The distinction between criminal breaching of trust and cheating must establish prior dishonest intent from the outset, and purely civil disputes cannot be criminally prosecuted.

ORDER :

1. In this petition petitioner seeks the following reliefs:

“a. Call for the entire records in Crime No.115/2023 dt. 12.06.2023 u/ss 406, 420 and 417 of the IPC pending on the file of Hon’ble IV th Addl. CMM court at Bangalore.

b. Quash the FIR and complaint in Crime No.115/2023 dt. 12.06.2023 registered by the respondent No.1 Byappanahalli Police Station, Bangalore city u/ss 406, 420 and 417 of the IPC pending before IV th ACMM, Bengaluru based on the complaint filed by the respondent No.2 and quash the entire criminal proceedings against the petitioners.

c. Pass such other relief/reliefs as this Hon’ble court deems fit in the facts and circumstances of the present case in the interest of justice and equity.”

2. A perusal of the material on record will indicate that the respondent No.2 – defacto complainant filed the instant impugned complaint against the petitioner on 12.06.2023 making certain allegations in relation to alleged sale agreement said to have been executed between respondent No.2 and petitioner No.1 and an alleged GPA dated 19.11.2022 said to have been executed between respondent No.2 and petitioner No.1. It is a matter of record and an undisputed fact that the alleged sale agreement and GPA pertains to agricultural lands bearing Sy.No.143 and 147 of Thambihalli village, Kolar taluk, involving a commercial transaction relating to immovable property. The respondent No.2 filed the instant complaint which was registered as FIR in Crime No.115/2023 for offence punishable under Sections 406 , 420 and 417 of IPC which are assailed in the present petition.

3. In relation to offence punishable under Sections 406 and 420 of IPC, the Hon’ble Apex Court in the case of Delhi Race Club and others vs. State of Uttar Pradesh , 2024 SCC Online SC 2248 held as under:

“36. What can be discerned from the above is that the offences of criminal breach of trust ( Section 406 IPC) and cheating ( Section 420 IPC) have specific ingredients:

In order to constitute a criminal breach of trust ( Section 406 IPC)

1) There must be entrustment with person for property or dominion over the property.

2) The person entrusted:

a) Dishonestly misappropriated or converted property to his own use.

b) Dishonestly used or disposed of the property or willfully suffers any other person so to do in violation of:

(i) Any direction of law prescribing the method in which the trust is discharged.

(ii) Legal contract touching the discharge of trust (see: S.W. Palanitkar.

Similarly, in respect of an offence under Section 420 IPC, the essential ingredients are:

1) Deception of any person, either by making a false or misleading representation or by other action or by omission;

2) Fraudulently or dishonestly inducing any person to deliver any property, or

3) The consent that any person shall retain any property and finally intentionally inducing that person to do or omit to do anything which he would not do or omit (See: Harmanpreet Singh Ahluwalia v. State of Punjab)

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41. The distinction between mere breach of contract and the offence of criminal breach of trust and cheating is a fine one. In case of cheating, the intention of the accused at the time of inducement should be looked into which may be judged by a subsequent conduct, but for this, the subsequent conduct is not the sole test. Mere breach of contract cannot give rise to a criminal prosecution for cheating unless fraudulent or dishonest intention is shown right from the beginning of the transaction i.e. the time when the offence is said to have been committed. Therefore, it is this intention, which is the gist of the offence.

42. Whereas, for the criminal breach o