87,392/- as

on 15.01.2025, which further escalated to Rs. 2,25,84,077/- as on

08.12.2025, thereby evidencing an intentional failure to honour the

terms of the loan facility.

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23. It has also been urged that as per the records available with the

Opposite Party No. 2, all other credit trade-lines/borrowings in the

name of the petitioners stand closed, leaving no bona fide

justification for the default. It is submitted that this establishes a

deliberate non-payment despite the capacity to repay, on account of

which the petitioners have been classified as 'Wilful Defaulters',

subject to due process and an opportunity of being heard.

24. In this regard, it has been submitted that a Show Cause Notice dated

22.12.2025 was issued to the petitioners in compliance with the RBI

Master Directions on Treatment of Wilful Defaulters and Large

Defaulters dated 30.07.2024 (effective from 31.10.2024), bearing

reference no. RBI/DoR/2024-25/122 DoR.FIN.REC. No.

31/20.16.003/2024-25.

25. It has further been contended that as per the Title Search Report

dated 12.12.2013, the mortgaged property stood duly registered in

favour of the petitioners vide the Agreement for Sale dated

08.11.2013, registered with the concerned Sub-Registrar of

Assurances as Serial No. KRL-1/9439/2013, thereby establishing the

petitioners as the lawful owners of the mortgaged property who have

enjoyed the benefit of the credit facility while deliberately ignoring

repayment of the dues payable jointly and severally to the Opposite

Party No. 2. It has also been pointed out that a 'No Objection

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Certificate' in respect of the said mortgaged property was issued by

the Developer, PRPL, on 30.10.2013, in favour of the petitioners.

26. It was further submitted that despite service of several

communications, no steps have been taken by the petitioners towards

regularisation or closure of the loan account, and that the petitioners

have continued to remain in default notwithstanding their realisation

of the benefits of the mortgaged property and their financial capacity

to discharge the outstanding dues.

27. It was finally submitted that the allegation against the present

petitioners is required to be proved after full-fledged trial. Therefore,

this instant application is liable to be dismissed. Learned counsel has

placed reliance of a judgment passed in the case of Kailash Kumar

Sanwatia Vs. State of Bihar & Anr.

3

to bolster his contention that

proving an accusation under section 405 of the IPC requires the

establishment of two factors, firstly, entrustment of property to the

accused, and secondly, whether the accused, having been entrusted,

was actuated by the dishonest intention to misappropriate it or

convert it to his own use, to the detriment of the persons who

entrusted it. It has been submitted, that since the question of

dishonest intention is seldom a matter of direct proof, the Court in

Kailash Kumar Sanwatia (Supra) laid down certain broad tests as

3

(2003) 7 SCC 399.

13

furnishing useful guidance in determining whether, on the facts of a

given case, the accused possessed the requisite mens rea for the

offence.

DISCUSSIONS, ANALYSIS AND CONCLUSION OF THIS COURT : -

28. Heard the submissions made by the learned counsels appearing on

behalf of the respective parties and having gone through the

materials available on records, this Court finds it is an undisputed

fact that the Registered Agreement for sale dated 08.11.2013 had

been executed by and between the parties. For the purpose of

purchase of the flat bearing Flat No. 802, Wing 'C', "Pashmina Lotus,"

Chandivali, Mumbai, the petitioners availed a loan amount of Rs.

2,98,59,000/- from the financial institution IIFL.

29. It is a further undisputed fact that a few instalments were paid to

IIFL out of the loan amount. A sum of Rs. 2,03,55,484/- is pending

as on 1

st

October, 2024, when IIFL filed the complaint before the

Chief Judicial Magistrate, Calcutta. Apart from this, IIFL has also

declared the loan account as a Non-Performing Asset on 03.01.2025,

and the petitioners have been declared "Wilful Defaulters" pursuant

to a Show Cause Notice dated 22.12.2025, issued purportedly in

terms of the RBI Master Directions on Treatment of Wilful Defaulters

and Large Defaulters dated 30.07.2024.

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30. This Court notes that none of the parties have indicated whether the

flat involved in the agreement for sale has finally reached the stage of

registration of the conveyance Deed or not. No documents,

whatsoever filed by any of the parties, despite giving opportunity to

file their affidavits. The petitioners have drawn some emails

communicated by and between the Petitioners and PRPL to indicate

that the Petitioners had approached the PRPL to cancel the deals and

they are not interested in buying the said flat due to various reasons

such as 1) non-delivery of possession within the stipulated period; 2)

deviation of construction from the sanctioned layout plan; 3) PRPL's

default in servicing the interest component under the subvention

scheme, resulting in encashment of the security cheques.

31. Now, the question arises under the above facts and circumstances,

whether the petitioners have committed offence as alleged by the IIFL

or they are entitled to their prayer for quashing of the proceedings

and setting aside the orders passed therein in the said proceedings?

32. The penal section 318 of the BNS, 2023 is involved in these

proceedings.

318. (1) Whoever, by deceiving any person, fraudulently or

dishonestly induces the person so deceived to deliver any property to

any person, or to consent that any person shall retain any property,

or intentionally induces the person so deceived to do or omit to do

anything which he would not do or omit if he were not so deceived,

and which act or omission causes or is likely to cause damage or

15

harm to that person in body, mind, reputation or property, is said to

cheat.

(2) Whoever cheats shall be punished with imprisonment of either

description for a term which may extend to three years, or with fine,

or with both.

(3) Whoever cheats with the knowledge that he is likely thereby to

cause wrongful loss to a person whose interest in the transaction to

which the cheating relates, he was bound, either by law, or by a legal

contract, to protect, shall be punished with imprisonment of either

description for a term which may extend to five years, or with fine, or

with both.

(4) Whoever cheats and thereby dishonestly induces the person

deceived to deliver any property to any person, or to make, alter or

destroy the whole or any part of a valuable security, or anything

which is signed or sealed, and which is capable of being converted

into a valuable security, shall be punished with imprisonment of

either description for a term which may extend to seven years, and

shall also be liable to fine.”

33. On a plain reading of Section 318(1), the following ingredients must

be established to constitute the offence: -

i. Deception of a person by the accused;

ii. Such deception must fraudulently or dishonestly induce the person

deceived either (a) to deliver property to any person, or to consent to

the retention of property by any person; or (b) intentionally (though

not necessarily fraudulently or dishonestly) induce that person to do

or omit to do an act which he would not otherwise have done or

omitted;

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iii. The act or omission so induced must cause, or be likely to cause,

damage or harm to that person in body, mind, reputation, or

property.

34. It is well settled that where the case falls in the first limb, the

inducement itself must be shown to be fraudulent or dishonest; mere

intentional inducement, without fraud or dishonesty, does not suffice

for that limb.

35. The ingredients necessary to sustain a charge under this provision

are: (i) entrustment of property, or of dominion over property, to the

accused; and (ii) dishonest misappropriation or conversion of that

property by the accused to his own use, or its use or disposal in

violation of a legal direction or contract governing the discharge of the

trust, to the detriment of the person who effected the entrustment.

36. It is not the case of IIFL that any property was induced to be delivered

directly to the petitioners by deception; rather, the allegation is that

the petitioners, having availed the loan facility, subsequently

defaulted in repayment. Based on the facts of the instant case, the

alleged deception has a retrospective inference from default, rather

than of any misrepresentation shown to have preceded, or

accompanied the disbursal of the loan. As regards the third

ingredient, this Court notes that IIFL has, in fact, suffered pecuniary

loss by reason of the default; however, the mere fact of loss, without

17

proof of fraudulent or dishonest inducement at inception, does not,

by itself, complete the ingredients of Section 318 of BNS.

37. Applying the ratio in Hridaya Ranjan Prasad Verma (Supra) and

Satishchandra Ratanlal Shah (Supra), this Court is of the view

that mere default in repayment, without more, does not establish the

fraudulent or dishonest intention required to sustain a charge of

cheating under Section 318 of BNS. Equally, applying the test in

Kailash Kumar Sanwatia (Supra) , the ingredient of dishonest

misappropriation necessary to sustain a charge of criminal breach of

trust under Section 316 of BNS is not made out merely from the fact

of default, in the absence of anything establishing that the petitioners

diverted or misapplied the disbursed amount in violation of the terms

on which it was entrusted, rather than having applied it towards the

very purchase for which it was sanctioned.

38. Applying the aforesaid principles to the facts of the instant case, this

Court finds that the transaction between the parties was structured

as a tripartite arrangement between the petitioners, PRPL, and IIFL

under a subvention scheme, whereunder the primary obligation to

service the interest on the disbursed loan amount, until handover of

possession, rested upon PRPL and not upon the petitioners. It is not

in dispute that possession of the flat was never handed over, that no

Deed of Conveyance has been executed, and that the petitioners had

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approached PRPL, the Developer, and not IIFL, seeking cancellation

of the transaction on account of PRPL's own default, well before the

account came to be classified as an NPA or the Wilful Defaulter

proceedings were initiated. The complaint, examined on its own

averments, does not disclose any representation or concealment

attributable to the petitioners at the time of availing the loan; the

allegation of dishonest intention rests entirely on the petitioners'

subsequent default in servicing the instalments, a default which, in

the petitioners' case, is directly traceable to PRPL's own failure to

honour its obligations under the subvention scheme.

39. Accordingly, CRR No. 1788 of 2025 is, thus, allowed. CRAN 2 of

2025 and CRAN 3 of 2026 are also, thus, disposed of.

40. Consequently, the proceedings being Case No. CS/195772/2024

(corresponding to TR Case No. 14605 of 2024) pending before the

Learned Judicial Magistrate, 16

th

Court, Calcutta under Section 318

of the BNS is quashed insofar as the petitioners are concerned and all

orders passed therein, including the orders dated 13.11.2024,

04.01.2025 and 07.03.2025 passed in connection with the said

proceeding are hereby set aside.

41. Case diary, if any, be forwarded to the learned counsel for the State.

42. Let a copy of this Judgment be sent to the Learned Court below for

information.

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43. Interim order, if any, stands vacated.

44. All parties will act on the server copies of this Judgment uploaded on

the official website of this Hon’ble High Court.

45. Urgent photostat certified copy of this Judgment, if applied for, is to

be given as expeditiously to the parties on compliance of all legal and

necessary formalities.

(Ajay Kumar Gupta, J.)

(P.A.)