The Supreme Court in the case Jay Shri vs. The State Of Rajasthan observed that the mere breach of contract does not amount to an offence of cheating or breach of trust as provided under the Indian Penal Code unless the fraudulent or dishonest intention is shown.
The Division bench comprising of Justice Sanjiv Khanna and Justice Dipankar Datta in the case observed and has deprecated converting purely civil disputes into criminal cases. The court in the case observed and has stated that the breach of contract does not amount to an offence as stated under Section 420 or Section 406 of the Indian Penal Code, 1860, unless fraudulent or dishonest intention is shown right at the beginning of the transaction. The court in the case also placed reliance upon Indian Oil Corpn. v. NEPC India Ltd. and Others.The court noted that any effort to settle civil disputes and claims, which do not involve any criminal offence, by applying pressure through criminal prosecution should be deprecated and discouraged.
The Supreme Court made the said observations while hearing the criminal appeal against the impugned order passed by the Rajasthan High Court, Jodhpur bench. Thus, the allegations made against the accused persons in the instant case was that they entered into an agreement to sell with the complainant and received Rs.80 Lacs.
Therefore, the court stated that neither the registration nor the money was returned to the complainant. Thus, an FIR was lodged against them under Section 420 and Section 120-B, the criminal conspiracy of the Indian Penal Code, IPC.The court while considering the facts and circumstances of the case stated that the appellants have made out their case for the grant of anticipatory bail. Thus, the court while granting them bail clarified that these observations would not be considered when deciding the case’s merits.
Accordingly, the court granted them bail.