2026:HHC:29821 IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Cr. Revision No. 208 of 2022 Reserved on: 7.7.2026 Date of Decision: 21.7.2026. Papinder Singh ...Petitioner Versus State of HP & anr. ...Respondents Coram Hon’ble Mr Justice Rakesh Kainthla, Judge. Whether approved for reporting?1 No. For the Petitioner : Mr Raman Sharma, Advocate, vice Mr Vinod Thakur, Advocate. For Respondent No.1/State : Mr Ajit Sharma, Deputy Advocate General. For Respondent No.2. : M/s Rakesh Chaudhary and Panku Chaudahry, Advocates. Rakesh Kainthla, Judge The present revision is directed against the order dated 26.10.2020, passed by the learned Judicial Magistrate First Class, Jawali, District Kangra, H.P. (learned Trial Court), vide which the cancellation report submitted by the police was 1 Whether reporters of Local Papers may be allowed to see the judgment? Yes. 2 2026:HHC:29821 accepted. (The parties shall hereinafter be referred to in the same manner as they were arrayed before the learned Trial Court for convenience). 2. Briefly stated, the facts giving rise to the present revision are that the complainant filed a complaint before the learned Trial Court against the accused for directing the police to register an FIR against them for the commission of offences punishable under Sections 415 and 420 of the Indian Penal Code (IPC). It was asserted that the complainant is the owner of the tractor bearing registration No. HP-54B-3958, which was financed by Mahindra & Mahindra Finance Company for ₹2,50,000/-. The complainant agreed to sell the tractor to the accused for a sale consideration of ₹ 5,00,000/-. The accused paid ₹50,000/- to the complainant and promised to pay ₹2,00,000/- on or before 13.10.2015. The accused also undertook to pay ₹2,50,000/- to the financier by way of instalments. The complainant handed over the possession of the tractor to the accused. The complainant had a right to forfeit the earnest money and recover the possession in case of failure to pay the instalments. The accused failed to pay the instalments to the financier as per the agreement. He also did not deliver the 3 2026:HHC:29821 possession of the tractor to the complainant. The complainant reported the matter to the police, and the police called the accused to the Police Station. The matter was compromised between the parties. The accused agreed to pay the money to the financier on 30.07.2016. He failed to honour the promise made by him. The accused sold the tractor to someone. The matter was reported to the police, but no action was taken by the police. Hence, it was prayed that the police be directed to register the FIR. 3. The learned Trial Court sent the complaint for the registration of the FIR and the investigation. The police registered the FIR and investigated the matter. The police did not find any evidence of the delivery of the tractor to the accused or payment of any money by the accused to the complainant, and concluded that the dispute between the parties was civil in nature. Hence, the police filed a cancellation report before the learned Trial Court. 4. The accused filed objections to the cancellation report, asserting that the police had failed to properly investigate the matter. The accused was not called to the Police Station, and 4 2026:HHC:29821 he was also not interrogated. The complainant received a call on his mobile number xxxx012 on 31.07.2018, and the caller stated that he had purchased the tractor and wanted the documents for transferring the registration certificate in his name. The witnesses were ready to make the statements before the Court. The accused had no right to sell the tractor to any person without paying the money to the complainant and the financier as per the terms and conditions of the agreement. Therefore, it was prayed that the cancellation report be rejected and the cognisance be taken. 5. Learned Trial Court held that the statement made in the objection petition that the complainant had received a call from an unknown person regarding the sale of the tractor was an improvement because no such fact was mentioned in the FIR or in the statement made before the police. The statements of the witnesses showed that the possession was not delivered to the accused. The matter appeared to be of a civil nature, and there was no infirmity in the cancellation report submitted by the police. Hence, the learned Trial Court accepted the cancellation report. 5 2026:HHC:29821 6. Being aggrieved by the order passed by the learned Trial Court, the complainant has filed the present revision asserting that the learned Trial Court erred in accepting the cancellation report. The accused had failed to pay the money to the complainant or the financier in terms of the agreement executed between the parties. The accused sold the tractor to an unknown person, who had called the complainant and demanded the documents. The accused had no right to sell the tractor without the payment of the consideration to the complainant. The caller had disclosed that the duplicate registration certificate was prepared, which was a case of forgery. The objections preferred by the complainant were not considered by the learned Trial Court. Therefore, it was prayed that the present revision be allowed and the order passed by the Learned Trial Court be set aside. 7. I have heard Mr Raman Sharma, learned vice counsel representing the petitioner/complainant, Mr Ajit Sharma, learned Deputy Advocate General, for the respondent No.1-State and M/s Rakesh Chaudahry and Panku Chaudahry, learned counsel for respondent No.2. 6 2026:HHC:29821 8. Mr Raman Sharma, learned vice counsel representing the petitioner/complainant, submitted that the learned Trial Court erred in accepting the cancellation report submitted by the police. The parties had entered into a compromise, and the accused failed to honour the terms and conditions of the compromise. He sold the tractor to someone on the basis of fake documents. The police had not correctly recorded the statements of the complainant's witnesses. Hence, he prayed that the present revision be allowed and the order passed by the learned Trial Court be set aside. 9. Mr Ajit Sharma, learned Deputy Advocate General, for the respondent No.1-State, submitted that the police found after the investigation that no cognizable offence was committed, and the matter was of a civil nature. Therefore, the police had rightly prepared the cancellation report, and the learned Trial Court had rightly accepted it. There is no infirmity in the order passed by the learned Trial Court. Hence, he prayed that the present revision be dismissed. 10. Mr Rakesh Chaudhary, learned counsel for respondent No. 2, adopted the submissions of Mr Ajit Sharma, 7 2026:HHC:29821 learned Deputy Advocate General, for the respondent No.1-State and prayed that the present petition be dismissed. 11. I have given a considerable thought to the submissions made at the bar and have gone through the records carefully. 12. The complainant had filed the complaint before the learned Trial Court for the commission of offences punishable under Sections 415 and 420 of the IPC, which deal with cheating. 13. The ingredients of cheating were explained by the Hon’ble Supreme Court in S.W. Palanitkar v. State of Bihar, (2002) 1 SCC 241, as under: “10. The ingredients of an offence of cheating are: (i) there should be fraudulent or dishonest inducement of a person by deceiving him, (ii)(a) the person so deceived should be induced to deliver any property to any person or to consent that any person shall retain any property; or (b) the person so deceived should be intentionally induced to do or omit to do anything which he would not do or omit if he were not so deceived; and (iii) in cases covered by (ii)(b), the act of omission should cause or is likely to cause damage or harm to the person induced in body, mind, reputation or property. 11. One of us (D.P. Mohapatra, J.), speaking for the Bench, in Hridaya Ranjan Prasad Verma v. State of Bihar [(2000) 4 SCC 168: 2000 SCC (Cri) 786] on facts of that case, has expressed thus: (SCC p. 177, para 15) 8 2026:HHC:29821 “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 that is the gist of the offence. To hold a person guilty of cheating, it is necessary to show that he had a fraudulent or dishonest intention at the time of making the promise. From his mere failure to keep up a promise, subsequently, such a culpable intention right at the beginning, that is, when he made the promise, cannot be presumed.” (emphasis supplied) 12. Finding that the ingredients of the offence of cheating and its allied offences had not been made out, this Court interfered with the order of the High Court and quashed the criminal proceedings. 13. In G.V. Rao v. L.H.V. Prasad [(2000) 3 SCC 693: 2000 SCC (Cri) 733], this Court in para 7 has stated thus: (SCC pp. 696-97) “7. As mentioned above, Section 415 has two parts. In the first part, the person must ‘dishonestly’ or ‘fraudulently’ induce the complainant to deliver any property; in the second part, the person should intentionally induce the complainant to do or omit to do a thing. That is to say, in the first part, inducement must be dishonest or fraudulent. In the second part, the inducement should be intentional. As observed by this Court in Jaswantrai Manilal Akhaney v. State of Bombay [AIR 1956 SC 575: 1956 Cri LJ 1116], a guilty intention is an essential ingredient of the offence of cheating. In order, therefore, to 9 2026:HHC:29821 secure the conviction of a person for the offence of cheating, ‘mens rea’ on the part of that person must be established. It was also observed in Mahadeo Prasad v. State of W.B. [AIR 1954 SC 724: 1954 Cri LJ 1806] that in order to constitute the offence of cheating, the intention to deceive should be in existence at the time when the inducement was offered.”(emphasis supplied) 14. In Trisuns Chemical Industry v. Rajesh Agarwal [(1999) 8 SCC 686: 2000 SCC (Cri) 47] dealing with the effect of existence of arbitration clause in the agreement on criminal prosecution on the ground that civil proceedings are also maintainable, this Court has held that quashing of FIR or a complaint exercising power under Section 482 CrPC should be limited to a very extreme exception; merely because an act has a civil profile is not enough to stop action on the criminal side. It is further held that a provision made in the agreement for referring the disputes to arbitration is not an effective substitute for a criminal prosecution when the disputed act constitutes a criminal offence. 14. A similar view was taken in G.V. Rao v. L.H.V. Prasad, (2000) 3 SCC 693, wherein it was observed as under: “7. As mentioned above, Section 415 has two parts. While in the first part, the person must “dishonestly” or “fraudulently” induce the complainant to deliver any property; in the second part, the person should intentionally induce the complainant to do or omit to do a thing. That is to say, in the first part, inducement must be dishonest or fraudulent. In the second part, the inducement should be intentional. As observed by this Court in Jaswantrai Manilal Akhaney v. State of Bombay [AIR 1956 SC 575: 1956 Cri LJ 1116: 1956 SCR 483], a guilty intention is an essential ingredient of the offence of cheating. In order, therefore, to secure the conviction of a 10 2026:HHC:29821 person for the offence of cheating, “mens rea” on the part of that person must be established. It was also observed in Mahadeo Prasad v. State of W.B. [AIR 1954 SC 724: 1954 Cri LJ 1806] that in order to constitute the offence of cheating, the intention to deceive should be in existence at the time when the inducement was offered. 8. Thus, so far as the second part of Section 415 is concerned, “property”, at no stage, is involved. Here, it is the doing of an act or omission to do an act by the complainant, as a result of intentional inducement by the accused, which is material. Such inducement should result in the doing of an act or omission to do an act as a result of which the person concerned should have suffered or was likely to suffer damage or harm in body, mind, reputation or property. In an old decision of the Allahabad High Court in Empress v. Sheoram [(1882) 2 AWN 237], it was held by Mahmood, J.: “That to palm off a young woman as belonging to a caste different to the one to which she really belongs, with the object of obtaining money, amounts to the offence of cheating by personation as defined in Section 416 of the Penal Code, 1860, which must be read in the light of the preceding Section 415.” 15. It was laid down by the Hon’ble Supreme Court in Ram Jas v. State of U.P., (1970) 2 SCC 740 that there should be a fraudulent or dishonest inducement before a person can be held guilty of cheating. It was observed: “3. In recording this finding and conviction, the High Court lost sight of the fact that no such charge was framed against the appellant in the trial court. As we have indicated above, the persons, who were cheated or attempted to be cheated, referred to in the charges framed 11 2026:HHC:29821 against the appellant, were Madan Lal, Chunni Lal, or the office of the Relief and Rehabilitation-cum-Settlement Officer, Saharanpur. There was no charge at all relating to any cheating or attempting to cheat the Oath Commissioner. In fact, the case was never brought to Court with the intention of obtaining a conviction of the appellant for any offence of cheating in respect of the Oath Commissioner. Not only was there no charge in this respect, but, in addition, the appellant, when questioned under Section 342 of the Code of Criminal Procedure after the prosecution's evidence had been recorded, was not asked to explain evidence relating to such a charge of cheating the Oath Commissioner. No doubt, there was mention of the commission of forgery of affidavits; but the mention of the commission of that offence could not possibly lead the appellant to infer that he was liable to be convicted for abetting the offence of cheating the Oath Commissioner. Further, in recording this conviction, the High Court did not even cease to examine in detail whether all the ingredients of the offence had been established by the prosecution's evidence. The only finding of fact was that the appellant, who was known to the Oath Commissioner, wrongly identified some other person as Govind Ram and got the affidavit attested by the Oath Commissioner as if it was being sworn by Govind Ram. This act of wrong identification committed by the appellant cannot amount to the offence of cheating by personation. Cheating is defined in Section 415 IPC, which is as follows: “Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that 12 2026:HHC:29821 person in body, mind, reputation or property, is said to ‘cheat’.” The ingredients required to constitute the offence of cheating are— (i) there should be fraudulent or dishonest inducement of a person by deceiving him; (ii)(a) the person so deceived should be induced to deliver any property to any person, or to consent that any person shall retain any property; or (b) the person so deceived should be intentionally induced to do or omit to do anything which he would not do or omit if he were not so deceived; and (iii) in cases covered by (ii)(b), the act or omission should cause or is likely to cause damage or harm to the person induced in body, mind, reputation or property. 4. In the present case, the finding of fact recorded only shows that the Oath Commissioner was induced to attest the affidavit by the deception practised by the appellant in wrongly identifying a person as Govind Ram when he was in fact not Govind Ram. That act done by the Oath Commissioner of attesting the affidavit could not, however, possibly cause any damage or harm to the Oath Commissioner in body, mind, reputation or property. The Oath Commissioner was obviously not induced to deliver any property to anybody by this wrong identification, nor was he induced to consent that any person should retain any property. Thus, the facts found did not constitute the offence of cheating at all. The conviction for an offence under Section 419, substantively or with the aid of Section 109 IPC, could only have been justified if the facts proved constituted all the ingredients of the offence of cheating. In recording the conviction, the High Court neglected to see whether all those ingredients were proved. On the face of it, though the Oath Commissioner was induced to attest the affidavit by wrong identification made by the appellant, there was no likelihood of any damage or harm 13 2026:HHC:29821 to him in body, mind, reputation or property, so that the Oath Commissioner was never cheated. Clearly, therefore, the High Court fell into an error in recording the conviction of the appellant for the offence under Section 419, read with Section 109 IPC and substituting that conviction in place of the conviction for offences for which he had been punished by the trial court. 16. Similar is the judgment in V.Y. Jose v. State of Gujarat, (2009) 3 SCC 78, wherein it was observed: - “14. An offence of cheating cannot be said to have been made out unless the following ingredients are satisfied: (i) deception of a person either by making a false or misleading representation or by other action or omission; (ii) fraudulently or dishonestly inducing any person to deliver any property, or to consent that any person shall retain any property and finally intentionally inducing that person to do or omit to do anything which he would not do or omit. For the purpose of constituting an offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intentions at the time of making a promise or representation. Even in a case where allegations are made in regard to failure on the part of the accused to keep his promise, in the absence of a culpable intention at the time of making the initial promise being absent, no offence under Section 420 of the Penal Code can be said to have been made out.” 17. This position was reiterated in Raju Krishna Shedbalkar v. State of Karnataka, 2024 SCC OnLine SC 200, wherein it was observed: “7. A perusal of the aforesaid provision shows that the offence of cheating is in two parts. The first is where a 14 2026:HHC:29821 person fraudulently or dishonestly deceives another in inducing that person to deliver any property to any person, etc. The second part of the offence would be made out if somebody is deceived to do an act which causes damage or harm to that person, “in body, mind, or reputation or property, " and is said to have cheated. Time and again, this Court has reiterated that in order to make out an offence under cheating, the intention to cheat or deceive should be right from the beginning. By no stretch of the imagination, this is even reflected in the complaint made by the informant. 8. In the case of Hridaya Ranjan Prasad Verma v. State of Bihar (2000) 4 SCC 168, this Court held 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 that is the gist of the offence. To hold a person guilty of cheating, it is necessary to show that he had a fraudulent or dishonest intention at the time of making the promise. From his mere failure to keep up a promise, subsequently, such a culpable intention right at the beginning, that is, when he made the promise, cannot be presumed.”(Emphasis supplied) 9. Further, in the case of Indian Oil Corporation v. NEPC India Ltd. (2006) 6 SCC 736, this position was reiterated in the following manner: 33. The High Court has held that a mere breach of contractual terms would not amount to cheating unless the fraudulent or dishonest intention is shown right at 15 2026:HHC:29821 the beginning of the transaction, and in the absence of an allegation that the accused had a fraudulent or dishonest intention while making a promise, there is no “cheating”. The High Court has relied on several decisions of this Court wherein this Court has held that dishonest intent at the time of making the promise/inducement is necessary, in addition to the subsequent failure to fulfil the promise. Illustrations (f) and (g) to Section 415 make this position clear: “(f) A intentionally deceives Z into a belief that A means to repay any money that Z may lend to him and thereby dishonestly induces Z to lend him money, A not intending to repay it. A cheats. (g) A intentionally deceives Z into a belief that A means to deliver to Z a certain quantity of indigo plant which he does not intend to deliver, and thereby dishonestly induces Z to advance money upon the faith of such delivery, A cheats; but if A, at the time of obtaining the money, intends to deliver the indigo plant, and afterwards breaks his contract and does not deliver it, he does not cheat, but is liable only to a civil action for breach of contract.”(emphasis supplied). 18. The complaint does not mention that the intention of the accused was fraudulent to begin with, and he never intended to honour the agreement being executed by him. It was only asserted that the accused had failed to honour the terms and conditions of the agreement, which does not constitute cheating but merely a breach of the agreement. Therefore, the police and Learned Trial Court were right in concluding that it was a case of 16 2026:HHC:29821 a breach of civil obligation which did not constitute the commission of any cognizable offence. 19. Even otherwise, the police recorded the statements of Shankar Singh and Rattan Singh, who had categorically stated that the complainant had not handed over the tractor to the accused and the accused had not sold it to any person to the best of their knowledge. Learned Trial Court had rightly concluded based on these statements that there was unsatisfactory evidence of the delivery of possession of the tractor to the accused. Hence, the complainant’s version that the accused had further sold the tractor to someone by forging the documents was not acceptable. The complainant relied upon the call made by some unknown person saying that the accused had sold the tractor by forging the documents. No inquiry was made from the Registration and Licensing Authority about the sale of the tractor to verify the correctness of the call. Therefore, this allegation was based upon hearsay evidence, which is inadmissible and cannot be looked into. 20. The complainant did not assert that he was misled by the act of the accused. As stated above, mere failure to honour the 17 2026:HHC:29821 terms and conditions of the agreement may give rise to civil liability but does not constitute criminal liability. The remedy of the complainant was to file a civil suit for specific performance and not an FIR for the commission of an offence. 21. Therefore, the allegations in the FIR and the result of the investigation did not disclose the commission of any cognizable offence and the learned Trial Court was justified in accepting the cancellation report. There is no infirmity in the order passed by the learned Trial Court requiring an interference from this Court in the exercise of the inherent jurisdiction. 22. In view of the above, the present revision petition fails and is dismissed. 23. A copy of this judgment, along with the records of the learned Trial Court, be sent back forthwith. Pending miscellaneous application(s), if any, also stand(s) disposed of. (Rakesh Kainthla) Judge 21st July, 2026 (Chander)