Non-payment in commercial transactions constitutes a civil breach of contract, not criminal cheating or breach of trust.

The petitioner, Shubham Bhardwaj, entered into a Memorandum of Understanding (MOU) with the informant for the supply of materials.

The petitioner issued four cheques totaling a significant amount, but a sum of ₹2,68,55,829/- remained outstanding.

When the informant demanded payment, it was alleged that co-accused persons abused and threatened him.

Based on a written report, Chira Chas P.S. Case No. 14 of 2025 was registered under Sections 316(2) (Criminal Breach of Trust), 318(4) (Cheating), 352 (Insult), 351(2) (Criminal Intimidation), and 3(5) of the Bharatiya Nyaya Sanhita (BNS), 2023.

Procedural orders for a non-bailable warrant and process under Section 82 Cr.P.C. were subsequently issued against the petitioner.

The petitioner moved the High Court to quash the FIR and the entire criminal proceeding, arguing the matter was purely civil/contractual.

1. Whether a mere breach of contract or non-payment of dues in a commercial transaction amount to the criminal offences of cheating or criminal breach of trust under the BNS?

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

3. Whether the allegations regarding verbal abuse and threats over the phone satisfy the legal ingredients of Sections 351(2) and 352 of the BNS?

Section 528 of the BNSS, 2023 (inherent powers).

Vir Prakash Sharma v. Anil Kumar Agarwal: non-payment for goods does not per se constitute cheating or criminal breach of trust.

Uma Shankar Gopalika v. State of Bihar: for cheating, fraudulent intention must exist at the inception of the contract.

Binod Kumar v. State of Bihar: mere retention of money without dishonest misappropriation is not criminal breach of trust.

Delhi Race Club (1940) Ltd. v. State of U.P.: criminal breach of trust (entrustment) and cheating (inducement) cannot co-exist simultaneously.

Fiona Shrikhande v. State of Maharashtra: intentional insult must be of a degree likely to provoke a breach of public peace.

The Court observed that the dispute was a quintessentially commercial transaction involving under-payment for goods.

Regarding Section 318(4) (Cheating), the Court found no allegation that the petitioner possessed a deceptive intention at the very beginning of the transaction.

Regarding Section 316(2) (Criminal Breach of Trust), the Court ruled that "entrustment" was absent because, in a sale of goods, ownership transfers to the buyer; thus, the buyer cannot "misappropriate" property they own.

The Court further noted the legal impossibility of cheating and breach of trust co-existing for the same transaction.

For the offences of insult and intimidation (Sections 351 and 352), the Court deemed the allegations "ornamental," finding that simple verbal abuse over the phone does not meet the threshold of provoking a breach of peace or causing alarm as required by statute.

The Court allowed the petition and quashed FIR Chira Chas P.S. Case No. 14 of 2025 and the entire criminal proceeding, including the orders for non-bailable warrants and Section 82 process.