Mere Breach Of Land Sale Contract Not Enough To Prosecute For Cheating Without 'Dishonest Intention' While Making Promise: Gauhati HC

The Gauhati High Court recently quashed an order taking cognizance of a cheating case for alleged breach of contract for sale of land, noting that there was no misappropriation or fraudulent or dishonest intention at the beginning of the transaction.

In doing so the court underscored that mere breach of contract is not enough to prosecute for cheating unless dishonest intention while making the promise is shown. 

Justice Kaushik Goswami observed:

“…mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction. To hold the person guilt of cheating, it is necessary to show that he had fraudulent or dishonest intention at the time of making promise.”

The Court was hearing a petition seeking quashing of a Magistrate Court order taking cognizance of the offences under Sections 420 (cheating) and 406 (criminal breach of trust) of IPC against the accused-petitioner as well as quashing of the whole proceeding in the case.

The facts of the case was that the complainant-respondent no.2 filed a complaint petition before the Chief Judicial Magistrate, Kamrup(M) on July 30, 2016 stating that the complainant was searching for a plot of land for constructing a permanent residence. He said that he came to the accused-petitioner, who agreed to sell his plot of land and asked the complainant to make an advance payment of Rs.2,00,000.

Accordingly the complainant on March 12, 2016 in the presence of two witnesses paid Rs.2,00,000 to the accused-petitioner. However, it was alleged that despite the complainant contacting the accused-petitioner for compliance of the sale, the same was not done, for which a legal notice was issued. It was alleged that accused-petitioner hadcheated the complainant and a case was registered under Sections 406 and 420 of IPC.

The Sub-Divisional Judicial Magistrate, Kamrup(M) upon receipt of the case records recorded the statement of the complainant under Section 200 of the CrPC and thereafter, by order dated August 14, 2018, took cognizance under Sections 420 and 406 of IPC against the accused-petitioner and was further fixed the next date on October 03, 2018 for appearance of the accused-petitioner.

The Counsel appearing for the petitioner submitted that even if the allegation in the complaint is taken in its face value and accepted to be true, no criminal offence is made out and therefore, continuance of the criminal proceeding is wholly unjustified.

The Additional Public Prosecutor appearing for the State respondents submitted that it is apparent from the body of the complaint that upon the complainant approaching the accused-petitioner for completing the sale proceedings, the accused-petitioner was willing to return the money and as such no case of cheating or breach of trust as claimed is made out on the face of the complaint.

The Court noted that after issuing the legal notice, it appeared that complainant attempted to compromise the matter by meeting the petitioner wherein he requested him to settle the matter and the petitioner at that time expressed to pay lump-sum amount.

“It is well settled that every breach of trust may not result in criminal breach of trust unless there is evidence showing act of fraudulent misappropriation. The act of breach of trust involves a civil wrong, in which a person who is aggrieved, may seek redressal for damages in civil Court but a breach of trust with mens rea gives rise to criminal prosecution,” the Court said.

It was noted by the Court that there has been no misappropriation or fraudulent or dishonest intention at the beginning of the transaction and as such no case under Sections 420 and 406 can be said to be made out from reading of the complaint. It was observed by the Court that mere breach of a promise cannot give rise to criminal prosecution.

Thus, the Court set aside and quashed the impugned order taking cognizance as well as the whole proceeding in the case.

Citation: 2025 LiveLaw (Gau) 13

Case Title: Sri Brajendra Das v. The State of Assam & Anr.

Case No.: Criminal Petition No. 1089 of 2018

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