Mere Breach of Contract Cannot Give Rise To Criminal Prosecution For Cheating Unless Initial Fraudulent Intention Is Shown: Jharkhand HC

While condemning the practice of giving criminal colour to civil disputes the Court said, “Time and again at innumerable instances, the Courts have expressed their disapproval for imparting criminal colour to a civil dispute, made merely to take advantage of a relatively quick relief granted in a criminal case in contrast to a civil dispute and such an exercise is nothing, but an abuse of process of law, which must be discouraged in its entirety.”

The Court was hearing a petition quashing the entire criminal proceeding including the order taking cognizance arising out of a case pending in the Court of the Chief Judicial Magistrate.

The bench of Justice Sanjay Kumar Dwivedi observed, “Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction.”

Advocate Santosh Kumar Tiwari appeared for the Appellants and Advocate Santosh Kumar Jha appeared for the Respondent.

Brief Facts-

In the present case, the FIR alleges that a notice was issued to shopkeepers from Zila Parishad, Pakur, to vacate their shops for constructing a market complex cum marriage hall. Following the notice, a meeting among the shopkeepers led to authorizing Abhay Kumar Singh, who runs a Xerox shop, to file a Writ Petition in the High Court. It is alleged that Singh withdrew the case without the other Petitioners' consent. When confronted, Singh admitted to the deceit, prompting the informant to lodge the FIR against him and his brother, Manikant Sinha.

The Court mentioned the Supreme Court decision in the case of Mitesh Kumar J. Sha v. State of Karnataka and others, reported in (2022) 14 SCC 572 and quoted, “While a criminal breach of trust as postulated under Section 405 of the Penal Code, 1860, entails misappropriation or conversion of another's property for one's own use, with a dishonest intention, cheating too on the other hand as an offence defined under Section 415 of the Penal Code, 1860, involves an ingredient of having a dishonest or fraudulent intention which is aimed at inducing the other party to deliver any property to a specific person.”

The Court finally relied on the decision of the Supreme Court in Vijay Kumar Ghai and others v. State of West Bengal and others, reported in (2022) 7 SCC 124 and quoted, “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.”

The Court said that no case of cheating is made out after relying on the judgment in the case of State of Haryana v. Bhajan Lal (supra) where the SC laid down instances wherein inherent power of the Court under Section 482 CrPC can be exercised to secure the ends of Justice.

Accordingly, the Court quashed the entire criminal proceeding including the order taking cognizance.

Finally, the Court allowed the Petition.

Cause Title: Abhay Kumar v. State of Jharkhand

Appearance:

Appellant: Adv. Santosh Kumar Tiwari

Respondent: APP Fahad Allam and Adv. Santosh Kumar Jha