Breach of contract without deception at inception is a civil dispute and excludes criminal liability.

The petitioners (husband and wife) sought quashing of a criminal proceeding arising from Complaint Case No. 167 of 2022.

The complainant alleged that Petitioner No. 1 entered into an agreement on 10.10.2017 to operate five buses but failed to pay outstanding rental dues of ₹20,00,000.

It was admitted that approximately ₹10,00,000 to ₹11,00,000 had already been paid under the agreement.

The petitioners contended the dispute was purely civil, sparked by the complainant's failure to provide valid permits/fitness certificates, and that Petitioner No. 2 was impleaded solely as a pressure tactic.

The learned CJM, Ranchi, had taken cognizance of the offences under Sections 420, 406, and 34 of the IPC via order dated 18.06.2022.

1. Whether a mere breach of contract or failure to pay outstanding dues, without proof of deception at the inception, attracts the offence of cheating under Section 420 of the IPC.

2. Whether the retention of money or non-payment of dues constitutes a criminal breach of trust under Section 406 of the IPC in the absence of dishonest misappropriation.

3. Whether the continuation of criminal proceedings in a dispute of primarily civil nature amounts to an abuse of the process of law.

A breach of contract only amounts to cheating if deception was played at the very inception as per Uma Shankar Gopalika v. State of Bihar.

Mere retention of money does not constitute criminal breach of trust without evidence of dishonest disposal or misappropriation as established in Binod Kumar v. State of Bihar.

The same transaction cannot typically result in simultaneous charges of cheating and criminal breach of trust as per Lalit Chaturvedi v. State of Uttar Pradesh.

The Court observed that the transaction began with an agreement and a substantial partial payment, which negated the allegation of a "dishonest intention" or deception existing from the start (inception) of the contract.

Regarding Section 406, the Court found no evidence of entrustment of property that was subsequently misappropriated; rather, the allegation was a mere failure to pay a debt—a civil liability.

The Court noted that Petitioner No. 2 was involved without specific allegations simply because she was the wife of Petitioner No. 1.

Determining that the complainant had placed a "cloak of a criminal case" over a "purely civil dispute" to wreck vengeance, the Court held that the legal ingredients for IPC Sections 420 and 406 were not satisfied.

The court quashed and set aside the entire criminal proceeding of Complaint Case No. 167 of 2022 and the cognizance order dated 18.06.2022 passed by the CJM, Ranchi, as against the petitioners.