Non-performance of an agreement to sell, absent initial deception or entrustment, does not constitute cheating or criminal breach of trust.

The complainant alleged that, in connection with an agreement to sell agricultural land, he paid ₹4.5 lakh by cheque to the legal heirs and a further ₹18 lakh to intermediaries, but the applicants later refused to execute a sale deed after the land was restored to its original owners.

He alleged offences under Sections 406, 420 and 114 IPC. The complainant had also filed a civil suit for specific performance.

The applicants sought quashing under Section 482 CrPC, contending that the dispute was civil and the FIR disclosed no criminal offence.

1. Whether the FIR’s allegations, taken at face value, disclosed the ingredients of cheating under Section 420 IPC against the applicants.

2. Whether the payments made under the agreement to sell constituted entrustment capable of supporting a charge of criminal breach of trust under Section 406 IPC.

3. Whether the FIR and consequential proceedings should be quashed under Section 482 CrPC.

Section 482 CrPC empowers the High Court to prevent abuse of process and secure the ends of justice, subject to the illustrative categories in State of Haryana v. Bhajan Lal.

Cheating under Section 420 IPC requires deception and dishonest or fraudulent intention when the inducement is made; a subsequent breach of contract alone is insufficient (Vesa Holdings Pvt. Ltd. v. State of Kerala).

Criminal breach of trust under Sections 405–406 IPC requires entrustment of property or dominion over it, followed by dishonest misappropriation, conversion, use or disposal in violation of law or contract.

The Court also relied on Radheyshyam v. State of Rajasthan for the principles that advance payment under an agreement to sell is not, without more, entrustment and that refusal to complete a sale may give rise to a civil remedy.

The Court also relied on Kishan Singh v. Gurpal Singh on scrutiny of an unexplained belated FIR.

The Court also relied on Pradeep Kumar Kesarwani v. State of Uttar Pradesh on the framework for assessing quashing petitions.

The Court found that the FIR did not explain how the applicants had fraudulently or dishonestly induced the complainant to make the payments, or allege facts showing dishonest intent at the inception of the transaction.

The payments were made as consideration under an agreement to sell, not entrusted to the applicants; their alleged refusal to execute a sale deed therefore did not establish misappropriation.

The Court treated the dispute as predominantly civil, noting that a suit for specific performance was pending, and also considered the unexplained delay in lodging the FIR.

It concluded that the allegations did not disclose the essential ingredients of Sections 406 or 420 IPC and that Section 114 IPC consequently had no application.

It clarified that its observations were confined to the quashing application and would not affect the merits of other litigation between the parties.