Non-payment without dishonest inducement or protective duty does not constitute cheating under Section 418 IPC.

The complainant company alleged that it supplied goods exceeding 155.52 MT between June and September 2015, invoiced at Rs. 21,00,429, and that Rs. 8,06,519 remained unpaid after part-payment.

The complaint alleged subsequent demands for payment and refusal by the accused persons.

The petitioner, described as the company’s Regional Administrator, was charged with an offence under Section 418 of the Indian Penal Code (IPC).

The Magistrate took cognizance on 12 April 2018 in Complaint Case No. 3161(C)/2016.

The petitioner sought to quash that order, submitting that the complaint attributed no specific role to him and disclosed, at most, a commercial payment dispute.

1. Whether the complaint, taken at face value, disclosed the essential ingredients of an offence under Section 418 IPC against the petitioner.

2. Whether continuation of the criminal proceedings against the petitioner would amount to an abuse of the process of the court warranting relief under Section 482 of the Code of Criminal Procedure (CrPC).

Section 418 IPC concerns cheating where the offender knows that wrongful loss may ensue to a person whose interests the offender is bound, by law or legal contract, to protect; it requires the ingredients of cheating under Section 415 IPC as well as the relevant duty to protect and knowledge of likely wrongful loss.

A subsequent failure to discharge a commercial liability, without allegations showing dishonest or fraudulent intention at the inception of the transaction, does not by itself constitute cheating.

In exercising its inherent jurisdiction under Section 482 CrPC, the Court may quash proceedings where the complaint, even accepted in its entirety, does not disclose the essential ingredients of the alleged offence.

The Court also relied on Rikhab Birani and Another v. State of Uttar Pradesh and Another, 2025 SCC OnLine SC 823, for the principle that a commercial or contractual dispute cannot be given a criminal colour absent the essential ingredients of the alleged offence.

The complaint did not allege that the petitioner made any representation, induced the complainant to supply goods, participated in the transaction giving rise to the outstanding amount, or assumed a personal or contractual obligation to protect the complainant’s interests.

Nor did it allege dishonest intent at the inception of the transaction; the allegations principally concerned the company’s subsequent non-payment.

The petitioner’s designation as Regional Administrator, without specific allegations of participation, was insufficient to establish liability under Section 418 IPC.

Since the pleaded facts did not disclose the offence’s essential ingredients, continuation of the proceedings against him would constitute an abuse of process.

It allowed the application and quashed the cognizance order dated 12 April 2018, together with all consequential proceedings in Complaint Case No. 3161(C)/2016, qua the petitioner.