Bonafide Purchaser Of Court-Auctioned Property Can't Be Prosecuted For Cheating Without Proof Of Conspiracy: AP High Court

The Andhra Pradesh High Court has held that a bonafide purchaser of a property earlier sold in a court auction cannot be prosecuted for cheating and forgery in the absence of material showing that he conspired with the vendor or had knowledge of the earlier court auction. [2026 LiveLaw (AP) 116]The order was passed by Justice K. Sreenivasa Reddy while allowing a criminal petition filed by the purchaser seeking quashing of the criminal case against him. The Court observed:"As per the contents of the charge sheet, the court auction, in respect of the same schedule house property, though conducted on 25.10.2004, delivery of possession of the same was made on 05.08.2016 i.e. subsequent to Registered Sale Deed vide Doc.No.6079/2015, dated 30.09.2015 which was executed between the petitioner/A2 and respondent No.3/A1. Therefore, it can be inferred that the respondent No.3/A1 is having knowledge that the schedule house property was once auctioned in the Court, and knowing fully well that the said house property was got attached and it is under litigation, sold the same to the petitioner/A2 under Registered Sale Deed dated 30.09.2015.However, merely, because respondent No.3/A1 is having knowledge, it cannot be inferred that the petitioner/A2 is also well aware of the said fact and conspiracy cannot be attributed to the petitioner/A2 that he conspired together with respondent No.3/A1...".The court said that prima facie, there was no material on record to believe that the petitioner by the act of purchasing the schedule house property from the respondent No.3, deceived the de facto complainant. The court however said that original owner/respondent no. 3 was indeed aware of the fact of schedule house property was being auctioned by the Court. "Therefore, it can be inferred that all the material allegations are pointing towards respondent No.3/A1 and prima facie there is no material on record to connect the petitioner/A2 to the alleged offences. When such being the case, continuing the proceedings against the petitioner/A2 is nothing but abuse of process of law," the court added.The case arose from a dispute concerning a house property that had been attached in execution proceedings and sold to the de facto complainant in a court auction.The prosecution alleged that while the matter was pending for delivery of possession through the Executing Court, the original owner executed a registered sale deed in favour of the petitioner, who thereafter got the property mutated in his name and obtained a bank loan by creating a charge over the property.Subsequently, criminal proceedings were initiated against the original owner and the petitioner alleging that they had dishonestly dealt with the property despite its earlier sale in court auction, thereby committing offences under Sections 420, 468 and 470 of the IPC, 1860. The purchaser contended that he had purchased the property under a registered sale deed after verifying the Encumbrance Certificate, which reflected the property in the vendor's name, and had subsequently availed a bank loan. He submitted that it was only subsequently that he came to know about the earlier court auction and the delivery of possession to the auction purchaser.Examining the material on record, the High Court found that the essential ingredients of the offences alleged were absent insofar as the petitioner was concerned. It noted that, on the date of purchase, the Encumbrance Certificate reflected the property in the vendor's name, supporting the petitioner's claim that he was a bona fide purchaser.The Court also observed that the sale deed in favour of the petitioner had been executed before the Executing Court delivered possession of the property to the auction purchaser.The Court held that while the original owner/vendor was aware of the earlier court auction and pending litigation, no material existed to show that the petitioner shared such knowledge or had conspired with the original owner. It noted that the petitioner himself filed a civil suit seeking declaration of title and recovery of possession after learning of the earlier court auction, supporting his claim that he was a bona fide purchaser.Accordingly, the High Court held that the allegations in the charge sheet, even if accepted in their entirety, did not prima facie disclose the ingredients of the offences alleged against the petitioner. Holding that continuation of the criminal proceedings would amount to an abuse of the process of law, it quashed the case against him.Case Title: Tellamekala Rama Rao v. State of Andhra Pradesh & OthersCase No.: Criminal Petition No. 980 of 2023Counsel for the Petitioner: Sri Gajjala Mallikarjuna ReddyCounsel for the Respondents: Sri Arun Showri G, Public Prosecutor (AP) and T.V.P.Sai VhiariClick Here To Read/Download Order

Bonafide Purchaser Of Court-Auctioned Property Can't Be Prosecuted For Cheating Without Proof Of Conspiracy: AP High Court

Ritika Verma

This is a premium content
Available exclusively to
Our subscribers

INR 1099+GST

Tags

Ritika Verma

Bonafide Purchaser Of Court-Auctioned Property Can't Be Prosecuted For Cheating Without Proof Of Conspiracy: AP High Court

Ritika Verma

This is a premium content Available exclusively to Our subscribers

INR 1099+GST

Tags

Ritika Verma

This is a premium content
Available exclusively to
Our subscribers