(2026:JHHC:15233) 1 Cr. M.P. No.1490 of 2026 IN THE HIGH COURT OF JHARKHAND AT RANCHI Cr.M.P. No.1490 of 2026 ------ 1. Bimal Kumar Agarwal @ Vimal Kumar Agarwal @ Vimal Kumar Agawal, Aged about 65 years, Son of Shyam Sundar Agarwal 2. Pratik Agarwal @ Pratik Agrawal, Aged about 35 years, Son of Bimal Kumar Agarwal Both Residents of – Plot No.2, Rajni Gandha Street, Ashiana Gardens, P.O. and P.S.- Sonari, District- Jamshedpur (East Singhbhum) … Petitioners Versus The State of Jharkhand … Opposite Party ------ For the Petitioners : Mr. Nilesh Kumar, Advocate Ms. Sonal Sodhani, Advocate For the State : Ms. Nehala Sharmin, Spl.P.P. ------ 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 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023 with the prayer to quash the entire criminal proceedings including the order dated 16.07.2025 passed by the learned Judicial Magistrate- 1st Class, Jamshedpur in connection with Sonari P.S. Case No.45 of 2025 corresponding to G.R. Case No.966 of 2025 whereby and where under the learned Magistrate has taken cognizance of the offences punishable under Sections 406, 420 and 34 of the Indian Penal Code. 3. The allegation against the petitioners is that the petitioner took Rs.1,91,00,000/- to invest in their business of tender work of Railways with the (2026:JHHC:15233) 2 Cr. M.P. No.1490 of 2026 promise to return the money with alluring profits but did not return the money. 4. On the basis of the written-report submitted by the informant, police registered Sonari P.S. Case No.45 of 2025 and took up the investigation of the case and after completion of the investigation submitted charge-sheet against the petitioners basing upon which the cognizance has been taken. 5. Learned counsel for the petitioners relies upon the judgment of the Hon’ble Supreme Court of India in the case of Uma Shankar Gopalika vs. State of Bihar & Anr. 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) and submits that therein the Hon’ble Supreme Court of India has reiterated the settled principle of law that that every breach of contract would not give rise to an offence of cheating and in order to constitute the offence of cheating, the accused must play deception since the beginning of the transaction between the parties and if the intention to cheat has developed later on, the same cannot amount to cheating. 6. Learned counsel for the petitioners submits that in this case, there is no allegation against the petitioners of playing deception since the beginning of the transaction between the parties. Hence, even if the entire allegations made against the petitioners are considered to be true in their entirety still the offence (2026:JHHC:15233) 3 Cr. M.P. No.1490 of 2026 punishable under Section 420 of the Indian Penal Code is not made out against the petitioners. 7. Learned counsel for the petitioners next relies upon the judgment of this Court in the case of Maya Rani vs. State of Jharkhand & Another reported in 2025 SCC OnLine Jhar 2950 and submits that in that case, this Court relied upon the judgment of the Hon’ble Supreme Court of India in the case of Satishchandra Ratanlal Shah vs. State of Gujarat & Another reported in (2019) 9 SCC 148 paragraph-11 and 13 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. 13. Now coming to the charge under Section 415 punishable under Section 420 IPC. In the context of contracts, the distinction between mere breach of contract and cheating would depend upon the fraudulent inducement and mens rea. (See Hridaya Ranjan Prasad Verma v. State of Bihar [Hridaya Ranjan Prasad Verma v. State of Bihar, (2000) 4 SCC 168: 2000 SCC (Cri) 786]) In the case before us, admittedly the appellant was trapped in economic crisis and therefore, he had approached Respondent 2 to ameliorate the situation of crisis. Further, in order to recover the aforesaid amount, Respondent 2 had instituted a summary civil suit seeking recovery of the loan amount which is still pending adjudication. The mere inability of the appellant to return the loan amount cannot give rise to a criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, as it is this mens rea which is the crux of the offence. Even if all the facts in the complaint and material are taken on their face value, no such dishonest representation or inducement could be found or inferred.” (Emphasis supplied) (2026:JHHC:15233) 4 Cr. M.P. No.1490 of 2026 wherein the Hon’ble Supreme Court of India has held that a mere breach of a promise, agreement or contract does not, ipso facto, constitute the offence of the criminal breach of trust contained and inability to pay the loan amount taken cannot give rise to criminal prosecution of cheating. 8. Learned counsel for the petitioners next submits that the amount of money allegedly taken by the petitioners cannot be termed as property entrusted as has been used under Section 405 of the Indian Penal Code as the ownership of the money given to the petitioners was transferred to the petitioners, of course with the liability to repay the same. So, the offence punishable under Section 406 of the Indian Penal Code is also not made out against the petitioners. Hence, it is submitted that the prayer, as prayed for in the instant Cr.M.P., be allowed. 9. Learned Spl. P. P. appearing for the State on the other hand vehemently opposes the prayer of the petitioners made in the instant Cr.M.P. and submits that even if the entire allegations made against the petitioners are considered to be true in their entirety; then both the offences punishable, of which the learned Magistrate has taken cognizance, is made out against the petitioners. Hence, it is submitted that this Cr.M.P., being without any merit, be dismissed. 10. 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 as has been discussed above, it is a settled principle of law that unless the accused person plays deception since the beginning of the transaction between the parties, the offence of cheating will not be made out. 11. Now, coming to the facts of the case, there is absolutely no allegation against the petitioners of having played deception since the beginning of the (2026:JHHC:15233) 5 Cr. M.P. No.1490 of 2026 transaction between the parties. Hence, this Court is of the considered view that even if the entire allegations made against the petitioners are considered to be true in their entirety, still the offence punishable under Section 420 of the Indian Penal Code is not made out against the petitioner. 12. So far as the offence punishable under Section 406 of the Indian Penal Code is concerned, the essential ingredients to constitute the said offence is that there must be entrustment and there must be misappropriation or conversion to one’s own use or use in violation of a legal direction or obtaining legal possession; as has been held by the Hon’ble Supreme Court of India in the case of Ram Narayan Popli vs. Central Bureau of Investigation reported in (2003) 3 SCC 641. 13. Now, coming to the facts of the case; the word ‘entrusted’ as used in Section 405 of the Indian Penal Code envisages that the ownership of the property entrusted still remains with the person who entrusts the property. The same is not in the case of money given to someone by way of loan. If a person takes a loan certainly a liability is created upon such person to pay back the amount taken but the same strictly does not constitute entrusted property as the word has been used in Section 405 of the Indian Penal Code. Because when a loan is disbursed, the beneficial ownership of the money passes from the lender to the borrower. The borrower is entitled to use it as he thinks it fit. In contrast, an entrustment implies that the property is handed over while the ownership and beneficial interest remain with the person who gave it. A loan transaction certainly creates a civil debtor-creditor relationship but not a fiduciary relationship of trust. The borrower is only legally obligated to repay the amount with interest, not to hold the money borrowed as a separate fund. (2026:JHHC:15233) 6 Cr. M.P. No.1490 of 2026 In the absence of the trappings of ‘entrustment’ as discussed above this court has no hesitation in holding that the informant has failed to establish any property being entrusted to the petitioners as they word ‘entrusted’ has been used in section 405 of the IPC. 2. Now, coming to the facts of the case, there is no allegation of dishonest misappropriation of any entrusted property against the petitioners. Hence, in the considered opinion of this Court even if the entire allegations made against the petitioners are considered to be true in their entirety, still the offence punishable under Section 406 of the Indian Penal Code is not made out against the petitioners. At best, this is a civil dispute between the parties to which a cloak of criminal case has been given for the purpose of wrecking vengeance. Hence, this Court is of the considered view that this is a fit case where the entire criminal proceedings including the order dated 16.07.2025 passed by the learned Judicial Magistrate-1st Class, Jamshedpur in connection with Sonari P.S. Case No.45 of 2025 corresponding to G.R. Case No.966 of 2025, be quashed and set aside qua the petitioners named above. 3. Accordingly, the entire criminal proceedings including the order dated 16.07.2025 passed by the learned Judicial Magistrate-1st Class, Jamshedpur in connection with Sonari P.S. Case No.45 of 2025 corresponding to G.R. Case No.966 of 2025, is quashed and set aside qua the petitioners named above. 4. In the result, this Cr.M.P. stands allowed. (Anil Kumar Choudhary, J.) High Court of Jharkhand, Ranchi Dated the 15th of May, 2026 AFR/ Animesh Uploaded on- 18/05/2026