Non-repayment of a loan does not constitute criminal offences under IPC unless fraudulent intent is proven from the beginning of the transaction.

JUDGMENT :

ANIL KUMAR CHOUDHARY

1. Heard the parties.

2. This Criminal Miscellaneous Petition has been filed invoking the jurisdiction of this Court under Section 528 of the B.N.S.S., 2023 with a prayer to quash and set aside the entire criminal proceeding arising out of C.P. Case No.9450 of 2023 for the offences punishable under Section 323, 420, 406 of the Indian Penal Code including the order taking cognizance dated 19.06.2024 passed by learned Judicial Magistrate-1st Class, Dhanbad whereby and where under the learned Judicial Magistrate-1st Class, Dhanbad has taken cognizance for the offences punishable under Sections 323, 420, 406 of the Indian Penal Code against the petitioner.

3. The brief facts of the case is that the petitioner in need of money approached the informant to help him of Rs.40 lakhs, the complainant paid him in total 40 lakhs by paying Rs.20 lakhs on 26.06.2020 by transferring the same to the account of the petitioner and further paying another Rs.20 lakhs by RTGS. Though the petitioner promised to return the money after the corona pandemic ceases, but he did not pay the money even after that and though the complainant also issued a notice still the money was not paid.

4. Learned counsel for the petitioner relies upon the judgment of the Hon’ble Supreme Court of India in the case of Delhi Race Club (1940) Ltd. and Others v. State of Uttar Pradesh and Another reported in (2024) 10 SCC 690 , paragraph-36 of which reads as under:-

“43. There is a distinction between criminal breach of trust and cheating. For cheating, criminal intention is necessary at the time of making a false or misleading representation i.e. since inception. In criminal breach of trust, mere proof of entrustment is sufficient. Thus, in case of criminal breach of trust, the offender is lawfully entrusted with the property, and he dishonestly misappropriated the same. Whereas, in case of cheating, the offender fraudulently or dishonestly induces a person by deceiving him to deliver any property. In such a situation, both the offences cannot co-exist simultaneously.”

and submits that both the offences punishable under Section 420 and 406 of the Indian Penal Code cannot co-exist simultaneously.

5. Learned counsel for the petitioner next relied upon the judgment of Hon’ble Supreme Court of India in the case of Rikhab Birani and Another vs. State of Uttar Pradesh and Another reported in 2025 SCC OnLine SC 823 paragraph-18 of which reads as under:-

“18. In Kunti v. State of Uttar Pradesh, this Court referred to Sarabjit Kaur v. State of Punjab wherein it was observed that a breach of contract does not give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction. Merely on the allegation of failure to keep a promise will not be enough to initiate criminal proceedings. Thus, the dishonest intention on the part of the party who is alleged to have committed the offence of cheating should be established at the time of entering into the transaction with the complainant, otherwise the offence of cheating is not established or made out.”

and submits that in that case, the Hon’ble Supreme Court of India has also reiterated the settled principle of law that, merely the allegation of failure to keep a promise will not be enough to initiate criminal proceedings, hence, it is submitted that even if the entire allegations made against the petitioner are considered to be true in their entirety, still the offence punishable under Section 420 or 406 of the Indian Penal Code is not made out. It is next submitted that there is no allegation against the petitioner of causing hurt to the complainant or anyone else, h