The Karnataka High Court has quashed a criminal case filed on the State Bank of India’s complaint against homebuyer Pritesh Bari. He had taken a ₹39.92 lakh loan for a flat that was never completed and was later sold by the builder to a third party.
The loan was for Flat No. B-306 in the “Grandeur Park” project. Bari, the builder and the bank signed a tripartite (three-party) agreement on February 8, 2020. Under it, the builder had to repay the bank all the money it received from the buyer if the project was shelved or left incomplete, or if the builder cancelled the booking because the buyer defaulted.
According to the bank, the builder sold the flat to M/s Benaka Enterprises in March 2023 without its consent, while the loan remained unpaid. SBI filed a complaint, and on a magistrate’s direction, Shankarapura police registered an FIR in September 2024 against the homebuyer, the builder and its partners. The offences included cheating, criminal breach of trust and forgery.
Counsel for the homebuyer argued that the complaint itself blamed the builder, since it was the builder who failed to complete the project and later sold the flat. The bank’s counsel argued that the unpaid loan and the resale pointed to an intention to deceive the bank, and that this needed investigation.
Justice Suraj Govindaraj noted that no sale deed was ever executed in homebuyer favour. As a result, he never acquired title to the flat and gained nothing from its resale. There was also no material showing that he acted together with the builder. On the bank’s conduct, the court observed:
“This Court is constrained to observe that the action of the Bank in setting the criminal machinery in motion against the petitioner, in the facts and circumstances of the present case, is wholly unwarranted and deserves to be deprecated. A financial institution, particularly a public sector bank, is expected to act with due care and circumspection before invoking the criminal process against a customer. The existence of an outstanding loan or the failure of the underlying transaction, by itself, cannot be treated as constituting a criminal offence. Criminal prosecution cannot be employed as a means of securing recovery of a financial liability unless the foundational ingredients of the alleged criminal offences are prima facie made out.”
Finding that no offence was made out against the homebuyer on the face of the record, the court held:
“Accordingly, ex facie, the allegations and material placed before this Court do not disclose the commission of the offences alleged against accused No.1. The continuation of the criminal proceedings against the petitioner would consequently amount to an abuse of the process of law.”
The court allowed the petition and quashed the FIR only against the homebuyer. It made no comment on the allegations against the builder and its partners.
Case Title: Pritesh Bari v. State of Karnataka & Another
Case Number: Criminal Petition No. 3230 of 2025 (NC: 2026:KHC:53492)
