Breach of agreement to sell is not cheating or criminal breach of trust absent dishonest inducement or entrustment.

A mere breach of an agreement to sell does not by itself constitute cheating unless dishonest inducement or intention to deceive existed at the inception; refusal to execute the sale deed after part-payment is insufficient. Criminal breach of trust also requires entrustment of property and dishonest misappropriation or conversion, which is not shown where the advance is only contractual consideration. On these principles, the dispute remains civil in nature and is ordinarily remediable through specific performance rather than criminal prosecution. A civil claim cannot be recast as offences under the Penal Code simply to pressure performance of a sale contract.

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Issues: (i) Whether the allegations arising from an agreement to sell disclosed the ingredients of cheating under Sections 420 and 415 of the Indian Penal Code, 1860. (ii) Whether the allegations disclosed the ingredients of criminal breach of trust under Sections 406 and 405 of the Indian Penal Code, 1860, or only a civil dispute fit for specific performance.

Issue (i): Whether the allegations arising from an agreement to sell disclosed the ingredients of cheating under Sections 420 and 415 of the Indian Penal Code, 1860.

Analysis: Cheating requires dishonest or fraudulent inducement and an intention to deceive at the inception, resulting in delivery of property or a legally relevant act or omission. The transaction in question was a consensual commercial arrangement for sale of property, followed by part-payment under the agreement. The materials did not show that the purchasers were fraudulently induced to make payment or that the sellers had, from the outset, deceived them. Mere refusal or failure to execute the sale deed, by itself, does not establish cheating.

Conclusion: The ingredients of cheating were not made out, and the allegation under Section 420 of the Indian Penal Code, 1860 failed.

Issue (ii): Whether the allegations disclosed the ingredients of criminal breach of trust under Sections 406 and 405 of the Indian Penal Code, 1860, or only a civil dispute fit for specific performance.

Analysis: Criminal breach of trust requires entrustment of property or dominion over property, followed by dishonest misappropriation, conversion, or disposal in violation of the legal or contractual terms governing the trust. The advance amount paid under the agreement to sell was consideration under a commercial contract and not property entrusted to the sellers. Refusal to complete the sale did not amount to misappropriation of entrusted property. The dispute therefore remained a civil dispute for which the remedy of specific performance was available and had already been invoked.

Conclusion: The ingredients of criminal breach of trust were not made out, and the criminal proceedings were unsustainable.

Final Conclusion: The criminal case arising from the agreement to sell could not be continued, as the dispute was civil in nature and the FIR did not disclose the ingredients of the alleged offences; the quashing of proceedings was justified.

Ratio Decidendi: A mere breach of an agreement to sell, without dishonest inducement at inception or entrustment of property, does not constitute cheating or criminal breach of trust, and a civil dispute cannot be converted into a criminal prosecution to enforce specific performance.

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