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G. Saminathan & Another v. The State, Represented by the Sub-Inspector of Police & Another

Criminal Appeal · 2026 INSC 772Decided 31 Jul 2026
Criminal Appeal (arising out of SLP (Crl.) No. 3565 of 2026)
Justice B.V. Nagarathna · Justice Ujjal Bhuyan

Background

G. Saminathan and his wife owned vacant land in Chennai and, in 2012, entered into an unregistered Joint Development Agreement with a construction company, executing a Power of Attorney in the company's favour and receiving a Rs. 3 crore refundable security deposit. The project stalled in 2013 when planning permission was refused because the land was part of an unapproved layout. In 2018, the owners cancelled the Power of Attorney and sold the property to a third party without refunding the deposit, prompting a criminal complaint for cheating and criminal breach of trust; the Madras High Court declined to quash the case.

Decision Breakdown

The Supreme Court quashed the FIR, chargesheet, and case entirely. It held that merely retaining a refundable deposit does not amount to criminal "entrustment," since it was consideration for the Power of Attorney, not property held in trust. On the cheating charge, the Court held that dishonest intent must exist at the very start of a transaction, not be inferred from how things fell apart later: here, the project's failure stemmed from a planning-approval risk the agreement itself allocated to the buyer's due diligence, not fraud. The Court also noted that cheating and criminal breach of trust are legally mutually exclusive and cannot both be alleged on identical facts, and, applying the Bhajan Lal guidelines, found this was fundamentally a civil dispute (already under arbitration) being pursued through criminal process as leverage.

Lesson Learnt

A failed business or property deal (a withheld refundable deposit, a stalled project, a later sale to someone else) is not automatically a crime. Cheating and criminal breach of trust require proof of dishonest intent from the very beginning of the deal, and courts will step in to quash criminal cases that are really an attempt to pressure the other side in what is fundamentally a civil dispute.

Official source (sci.gov.in)View Judgment (PDF)

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