A contractual payment dispute lacking inception deception, dishonest misappropriation, or criminal intimidation cannot sustain prosecution.

The informant alleged that Petitioner No. 1 paid him an advance of ₹10,000 and a further ₹2,50,000 for construction work on the foundation and pillars of Sunagi Bridge.

The informant claimed to have spent ₹12,20,010 on the work, but alleged that the remaining amount was not paid.

He also alleged that Petitioner No. 1 abused and threatened him, and that he had paid ₹10,000 into Petitioner No. 2’s account to help secure the work.

The Magistrate took cognizance of offences under Sections 420 and 406 read with Section 34 IPC; charges were later framed under Sections 420/34, 406/34 and 506/34 IPC.

No witnesses had been examined when the petition was heard.

The petitioners sought quashing of the proceedings under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023.

1. Whether the allegations, taken at their highest, disclosed cheating under Section 420 read with Section 34 IPC, including deception at the inception of the transaction.

2. Whether the allegations disclosed criminal breach of trust under Section 406 read with Section 34 IPC, including entrustment and dishonest misappropriation or conversion.

3. Whether the alleged threat disclosed criminal intimidation under Section 506 read with Section 34 IPC.

4. Whether continuation of the criminal proceedings amounted to an abuse of process warranting quashing under Section 528 BNSS.

The Court considered its inherent jurisdiction under Section 528 of the BNSS to quash criminal proceedings, and the charged offences under Sections 420, 406 and 506, read with Section 34, IPC.

Relying on Uma Shankar Gopalika v. State of Bihar, (2005) 10 SCC 336, it applied the rule that a breach of contract constitutes cheating only where deception and the intention to cheat existed at the inception of the transaction.

Under Section 405 IPC, criminal breach of trust requires entrustment and dishonest misappropriation, conversion, use or disposal of the entrusted property; mere non-payment is insufficient (Binod Kumar v. State of Bihar, (2014) 10 SCC 663; Ram Narayan Popli v. CBI, (2003) 3 SCC 641; Vir Prakash Sharma v. Anil Kumar Agarwal, (2007) 7 SCC 373).

For Section 506 IPC, the prosecution must establish a threat of the specified injury made with the requisite intent to cause alarm or to compel or prevent an act; an allegation of abuse alone does not satisfy the offence (Vikram Johar v. State of Uttar Pradesh, (2019) 14 SCC 207).

The Court treated the dispute as one concerning payment for construction work and found no allegation that the petitioners had intended to deceive the informant when the transaction began; it therefore held that the ingredients of cheating were absent.

It found no allegation of entrustment of property to the petitioners or of dishonest misappropriation or conversion, so non-payment of the claimed balance did not establish criminal breach of trust.

As to criminal intimidation, the allegations did not state that the threat was intended to cause alarm or to compel the informant to act, or refrain from acting, as described by the law.

The Court concluded that none of the charged offences was made out even if the allegations were accepted in their entirety.

It quashed, as against the petitioners, the proceedings in Karra P.S. Case No. 82 of 2015, corresponding to G.R. Case No. 518 of 2015, including the cognizance order dated 28 February 2025 and the charge-framing order dated 29 June 2026.