Cheating allegations in a commercial lending dispute failed where no deception at inception was shown, leading to quashing.

The FIR alleging cheating, conspiracy and corruption was held unsustainable because the materials from the preliminary enquiry, forensic audit and bank communications did not disclose any false representation or dishonest intention at the inception of the transaction. The allegations were found to concern a commercial lending and recovery dispute rather than the essential ingredients of cheating, and there was no concrete material showing collusion or misconduct by any identified public servant or bank official. In the absence of a prima facie case of deception, dishonest inducement or intentional wrongful loss, continuation of the criminal process was treated as a fishing inquiry, and the FIR was quashed.

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Issues: Whether the First Information Report alleging cheating, conspiracy, and corruption could be quashed on the basis that the materials collected did not disclose deception at the inception, the alleged advances and recoveries were supported by documents, and the continuation of investigation would amount to a roving inquiry.

Analysis: The materials placed on record, including documents gathered during the preliminary enquiry, the forensic audit material, the communications from the lending banks, and the conduct of the consortium, did not show any false representation or dishonest intention at the inception of the transaction. The allegations essentially disclosed a commercial lending dispute and recovery issues, not the essential ingredients of cheating. The record also did not show any identifiable public servant or bank official against whom a concrete allegation of collusion or misconduct had been made. In the absence of a prima facie case of deception, dishonest inducement, or intentional wrongful loss, continuation of the criminal process would serve only as a fishing exercise.

Conclusion: The First Information Report could not be allowed to continue and was liable to be quashed.

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