Failure to pay consideration in sale of goods constitutes civil dispute, not criminal breach of trust.

The applicant, proprietor of S.S. Trading Company, was accused of purchasing agricultural produce (wheat) from 21 farmers on credit between March 23, 2025, and March 29, 2025, and subsequently failing to pay the promised amount, totaling approximately ₹3.95 Crores

An FIR was registered under Sections 318(4), 316(2), and 316(5) of the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023.

The applicant was arrested on April 20, 2025

In a previous bail application (M.Cr.C. No. 26097 of 2025), the applicant was granted conditional bail subject to depositing ₹2.5 Crores in installments, which he failed to comply with, leading to his continued incarceration for 11 months.

The applicant moved this second bail application, contending the failure was a commercial default without criminal intent.

1. Whether a failure to pay the consideration amount in a transaction for the sale of goods constitutes the criminal offence of cheating or criminal breach of trust

2. Whether the applicant is entitled to regular bail under Section 483 of the BNSS, 2023, despite non-compliance with previous onerous monetary bail conditions

The Court primarily applied Section 483 of the BNSS, 2023 regarding regular bail.

It relied on the Supreme Court precedent in *Delhi Race Club (1940) Ltd. v. State of Uttar Pradesh*, (2024) 10 SCC 690, which clarified that in a sale of movable property, ownership passes upon delivery under Sections 20 and 24 of the Sale of Goods Act, 1930; therefore, a subsequent failure to pay does not constitute criminal breach of trust as there is no "entrustment" of property.

The Court also referenced *Gajanan Dattatray Gore v. State of Maharashtra*, 2025 SCC Online SC 1571, regarding the inability to comply with high-stake monetary bail conditions.

The Court observed that the transaction appeared to be a continuous business relationship where the applicant failed to pay dues due to business losses ("went haywire"), rather than an initial intent to defraud.

Applying the *Delhi Race Club* doctrine, the Court reasoned that since the property in the wheat passed to the buyer upon delivery, the failure to pay the consideration is a civil wrong rather than criminal misappropriation.

The Court noted that the applicant had been in custody for 11 months, only one witness had been examined, and the trial was likely to be prolonged.

Furthermore, the Court accepted the contention that the previous offer to deposit ₹2.5 Crores was made by counsel without the applicant's consultation and was beyond his financial capacity.

The application for regular bail was allowed.

The Court ordered the applicant's release on a personal bond of ₹10,00,000/- with two sureties of ₹5,00,000/- each, subject to conditions including remaining present for all hearings, not tampering with evidence, and not leaving Madhya Pradesh without prior permission from the Trial Court.