Breach Of Contract Alone Not Cheating, Observes HC

Nagpur: The Nagpur bench of Bombay high court recently quashed a cheating case arising from a 5 crore pharmacy investment dispute, observing that mere breach of contract cannot amount to a criminal offence unless "fraudulent or dishonest intention is shown right from the beginning of the transaction".Justice Vrushali Joshi set aside an FIR registered by Sitabuldi police against a city doctor for alleged cheating, criminal breach of trust and criminal intimidation, ruling the dispute was "essentially of civil nature" and already pending before a competent civil court.The case stemmed from a 2019 agreement in which respondent and his associates invested over 5.14 crore to run a pharmacy at a hospital. The agreement promised monthly business between 60 lakh and 90 lakh, with 18% revenue share payable to the hospital owner. However, the complainant alleged financial losses, non-fulfilment of assurances, and opening of parallel pharmacy, eventually leading to closure of the venture.Petitioner doctor, who filed the case through senior counsel Sunil Manohar along with Adil Mirza and Masood Sharif, however, argued the complainant defaulted on agreed payments and breached contractual obligations, prompting a civil suit for eviction, recovery of dues and damages filed in 2023, which remains pending.The court noted that an earlier complaint on the same issue was closed by police, advising parties to pursue civil remedies. Yet, a subsequent complaint led to the registration of FIR.Calling this sequence "surprising", the judge observed "dispute between the petitioner and third respondent is a civil litigation," and termed the second FIR an apparent "arm-twisting tactic".Citing SC precedents, court reiterated that "criminal process cannot be utilised for any oblique purpose" and proceedings should be quashed where chances of conviction are "bleak" and continuation would amount to abuse of process.Rejecting allegations of fraud, court found no evidence of dishonest intent at inception of transaction, noting a formal MoU and subsequent agreements reflected a commercial arrangement. Court quashed the FIR against petitioner, subject to a cost of 25,000 to be deposited with the court's public welfare account within 2 weeks.
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