IMPORTANT POINT
A mere breach of contract does not constitute cheating unless there is deception at inception; individual liability requires evidence of active role and criminal intent.

JUDGMENT :

Anil Kumar Choudhary, J.

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 to quash the entire criminal proceeding in connection with Complaint Case No.3834 of 2018 including the order dated 13.03.2023 passed by the learned Judicial Magistrate 1st Class, Ranchi whereby and where under, cognizance has been taken for the offence punishable under Section 406, 420/34 of Indian Penal Code.

3. The allegation against the petitioner is that the petitioner is the director of Ritebanc Agritech Solution Pvt. Ltd. The co-accused – Managing Director of the said company came to the office of the complainant and entered into an agreement as per which the complainant supplied rice against eight written orders worth Rs.1,67,50,573/-by truck. A sum of Rs.34,60,000/-in total was transferred to the bank account of the complainant on different dates. On demand being made to pay the remaining money, it was told that the payment will be made after six months as there was shortage of money. Some money was also transferred to the account of the complainant from the account of Bio Ethanol Agro Pvt. Ltd. in which the co-accused was the director but after six months also the money was not paid and ultimately, the accused informed the complainant to forget his remaining money hence, the complaint was filed.

4. It is submitted by the learned counsel for the petitioner that this is the second journey of the petitioner. Earlier the petitioner along with accused persons moved before this Court in Cr.M.P. No. 3504 of 2021 and vide order dated 01.12.2022, the coordinate Bench of this Court set aside the cognizance order dated 03.11.2018 and directed the trial court to proceed afresh in accordance with law and after that vide order dated 13.03.2023, learned Magistrate has found prima facie case for the offence punishable under Section 406, 420 and 34 of Indian Penal Code against the petitioner as well and ordered for issue of summons.

5. It is submitted by the learned counsel for the petitioner that there is absolutely no allegation against the petitioner and she has been arraigned as an accused only because she was the director of the company which is not permissible in law. Relying upon the judgment of this Court in the case of Ashok Agrawal & Ors. vs. The State of Jharkhand & Anr. in Cr.M.P. No. 617 of 2021 dated 13.06.2023, learned counsel for the petitioner submits that this Court referred to the settled principle of law as has been reiterated by the Hon’ble Supreme Court of India in the case of Uma Shankar Gopalika vs. State of Bihar & Anr. reported in (2005) 10 SCC 336, paragraph no. 6 of which reads as under :

6. Xxxx xxxx xxxx

It is well settled that every breach of contract would not give rise to an offence of cheating and only in those cases breach of contract would amount to cheating where there was any deception played at the very inception. If the intention to cheat has developed later on, the same cannot amount to cheating. In the present case it has nowhere been stated that at the very inception there was any intention on behalf of the accused persons to cheat which is a condition precedent for an offence under Section 420 IPC.”

(Emphasis supplied)

to the effect that every breach of contract would not give rise to an offence of cheating and only in those cases breach of contract would amount to cheating; where there was any deception played at the very inception and in that case also this Court also relied upon the judgment of Hon’ble Supreme Court of India in the case of Satish Chandra Ratanlal Shah vs. State of Gujarat & Anr. reported in (2019) 9 SCC 148 wherein the Hon’ble Supreme Court of India reiterated the settled principle of law that a mere breach of a promise, agreement or contract does not, ipso facto, constitute the offence of the criminal breach of trust contained in Section 405 of the Indian Penal Code for which punishment ha