( 2025:JHHC:31723 ) 1 Cr. M.P. No.801 of 2022 IN THE HIGH COURT OF JHARKHAND AT RANCHI Cr.M.P. No.801 of 2022 ------ Rishi Kumar, S/o Ajay Vishwakarma, aged about 22 years, resident of Village-Lohar Toli, Purenia Talab, Dibha Mohalla, P.O. & P.S.- Sadar, District-Chatra, (Jharkhand). … Petitioner Versus 1. The State of Jharkhand 2. Dhiraj Kumar, aged about 37 years, S/o Bhola Verma, resident of village-Dibha, Ward No.7, P.O. & P.S.-Sadar, District-Chatra, (Jharkhand). … Opposite Parties ------ For the Petitioner : Mr. Dhirendra Kr. Deo, Advocate For the State : Ms. Kumari Rashmi, Addl.P.P. For the O.P. No.2 : Mr. Munna Lal Yadav, Advocate : Mr. Sarvendra Kumar, Advocate : Ms. Rachana R.M., Advocate ------ P R E S E N T HON’BLE MR. JUSTICE ANIL KUMAR CHOUDHARY By the Court:- 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 and set aside the entire criminal proceeding in connection with Sadar P.S. Case no.298 of 2020 registered for the offences punishable under Sections 420/406 of the Indian Penal Code against the petitioner, which is now pending in the Court of learned Chief Judicial Magistrate, Chatra. 3. The brief fact of the case is that the petitioner took loan of Rs.12 lakhs from the informant and promised to give land to the informant, but ( 2025:JHHC:31723 ) 2 Cr. M.P. No.801 of 2022 the petitioner did not return the loan amount even after expiry of six months and when the informant demanded back his money, the petitioner twice gave different dates to return the money; but as yet the petitioner has not returned the money. Thereafter, the petitioner issued a cheque of Rs.12 lakhs to the informant but the said cheque was dishonored because of the insufficiency of the funds. 4. On the basis of written report submitted by the informant, police registered Sadar P.S. Case no.298 of 2020 and took up investigation of the case. 5. Learned counsel for the petitioner submits that during the trial as yet, no witness has been examined. 6. Learned counsel for the petitioner next relies upon the judgment of Dalip Kaur & Ors. vs. Jagnar Singh & Anr. 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 ( 2025:JHHC:31723 ) 3 Cr. M.P. No.801 of 2022 of the appellants by non-refunding the amount of advance, the same would not constitute the offence of cheating. 7. Learned counsel for the petitioner next relies upon the judgement of the Hon’ble Supreme Court of India in the case of Satish Chandra Ratanlal Shah vs. State of Gujarat & Anr. reported in (2019) 9 SCC 148, paragraph nos. 11 of which reads as under:- “11. Having observed the background principles applicable herein, we need to consider the individual charges against the appellant. Turning to Section 405 read with Section 406 IPC, we observe that the dispute arises out of a loan transaction between the parties. It falls from the record that Respondent 2 knew the appellant and the attendant circumstances before lending the loan. Further it is an admitted fact that in order to recover the aforesaid amount, Respondent 2 had instituted a summary civil suit which is still pending adjudication. The law clearly recognises a difference between simple payment/investment of money and entrustment of money or property. A mere breach of a promise, agreement or contract does not, ipso facto, constitute the offence of the criminal breach of trust contained in Section 405 IPC without there being a clear case of entrustment.” (Emphasis supplied)” wherein the Hon’ble Supreme Court of India has reiterated the settled principle of law that payment/lending the money on loan to an acquaintance, amounts to simple payment or investment of money but the same cannot be construed as entrustment of money in terms of Section 405 of the Indian Penal Code. 8. Learned counsel for the petitioner next submits that therefore, in this case, there is absolutely no material to constitute the offence punishable under Section 406 of the Indian Penal Code, even if the entire allegations against the petitioner are considered to be true in their ( 2025:JHHC:31723 ) 4 Cr. M.P. No.801 of 2022 entirety, hence, the offence punishable under Section 406 of the Indian Penal Code is made out against the petitioner. 9. Learned counsel for the petitioner next relies upon the judgment of Hon’ble Supreme Court of India in the case of Mahindra & Mahindra Financial Services Limited and Another vs. Rajiv Dubey reported in (2009) 1 SCC 706 wherein in para-19, the Hon’ble Supreme Court of India relied upon its own judgment in the case of State of Haryana vs. Bhajan Lal reported in 1992 Supp (1) SCC 335 and submits that in that case, the Hon’ble Supreme Court of India enunciated the principle of law relating to exercise of the extraordinary power under Article 226 or the inherent power under Section 482 of Cr.P.C. 10. Learned counsel for the petitioner next relies upon the judgment of Hon’ble Supreme Court of India in the case of Vinod Natesan vs. State of Kerala and Others reported in (2019) 2 SCC 401, wherein in the facts of that case, it was held by the Hon’ble Supreme Court of India that merely because the accused person might not have paid the amount due and payable under the agreement or might not have paid the amount in lieu of one month’s notice, before terminating the agreement, the same by itself cannot be said to be cheating and/or having committing the offence punishable under Sections 406 and 420 of the Indian Penal Code. 11. Learned counsel for the petitioner next relies upon the judgment of this Court in the case of Rana Chakraborty vs. The state of Jharkhand and Another in Cr.M.P. No.962 of 2023 vide order dated 20.03.2024 and submits that in that case, this Court relied upon the judgment of Hon’ble ( 2025:JHHC:31723 ) 5 Cr. M.P. No.801 of 2022 Supreme Court of India in the case of S.W. Palanitkar vs. State of Bihar reported in (2002) 1 SCC 241, paragraph no.8 of which reads as under:- “8. Before examining respective contentions on their relative merits, we think it is appropriate to notice the legal position. Every breach of trust may not result in a penal offence of criminal breach of trust unless there is evidence of a mental act of fraudulent misappropriation. An act of breach of trust involves a civil wrong in respect of which the person wronged may seek his redress for damages in a civil court but a breach of trust with mens rea gives rise to a criminal prosecution as well.” (Emphasis supplied) wherein the Hon’ble Supreme Court of India has held that mens rea is a sine-qua-non for a breach of trust giving rise to a criminal prosecution. 12. It is next submitted that in that case, this Court also relied upon the judgment of Hon’ble Supreme Court of India in the case of Hridaya Ranjan Prasad Verma vs. State of Bihar reported in (2000) 4 SCC 168, paragraph no. 15 of which reads as under:- “15. In determining the question it has to be kept in mind that the distinction between mere breach of contract and the offence of cheating is a fine one. It depends upon the intention of the accused at the time of inducement which may be judged by his subsequent conduct but for this subsequent conduct is not the sole test. 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, that is the time when the offence is said to have been committed. Therefore, it is the intention which is the gist of the offence. To hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise. From his mere failure to keep up promise subsequently such a culpable intention right at the beginning, that is, when he made the promise cannot be presumed.” (Emphasis supplied) wherein the Hon’ble Supreme Court of India has reiterated the settled principle of law that a mere breach of contract cannot give rise to ( 2025:JHHC:31723 ) 6 Cr. M.P. No.801 of 2022 criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction between the parties. 13. Learned counsel for the petitioner next submits that admittedly, the petitioner was known to the informant and he took a friendly loan, so there is no allegation of petitioner of playing deception since the beginning of the transaction, hence, the offence punishable under Section 420 of the Indian Penal Code is not made out and in the absence of such essential ingredients, the question of any dishonest misappropriation of any entrusted property does not arise. Accordingly, the offence punishable under Section 406 of the Indian Penal Code is not made out. Therefore, it is lastly submitted that the prayer as prayed for in this Cr.M.P. be allowed. 14. Learned Addl.P.P. appearing for the State and the learned counsel for the opposite party No.2 on the other hand vehemently oppose the prayer of the petitioner made in the instant Cr.M.P and submit that the materials available in the record is sufficient to constitute the offence punishable under Section 406 as well as the Section 420 of the Indian Penal Code. Therefore, it is submitted that this Cr.M.P., being without any merit, be dismissed. 15. Having heard the rival submissions made at the Bar and after carefully going through the materials available in the record, it is pertinent to mention here that it is a settled principle of law as has been held by the Hon’ble Supreme Court of India in the case of Uma Shankar ( 2025:JHHC:31723 ) 7 Cr. M.P. No.801 of 2022 Gopalika vs. State of Bihar & Another reported in (2005) 10 SCC 336 paragraph-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 reiterated the settled principle of law that unless the accused has played deception since the beginning of the transaction between the parties, the offence punishable under Section 420 of the Indian Penal Code is not made out. 16. Now coming to the facts of the case, it is the admitted case of the informant that the petitioner was known to the informant and he took a friendly loan of Rs.12 lakhs, so the question of playing deception by the petitioner since the beginning of the transaction does not arise and in the absence of the same, the offence punishable under Section 420 of the Indian Penal Code is not made out. 17. So far as the offence punishable under Section 406 of the Indian Penal Code is concerned, the essential ingredient to constitute the offence is dishonest misappropriation of the entrusted property. 18. Now coming to the facts of the case, it is a settled principle of law as has been held by the Hon’ble Supreme Court of India in the case of Uma Shankar Gopalika vs. State of Bihar & Another (Supra), the money taken ( 2025:JHHC:31723 ) 8 Cr. M.P. No.801 of 2022 on loan by a person from another person does not amount to entrustment, so in the absence of the entrustment, as there is no question of dishonest misappropriation of any entrusted property and in the absence of the same, the offence punishable under Section 406 of the Indian Penal Code is not made out. 19. In view of the discussion made above, neither the offence punishable under Section 406 of the Indian Penal Code nor the offence punishable under Section 420 of the Indian Penal Code is made out against the petitioner, therefore, this Court is of the considered view that the continuation of this criminal proceeding against the petitioner will amount to abuse of process of law and this is a fit case where the entire criminal proceeding in connection with Sadar P.S. Case no.298 of 2020 registered for the offences punishable under Sections 420/406 of the Indian Penal Code against the petitioner, which is now pending in the Court of learned Chief Judicial Magistrate, Chatra, be quashed and set aside. 20. Accordingly, the entire criminal proceeding in connection with Sadar P.S. Case no.298 of 2020 registered for the offences punishable under Sections 420/406 of the Indian Penal Code against the petitioner which is now pending in the Court of learned Chief Judicial Magistrate, Chatra, is quashed and set aside qua the petitioner only. 21. In the result, this Cr.M.P., stands allowed to the aforesaid extent only. (Anil Kumar Choudhary, J.) High Court of Jharkhand, Ranchi Dated the 14th of October, 2025 AFR/ Abhiraj Uploaded on 29/10/2025