Partnership investment is not entrustment, and cheating requires deception from the transaction’s inception.

The complainant alleged that, in 2011, petitioner no. 2, acting for petitioner no. 1, entered into a partnership with him for mechanised coach-cleaning work for Indian Railways at the Dhanbad site.

The complainant claimed a 25% share and alleged that he invested ₹19,50,000 towards labour payments, ₹13,50,000 towards materials, and ₹3,76,000 as a security deposit, which the petitioners did not repay.

The Judicial Magistrate First Class, Dhanbad, found a prima facie case under Sections 406 and 417 of the Indian Penal Code and issued summons in Complaint Case No. 10242 of 2024.

The petitioners sought to quash the proceeding and summoning order under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023.

Whether the alleged investment in the partnership, without an allegation of entrustment or dishonest misappropriation, disclosed an offence under Sections 406/405 IPC.

Whether the allegations disclosed cheating under Section 417 IPC in the absence of an allegation that the petitioners intended to deceive the complainant at the inception of the transaction.

Whether the criminal proceeding and summoning order should therefore be quashed.

Section 405 IPC requires entrustment of property or dominion over it, followed by dishonest misappropriation, conversion, use, or disposal; mere retention or non-payment is insufficient to establish criminal breach of trust under Section 406 IPC.

A partner’s ordinary dominion over partnership property is not, without more, dominion resulting from entrustment for purposes of Section 405 IPC.

For cheating under Sections 415/417 IPC, fraudulent or dishonest intention must exist when the inducement or transaction begins; a subsequent failure to perform a contractual obligation does not, by itself, constitute cheating.

The Court noted that the complainant’s case was that the money was invested in a partnership in which he held a 25% share, and that the partnership entity continued to exist.

In those circumstances, the investment did not amount to property entrusted to the petitioners; the allegations also did not disclose dishonest misappropriation of entrusted property.

As to cheating, the complaint contained no allegation that the petitioners had deceived the complainant from the outset of the transaction.

Thus, even accepting the allegations in full, the essential ingredients of either offence were absent.

It quashed and set aside, qua the petitioners, the criminal proceeding in Complaint Case No. 10242 of 2024, including the order dated 23 June 2025, and allowed the criminal miscellaneous petition.