The failure to repay a loan due to financial constraints does not constitute cheating or criminal breach of trust, and the purpose for which the loan was used is the personal right of the borrower and does not affect the criminal nature of the transaction.

The petitioner has filed the above Criminal Original Petition to call for the entire records pertaining to complaint in C.C.No. 574 of 2007 pending on the file of the III Metropolitan Magistrate, George Town, Chennai and quash the same.

2. The respondent/complainants complaint is that the petitioner had approached the office of the complainant for a person loan for purchase of a used car. The complainant after completing the necessary legal formalities, sanctioned a loan of Rs.70,000/-to the accused vide agreement No.LPK0M00001433529. After obtaining the said loan, the accused executed a loan agreement in favour of the complainant. As per agreement, the accused had agreed to repay the said loan in 36 equated monthly instalments of Rs.3,206/-. The accused, after receipt of the said loan, had intentionally not purchased the car and thus cheated the complainant. Further, the respondent stated that the petitioner had become a chronic defaulter in payment and had violated the agreement made with the complainant, with the criminal intention of cheating. So, the respondent had committed the offence of cheating, thereby, punishable under Section 420 of IPC and had misappropriated the money and thereby committed an offence under Section 406 of IPC. In support of the complaint, two documents are filed and one witness mentioned.

3. The learned Magistrate has taken the case on his file and issued summons to the petitioner herein.

4. The petitioners contention is that the monthly instalments were not paid due to the financial constraints and inability to pay the instalments and therefore cheating or criminal breach of trust, as stated by the respondent does not arise. Further, the claim amount mentioned in the complaint is different from an earlier claim in the legal notice. Further, the petitioner contended that the entire transaction is of a civil nature. The inability to pay the instalments will not make it a criminal offence.

5. Considering the facts and circumstances of the case, particularly the agreement entered into between both the parties, dated 14.08.2003 and arguments advanced by the Learned Counsel for the petitioner, the Court is of the view that in the legal notice sent by the respondent, it has been mentioned that they will initiate appropriate legal proceedings for recovery against the petitioner and attach the personal assets of the petitioner. But the said complaint will not attract 420 and 406 of IPC, since the matter is purely Civil in Nature as per terms of agreement. If either of the two parties breach the agreement, the offence committed will not be liable for criminal prosecution. Further, the contention that the petitioner did not use the personal loan for purchase of car but used it for other purposes cannot be a factor in criminal offence. It is the personal right of the petitioner to use the loan in any appropriate manner.

6. Accordingly, the Criminal Original Petition No.23477 is dismissed. Consequently, the connected Miscellaneous Petition is closed.