Breach of Contract vis a vis Offence of Cheating

In Rashmi Jain v. State of U.P., 2014 (1) SCALE 415, the court said that mere failure of a person to keep up promise subsequently, a culpable intention right at the beginning, i.e., when he made the promises cannot be presumed. A distinction has to be kept in mind between mere breach of contract and the offence of cheating. It depends upon the intention of the accused at the time of inducement. The subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent, dishonest intention is shown at the beginning of the transaction.
In Vesa Holdings Pvt. Ltd. v. State of Kerala, 2015 CRLJ 2455 the court held that every breach of contract would not give rise to an offence of cheating and only in those cases breach of contract would amount to cheating where there was any deception played at the very inception. If the intention to cheat has developed later on, the same cannot amount to cheating. In other words, for the purpose of constituting an offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise. Even in a case where allegations are made in regard to failure on the part of the accused to keep his promise, in the absence of a culpable intention at the time of making initial promise being absent, no offence under Section 420 IPC can be said to have been made out. Suneel Galgotia v. State of U.P., 2016 (92) ACC 40.

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Filed under Criminal Law, Offence of Cheating

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