Inability to repay a loan does not constitute criminal cheating without evidence of fraudulent intent or deception at the transaction's inception.

JUDGMENT :

ANIL KUMAR CHOUDHARY, J.

Heard the parties.

2. This Criminal Miscellaneous Petition has been filed invoking the jurisdiction of this Court under Section 482 of the Code of Criminal Procedure with the prayer to quash and set aside the entire criminal proceeding including the order dated 23.05.2017 passed in connection with Dhanbad P.S. Case No.769 of 2016 corresponding to G.R. Case No.4844 of 2016 by learned Chief Judicial Magistrate, Dhanbad whereby and where under the learned Chief Judicial Magistrate, Dhanbad has taken cognizance for the offences punishable under Sections 420/406/120B of the Indian Penal Code against the petitioners on the basis of the charge sheet submitted by the police after investigation of the case.

3. The allegation against the petitioners is that the petitioners took friendly loan of Rs.50 lakhs from the informant and his friend Ramendra Kumar Rai, but did not repay the same and the cheque which the petitioners subsequently gave to the informant and his friend was dishonoured because of the account was closed by the time the cheque could be presented in the bank.

4. Learned senior counsel for the petitioners submit that the case is next fixed to 27.01.2026 before the trial court and charge has not yet been framed in this case.

5. Learned senior counsel for the petitioners relies upon the judgment of the Hon’ble Supreme Court of India in the case ofSatish Chandra Ratan Lal Shah vs. State of Gujarat & Anr. reported in(2019) 9 SCC 148 paragraph nos.11 and 13 of which reads as under:-

13. Now coming to the charge under Section 415 punishable under Section 420 IPC. In the context of contracts, the distinction between mere breach of contract and cheating would depend upon the fraudulent inducement and mens rea. (See Hridaya Ranjan Prasad Verma v. State of Bihar [Hridaya Ranjan Prasad Verma v. State of Bihar, (2000) 4 SCC 168 : 2000 SCC (Cri) 786] .) In the case before us, admittedly the appellant was trapped in economic crisis and therefore, he had approached Respondent 2 to ameliorate the situation of crisis. Further, in order to recover the aforesaid amount, Respondent 2 had instituted a summary civil suit seeking recovery of the loan amount which is still pending adjudication. The mere inability of the appellant to return the loan amount cannot give rise to a criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, as it is this mens rea which is the crux of the offence. Even if all the facts in the complaint and material are taken on their face value, no such dishonest representation or inducement could be found or inferred.” (Emphasis supplied)

wherein the Hon’ble Supreme Court of India has reiterated the settled principle of law that the mere inability of the appellant to return the loan amount cannot give rise to a criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction between the parties.

6. Learned senior counsel for the petitioners next relies upon the judgment of the Hon’ble Supreme Court of India in the case ofShailesh Kumar Singh alias Shailesh R. Singh vs. State of Uttar Pradesh & Others reported in2025 SCC OnLine SC 1462 and submits that in that case, the Hon’ble Supreme Court of India relied upon its own judgement in the case ofDelhi Race Club (1940) Ltd. & Ors. vs. State of Uttar Pradesh & Anr. reported in (2024) 10 SCC 690, wherein the Hon’ble Supreme Court of India has held that the offence of cheating and criminal breach of trust cannot co-exist for the same occurrence and