116 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision:16.02.2026 SHIV KUMAR VIG AND ANOTHER ... PETITIONERS VERSUS STATE OF PUNJAB AND ANOTHER ... RESPONDENTS CORAM : HON'BLE MR. JUSTICE H.S.GREWAL Present:- Mr. Aalok Jagga, Advocate with Mr. Karan Inder Singh, Mr. Aryaman Jagga and Mr. Madhav Singhal, Advocates for the petitioners.

Mr. Rishabh Singla, A.A.G., Punjab.

Mr. Bhupinder Singh, Advocate for the respondent no.2.

H.S. GREWAL, J. (ORAL)

1. The present petition has been filed by the petitioners under Section 482 Cr.P.C. for quashing the FIR No. 279 dated 28.12.2018 under Section 406 IPC registered at Police Station Model Town, District Hoshiarpur along with all the consequential proceedings arising therefrom.

2. Learned counsel for the petitioners contends that the petitioners have been falsely implicated in the present case. It is submitted that the dispute, on a plain reading of the FIR, arises out of business transactions between the parties and is purely civil in nature. The complainant alleges that the petitioners, who are engaged in running a brick kiln, had purchased coal from the complainant’s company between the years 2013 and 2016, ₹

partly on credit. It is further alleged that an amount of 6,50,000/- was advanced to the petitioners on 31.07.2014, which was withdrawn from the ₹ ₹

bank. Out of the total alleged liability of 16,00,000/-, a sum of 9,50,000/-

₹

is stated to pertain to the purchase of coal and 6,50,000/- towards a loan transaction.

3. Learned counsel for respondent No.2 submits that the outstanding amount was never repaid. Although a settlement was purportedly arrived at, the same was not honoured by the petitioners, and ₹ ₹

only 70,000/- was paid against the total claimed amount of 16,00,000/-.

4. To support his submissions, learned counsel for the petitioners has further placed reliance upon the judgment of Hon’ble Supreme Court in Delhi Race Club Limited Vs. State of U.P. 2024 INSC 626 wherein it has been held that the offences of cheating and criminal breach of trust are distinct and mutually exclusive, and that a mere breach of contractual obligation, absent dishonest intention at inception, does not constitute a criminal offence. The Apex Court has categorically observed that mere non- payment of dues arising from a commercial transaction would not attract the provisions of Section 406 IPC unless there is clear averment and proof of entrustment and dishonest misappropriation. The relevant portion of the judgment reads as under:-

“The distinction between mere breach of contract and the offence of criminal breach of trust and cheating is a fine one. In case of cheating, the intention of the accused at the time of inducement should be looked into which may be judged by a subsequent conduct, but for this, the subsequent conduct is not the sole test. Mere breach of contract cannot give rise to a criminal prosecution for cheating unless fraudulent or dishonest intention is shown right from the beginning of the transaction i.e. the time when the offence is said to have been committed. Therefore, it is this intention, which is the gist of the offence. Whereas, for the criminal breach of trust, the property must have been entrusted to the accused or he must have dominion over it. The property in respect of which the offence of breach of trust has been committed must be either the property of some person other than the accused or the beneficial interest in or ownership’ of it must be of some other person. The accused must hold that property on trust of such other person. Although the offence, i.e. the offence of breach of trust and cheating involve dishonest intention, yet they are mutually exclusive and different in basic concept. There is a distinction between criminal breach of trust and cheating. For cheating, criminal intention is necessary at the time of making a false or misleading representation i.e., since inception. In criminal breach of trust, mere proof of entrustment is sufficient