A civil dispute, such as the non-repayment of a loan, cannot be prosecuted as cheating or criminal breach of trust absent evidence of fraudulent intent at the contract's inception or clear misappropriation of entrusted property.

JUDGMENT :

ANIL KUMAR CHOUDHARY, J.

1. Heard the parties.

2. Though, notice has validly been served upon the opposite party no.2, but no one turns up on behalf of the opposite party no.2 in spite of repeated calls.

3. 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 arising out of C.P. Case No.09 of 2018 including the order dated 05.09.2018 passed by learned Chief Judicial Magistrate, Khunti whereby and where under the learned Chief Judicial Magistrate, Khunti has taken cognizance for the offences punishable under Sections 420/406/506 of the Indian Penal Code against the petitioner.

4. The brief facts of the case is that the petitioner took Rs.7 lakhs on loan from the complainant but did not repay Rs.1,96,000/- out of the said loan amount and when the complainant demanded the said money, the petitioner threatened him.

5. On the basis of the complaint, statement on solemn affirmation of the complainant and the statement of the enquiry witnesses, the learned Chief Judicial Magistrate, Khunti has found prima facie case for the offences punishable under Sections 420/406/506 of the Indian Penal Code against the petitioner.

6. Learned counsel for the petitioner submits that charge has not yet been framed in this case and trial is yet to begin.

7. Learned counsel for the petitioner relies upon the judgment of this Court in the case of Phudan Murmu vs. The State of Jharkhand & Another dated 21.06.2024 in Cr.M.P. No.2601 of 2022 and submits that in that case, this Court has relied upon the judgment of the Hon’ble Supreme Court of India in the case of Satish 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:-

“11. Having observed the background principles applicable herein, we need to consider the individual charges against the appellant. Turning to Section 405 read with Section 406 IPC, we observe that the dispute arises out of a loan transaction between the parties. It falls from the record that Respondent 2 knew the appellant and the attendant circumstances before lending the loan. Further it is an admitted fact that in order to recover the aforesaid amount, Respondent 2 had instituted a summary civil suit which is still pending adjudication. The law clearly recognises a difference between simple payment/investment of money and entrustment of money or property. 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 IPC without there being a clear case of entrustment.” (Emphasis supplied)”

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