The court held that mere allegations of breach of contract do not constitute criminal cheating unless fraudulent intent is established, emphasizing the distinction between civil and criminal matters.

ORDER

This Criminal Miscellaneous Case is filed to quash the proceedings in C.C.No.170/2018 on the file of the Judicial First Class Magistrate Court-I, Alathur, arising from Crime No.1130/2016 of Alathur Police Station. The above case is charge sheeted against the petitioner alleging offences punishable under Sections 17 and 18(a) of Kerala Money Lenders Act , and also under Section 420 IPC .

2. The allegation of the third respondent is that during the year 2011-2012 the petitioner herein paid an amount of Rs.1,50,000/- to the husband of the third respondent, and inspite of repayment of Rs.3,50,000/- petitioner demanded exorbitant amount and there by committed the offence under Sections 17 and 18(a) of the Kerala Money Lenders Act , and also under Section 420 IPC . On the basis of the complaint, the case was registered, and Annexure A1 final report is filed.

3. According to the petitioner, even if the entire allegations are accepted, no offence is made out against the petitioner. Hence this Crl.M.C. is filed.

4. Heard learned counsel for the petitioner and the learned Public Prosecutor.

5. Even though notice is issued to the third respondent, there is no appearance of the third respondent. This court perused Annexure A1 final report. It will be better to extract the relevant portion of Annexure A1 final report:

6. The case of the de facto complainant is that, after executing a sale deed in connection with a money transaction, the accused demanded more amount and more interest. The further case of the prosecution is that a suit is filed before the Munsiff Court demanding more amount.

7. Admittedly, suit is filed by the petitioner against the defacto complainant, and the suit is pending even now. The main grievance of the third respondent is that the claim of the petitioner in the suit is without any basis. The question to be decided is that, whether the same attract the offence under Section 420 IPC and also under the provisions of the Kerala Money Lenders Act . The ingredients of is considered by this court and Apex court in several decisions. The Apex Court considered the ingredients to attract inSubbiah C. @ Kadambur Jayaraj v. Superintendent of Police [2024 KHC 6288]. The relevant portion of the above judgment is extracted hereunder:

“40. The complainant has clearly alleged that the accused caused him monetary loss because the appropriate share of profits was not passed on to him after some plots from the entire chunk had been sold. This Court in the case of Sarabjit Kaur v. State of Punjab and Anr, 2023 SCC OnLine SC 201 observed that: -

"A breach of contract does not give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction. Merely on the allegation of failure to keep up the promise will not be enough to initiate criminal proceedings".

41. Similarly, in the case of Vijay Kumar Ghai v. State of W.B., 2022 (7) SCC 124, this Court while tracing the earlier decisions on the subject observed as under:

24. This Court in G. Sagar Suri v. State of U.P. (G. Sagar Suri v. State of U.P., 2000 (2) SCC 636) observed that it is the duty and obligation of the criminal court to exercise a great deal of caution in issuing the process, particularly when matters are essentially of civil nature.

25. This Court has time and again cautioned about converting purely civil disputes into criminal cases. This Court in Indian Oil Corpn. (Indian Oil Corpn. v. NEPC India Ltd., 2006 (6) SCC 736) noticed the prevalent impression that civil law remedies are time consuming and do not adequately protect the interests of lenders / creditors. The Court further observed that : (Indian Oil Corpn case (Indian Oil Corpn v. NEPC India Ltd., 2006 (6) SCC 736)

"13. ... Any effort to settle civil disputes and claims, which do not involve any criminal offence, by applying pressure through criminal prosecution should be deprecated and discouraged."

42. Thus, we are of the firm view that the ne