Cheating requires dishonest intent at inception; later contractual disputes alone do not justify criminal proceedings.

Cheating requires dishonest or fraudulent intention at the inception of the transaction; a later contractual dispute or refusal to renew does not by itself satisfy the offence. The text notes that the complainant's agreements were entered into before the appellants came into the picture, and there was no allegation of inducement at the outset or dishonest representation causing the complainant to part with property or alter its position. On that basis, the complaint and connected FIRs, taken at face value, did not disclose the essential ingredients of cheating and fell within the category of cases where criminal proceedings may be quashed to prevent abuse of process.

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Issues: Whether the allegations in the complaint and the connected FIRs disclosed the offence of cheating so as to justify criminal proceedings against the appellants, and whether such proceedings were liable to be quashed under the inherent jurisdiction of the Court.

Analysis: The complaint arose out of bottling agreements which, by their terms, were to run for an initial period of five years and could be terminated on notice given before expiry of that term. The appellants came into the picture only after the trademarks and related business were transferred, well after the complainant had entered into the agreements and made its investments. There was no allegation that the appellants induced the complainant at the inception to part with property or to alter its position by any dishonest representation. For an offence of cheating, fraudulent or dishonest intention must exist at the time of inducement, and a mere later refusal to renew or continuation of a contractual dispute does not amount to cheating. The complaint therefore did not disclose the essential ingredients of the penal provision against the appellants, and the category of cases permitting quashing at the threshold was attracted where the complaint/FIR, even if taken at face value, did not make out a cognizable offence.

Conclusion: The complaint and the FIRs, insofar as they concerned the appellants, did not disclose an offence of cheating and were liable to be quashed.

Ratio Decidendi: Where the alleged dishonest intention is absent at the inception of the transaction and the complaint, taken at face value, does not disclose the essential ingredients of the offence, criminal proceedings may be quashed in exercise of inherent powers to prevent abuse of process.

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