Cheating requires dishonest intent at inception; a contractual payment dispute cannot be converted into criminal prosecution.

Allegations arising from a sub-contract within an insolvency and liquidation setting did not, on the face of the FIR, disclose cheating because dishonest or fraudulent intention at the inception of the transaction was not shown. The dispute concerned unpaid dues, GST adjustments and account reconciliation, which the Court treated as a commercial and contractual controversy rather than a criminal offence. It reiterated that mere breach of contract or subsequent non-payment does not constitute cheating unless deception from the beginning is established. Criminal process cannot be used to coerce recovery of disputed commercial claims, and the FIR and consequential proceedings were liable to be quashed.

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Issues: Whether the allegations in the FIR, taken at face value, disclose the offences of cheating and related liability, or whether the prosecution is an attempt to convert a contractual and commercial dispute arising from alleged non-payment of dues into a criminal case.

Analysis: The dispute arose from a sub-contract executed in the course of an insolvency and liquidation framework, with work orders issued, invoices raised and part-payments made. The allegations centered on alleged outstanding dues, GST adjustments and reconciliation of accounts. The materials did not prima facie show that the accused had dishonest or fraudulent intention from the very inception of the transaction. The Court reiterated that mere non-payment, breach of contract or financial dispute does not, by itself, amount to cheating unless deception at inception is shown. It further held that criminal process cannot be used as a coercive tool for recovery of disputed commercial claims, and that the broader insolvency context reinforced the essentially civil character of the controversy.

Conclusion: The FIR and consequential proceedings did not disclose the foundational ingredients of cheating and were liable to be quashed.

Ratio Decidendi: To constitute cheating, dishonest or fraudulent intention must exist at the inception of the transaction; a mere subsequent failure to pay contractual dues or a commercial breach does not, without more, justify criminal prosecution.

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