Quashing of criminal proceedings for civil commercial dispute affirmed where cheating allegations lacked fraudulent intent at inception.

Criminal proceedings arising from a business supply transaction were held liable to quashing where the complaint attempted to give a civil dispute a criminal colour. The Court applied the principle that mere breach of contract does not constitute cheating unless fraudulent or dishonest intention existed at the time of inducement, and found the allegations to be absurd, inherently improbable and mala fide. It held that inherent jurisdiction under Section 482 CrPC may be used to prevent abuse of process when the complaint is legally untenable and designed to fasten criminal liability in a fundamentally civil matter.

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Issues: Whether the criminal proceedings arising out of a commercial transaction deserved to be quashed under Section 482 of the Code of Criminal Procedure, 1973 on the ground that the complaint was an attempt to convert a civil dispute into a criminal case and was attended with mala fide and inherently improbable allegations.

Analysis: The dispute between the parties arose from a business transaction for supply of wooden bracelets and the materials showed a claim for the balance price after part-payment. The allegations relied upon to give a criminal colour to the matter were found to be absurd, inherently improbable and inserted to fasten criminal liability where the dispute was essentially civil in nature. The governing principle applied was that mere breach of contract does not amount to cheating unless fraudulent or dishonest intention exists at the time of the inducement, and that inherent jurisdiction may be exercised to prevent abuse of process where the complaint is manifestly mala fide or legally untenable.

Conclusion: The proceedings were liable to be quashed and the appeal succeeded.

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