Subsequent denial of payment adjustment does not constitute cheating absent dishonest intent at inception.

The Petitioner, proprietor of M/s Imperial Shovel Works, entered into a transaction with Respondent Nos. 1 and 2, partners of M/s Parrytech Hydraulics, for purchase of a hydraulic machine for ₹16,80,000. At their request, the Petitioner handed over a blank-payee cheque for ₹5,15,000 drawn from his wife’s account, allegedly for payment to a third party in connection with the Respondents’ business. The cheque was subsequently credited to Respondent No. 3’s account. Although the machine was delivered, Respondent Nos. 1 and 2 allegedly denied that the payment had been made towards the sale consideration and demanded further payment.

The Petitioner filed a complaint alleging offences under Sections 420, 120B and 34 IPC. His application under Section 156(3) CrPC was dismissed, but he was permitted to lead pre-summoning evidence. After examining four witnesses, the Magistrate dismissed the complaint and declined to issue process on 21.09.2019. The Revisional Court dismissed the Petitioner’s challenge on 03.12.2021. The Petitioner thereafter invoked the High Court’s inherent jurisdiction under Section 482 CrPC.

Whether the complaint and pre-summoning evidence disclosed sufficient grounds for issuing process against the Respondents for cheating under Section 420 IPC, particularly whether dishonest or fraudulent intention existed at the inception of the transaction?

Whether the allegations disclosed a prima facie criminal conspiracy under Section 120B IPC or common intention under Section 34 IPC?

Whether the High Court should exercise its jurisdiction under Section 482 CrPC to interfere with concurrent orders of the Magistrate and Revisional Court declining issuance of process?

At the stage of issuance of process under Section 204 CrPC, the court must determine whether sufficient grounds exist to proceed, and not whether conviction is ultimately certain; however, a complaint must be dismissed where its allegations and supporting evidence do not disclose the essential ingredients of the alleged offence.

For an offence under Section 420 IPC, deception and fraudulent or dishonest inducement are essential, and dishonest intention must exist from the inception of the transaction; a subsequent breach of promise or contractual dispute, by itself, does not constitute cheating. The Court relied on Delhi Race Club (1940) Ltd. v. State of Uttar Pradesh, 2024 INSC 626, and V. Ganesan v. State, 2026 INSC 265.

The Court also relied on Manohar Singh v. Pradeep Mehta, 2024:DHC:157, and Rajan Kumar Manchanda v. State of Karnataka, 1990 Supp. SCC 132, for the principle that Section 482 CrPC cannot be used to circumvent the bar against a second revision or to obtain another round of revisional re-appreciation.

Sections 120B and 34 IPC cannot independently sustain process where there is no prima facie substantive criminal offence or material showing an agreement or shared criminal intention.

The Court held that, even accepting the Petitioner’s evidence at face value, the circumstances did not establish dishonest intention at the inception. The Petitioner himself alleged that Respondent Nos. 1 and 2 had requested that the payee’s name be left blank because the payment was to be made to a third party, and the cheque was in fact credited to Respondent No. 3, whom the Respondents identified as having business dealings with them. Thus, the payment’s destination was not contrary to the original representation.

The delivery of the hydraulic machine further constituted a relevant circumstance indicating performance of the principal transaction, although it was not treated as conclusive of the absence of criminality.

The evidence of CW-1 to CW-3 and the banking records proved the transfer of ₹5,15,000 but did not show that the representation concerning the payment was false or made with a preconceived dishonest intention.

The later disagreement over whether the amount should be adjusted against the sale consideration was therefore a monetary or contractual dispute and could not retrospectively establish the mens rea required under Section 420 IPC.

Since the substantive allegation of cheating was not made out, the bare assertion of connivance was insufficient to invoke Sections 120B or 34 IPC.

The Court also held that alleged discrepancies between the certified and digitally uploaded versions of the Magistrate’s order did not affect the result, because the complaint independently failed on the absence of dishonest intention at inception.

Finding no basis for interference under Section 482 CrPC and noting that the Magistrate’s order had already undergone revisional scrutiny, the Court dismissed the petition and disposed of any pending applications.

The Court clarified that its observations were confined to the criminal proceedings and would not affect the parties’ civil rights or claims.