In a significant ruling, the Supreme Court on Tuesday set aside criminal proceedings arising out of a stalled real estate joint venture in Kanpur, observing that the dispute was essentially civil in nature.
A bench of Justices Pamidighantam Sri Narasimha and Manoj Misra quashed an FIR lodged against Vandana Jain and others, holding that allegations of cheating and forgery could not be sustained merely because a commercial agreement had failed.
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Background of the Case
The case, titled Vandana Jain & Ors. v. State of Uttar Pradesh & Ors., arose from a Joint Venture Agreement (JVA) executed on August 16, 2010.
Under the agreement, the Jain family granted development rights over a 1500 square yard property in Kanpur to Motor General Sales Ltd. The understanding was simple: the landowners would contribute the land, and the developer would construct residential apartments at its own cost. The profit-sharing ratio was 50:50.
As part of the agreement, the developer paid ₹1 crore as “security for due compliance.”
More than a decade later, in March 2021, an FIR was registered at Hazratganj Police Station, Lucknow, under Sections 406, 420, 467, 468 and 471 of the Indian Penal Code. The complainant alleged that:
- Possession of the land was not handed over despite receiving ₹1 crore.
- The money was not refunded.
- There was suppression of pending litigation regarding the land.
- A forged document was submitted to establish title.
The Allahabad High Court refused to quash the FIR, prompting the accused to approach the Supreme Court.
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Court’s Examination of the Agreement
The bench carefully examined the Joint Venture Agreement, including its clauses on title assurance and security deposit.
The Court noted that the agreement contained no specific statement that no litigation was pending regarding the land. What the landowners had assured was that:
- The property was not under attachment.
- There was no restraint order preventing them from entering into the agreement.
- They would indemnify the developer in case of title-related issues.
“The allegation that the accused had falsely represented about there being no litigation qua the land/property is unfounded,” the bench observed.
On the Security Deposit
One of the central allegations was non-refund of ₹1 crore paid as security.
However, the Court pointed out that Clause 5 of the agreement did not provide for refund of the security amount. Instead, it stated that the amount would be adjusted from the first party’s share of sale proceeds once the flats were constructed.
“The deposit of security money is non-refundable,” the Court noted, adding that failure to return it might give rise to a civil claim but not a criminal offence.
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Allegation of Forgery
The complainant argued that a letter from the Tehsildar (Judicial), Kanpur, certifying that there was no dispute regarding the land, was forged because it was not traceable in official records years later.
The Court rejected this reasoning.
“Merely because a document is not traceable in the records after several years of its issuance, it cannot be said that the document is forged,” the bench stated.
It further clarified that for forgery to be made out under Section 464 IPC, there must be specific allegations that the document was dishonestly or fraudulently created as a false document. No such clear accusation was present in the FIR.
Delay and Nature of Dispute
The judges also took note of the timeline. The agreement was executed in 2010, but the FIR was lodged in 2021.
“If there was something stark about the dishonest intention on part of one of the parties to the agreement, it would have been reported promptly and not after 10 years,” the Court remarked.
The bench concluded that there was no material to suggest dishonest intention from the beginning - a key requirement to establish the offence of cheating.
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Supreme Court’s Decision
After analysing the FIR alongside the admitted documents, the Court held that the allegations did not disclose the commission of offences of cheating, criminal breach of trust, or forgery.
The bench observed that the dispute stemmed from a failed commercial arrangement and was “essentially of a civil nature.”
Allowing the appeal, the Court set aside the Allahabad High Court’s order and quashed the FIR and all proceedings arising from it.
Case Title: Vandana Jain & Ors. v. State of Uttar Pradesh & Ors.
Case No.: Criminal Appeal No. 1127 of 2026 (Arising out of SLP (Crl.) No. 6670/2021)
Decision Date: February 25, 2026
