A breach of contract does not constitute cheating unless there is initial deception; mere non-payment does not amount to criminal breach of trust.

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 and set aside the entire criminal proceeding arising out of order dated 16.03.2023, passed by the learned Judicial Magistrate -1st Class, Bokaro in C.P. Case No. 914 of 2022 whereby and where under the learned Magistrate has found prima facie case for the offences punishable under Section 406/420 of the Indian Penal Code.

3. The allegation against the petitioner is that the petitioner is an old acquaintance of the complainant. On 30.09.2016, the petitioner offered the complainant and his friend to invest Rs.5,00,000/- each in the business of the petitioner and promised to return the investment amount within six months and after eight months he will pay an additional amount of Rs.10,00,000/- as profit. An agreement was prepared. The complainant and his friend paid Rs.5,00,000/- each to the petitioner. The petitioner issued cheques as security. After eight months, the petitioner returned Rs.5,00,000/- each to the complainant and his friend. Another agreement was prepared on 03.01.2018 for payment of the profit amount but till 31.10.2018, the petitioner did not pay the promised profit amount of Rs.10,00,000/- each to the complainant and his friend. Later on he agreed to pay the profit amount of Rs.5,00,000/- each instead of Rs.10,00,000/- each. Then on 30.12.2020, the petitioner took Rs.5,00,000/- each from the complainant and his friend as advance for selling his shop and an agreement was prepared. The petitioner returned Rs.2,00,000/- as profit but did not pay the rest amount. On the basis of the complaint, statement of the complainant under solemn affirmation and statement of the inquiry witnesses, the learned Judicial Magistrate -1st Class found prima facie case for the offences punishable under Section 406/420 of the Indian Penal Code against the petitioner and ordered for issuance of summons.

4. It is submitted by the learned counsel for the petitioner relying upon the Judgment of this Court in the case of Satyabhama Dubey @ Satyabhama Devi & Ors. Vs. The State of Jharkhand and Ors., reported in 2024 0 Supreme (Jhk) 171 that therein this Court relied upon the Judgment of Dalip Kaur Vs. Jagnar Singh, reported in (2009) 14 SCC 696, para -10 of which reads as under:-

“10. The High Court, therefore, should have posed a question as to whether any act of inducement on the part of the appellant has been raised by the second respondent and whether the appellant had an intention to cheat him from the very inception. If the dispute between the parties was essentially a civil dispute resulting from a breach of contract on the part of the appellants by non-refunding the amount of advance the same would not constitute an offence of cheating. Similar is the legal position in respect of an offence of criminal breach of trust having regard to its definition contained in Section 405 of the Penal Code. (See Ajay Mitra v. State of M.P. [(2003) 3 SCC 11 : 2003 SCC (Cri) 703] )”

(Emphasis supplied)

Wherein the Hon’ble Supreme Court of India has observed that if the dispute between the parties was essentially a civil dispute, resulting from a breach of contract on the part of the accused persons by non-refunding the amount of advance, the same would not constitute the offence of cheating and similar is the legal position in respect of an offence of criminal breach of trust punishable under Section 406 of the Indian Penal Code.

5. It is next submitted by the learned counsel for the petitioner that in that case, this Court also relied upon the Judgment of Hon’ble Supreme Court of India in the case of Vir Prakash Sharma Vs. Anil Kumar Agarwal & Anr., reported in (2007) 7 SCC 373 wherein the Hon’ble Supreme Court of India has observed that when the dispute between the parties is essentially a civil dispute, non-payment or under-payment of the price of the good