Cheating requires dishonest intention at inception; a contractual payment dispute without entrustment or misappropriation cannot sustain criminal prosecution.

A contractual dispute over construction advances and repayment did not disclose cheating because the allegations showed no fraudulent or dishonest intention at the inception of the transaction. The complaint also failed to establish the essential elements of criminal breach of trust or misappropriation, as it did not plead entrustment followed by dishonest misappropriation. Applying the settled principle that a civil dispute cannot be given a criminal colour, the HC held that criminal proceedings may be quashed where the allegations, even if accepted, do not disclose a cognizable offence.

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Issues: Whether the FIR disclosed the offence of cheating, criminal breach of trust or misappropriation, or whether the dispute was purely civil so as to justify quashing under the inherent jurisdiction.

Analysis: The complaint arose out of a contractual arrangement for construction and payment of advance money. The decisive test for cheating is whether fraudulent or dishonest intention existed at the inception of the transaction. On the facts pleaded, the parties voluntarily entered into the agreement, the advance was paid pursuant to that agreement, and the subsequent dispute concerned repayment, dishonour of cheques and rival claims regarding liability. Those facts indicated a breach of contractual terms rather than deception at the outset. For criminal breach of trust and misappropriation, the complaint also failed to show the necessary entrustment and dishonest misappropriation. The Court applied the settled principle that a civil dispute cannot be given a criminal colour merely to pressurise a party, and that criminal process may be quashed where the allegations, even if accepted, do not disclose a cognizable offence.

Conclusion: The FIR did not make out the offences alleged and the criminal proceedings were liable to be quashed.

Final Conclusion: The matter was held to be a civil dispute arising from a contractual transaction, and the invocation of criminal law was found unwarranted.

Ratio Decidendi: For cheating, dishonest intention must exist at the very inception of the transaction, and where the allegations disclose only a contractual breach without the essential ingredients of deception, entrustment or misappropriation, criminal proceedings under the inherent jurisdiction may be quashed.

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