A breach of contract does not constitute cheating unless there is initial fraudulent intent; civil remedies should be pursued instead of criminal proceedings.

JUDGMENT :

Sanjay Kumar Dwivedi, J.

Heard learned counsel for the petitioner and the learned counsel appearing for the respondent State.

2. Learned counsel for the petitioner has confined his prayer with regard to prayer no.2 relating to quashing of the entire criminal proceeding in connection with Bank More P.S. Case No.121 of 2022 dated 22.5.2022, registered under sections 420, 409/120B IPC, pending in the court of learned Chief Judicial Magistrate, Dhanbad.

3. Mr. Utkarsh Krishna, the learned counsel for the petitioner submits that in the FIR the allegations are made that the informant has supplied coal to various companies/ persons and against that the money was due to the informant and inspite of that those persons are not paying the money to the informant and he submits that so far the role of the petitioner is concerned only the allegations is made that the petitioner has introduced the informant with M/s Bajrang Coke, Kanpur (Dehat). He submits that in the FIR itself it is disclosed that after supply of the coal certain amount has been paid however for recovery of certain amount the case has been lodged and if such a situation is there, the only remedy to the informant is to file a civil suit for recovery of the amount and at this stage he submits that the entire criminal proceeding is misuse of process of law. To buttress his argument he relied in the case of Uma Shankar Gopalika v. State of Bihar reported in (2005) 10 SCC 336 wherein at paragraph nos.6 and 7 it has been held as under:

6. Now the question to be examined by us is as to whether on the facts disclosed in the petition of complaint any criminal offence whatsoever is made out much less offences under Sections 420/120-B IPC. The only allegation in the complaint petition against the accused persons is that they assured the complainant that when they receive the insurance claim amounting to Rs 4,20,000, they would pay a sum of Rs 2,60,000 to the complainant out of that but the same has never been paid. Apart from that there is no other allegation in the petition of complaint. It was pointed out on behalf of the complainant that the accused fraudulently persuaded the complainant to agree so that the accused persons may take steps for moving the Consumer Forum in relation to the claim of Rs 4,20,000. 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.

7. In our view petition of complaint does not disclose any criminal offence at all much less any offence either under Section 420 or Section 120-B IPC and the present case is a case of purely civil dispute between the parties for which remedy lies before a civil court by filing a properly constituted suit. In our opinion, in view of these facts allowing the police investigation to continue would amount to an abuse of the process of court and to prevent the same it was just and expedient for the High Court to quash the same by exercising the powers under Section 482 CrPC which it has erroneously refused.

4. Relying on the said judgment, he submits that every breach of contract cannot be a subject matter of FIR. He further submits that this aspect of the matter has recently been considered by the Hon’ble Supreme Court with regard to the filing of the criminal case for recovery of the amount in the case of Delhi Race Club (1940) Ltd. & Ors. Versus State of Uttar Pradesh & Anr., reported in 2024 SCC OnLine SC 2248, where in para-36 it has been held as follows:-

“36. From the aforesaid, there is no manner of any doubt whatsoever that in case of sale of goods, the proper