22 Jan 2024 4:19 PM GMT
The Supreme Court has (on 19 January) prima facie observed that a mere breach of contract does not amount to an offence of cheating or breach of trust as provided under the Indian Penal Code unless the fraudulent or dishonest intention is shown.
“Prima facie, in our opinion, mere breach of contract does not amount to an offence under Section 420 or Section 406 of the Indian Penal Code, 18601, unless fraudulent or dishonest intention is shown right at the beginning of the transaction.”
Additionally, the Division Bench of Justices Sanjiv Khanna and Dipankar Datta deprecated converting purely civil disputes into criminal cases. Placing its reliance upon Indian Oil Corpn. v. NEPC India Ltd. and Others, the Court noted:
“Any effort to settle civil disputes and claims, which do not involve any criminal offence, by applying pressure through criminal prosecution should be deprecated and discouraged.”
The Top Court made these observations while hearing a criminal appeal against the impugned order passed by the Rajasthan High Court, Jodhpur bench. The allegation against the accused persons in the instant case was that they entered into an agreement to sell with the complainant and received Rs.80 Lacs. Thereafter, neither the registration nor the money was returned to the complainant. Thus, an FIR was lodged against them under Sections 420 and 120-B (criminal conspiracy) of the IPC.
Aggrieved, the accused approached the High Court, praying for anticipatory bail. Therein, inter-alia, they contended that it is a case of breach of contract and is of a civil nature. However, the High Court dismissed their bail application. Thus, they preferred the present appeal.
In view of the above projection, the Court was satisfied that the appellants have made out their case for the grant of anticipatory bail. Accordingly, the Court granted them bail while clarifying that these observations would not be considered when deciding the case's merits.
Case Title: JAY SHRI vs. THE STATE OF RAJASTHAN., Diary No.- 45821 – 2023
Citation : 2024 LiveLaw (SC) 51
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