FIR Quashed | Breach of Contract Does Not Attract Criminal Prosecution for Cheating Unless Fraudulent Intention Exists at the Outset: Calcutta High Court

Calcutta High Court quashed an FIR alleging cheating and criminal conspiracy against actress Zareen Khan. The FIR, registered as Narkeldanga P.S. Case No. 254 of 2018, arose from the petitioner’s alleged failure to appear as a guest artist at multiple events during the 2018 Kali Puja festivities despite receiving advance payment.

Justice Bibhas Ranjan De held that the dispute between the parties was purely civil in nature, stemming from a breach of contract, and did not meet the ingredients of criminal offences under Sections 406, 420, 506, and 120B of the IPC. The court ruled:

"A mere breach of contract does not constitute an offence of cheating unless there is evidence of dishonest or fraudulent intent from the very inception of the transaction."

The court further emphasized that allowing criminal proceedings in such cases would amount to an abuse of the process of law.

The petitioner, Zareen Khan, was engaged by Phoenix Talent Management, represented by Opposite Party No. 2, to appear as a guest artist at eight puja pandals on November 5, 2018, during Kali Puja. She allegedly accepted an advance payment of ₹12 lakhs but failed to appear at the events. The FIR alleged that her absence caused wrongful loss of ₹42 lakhs to the complainant and that she also threatened the complainant with dire consequences when approached for a refund.

During the investigation, police collected several documents, including flight tickets, bank statements, and hotel bookings, showing arrangements made for the petitioner’s attendance. A charge sheet was subsequently filed under Sections 406 (criminal breach of trust), 420 (cheating), 506 (criminal intimidation), and 120B (criminal conspiracy) of the IPC.

The petitioner sought to quash the FIR under Section 482 of the CrPC, asserting that the dispute was contractual and did not involve criminal elements.

The primary issue was whether the petitioner’s failure to perform the contract constituted cheating under Section 420 IPC. The court emphasized that for an act to qualify as cheating, there must be evidence of fraudulent or dishonest intention at the inception of the transaction.

Justice De observed: "Merely failing to fulfill a contractual obligation, without evidence of initial deception or dishonest intent, does not constitute cheating. The petitioner’s actions, even if they amounted to breach of contract, cannot be converted into a criminal offence." [Paras 19–21]

The court noted that the petitioner’s conduct demonstrated a contractual relationship rather than a criminal conspiracy.

The court reaffirmed the principle that Section 482 CrPC must be exercised sparingly to prevent abuse of legal processes. Justice De stated:

"The inherent power of the High Court is to be exercised to prevent abuse of process or to secure the ends of justice. Criminal proceedings should not be used to pressurize parties to settle civil disputes." [Paras 15–17]

The court also held that the pendency of a civil suit filed by the complainant before the City Civil Court, Mumbai, further supported the argument that the matter was civil rather than criminal in nature.

The complainant objected to the petitioner’s affidavit, claiming it was improperly affirmed under Section 4(2) of the Oaths Act. Rejecting this contention, the court held:

"Even if procedural irregularities exist in the affirmation of the affidavit, they do not constitute a ground for dismissing the application for quashing the FIR. Such objections are not substantial enough to invalidate the petitioner’s case." [Para 22]

The court quashed the FIR and the corresponding criminal proceedings, holding that:

No criminal offence was made out: The dispute was contractual and did not involve dishonest or fraudulent intention to constitute cheating under Section 420 IPC.

Civil remedies were available: The pending civil suit before the Bombay High Court reinforced the conclusion that the issue was of a civil nature.

Preventing abuse of process: Continuing the criminal proceedings would have amounted to misuse of the judicial process.

Justice De concluded: "The complaint in question, on the basis of which the FIR was registered, clearly spells out the commercial nature of the relationship between the parties. Allowing the criminal proceedings to continue would be an abuse of process of the court."

The FIR and all subsequent proceedings were quashed.

This judgment reiterates the principle that criminal law should not be used as a shortcut for settling civil disputes. It also highlights the judiciary’s role in preventing abuse of criminal proceedings to pressurize parties in contractual matters.

Date of Decision: January 22, 2025