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Civil Dispute Vs Criminal complaint for breach of contract

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The respondent no.2 – complainant paid an advance of Rs.2 lakhs on 12.3.2016 to the petitioner-accused for purchase of the plot.   Later on, the sale was done.  Legal notice was issued.   It is alleged that the petitioner-accused cheated the complainant.

After recording the statement of the complainant under Section 200 of Cr PC and by the order dated 14.8.2018, took the cognizance under Sections 420/406 of IPC against the petitioner.

HELD that every breach of trust may not result in criminal breach 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.  Similarly, mere breach of contract cannot rise to criminal prosecution for cheating fraudulent or dishonest intention is shown right at the beginning of the transaction.  To hold the person guilty of cheating, it is necessary to show that he had fraudulent or dishonest intention at the time of making promise.

In the present case, taking the averments on face value there appears no misappropriation or fraudulent or dishonest intention at the beginning of the transaction and as such no case under Sections 420/406 IPC can be said to be made out from reading of the complaint.   Mere breach of a promise cannot give rise to criminal prosecution.

Judgment and Order dated 7.3.2025 of the Gauhati High Court in Criminal Petition NO.1089 of 2018 of Sri Brajendra Das   Vs.   The State of Assam and another

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