Simultaneous Prosecution Under Sections 406 and 420 IPC Is Impermissible for Breach of Sale Agreement

In brief

The question

1. Whether a breach of an agreement to sell property, involving an advance payment, constitutes the offence of Criminal Breach of Trust under Section 406 or Cheating under Section 420 of the IPC.

The court held

The Court held that the criminal proceedings were an abuse of the process of law as the ingredients of the alleged offences were not made out.

It also directed

The Court quashed the entire criminal prosecution in Complaint Case No. 243 of 2022, including the cognizance order dated 28.06.2022 and the framing of charges dated 19.11.2025. The Criminal Miscellaneous Petition was allowed.

01Facts

The Petitioner entered into an agreement to sell property to the complainant (Opposite Party No. 2), receiving an advance of Rs. 20,00,000.

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It was alleged that the Petitioner later reneged on this agreement to sell the land to a third party for a higher price and subsequently abused and threatened the complainant when questioned.

¶ 3

Based on the complaint, the Chief Judicial Magistrate, Koderma, took cognizance and framed charges under Sections 406, 420, 504, and 506 of the Indian Penal Code (IPC) on 19.11.2025.

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The Petitioner moved the High Court under Section 482 of the Cr.P.C. to quash the proceedings, contending the dispute was civil in nature and the criminal charges were legally unsustainable.

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02Issues

i.1. Whether a breach of an agreement to sell property, involving an advance payment, constitutes the offence of Criminal Breach of Trust under Section 406 or Cheating under Section 420 of the IPC.

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ii.2. Whether the mere allegation of "abusing" and "threatening" is sufficient to satisfy the specific ingredients of Sections 504 and 506 of the IPC.

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03Law Applied

For cheating to occur, fraudulent intention must exist at the inception of the transaction.

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Radheyshyam v. State of Rajasthan (2024), which held that consideration paid for an agreement to sell does not constitute "entrustment".

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Delhi Race Club (1940) Ltd. v. State of U.P. (2024) to establish that Sections 406 and 420 cannot co-exist simultaneously.

¶ 4

Statutory requirements of Section 504 (intentional insult to provoke breach of peace) and Section 506 (criminal intimidation) as defined in the IPC.

¶ 12, 14

Provisions in the judgment · 5 · Linked ones open on LawLens

Code of Criminal Procedure, 1973 Section 482

Indian Penal Code, 1860 Section 406 Section 420 Section 504 Section 506

04Reasoning

The Court observed that the money paid was a part-payment for a sale agreement, not an "entrustment" of property; therefore, a refusal to register the sale does not amount to misappropriation under Section 406.

¶ 8-9

Regarding Section 420, the Court found no material suggesting the Petitioner intended to deceive the complainant at the time the agreement was signed, noting that a subsequent breach of contract does not retroactively constitute cheating.

¶ 10-11

For the charges under Sections 504 and 506, the Court reasoned that the allegations lacked the essential elements: there was no evidence that the "abuse" was intended to provoke a breach of peace, nor was the "threat" described as being of a nature to cause specific alarm or force the complainant to perform an illegal act.

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Consequently, the Court determined the allegations, even if true, failed to meet the legal thresholds for criminal prosecution.

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