A breach of contract does not constitute criminal cheating or breach of trust absent evidence of dishonest intention from the inception of the transaction and a clear established case of entrustment of property. Such disputes are primarily civil in nature, and criminalizing them constitutes an abuse of process.

JUDGMENT :

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 First Information Report registered as Sitaramdera P.S. Case no.45 of 2015 corresponding to G.R. No.576 of 2015 including charge sheet no.229 of 2021 dated 12.10.2021 and the order taking cognizance dated 12.04.2022 passed by learned Judicial Magistrate-1st Class, Jamshedpur whereby and where under the learned Judicial Magistrate-1st Class, Jamshedpur has taken cognizance of the offences punishable under Sections 420/406/120B of the Indian Penal Code against the petitioner.

3. The brief facts of the case is that the petitioner entered into an oral agreement with the informant to sell a flat, the informant paid Rs.15 lakhs but the petitioner did not handover the flat to the informant but undertook to pay Rs.30 lakhs instead of Rs.15 lakhs taken by the informant, to compensate the loss of the informant and entered into an agreement in this respect, but actually returned only Rs.2,50,000/- and did not pay the rest amount. In the complaint it has categorically been mentioned that in para-4 that the petitioner failed to handover the flat to the informant due to unexplained and unavoidable reasons.

4. The Complaint Case No.3881 of 2014 filed by the informant was referred to police under Section 156(3) of Cr.P.C. and basing upon the same, police registered Sitaramdera P.S. Case no.45 of 2015 and after investigation of the case police submitted charge sheet.

5. Learned counsel for the petitioner next relies upon the judgment of this Court in the case of Latika Chari & Others vs. The state of Jharkhand in Cr.M.P. No.1873 of 2023 and submits that therein this Court relied upon the judgment of Dalip Kaur & Ors. vs. Jagnar Singh & Anr. 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 reiterated the settled principle of law that the dispute between the parties is basically a civil dispute resulting from the alleged breach of contract on the part of the petitioner, hence, the offence punishable under Section 406 is not made out and in the absence of any dishonest misappropriation of any entrusted property by the petitioner, the offence punishable under Section 420 of IPC is also not made out.

6. It is next submitted that in that case, this Court also relied upon the judgement of the Hon’ble Supreme Court of India in the case of Uma Shankar Gopalika vs. State of Bihar & Another reported in (2005) 10 SCC 336 paragraph-6 of which reads as under:-

6. “Xxxx xxxx xxxx 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 t