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SUPREME COURT OF INDIA
Pamidighantam Sri Narasimha, Manoj Misra, JJ.
V. Ganesan – Appellant
Versus
State Rep By The Sub Inspector Of Police & Anr. – Respondents
Criminal Appeal No. 1470 of 2026 (Arising out of SLP Criminal No. 10478 of 2023)
Decided On : 19-03-2026
(A) Indian Penal Code, 1860 – Sections 406 and 420 – Criminal Procedure Code, 1973 – Section 482 – Criminal breach of trust and cheating – In order to constitute offence of cheating intention to deceive should be in existence when inducement was made – Mere failure to keep promise subsequently cannot be sole basis to presume that dishonest intention existed from very beginning – Police report indicted appellant for offences of criminal breach of trust and cheating punishable under Sections 406 and 420 IPC respectively – High Court came to right conclusion that no offence punishable under Section 406 of IPC is made out as there was no entrustment – Regarding offence of cheating, High Court concluded that prima facie it is made out – Whether non-fulfilment of promise/ commitment by accused is a reflection of his or her dishonest intention at the time of making promise is ordinarily a matter of trial – However, where transaction between parties is such that fulfilment of promise is not entirely in control of promisor, High Court may quash criminal complaint/ proceedings and relegate aggrieved party to civil remedies – From allegations made in complaint it cannot be said that there was any dishonest intention of appellant in making promise which remained unfulfilled – Appellant issued post-dated cheques to discharge existing liability and not by way of inducement to take more money – Criminal proceedings quashed. (Paras 5, 10, 13, 14, 15, 17, 18, 19, 20 and 21)
(B) Negotiable Instruments Act, 1881 – Section 138 – Dishonour of cheque – Dishonour of cheques, though may give right to initiate proceeding under Section 138 of Negotiable Instruments Act, 1881, would not ipso facto amount to offence of cheating, inasmuch as for offence of cheating dishonest intention must exist from very beginning – Ordinarily, post-dated cheques are issued either by way of security to discharge an existing or future liability or to discharge liability at some point of time in future – It is quite possible that at the time of issuance of a post-dated cheque, drawer may have reason to believe that he would have sufficient balance in his account by date of cheque – Dishonour of a post-dated cheque by itself is not sufficient to presume existence of a dishonest intention on part of its drawer. (Para 18)
Facts of the case:
Present appeal impugns judgment and order of High Court at Madras dated 06.04.2023, whereby prayer of appellant to quash final report and consequential proceedings in C.C. No. 3569 of 2020 on the file of Metropolitan Magistrate, under Sections 406 and 420 of the Indian Penal Code, 1860, was partly allowed to the extent of indictment under Section 406 IPC; however, prayer to quash indictment under Section 420 IPC was declined.
Findings of Court:
Impugned judgment and order of the High Court is set aside to the extent it declined quashing of the proceedings under Section 420 IPC. The impugned criminal proceedings under Section 420 IPC are also quashed. Pending applications if any stands disposed of.
Result : Appeal allowed.
Based on the provided legal document, here are the key points regarding the case Pamidighantam Sri Narasimha v. Ganesan:
JUDGMENT :
MANOJ MISRA, J.
1. Leave granted.
2. This appeal impugns the judgment and order of the High Court at Madras1[The High Court] dated 06.04.2023 in Crl.O.P. No. 847 of 2021 and Crl. M.P. No. 518 of 2021, whereby the prayer of the appellant to quash final report and consequential proceedings in C.C. No. 3569 of 2020 on the file of the Metropolitan Magistrate (CCB and CBCID, Metro Cases), Egmore, Chennai-600008, under Section 406 and 420 of the Indian Penal Code, 18602[IPC], was partly allowed to the extent of indictment under Section 406 IPC; however, the prayer to quash indictment under Section 420 IPC was declined.
3. In brief, the prosecution case, as could be evinced from the final report (i.e., police report) submitted under Section 173 of the Code of Criminal Procedure, 19733[CrPC], is that the accused (the appellant herein) was producing a ‘movie’. In the course of its production, he ran short of funds. He, therefore, requested the de-facto complainant (i.e., the second-respondent herein) to lend him money on assurance that it would be returned by a share in profits to the extent of 30%. Later, further money was lent on promise of an additional 17% share in profits. Ultimately, two post-dated cheques of Rs.24 lacs each were issued by the accused to the de facto complainant towards return of the principal amount which returned unpaid for insufficient funds in the account. Based on above, it was alleged that the accused had cheated the complainant and had also committed offence of criminal breach of trust.
4. Aggrieved by the police report and the consequential proceedings, the appellant invoked the jurisdiction of the High Court under Section 482 of CrPC, inter alia, to quash the report and the consequential proceedings on the ground that a pure civil cause of action was given colour of a criminal offence.
5. By the impugned order, the High Court quashed the indictment of an offence punishable under Section 406 IPC but declined to quash the proceedings qua the offence of cheating punishable under Section 420 IPC.
6. We have heard the learned counsel for the parties.
7. On behalf of the appellant it is submitted that admittedly the second-respondent had invested money in a movie project on expectation of good returns. There is no dispute that the movie project was completed. However, it could not generate profits. In such circumstances, the appellant could not fulfil its commitment of providing good returns on the investment. Therefore, there was no dishonest intention and the dispute between the parties is purely civil in nature. Hence, institution and continuation of criminal proceedings is nothing but abuse of the process of Law.
8. Per contra, on behalf of the respondent(s) it is submitted that dishonest intention of the appellant was there from the very beginning which is evident from the fact that the two cheques got dishonoured for want of funds. Besides, on appellant’s false assurance of profits, money was lent. In these circumstances, offence of cheating is made out.
9. We have accorded due consideration to the rival submissions and have perused the record.
10. The police report indicted the appellant for offences of criminal breach of trust and cheating punishable under Sections 406 and 420 IPC respectively. The High Court came to the conclusion, and rightly so, that no offence punishable under Section 406 of IPC is made out as there was no entrustment. Regarding the offence of cheating, the High Court concluded that prima facie it is made out. The reasoning of the High Court in support of its conclusions can be found in paragraph 6 of its judgment, which is extracted below:
(1) Criminal breach of trust and cheating – In order to constitute offence of cheating intention to deceive should be in existence when inducement was made – Mere failure to keep promise subsequently....
To constitute the offence of cheating, the accused must possess a dishonest or fraudulent intention at the time of the initial inducement. Mere breach of contract, failure to fulfill a promise, or th....
Criminal law cannot address purely civil disputes without clear evidence of fraudulent intent.
Non-payment in a commercial transaction does not constitute criminal breach of trust or cheating unless there is evidence of dishonest intention from the inception.
Point of law : exercise powers under Section 482 CrPC, the complaint in its entirety shall have to be examined on the basis of the allegation made in the complaint/FIR/charge-sheet and the High Court....
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