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Arshad Neyaz Khan vs. State of Jharkhand & Anr.

Not available · 2025 INSC 1151Decided 24 Sept 2025
Not available
Justice B.V. Nagarathna · Justice R. Mahadevan

Background

The appellant, owner/power-of-attorney holder of certain plots, entered into a 2013 agreement to sell the properties to the complainant for Rs. 43 lakh, receiving a Rs. 20 lakh advance. Nearly eight years later, after the sale was never completed, the complainant filed a criminal complaint and FIR alleging cheating and criminal breach of trust under Sections 406, 420 and 120B IPC. The Jharkhand High Court declined to quash the proceedings, and the appellant approached the Supreme Court.

Decision Breakdown

The Supreme Court held that the allegations, even taken at face value, did not disclose the essential ingredients of either cheating (which requires dishonest intent from the very inception of the transaction) or criminal breach of trust (which requires proof of entrustment followed by dishonest misappropriation). The Court reiterated that cheating and criminal breach of trust are mutually exclusive offences that cannot arise from the same set of facts. It also noted the unexplained eight-year delay in lodging the complaint, the availability of a civil remedy for breach of contract, and cautioned against using criminal law to settle what is essentially a civil/contractual dispute. Applying the guidelines from State of Haryana v. Bhajan Lal, the Court set aside the High Court's order and quashed the complaint, FIR, and all consequent proceedings.

Lesson Learnt

A failed property sale agreement or unpaid dues, by itself, is a civil dispute; criminal proceedings for cheating or breach of trust cannot be used as a shortcut to recover money or pressure the other side unless dishonest intent from the outset (for cheating) or entrustment plus misappropriation (for breach of trust) is clearly shown.

Official source (sci.gov.in)View Judgment (PDF)

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