Commercial dispute cannot become criminal breach of trust or cheating without entrustment or dishonest intention, prosecution quashed.

A commercial supply dispute arising from a written contract for iron was treated as civil in nature because the pleadings and charge sheet disclosed only a claim for unpaid balance consideration. The High Court held that non-payment alone does not establish entrustment, dishonest misappropriation, or a contemporaneous intention to induce delivery of property. As the essential ingredients of criminal breach of trust and cheating were absent, continuation of the prosecution amounted to an abuse of process and the criminal proceedings were quashed.

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Issues: Whether the criminal proceedings arising out of a commercial transaction disclosed the ingredients of criminal breach of trust and cheating, or were liable to be quashed as an abuse of process of law.

Analysis: The dispute arose from a written contract for supply of iron between the parties. The pleadings and charge sheet showed a monetary dispute over the balance sale consideration, but did not show entrustment of property, dishonest misappropriation, or a contemporaneous dishonest intention to induce delivery of property. Non-payment of the balance amount, by itself, was held insufficient to attract criminal breach of trust or cheating. The controversy was treated as essentially civil in nature, and continuation of the prosecution was found to be impermissible where the essential ingredients of Sections 406 and 420 of the Indian Penal Code were absent.

Conclusion: The criminal proceedings were quashed as no offence under Sections 406 and 420 of the Indian Penal Code was made out.

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