Cheating and criminal breach of trust cannot coexist on the same facts involving the same property.

The extract concerns criminal proceedings arising from commercial transactions, including an alleged offer of distributorship, receipt of advance payments, non-supply of goods, and allegations of cheating under Section 318(4) of the Bharatiya Nyaya Sanhita (BNS) and criminal breach of trust under Section 316(2) BNS.

The Court also considered allegations involving a refundable security deposit paid under a Joint Development Agreement, an alleged false representation that property was free from encumbrances, and its subsequent sale to a third party.

Whether failure to supply goods after receiving advance payments pursuant to a commercial agreement constitutes cheating under Section 318(4) BNS in the absence of specific allegations establishing dishonest intention at the inception of the transaction.

Whether receipt and subsequent non-refund of money paid as the price or advance price of goods constitutes criminal breach of trust under Section 316(2) BNS without entrustment of the money.

Whether cheating and criminal breach of trust can simultaneously be alleged on the same property and on the same factual substratum where the amount is alleged both to have been dishonestly induced and lawfully entrusted.

Whether prosecution under Section 420 IPC is maintainable in addition to proceedings under Section 138 of the Negotiable Instruments Act, 1881, where the dishonoured cheque was allegedly issued with dishonest intention from the outset.

Whether anticipatory bail should be granted in an economic offence involving a substantial amount, alleged deliberate conduct, transfer of property to a third party, and non-availability during investigation.

Cheating under Section 318(4) BNS, corresponding to Section 420 IPC, requires deception and fraudulent or dishonest inducement at the inception of the transaction; a mere subsequent failure to perform a contract is insufficient.

Criminal breach of trust under Section 316(2) BNS requires entrustment, meaning that the beneficial interest in the property remains with the person delivering it and the accused receives only custody or dominion for another’s benefit.

Money paid to a supplier as consideration or advance consideration ordinarily becomes the supplier’s property and its non-refund or non-use for the agreed purpose generally gives rise to a civil contractual claim, not criminal breach of trust.

Applying the principles governing quashing under State of Haryana v. Bhajan Lal, criminal proceedings may be quashed where the allegations, even if accepted in full, do not disclose the essential ingredients of the offence.

Sections 138 of the Negotiable Instruments Act and 420 IPC create distinct offences: Section 138 does not require proof of dishonest intention at the time of issuance of the cheque, whereas Section 420 IPC does; therefore, both prosecutions may proceed if the complaint specifically alleges dishonest intention at the time of issuing the cheque.

The Court found that the distributorship allegations disclosed, at most, non-performance of a written commercial arrangement.

The absence of particulars identifying the alleged false representation, the person who made it, the time and place of its making, and any facts showing that the accused never intended to supply the goods meant that dishonest intention at inception could not be inferred.

The claim under Section 316(2) BNS also failed because payments made as the price or advance price of goods were not alleged to have been entrusted for the complainant’s benefit; ownership of the money passed to the supplier subject to contractual obligations.

Accordingly, continuation of the criminal case would improperly convert a contractual dispute into criminal proceedings and amount to abuse of process.

In the refundable-security-deposit scenario, the allegations were internally inconsistent: if the deposit was lawfully entrusted and later misappropriated, it could not simultaneously be said that the accused obtained it through cheating on the same factual basis.

Conversely, where a dishonoured cheque is specifically alleged to have been issued with dishonest intention from the beginning, Section 420 IPC may proceed independently of Section 138 proceedings because the two offences have different ingredients.

The proceedings were therefore liable to be quashed as an abuse of process under the Bhajan Lal principles.

It further held that cheating and criminal breach of trust cannot be sustained simultaneously on the same property and identical factual substratum where their foundational allegations are mutually inconsistent; the resulting dispute is essentially civil.

Proceedings under Section 420 IPC remain maintainable alongside Section 138 of the Negotiable Instruments Act where dishonest intention at the time of issuing the cheque is specifically alleged.

In the separate anticipatory-bail matter, relief was held unwarranted at that stage because of the substantial economic allegations, alleged deliberate conduct, and investigative requirements.