Failure to repay a loan or perform promised labor does not constitute cheating absent dishonest intention at inception.

The petitioner (complainant) filed a complaint alleging that Opposite Party No. 2 took a friendly loan of ₹3,000 to be adjusted against future wages as a mason.

However, the accused neither performed the work nor refunded the amount, and allegedly threatened the petitioner with false litigation under the SC/ST Act.

The Judicial Magistrate 1st Class, Deoghar, dismissed the complaint under Section 203 of the Cr.P.C. on August 6, 2022, finding no dishonest intention at the time of the transaction.

This dismissal was subsequently upheld by the Sessions Judge, Deoghar, in Criminal Revision No. 169 of 2022.

The petitioner then invoked the inherent jurisdiction of the High Court under Section 482 of Cr.P.C. to quash the lower court orders.

Whether the failure to repay a loan or fulfill a service contract constitutes the criminal offence of cheating under Section 420 or criminal breach of trust under Section 406 of the Indian Penal Code.

Whether the lower courts committed an illegality by dismissing the complaint under Section 203 of the Cr.P.C. despite the testimony of inquiry witnesses.

The court relied on Section 482 of the Cr.P.C. regarding inherent powers.

Sections 406 and 420 of the IPC.

It applied the principle from *Satish Chandra Ratan Lal Shah v. State of Gujarat* (2019) 9 SCC 148, which holds that a mere breach of promise or inability to return a loan does not constitute cheating or criminal breach of trust unless fraudulent intent (*mens rea*) existed at the very inception of the transaction.

It further cited *Uma Shankar Gopalika v. State of Bihar* (2005) 10 SCC 336, establishing that deception at the inception is a *sine qua non* for an offence under Section 420 IPC, and subsequent development of intent is insufficient.

The Court examined the materials on record and observed that the dispute was essentially a civil matter arising from a failed loan transaction.

Relying on the established precedents, the Court noted that for an offence of cheating, the complainant must show a "fraudulent inducement" at the beginning of the deal; however, the petitioner failed to allege any such initial deception.

Regarding Section 406 IPC, the Court found an absence of "dishonest misappropriation" of entrusted property, as a simple loan does not automatically create an entrustment for criminal purposes.

The Court reasoned that criminal law cannot be set in motion as a matter of course for simple breaches of contract.

The Court found no illegality or absurdity in the concurrent findings of the lower courts.

Consequently, the Court dismissed the criminal miscellaneous petition, affirming the dismissal of the complaint.