Jharkhand High Court Reiterates: Mere Loan Default Does Not Constitute Cheating or Criminal Breach of Trust
Cr.M.P. No. 4760 of 2022
By Navya Tiwari
The Jharkhand High Court dismissed a criminal miscellaneous petition filed under Section 482 Cr.P.C., holding that mere non-repayment of a loan does not constitute offences of cheating or criminal breach of trust in the absence of dishonest intention at the inception of the transaction. The case arose from a complaint filed by the petitioner, alleging that the opposite party had taken a friendly loan of ₹3,000 on the promise of repayment through labour work, but neither repaid the amount nor performed the agreed work, and further threatened to implicate the petitioner under provisions of the SC/ST Act. The complaint was dismissed by the Judicial Magistrate under Section 203 Cr.P.C., and the revision against the same was also dismissed by the Sessions Court.
Mere loan default held insufficient to attract criminal liability
Absence of dishonest intention at inception proved fatal to the case
Dispute characterized as civil in nature
High Court declined to invoke inherent jurisdiction under Section 482 Cr.P.C.
The petitioner challenged these orders, contending that sufficient material existed to proceed against the accused for offences under Sections 420 and 406 IPC, and that the courts below failed to properly appreciate the statements of the complainant and inquiry witnesses. Per contra, the respondents argued that the dispute was purely civil in nature arising out of a loan transaction, and that no ingredients of cheating or criminal breach of trust were made out.
Justice Anil Kumar Choudhary, upon examining the record, held that the allegations only disclosed a simple loan transaction, and there was no material to indicate that the accused had any dishonest or fraudulent intention at the inception of the agreement, which is a sine qua non for constituting the offence of cheating. The Court relied upon the principles laid down in Satish Chandra Ratan Lal Shah v. State of Gujarat, (2019) 9 SCC 148 and Uma Shankar Gopalika v. State of Bihar, (2005) 10 SCC 336, reiterating that mere breach of contract or inability to repay a loan does not give rise to criminal liability unless there is initial fraudulent intent or entrustment coupled with dishonest misappropriation.
Transaction was a simple loan arrangement
No dishonest or fraudulent intention at inception
Essential ingredients of Section 420 IPC not satisfied
No entrustment or misappropriation to attract Section 406 IPC
No illegality in the orders of the courts below
Finding that neither the ingredients of Section 420 IPC nor Section 406 IPC were satisfied, and that the courts below had committed no illegality, the High Court declined to exercise its inherent jurisdiction under Section 482 Cr.P.C. Accordingly, the criminal miscellaneous petition was dismissed.
