01Facts
The petitioners were accused of taking Rs. 1,91,00,000/- from the informant with a promise to invest it in a Railway tender business and return the money with alluring profits, which they subsequently failed to do.
¶ 3Based on a written report, the police registered Sonari P.S. Case No. 45 of 2025 and filed a charge-sheet. Consequently, the Judicial Magistrate-1st Class, Jamshedpur, took cognizance of offences under Sections 406 (criminal breach of trust), 420 (cheating), and 34 of the Indian Penal Code (IPC) via an order dated 16.07.2025.
¶ 2, 4The petitioners moved the High Court under Section 528 of the BNSS, 2023, seeking to quash the proceedings.
¶ 202Issues
i.1. Whether a mere breach of contract or failure to repay a loan, without evidence of deception at the inception, constitutes the offence of cheating under Section 420 IPC.
¶ 5, 10ii.2. Whether the receipt of money as an investment or loan constitutes "entrustment" of property required to attract Section 406 IPC.
¶ 8, 12, 1303Law Applied
The Court applied Section 406 and 420 of the IPC.
It relied on Uma Shankar Gopalika v. State of Bihar (2005), which established that cheating requires fraudulent intent at the very inception of the transaction.
¶ 5It further applied Satishchandra Ratanlal Shah v. State of Gujarat (2019), holding that a mere breach of promise or inability to return a loan does not ipso facto constitute criminal breach of trust or cheating.
¶ 7The Court relied on Ram Narayan Popli v. CBI (2003) regarding the essential ingredients of entrustment and misappropriation under Section 405 IPC.
¶ 12Provisions in the judgment · 6 · Linked ones open on LawLens
Bharatiya Nagarik Suraksha Sanhita, 2023 Section 528
Indian Penal Code, 1860 Section 406Section 420Section 34Section 405Section 415
04Reasoning
Regarding Section 420 IPC, the Court observed that the record contained no allegation that the petitioners played any deception at the beginning of the transaction; rather, the intention to allegedly cheat would have had to develop later, which does not meet the legal threshold for cheating.
¶ 10-11Regarding Section 406 IPC, the Court reasoned that "entrustment" under Section 405 IPC requires the owner to retain beneficial interest in the property. In a loan or investment where money is transferred, ownership passes to the borrower, creating a debtor-creditor relationship rather than a fiduciary one.
¶ 13The Court concluded that since the ownership of the money was transferred with only a liability to repay, there was no "entrustment" of property.
¶ 8, 13The dispute was determined to be of a civil nature, improperly cloaked in criminal proceedings.
¶ 1405Holding
The Court answered both issues in the negative and held that even if the allegations were true, they did not constitute the offences charged.
¶ 11, 14The Court allowed the Cr.M.P. and quashed the entire criminal proceedings, including the cognizance order dated 16.07.2025, in connection with Sonari P.S. Case No. 45 of 2025.
¶ 14-16Original Court PDF
BIMAL KUMAR AGARWAL ALIAS VIMAL KUMAR AGRAWALvsTHE STATE OF JHARKHAND
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