The distinction between mere breach of contract and cheating lies in the dishonest intention of the accused at the time of the alleged inducement, which cannot be inferred solely from the subsequent act of not fulfilling the promise.

JUDGMENT :

B.K. Behera, J. - The five Petitioners, figuring as the accused persons in a case u/s 420 of the Indian Penal Code, on the petition of complaint made by the opposite party, who is the proprietor of the South Indian Match Trading Company having business at Cuttack, in the Court of the Chief Judicial Magistrate, Cuttack, who, after having the complaint enquired into by a Magistrate of the second class, has taken cognisance of the offence on the basis of the report submitted by the Magistrate after examining the opposite party, and one witness, have made this application u/s 482 of the Code of Criminal Procedure ('the Code', for short) for quashing the criminal proceeding against them. Mr. R. Mohanty for the Petitioners has urged that the opposite party has alleged violation of contractual obligations and in the absence of prima facie materials making out an offence of cheating, no cognisance could be taken against the Petitioners who have falsely been implicated by the opposite party in his complaint filed as a counter blast to and for his defence in the suit instituted by the Petitioners against the opposite party arising out of the same contract. Mr. Tripathy, the learned Counsel appearing for the opposite party, has, however, submitted that after the enquiry, cognisance has been taken and it is not a fit case in which the inherent jurisdiction of this Court should be exercised u/s 482 of the Code.

2. The case of the complainant opposite party, as can be gathered from the petition of complaint and the statements of the opposite party and his witness examined during the enquiry u/s 202 of the Code and the documents on which reliance had been sought before cognisance of the offence was taken, is that the Petitioner No. 5, being the salesman of the Petitioner No. 1 M/s. Lord Match Industries of which the other three Petitioners are said to be partners, contacted the opposite party in March, 1981 for purchase of safety marches of 'Jolly' brand assuring that the safety matches supplied would be of the best variety and quality which were damp-proof and upto the norm and standard laid down by the Government and Central Excise Manual and an agreement was executed by the opposite party who placed orders for the supply of 600 bundles of 'Jolly' brand safety matches and banded over a cheque for Rs. 5,000/- on March 19, 1981 as advance, but the Petitioners supplied 600 bundles of 'Jolly' brand match boxes which were not damp-proof and were of substandard quality containing less than 50 sticks in violation of Rule 63 of the Central Excise Manual for which the opposite patty found difficulties in disposing of the stock and earned a bad reputation and lost the faith and goodwill of many of his customers because of complaints by the local dealers. The Petitioners, it is alleged, have not properly executed the contract and the safety matches supplied by them are not according to the specifications contained in the contract and after protracted correspondences with the Petitioners, the opposite party informed the Assistant Collector, Central Excise, Bhubaneswar, about this illegal and fiaudulent action on the part of the Petitioners and on verification, by the Superintendent (Preventive) Central Excise, Bhubaneswar, it was noticed that some match boxes contained less than 50 sticks.

3. It would be noticed from the report of enquiry that the Magistrate to whom the case had been referred has come to the abrupt conclusion that the opposite party had succeeded in making out a prima facie case without indicating as to how he came to find that the ingredients of an offence of cheating had been made out and the learned Chief Judicial Magistrate went legally wrong in taking cognisance of the offence on the basis of such a report without recording the grounds for his satisfaction that an offence had been made out and by merely stating that there was a prima facie case against the Petitioners.

4. For the reasons to follow, I would accept the conte