The judgment established that not every breach of contract amounts to a criminal offence and emphasized the importance of the presence of deception and dishonesty at the inception of a transaction to constitute cheating.

JUDGMENT :

1. Heard the parties.

2. This criminal miscellaneous petition has been filed invoking the jurisdiction of this Court under Section 482 Cr.P.C. with a prayer for quashing the entire criminal proceeding including the order dated 08.06.2022 passed by the learned Judicial Magistrate 1st Class, Jamshedpur in C-1 Case No.435 of 2020 by which the learned Judicial Magistrate 1st Class, Jamshedpur has found prima facie case for the offence punishable under Sections 406 and 420 of Indian Penal Code against the petitioners and ordered for issue of summons to the petitioners.

3. The brief facts of the case is that the petitioner no.1 is the company of which the petitioner no.2 is the Chairman, petitioner no.3 is Director, petitioner no.4 is Chief Finance Officer, petitioner no.5 is Site in-charge and petitioner no.6 is Site Engineer. The allegation against the petitioners is that they engaged the complainant-company for the work of cutting and filling of earth at a particular site as a sub-contractor in the year 2015 to 2019 by giving work order. They paid the bills of the complainant company up to January, 2019 from 2015 but thereafter, they are not paying the bill amount of Rs.2,16,25,799/-.

4. It is submitted by the learned counsel for the petitioners that the transaction between the petitioner no.1 and the complainant was purely business transaction and the schedule completion of the date of work was 31.03.2018 but the complainant did not complete the same within the stipulated time. It is further submitted by the learned counsel for the petitioners that on the repeated request of the complainant, the complainant was given ample opportunity by the petitioner no.1 for completion of the work but despite that the performance of the complainant was not up to the mark and lastly the petitioners engaged other agencies. It is next submitted by the learned counsel for the petitioners that the petitioners paid to the complainant a sum of Rs.4,87,83,445/- against the total quantity of earth work measuring 7,55,178.02 cubic metre and the petitioner no.1 has paid Rs.2,18,09,988/- to other agencies for earth work measuring 3,57,540.79 cubic metre. Relying upon the judgment of Hon’ble Supreme Court of India in the case of Hridaya Ranjan Prasad Verma vs. State of Bihar reported in (2000) 4 SCC 168, paragraph no. 15 of which reads as under:-

“15. In determining the question it has to be kept in mind that the distinction between mere breach of contract and the offence of cheating is a fine one. It depends upon the intention of the accused at the time of inducement which may be judged by his subsequent conduct but for this subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, that is the time when the offence is said to have been committed. Therefore it is the intention which is the gist of the offence. To hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise. From his mere failure to keep up promise subsequently such a culpable intention right at the beginning, that is, when he made the promise cannot be presumed.”

It is submitted by the learned counsel for the petitioners that the Hon’ble Supreme Court of India has held that mere failure to keep up a promise will not give rise to culpable intention of the accused right at the beginning.

5. Learned counsel for the petitioners next relied upon the judgment of Hon’ble Supreme Court of India in the case of Anil Mahajan vs. Bhor Industries Ltd. reported in (2005) 10 SCC 228, paragraph no. 8 of which reads as under:-

“8. The substance of the complaint is to be seen. Mere use of the expression “cheating” in the complaint is of no consequence. Except mention of the words “deceive” and “cheat” in the complaint filed before the Magistrate and “cheating” in the complaint