To hold a person guilty of cheating, it is necessary to show that he had a fraudulent and dishonest intention at the time of making the promise: Jharkhand High Court

In a significant ruling, the High Court of Jharkhand at Ranchi has quashed criminal proceedings in Complaint Case No. 1499 of 2011, involving allegations of cheating and breach of contract in a land deal for establishing a multiplex. The decision was delivered by Hon’ble Mr. Justice Sanjay Kumar Dwivedi in the case of Prakash Jha & Ors. vs The State of Jharkhand & Anr.

The crux of the judgement centered around the quashing of criminal proceedings due to the allegations being of a civil nature. The court meticulously analyzed whether the elements necessary for constituting cheating under Section 415 IPC were present and concluded they were not, given the absence of fraudulent or dishonest intention at the outset.

The complaint alleged that Prakash Jha, associated with Holy Cow Pictures Pvt. Ltd., had entered into a land deal for a multiplex in Jamshedpur but reneged on promises. The case took a turn when the police, after investigation, submitted a final form declaring the case as civil in nature. However, the court took cognizance under Section 418 IPC based on a protest petition.

Justice Dwivedi's observation highlighted the absence of encashment of relevant bank drafts, which rendered any agreement void under Section 25 of the Indian Contract Act, 1872. "To hold a person guilty of cheating, it is necessary to show that he had a fraudulent and dishonest intention at the time of making the promise," the judgement read, echoing the principles laid down in precedents like Inder Mohan Goswami v. State of Uttaranchal and Murari Lal Gupta v. Gopi Singh.

The judgement emphasized that the allegations, even if accepted in totality, did not suffice to initiate criminal proceedings under the IPC for cheating. It underscored that a mere breach of contract, without initial fraudulent intent, does not equate to criminal cheating.

The court allowed the petition, thereby quashing the criminal proceedings including the order of cognizance dated 10.01.2018. It was categorically stated that this decision should not influence the merits of the pending Title Suit No. 107 of 2009, which is to be adjudicated independently.

Date of Decision: 08.02.2024.

Prakash Jha & Ors. vs The State of Jharkhand & Anr