Supreme Court quashes FIR and chargesheet where no prima facie case of cheating under S.420 is made out

A bench of Justice B.V. Nagarathna and Justice R. Mahadevan heard an appeal under Article 136 and a writ petition arising from the same FIR, challenging the continuation of criminal proceedings under Section 420 read with Section 120B IPC and seeking quashing of FIR No.11/2023 and the subsequent chargesheet and proceedings.

The Court allowed the appeal and the writ petition, set aside the High Court order that had declined relief under Section 482 CrPC, and quashed FIR No.11/2023 dated 14.02.2023, the chargesheet dated 27.07.2023 and all consequential proceedings. The judges held that the factual allegations, even if taken at face value, did not disclose the essential ingredients of cheating under Section 420 IPC because there was no cogent material to infer a "fraudulent or dishonest intention at the time of making the promise." The Court, in its reasoning, observed: “It is settled law that for establishing the offence of cheating, the complainant/respondent No.3 was required to show that the appellants had a fraudulent or dishonest intention at the time of making a promise or representation of buying the said ‘ruula set fitting’. Such a culpable intention when the promise was made cannot be presumed but has to be supported with cogent facts. In the facts of the present case, there is a clear absence of dishonest and fraudulent intention on the part of the appellants as regards the sale and purchase agreement. We must hasten to add that there is no allegation in the First Information Report or the chargesheet indicating either expressly or impliedly any intentional deception or fraudulent/dishonest intention on the part of the appellants right from the time of making the promise or misrepresentation. Nothing has been said on what the misrepresentations were and how the appellants intentionally deceived the complainant/ respondent No.3. Mere vague allegations by the complainant/ respondent No.3 that the appellants failed to provide a product of a particular specification and failed to replace the faulty machines do not satisfy the test of dishonest inducement to deliver a property or part with a valuable security as enshrined under Section 420 IPC.” The Court further noted that "Criminal law ought not become a platform for initiation of vindictive proceedings to settle personal scores and vendettas" and relied upon settled authorities including Inder Mohan Goswami, Vesa Holdings P. Ltd., Bhajan Lal and recent observations in Vishal Noble Singh to caution against misuse of criminal process.

Background The dispute arose from a commercial transaction between M/s Soma Stone Crusher (complainant) and proprietorship firms run by brothers Paramjeet Singh and Sarabjit Singh (the appellants). On 12.12.2017, Soma entered a sale-purchase agreement with M/s Saini Engineering Works for a 20x40 ruula machine and associated equipment for Rs.9,12,912/-. A cheque for Rs.5,00,000/- dated 13.01.2018 was later returned by the bank marked "Stop Payment." M/s Saini Engineering Works pursued a remedy under Section 138 NI Act in 2018. Nearly five years after the contract, on 14.02.2023, an FIR was lodged alleging that the delivered ruula weighed around 12 tons instead of the promised 14 tons, produced lower output, and that the accused had promised replacement but failed to do so, causing alleged loss of Rs.50 lakhs. A police investigation led to a chargesheet under Sections 420 and 120B IPC. Paramjeet sought quashing under Section 482 CrPC in the Himachal Pradesh High Court, which dismissed the petition on 02.01.2024; Sarabjit separately filed a writ petition in this Court. The Supreme Court heard both matters together.

The Court examined the legal requirement that to make out cheating under Section 420 IPC there must be evidence of dishonest or fraudulent intention at the time of promise, not mere non‑performance later. It found no allegation in the FIR or chargesheet showing misrepresentation or intent at inception, and observed the unexplained delay of nearly five years in lodging the FIR, which raised suspicion about the complainant’s bona fides. Applying the principles in Bhajan Lal, the Court concluded that the allegations were so weak and/or mala fide that continuation of criminal proceedings would amount to abuse of process. The Court therefore allowed the appeals and quashed the FIR, the chargesheet and all consequent proceedings. No interim directions were necessary and no liberty was reserved.

Case No.: 2025 INSC 1118 (Criminal Appeal arising out of Special Leave Petition (Criminal) No.3415 of 2024; Writ Petition (Criminal) No.217/2025) Case Title: Paramjeet Singh v. State of Himachal Pradesh & Others Appearances: For the Petitioner(s): [Counsel not indicated in the judgment] For the Respondent(s): [Counsel not indicated in the judgment]