Table of Content
1. challenge to a magistrate's order to proceed with criminal charges for loan default. (Para 1 , 2 , 3)
2. distinction between civil breach of contract and criminal cheating/breach of trust. (Para 4 , 5 , 6 , 7)
3. absence of inception-deception and entrustment in friendly loan transactions. (Para 8 , 9 , 10)
4. quashing of proceedings to prevent abuse of the process of law. (Para 11 , 12 , 13)

By the Court:-

1. 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 the order dated 16.09.2022, passed by the learned Judicial Magistrate -1st Class, Jamshedpur in Complaint Case No. 2256 of 2021 by which the learned Magistrate has found sufficient ground to proceed against the petitioner for having committed the offences punishable under Section 406/420 of the Indian Penal Code.

3. The allegation against the petitioner is that the petitioner took a friendly loan of Rs.16,00,000/- from the complainant but did not pay back the same and upon repeated demands, the petitioner issued a cheque for Rs.16,00,000/- which was dishonoured. On the basis of the complaint, statement of the complainant on solemn affirmation and the statement of the inquiry witnesses, the learned Magistrate found sufficient materials to proceed against the petitioner for having committed the offences as already indicated above.

4. Relying upon the Judgment of this Court in the case of Shamim Ahmad Vs. The State of Jharkhand & Anr., reported in 2024:JHHC:38249 it is submitted by the learned counsel for the petitioner that therein this Court relied upon the Judgment of Hon’ble Supreme Court of India in the case of of Dalip Kaur v. Jagnar Singh 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 if the dispute between the parties was essentially a civil dispute resulting from a breach of contract on the part of the accused person by non-refunding the amount of advance, the same would not constitute an offence of cheating and similar is the legal position in respect of an offence of criminal breach of trust punishable under Section 406 of the Indian Penal Code.

5. It is next submitted by the learned counsel for the petitioner that in that case, this Court also relied upon the Judgment of the Hon’ble Supreme Court of India in the case of Uma Shankar Gopalika vs. State of Bihar & Anr. reported in (2005) 10 SCC 336 paragraph no. 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 to cheating where there was any deception played at the very inception. If the intention to cheat has developed later on, the same cannot amount to cheating. In the present case it has nowhere been stated that at the very inception there was any intention on behalf of the accused persons to cheat which is a condition precedent for an offence under Section 420 IPC.” (Emphasis supplied)

Wherein the Hon’ble Supreme Court of India has reiterated the settled principle of law that in order

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