The Allahabad High Court has reaffirmed a fundamental principle of criminal jurisprudence: the return of defrauded money does not absolve the accused of criminal liability for offences under Sections 406, 420, and 120-B of the Indian Penal Code. This judgment underscores that fraudulent acts, once committed, cannot be undone merely by subsequent repayment, and directs the trial court to proceed with the case in accordance with law.
Background & Facts
The Dispute
The petitioner, Pratap Singh, entered into an agreement for the purchase of Plot No. 34, Bajrang Nagar, Tehsil Sikandra, District Agra, from respondents Smt. Durgesh Goswami and Pradeep Giri. The respondents claimed to have a valid power of attorney executed by the true owner, Manoj Giri (respondent no. 4), authorizing them to sell the plot. Relying on this assurance, the petitioner paid Rs. 15,53,000 as consideration and executed a sale deed on 27.6.2017. However, the petitioner was subsequently informed that the power of attorney had been revoked on 18.8.2015, rendering the sale deed unauthorized.
Key Facts
- Respondent no. 4, Manoj Giri, was the true owner of Plot No. 34
- On 27.6.2015, Manoj Giri allegedly executed a power of attorney in favour of Smt. Durgesh Goswami and Pradeep Giri
- The petitioner verified the authority with Manoj Giri, who assured him of the validity of the power of attorney
- On 27.6.2017, the petitioner paid Rs. 15,53,000 and executed a sale deed
- Manoj Giri later informed the petitioner that the power of attorney had been revoked on 18.8.2015
- The petitioner lodged an FIR under Sections 406, 420, and 120-B IPC on 2019 (Case Crime No. 0590 of 2019)
- The Investigating Officer submitted a final report, which the petitioner challenged via a protest petition
Procedural History
- 2019: FIR lodged under Sections 406, 420, and 120-B IPC (Case Crime No. 0590 of 2019)
- 2019: Final report submitted by the Investigating Officer
- 2019: Protest petition filed by the petitioner (Misc. Case No. 3468 of 2019)
- 05.10.2023: Protest petition dismissed by the Chief Judicial Magistrate, Agra, on grounds that the consideration amount had been returned
- 2023: Criminal Revision No. 696 of 2023 filed by the petitioner
- 04.09.2024: Revisional court upheld the trial court's findings
- 2025: Present petition filed under Article 227 of the Constitution before the Allahabad High Court
The Parties' Positions
For the Petitioner:
- Argued that the respondents conspired to defraud him by falsely representing the validity of the power of attorney
- Contended that the sale deed was executed without authority, as the power of attorney had been revoked prior to the transaction
- Submitted that mere return of money does not absolve the respondents of criminal liability
For the Respondents/State:
- Submitted that an agreement had been reached between the parties and the entire consideration amount had been returned
- However, acknowledged that the financial dispute resolution does not negate the survival of the offences committed
Relief Sought
The petitioner sought:
- Setting aside of the impugned orders dated 05.10.2023 and 04.09.2024
- Restoration of Misc. Case No. 3468 of 2019
- A direction to the trial court to pass a fresh order in accordance with law
The Legal Issue
The central question before the Court was whether the return of the defrauded amount absolves the accused of criminal liability under Sections 406 (criminal breach of trust), 420 (cheating), and 120-B (criminal conspiracy) of the IPC, or whether the offences survive despite such repayment.
Arguments Presented
For the Petitioner
- Relied on the settled principle of criminal jurisprudence that what is done cannot be undone by subsequent repayment
- Argued that the respondents acted in concert to defraud the petitioner by executing a sale deed on the basis of a revoked power of attorney
- Contended that the trial court erred in dismissing the protest petition merely on the ground of repayment
For the Respondent/State
- Conceded that while the financial dispute may have been resolved, the offences committed by the respondents still survive
- Did not dispute the factual matrix of the case but implied that the return of money mitigated the gravity of the offence
The Court's Analysis
The Court examined the allegations in the FIR and the conduct of the parties, emphasizing that criminal liability for fraud and cheating is not extinguished by the subsequent return of the defrauded amount. The Court observed:
"It is a settled principle of criminal jurisprudence that what is done cannot be undone. If a person commits an offence of fraud and cheating and thereafter returns the defrauded amount, such subsequent conduct does not absolve him of criminal liability merely on the ground of repayment."
The Court further noted that the sale deed was executed in 2017 based on a power of attorney allegedly executed in 2015, which had been revoked prior to the transaction. This prima facie indicated that the respondents acted in concert to defraud the petitioner. The Court held:
"If the power of attorney had already been revoked in the year 2015, then the execution of the sale deed in 2017 prima facie indicates that the parties acted in concert to defraud the petitioner. Thus, the return of money cannot absolve the respondents of the offences committed by them."
The Court distinguished the present case from scenarios where repayment might mitigate liability, holding that the gravity of the offence - fraudulent execution of a sale deed based on a revoked authority - warranted criminal prosecution.
The Verdict
The Allahabad High Court allowed the petition and set aside the impugned orders dated 05.10.2023 and 04.09.2024. The Court directed the Chief Judicial Magistrate, Agra, to restore Misc. Case No. 3468 of 2019 and pass a fresh order in accordance with law, keeping in view the observations made in the judgment.
What This Means For Similar Cases
Criminal Liability Survives Repayment
- No Absolution by Repayment: The judgment reaffirms that criminal liability for offences under Sections 406, 420, and 120-B IPC is not extinguished by the mere return of the defrauded amount. Practitioners must emphasize this principle in cases where accused parties attempt to argue that repayment negates criminality.
- Burden of Proof: The prosecution must establish that the accused acted with dishonest intent at the time of committing the offence. Subsequent repayment may be considered as a mitigating factor during sentencing but does not absolve the accused of the offence itself.
Fraudulent Transactions and Authority
- Power of Attorney Fraud: The judgment highlights the risks associated with transactions based on powers of attorney. Parties must verify the continuing validity of such authorities before entering into agreements. In this case, the revocation of the power of attorney prior to the sale deed execution was a critical factor in establishing fraud.
- Prima Facie Evidence: The Court relied on the chronology of events - revocation of the power of attorney in 2015 and execution of the sale deed in 2017 - to infer a prima facie case of conspiracy and cheating. Practitioners should ensure that timelines are clearly established in fraud cases.
Procedural Compliance in Criminal Cases
- Protest Petitions: The judgment underscores the importance of protest petitions in cases where the police submit a final report. Petitioners must ensure that all allegations are thoroughly pleaded and supported by evidence to avoid dismissal on technical grounds.
- Appellate Review: The Court's intervention under Article 227 demonstrates that higher courts will scrutinize orders dismissing protest petitions or criminal complaints where legal principles are misapplied. Practitioners should highlight errors in the application of law in lower court orders.
