The Supreme Court quashed criminal proceedings under Section 420 IPC, ruling that a mere breach of contract does not constitute cheating. The essential ingredient of a dishonest intention at the inception of the agreement was absent. Allegations of supplying non-conforming goods disclosed only a civil dispute, not a criminal offense, making the FIR unsustainable.
Facts Of The Case:
The case originated from a business transaction dated 12.12.2017, where M/s Soma Stone Crusher (complainant) agreed to purchase a ‘sand rrulla machine’ from M/s Saini Engineering Works, run by Sarabjit Singh. An advance of ₹5,00,000 was paid via cheque. The complainant alleged that the appellant, Paramjeet Singh, acting on behalf of his brother, had assured that the machine would meet specific specifications (14 tons weight, 1000-1200 ft/hour output) and would be replaced if found deficient. They also claimed it was agreed the cheque would only be presented upon the complainant’s satisfaction. The delivered machine allegedly weighed only 12 tons and had a lower output. When the complainant stopped the cheque payment, the suppliers initiated proceedings under the Negotiable Instruments Act. Five years later, the complainant filed an FIR under Section 420 IPC, alleging cheating and breach of trust, claiming a loss of ₹50 lakhs. The High Court refused to quash the FIR, leading to appeals before the Supreme Court, which consolidated the challenge against the FIR and subsequent chargesheet.
Procedural History:
The procedural history of this case began with the filing of FIR No. 11 of 2023 dated 14.02.2023 at Police Station Lambagaon under Section 420 of the IPC by the complainant. Following an investigation, the police submitted a chargesheet against the appellants on 27.07.2023 before the Chief Judicial Magistrate. The appellant, Paramjeet Singh, then approached the Himachal Pradesh High Court under Section 482 of the CrPC, seeking to quash the FIR and all subsequent proceedings. However, the High Court dismissed his petition vide order dated 02.01.2024. Aggrieved by this dismissal, the appellants filed a Special Leave Petition (Criminal) No. 3415 of 2024 in the Supreme Court, which was converted into Criminal Appeal No. ______ of 2025. A connected Writ Petition (Criminal) No. 217 of 2025 was also filed directly before the Supreme Court by the co-accused, Sarabjit Singh. The Supreme Court clubbed these matters, heard them together, and delivered the present common judgment.
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Court Observation:
The Supreme Court made several critical observations while quashing the criminal proceedings. It emphasized that the essential ingredient for an offence of cheating under Section 420 IPC is a fraudulent or dishonest intention at the very inception of the agreement. The Court found that the allegations in the FIR and chargesheet, even if accepted as true, disclosed only a breach of contract for supplying non-conforming machinery, not criminal cheating. It noted a complete absence of any material indicating intentional deception from the beginning. The Court also took serious note of the inordinate and unexplained five-year delay in lodging the FIR, which raised suspicions about the complainant’s bona fides. It strongly reiterated that criminal law cannot be used as an instrument of harassment or for settling purely civil and contractual disputes, and allowing such proceedings would amount to an abuse of the process of the court.
Final Decision & Judgement:
The Supreme Court allowed the appeal and the writ petition, setting aside the impugned order of the High Court. Consequently, it quashed the FIR No. 11/2023 dated 14.02.2023 registered at Police Station Lambagaon, the chargesheet dated 27.07.2023, and all subsequent proceedings emanating from them. The Court held that continuing the criminal prosecution against the appellants would cause undue harassment as the allegations, even taken at their face value, did not prima facie constitute the offence of cheating under Section 420 IPC. The dispute was determined to be purely civil and contractual in nature, lacking the essential criminal intent required to sustain the prosecution.
Case Details:
Case Title: Paramjeet Singh vs. State of Himachal Pradesh & Others Citation: 2025 INSC 1118 Criminal Appeal No.: (Arising out of Special Leave Petition (Criminal) No. 3415 of 2024) Date of Judgement: September 15, 2025 Judges/Justice Name: Justice B.V. Nagarathna and Justice R. Mahadevan