Every Breach Of Contract Would Not Constitute Cheating Or Breach Of Trust Unless Intention To Defraud From Very Inception Is Born Out From Prosecution Records: Kerala HC

The Court said that merely for breach of contract criminal proceedings would not lie and the remedy in case of breach of trust is to sue for damages.

The Court is hearing a Criminal Miscellaneous Case under Section 482 of the Code of Criminal Procedure, 1973, seeking to quash the entire proceedings of the case registered for the offences punishable under Sections 405, 406, 415, 418, 420 read with 34 of IPC as well as the final report in the interest of Justice.

The bench of Justice A. Badharudeen observed, “Each and every breach of contract would not amount to a breach of trust or cheating, unless the every intention to cheat and defraud the defacto complainant at the very inception is to be born out from the prosecution records. Merely for breach of contract, criminal proseedings would not lie and the remedy in case of breach of trust is to sue for damages.”

Advocate Varghese C. Kuriakose appeared for the Appellant and Senior PP Renjith George appeared for the Respondent.

Brief Facts-

In this case, the Director of M/s Forido Travel and Tourism Pvt. Ltd, filed a private complaint before the Judicial First Class Magistrate Court leading to the registration of a criminal case. The complaint alleged that the petitioners acting with a common intention to unjustly enrich themselves and cause loss to the complainant, entered into an agreement with the intent to cheat and defraud her. They allegedly failed to fulfil the terms of the agreement, thereby committing cheating and breach of trust. The prosecution has charged the petitioners with offences under Sections 405, 406, 415, 418, and 420 read with Section 34 of the IPC.

The Court perused the agreement and noted that the same would suggest that there was an offer and acceptance of reciprocal promises. It also noted that the petitioners failed to perform their part of the contract and if so, the consequential event is a breach of contract.

The Court said that in the present case what is made out is only a breach of contract and not a breach of trust.

According to the Court, since breach of contract would not attract a breach of trust or cheating, the proceedings against the Petitioners are unwanted.

Finally, the Court allowed the Petition and quashed all the further proceedings.

Cause Title: Mansoor Ali v. State of Kerala (Neutral Citation: 2024/KER/48056)

Appearance:

Appellant: Adv. Varghese C. Kurikose, Adv. Sushant Shanji, Adv. Albin A. Joseph and Adv. Ameitha J.

Respondent: Sr. PP Renjith George