Mere breach of a contractual undertaking, without more, does not establish cheating.

Respondent No. 2 alleged that the petitioner received 450 grams of gold to make jewellery but failed to deliver it.

After a police complaint and an alleged failure to take action, respondent No. 2 filed a private complaint under Section 200 CrPC; the matter was referred for investigation under Section 156(3) CrPC, resulting in registration of a case under Sections 409 and 420 IPC.

The police filed a ‘B’ report, which respondent No. 2 challenged by protest petition.

The petitioner and respondent No. 2 had executed a Mutual Consent Agreement-cum-Undertaking recording the petitioner’s obligation to return 450 grams of gold by 29 July 2019 and permitting respondent No. 2 to take appropriate legal action upon default.

The petitioner sought to quash the proceedings in C.C. No. 1418/2023.

1. Whether failure to comply with the Mutual Consent Agreement-cum-Undertaking, by itself, provided a basis to initiate criminal proceedings against the petitioner for the alleged offences.

2. Whether the proceedings under Sections 409 and 420 IPC could continue where the allegations and investigation material did not disclose the essential ingredients of the offences alleged.

The petition was brought under Section 482 CrPC, corresponding to Section 528 BNSS, seeking to quash criminal proceedings.

The alleged offences were criminal breach of trust under Section 409 IPC and cheating under Section 420 IPC.

The Court held that failure to fulfil a contractual undertaking, without more, does not establish cheating under Section 420 IPC.

A contractual clause permitting legal action neither creates a criminal offence nor excludes the application of criminal law; the relevant inquiry is whether the complaint and investigation material disclose the essential ingredients of the alleged offences.

The agreement established the petitioner’s obligation to return the gold and the parties’ contemplated recourse in case of default, but that contractual stipulation did not itself establish criminal liability.

The Court distinguished non-performance of the undertaking from the ingredients required to sustain a criminal charge, observing that contractual default alone was insufficient to establish cheating.

On that basis, it set aside the order rejecting the ‘B’ report and quashed the proceedings.