No criminal proceedings if it is only a breach of contract, rules SC

 

The Supreme Court propounded that a breach of contract does not give rise to criminal prosecution for cheating unless the fraudulent or dishonest intention is proved right at the commencement of the transaction. Criminal proceedings cannot be initiated merely because it has been alleged that the promise was not kept. 

Brief Facts:

The present appeal has been preferred seeking quashing of an FIR under Sections 420, 120B and 506 of the Indian Penal Code, 1860 (hereinafter referred to as “IPC”). 

Brief Background:

As per the Appellant, an agreement to sell was entered into to sell a plot to the wife of Respondent No.2. The Agreement explicitly specified that the vendor was not the owner at the time.  The execution date of the agreement was extended. 

Thereafter, a complaint was filed by Respondent No. 2. After investigation, it was recorded that it was a civil dispute and hence, no police action was necessary. Thereafter, more complaints were filed and then an FIR was registered against the Appellant. 

Contentions of the Appellant: 

It was contended that the dispute is of civil nature. Since the agreement was not executed, Respondent No.2 could have sought relief for specific performance, but it was not availed. It was also argued that the FIR was filed nearly 3 years after the date fixed for the execution of the sale deed. 

Observations of the Court: 

It was observed that Respondent No. 2 did not initiate any civil proceedings for execution of the sale deed or in the alternative return of the earnest money. Instead, complaints were filed to initiate a criminal case. 

Further, it was noted that the earlier 2 complaints filed did not mention the name of the Appellant. Then, a 3^rdcomplaint was filed based on which FIR was lodged. 

The Bench opined that the actions of Respondent No. 2 were only to pressurize the Appellant to get the money back. Nothing on record proved that Respondent No. 2 was willing to get the sale deed registered and executed.

It was propounded that a breach of contract does not give rise to criminal prosecution for cheating unless the fraudulent or dishonest intention is proved right at the commencement of the transaction. Criminal proceedings cannot be initiated merely because it has been alleged that the promise was not kept. 

In the present case, it was noticed that it was an attempt to convert a civil case into a criminal one. 

The decision of the Court: 

Based on the abovementioned findings, the Top Court quashed the FIR and accordingly, allowed the petition. 

Case Title: Sarabjit Kaur v. The State of Punjab & Anr. 

Coram: Hon’ble Mr. Justice Abhay S. Oka, Hon’ble Mr. Justice Rajesh Bindal

Case No: Criminal Appeal No. 581 of 2023

Citation: 2023 Latest Caselaw 160 SC

Advocate for Appellant: Adv. Bankey Bihari 

Advocate for Respondent: Adv. Nupur Kumar 

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 (With input from news agency language) 

 

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