Contractual dispute and non-refund of advance are not cheating or criminal breach of trust without dishonest intent at inception.

A dispute arising from an agreement for sale and non-refund of advance did not, on the allegations, disclose cheating or criminal breach of trust because dishonest intention at inception, entrustment, and misappropriation were absent. The Court reiterated that a mere breach of contract, even if it results in non-payment or non-refund, is not enough to attract criminal liability. It further noted that inherent jurisdiction may be invoked where the FIR, taken at face value, discloses only a civil dispute and no cognizable offence, and the refusal to quash was therefore unsustainable.

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Issues: (i) Whether the allegations arising out of an agreement for sale and subsequent non-refund of advance amount constituted offences of criminal breach of trust or cheating. (ii) Whether the High Court ought to have exercised its inherent jurisdiction to quash the FIR.

Issue (i): Whether the allegations arising out of an agreement for sale and subsequent non-refund of advance amount constituted offences of criminal breach of trust or cheating.

Analysis: For cheating, the decisive element is dishonest or fraudulent intention at the time of making the promise or representation. A mere breach of contract, even if it results in non-payment or non-refund of money, does not by itself establish cheating. Likewise, criminal breach of trust requires entrustment and dishonest misappropriation or conversion in violation of the legal duty attached to the property. The allegations, taken at face value, essentially disclosed a contractual dispute concerning performance and refund of consideration.

Conclusion: The allegations did not, by themselves, disclose the ingredients of the offences in question.

Issue (ii): Whether the High Court ought to have exercised its inherent jurisdiction to quash the FIR.

Analysis: Inherent jurisdiction is to be exercised sparingly and only where the FIR, even if accepted in full, does not disclose a cognizable offence. The High Court was required to examine whether the complaint showed inducement from the inception and whether the dispute was essentially civil in nature. Since those aspects were not properly considered, the refusal to quash could not be sustained.

Conclusion: The High Court should not have declined interference on the material before it and its order was unsustainable.

Final Conclusion: The appeal succeeded and the matter was sent back for fresh consideration by the High Court.

Ratio Decidendi: A breach of contract does not amount to cheating or criminal breach of trust unless the complaint discloses dishonest intention at the inception and the ingredients of the criminal offence are otherwise made out; where the FIR discloses only a civil dispute, inherent jurisdiction may be invoked to prevent abuse of process.

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