Commercial default without inception-stage deception does not constitute cheating or criminal breach of trust under B.N.S.

The petitioners (brother and sister-in-law of the main accused, Shubham Bhardwaj) sought the quashing of an FIR registered under Sections 316(2), 318(4), 352, 351(2), and 3(5) of the Bharatiya Nyaya Sanhita (BNS), 2023.

The dispute arose from a Memorandum of Understanding (MOU) between the informant and Shubham Bhardwaj involving the supply of materials and the issuance of four cheques. The informant alleged that a sum of ₹2,68,55,829/- remained outstanding and that Petitioner No. 1 failed to fulfill telephonic assurances of payment, while both petitioners allegedly orated threats/abuses over the phone.

The petitioners contended the dispute was purely commercial and that Petitioner No. 2 had previously lodged a case against the informant in Ghaziabad.

1. Whether a breach of contract and non-payment in a commercial transaction can sustain criminal proceedings for cheating and criminal breach of trust under the BNS.

2. Whether the offences of criminal breach of trust and cheating can co-exist simultaneously.

3. Whether telephonic abuses and threats, lacking intent to provoke a breach of peace or cause alarm, constitute offences under Sections 351(2) and 352 of the BNS.

The Court applied the principle that a contractual dispute or breach of contract per se does not initiate criminal proceedings unless deception is present at the inception, as established in Lalit Chaturvedi v. State of U.P., Vir Prakash Sharma v. Anil Kumar Agarwal, and Uma Shankar Gopalika v. State of Bihar.

It relied on Delhi Race Club (1940) Ltd. v. State of U.P. to distinguish between criminal breach of trust (requiring entrustment) and cheating (requiring fraudulent induction), noting they cannot co-exist.

Regarding intimidation/insult, the Court applied the standards from Vikram Johar v. State of U.P. and Fiona Shrikhande v. State of Maharashtra, holding that the insult must be of a degree intended to provoke a breach of public peace or cause alarm to satisfy the legal ingredients.

The Court reasoned that the case was a "clear case of commercial transaction" involving under-payment for goods sold. Regarding Section 318(4) (cheating), there were no allegations of deception at the start of the transaction; any intent developed later does not constitute cheating.

Regarding Section 316(2) (criminal breach of trust), the Court observed that "property entrusted" implies ownership remains with the entruster; in a sale, ownership transfers to the purchaser, making the section inapplicable. Based on Delhi Race Club, the Court held both charges could not coexist.

Furthermore, the allegations of telephonic abuse under Sections 351(2) and 352 were deemed "ornamental" and lacked the specific intent to provoke a breach of peace or cause genuine alarm.

The High Court allowed the petition and quashed the FIR in Chira Chas P.S. Case No. 14 of 2025 and the entire criminal proceeding pending before the Chief Judicial Magistrate, Bokaro, as its continuation would amount to an abuse of the process of law.