A loan default does not constitute cheating unless there was fraudulent intention at the inception of the agreement, distinguishing civil disputes from criminal offenses.

JUDGMENT :

Anil Kumar Choudhary, J.

1. Heard the parties.

2. Though the opposite party no.2 has put in appearance through his lawyer 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 Cr.P.C. with the prayer to quash/set aside the entire criminal proceeding including the order taking cognizance dated 12.08.2022 passed by the learned Judicial Magistrate 1st Class, Chatra in connection with Complaint Case No. 592 of 2020, whereby and where under, the learned Judicial Magistrate 1^st Class, Chatra has found prima facie case for the offence punishable under Section 420 of the Indian Penal Code against the petitioner.

4. The allegation against the petitioner is that the petitioner took a loan of Rs.5,00,000/- from the complainant with the promise to return the same within six months but did not repay the said amount and issued cheques for the purpose of security but the cheques on being presented by the complainant, in his bank account for payment, were dishonoured. The complainant filed two complaint cases but there was mediation consequent upon which the complainant withdrew the said cases but the petitioner did not honour the terms and condition of the mediation.

5. On the basis of the complaint, statement of the complainant on solemn affirmation and the statement of the inquiry witness, the learned Judicial Magistrate 1st Class, Chatra has found prima facie case for the offence punishable under Section 420 of the Indian Penal Code.

6. It is submitted by the learned counsel for the petitioner by relying upon the judgment of the Hon’ble Supreme Court of India in the case ofArshad Neyaz Khan vs. State of Jharkhand & Anr. reported in2025(4) JBCJ 120 [SC] that therein, the Hon’ble Supreme Court of India has reiterated the settled principle of law that in establishing the offence of cheating the complainant was required to show that accused person had a fraudulent and dishonest intention at the time of making the promise or representation for not fulfilling the agreement for sale of the property. Leaned counsel for the petitioner next relied upon the judgment of this Court in the case ofSaloni Salvi vs. State of Jharkhand & Anr. reported in2025 (4) JBCJ 487 [HC], wherein, this Court relied upon the judgment of the Hon’ble Supreme Court of India in the case ofDalip Kaur & Ors. vs. Jagnar Singh & Anr. reported in(2009) 14 SCC 696, paragraph no.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 if the dispute between the parties was essentially a civil dispute resulting from the breach of contract on the part of the accused person by not refunding the amount of advance, the same would not constitute the offence of cheating.

7. Learned counsel for the petitioner next relies upon the judgment of a coordinate Be