Non-payment of rent under a lease, without criminal ingredients, cannot sustain cheating or breach-of-trust charges.

Respondent No.2, the landlord/managing partner of SSR Royale Developers, entered into a lease deed dated 29 May 2023 and a connected maintenance agreement with petitioner No.4, M/s Kids Clinic India Ltd., for operating a clinic in the leased premises.

The maintenance agreement contained an arbitration clause.

Rent was paid until February 2026, but rent for March to May 2026, amounting to approximately ₹11,70,858, allegedly remained unpaid after a dispute concerning transfer of the electricity meter/RR number.

The landlord approached the police, alleging cheating, criminal breach of trust, criminal intimidation, insult, conspiracy and related offences.

Crime No.358/2026 was registered under Sections 316(2), 318(4), 351(2), 352, 61(1), 319(2) read with Section 3(5) of the Bharatiya Nyaya Sanhita, 2023.

The petitioners invoked the High Court’s inherent jurisdiction under Section 482 CrPC/Section 528 BNSS seeking quashing of the criminal proceedings.

1. Whether a landlord–tenant dispute concerning non-payment of three months’ rent, arising during the performance of an admitted lease and maintenance agreement, disclosed the ingredients of cheating, criminal breach of trust or other alleged offences under the BNS.

2. Whether continuation of the criminal investigation, when the complainant’s grievance was essentially recovery of contractual dues and the agreements provided civil/arbitral remedies, amounted to abuse of the process of law warranting exercise of inherent jurisdiction.

The Court applied the principle that mere breach of contract or non-payment of money does not constitute cheating unless fraudulent or dishonest intention existed at the inception of the transaction, relying on G. Saminathan v. State, Hridaya Ranjan Prasad Verma v. State of Bihar, Dalip Kaur v. Jagnar Singh and Lalit Chaturvedi v. State of U.P.

Criminal breach of trust requires entrustment or dominion over property followed by dishonest misappropriation or conversion; a contractual debt or unpaid rent does not, by itself, amount to entrusted property.

The Court also relied on Delhi Race Club (1940) Ltd. v. State of U.P. for the distinction between cheating and criminal breach of trust, and on Indian Oil Corporation v. NEPC India Ltd. for the rule that criminal proceedings cannot be used as pressure for recovery of civil or commercial dues.

Under the inherent jurisdiction preserved by Section 482 CrPC/Section 528 BNSS, criminal proceedings may be quashed where the allegations, even if accepted in their entirety, do not disclose a criminal offence or where continuation would constitute abuse of process.

The Court found that the petitioners entered the premises under a formally executed lease and that the landlord–tenant relationship, as well as payment of rent for nearly three years, was admitted.

The complaint did not allege that the petitioners possessed a dishonest or fraudulent intention when the lease was executed in May 2023; subsequent non-payment of rent could not retrospectively establish cheating.

Nor did the complaint identify any property entrusted to the petitioners and dishonestly misappropriated by them; the alleged unpaid rent was merely a contractual debt.

The substance of the complaint was therefore recovery of ₹11,70,858 arising from a contractual dispute, for which civil remedies and the agreed arbitration mechanism were available.

The Court held that the police could not be converted into a forum for enforcing private contractual obligations or recovering rent, and that giving the dispute a criminal colour constituted abuse of process.

It held that the complaint disclosed, at most, a civil landlord–tenant dispute concerning unpaid rent and did not establish the foundational ingredients of cheating, criminal breach of trust or the other invoked offences.

The criminal petition was allowed, and the investigation in Crime No.358/2026 pending before the Additional Chief Judicial Magistrate, Bengaluru, was quashed.