Mere Breach Of Promise To Repay Does Not Infer Dishonest Intention U/S. 415 IPC: Supreme Court
The Supreme Court allowed an Appeal against the Order of the High Court whereby the Appellant’s prayer for quashing the FIR was refused.
Justice Pamidighantam Sri Narasimha, Justice Joymalya Bagchi, Supreme Court
The Supreme Court quashed an FIR registered under Section 420 of the IPC while reiterating that mere breach of promise to repay per se does not infer dishonest intention.
The Court allowed an Appeal against the Order of the Bombay High Court whereby the Appellant’s prayer for quashing the FIR was refused. The High Court refused to quash the proceeding inter alia holding the allegations prima facie divulged ingredients of an offence under Section 415 of the IPC.
A Bench of Justice Pamidighantam Sri Narasimha and Justice Joymalya Bagchi held, “The High Court came to the conclusion that the appellant had intention to deceive from the inception of the transaction. This reasoning is wholly fallacious. Mere breach of promise to repay per se does not infer dishonest intention.”
AOR Rajat Joseph represented the Appellant, while AOR Aaditya Aniruddha Pande appeared for the Respondent.
Brief Facts
The non-applicant had alleged that the Appellant had misrepresented himself as a "reputed, trustworthy and creditworthy" businessman. Based on this representation, the non-applicant supplied coal to the Appellant on credit. While initial payments were made, a large amount eventually became due.
A notarized agreement was executed, wherein the Appellant agreed to repay the outstanding sum in installments, but failed to do so. This led to the registration of the FIR under Section 420 of the IPC.
Court’s Reasoning
The Supreme Court noted, “Nothing is placed on record to disclose utter insolvency or bankruptcy of the appellant, which he had knowingly suppressed and persuaded the 2nd non-applicant to enter into the commercial arrangement. The High Court erred in not taking into consideration these relevant aspects, which shows the representation of the appellant that he was a creditworthy businessman cannot be labelled as ‘deception’ merely on the ground that the appellant had failed to honour the terms of the subsequent agreement.”
The Bench explained, “In order to attract the penal provision, the uncontroverted allegations including material collected during investigation must disclose that pursuant to the assurance in the subsequent agreement, the 2nd non applicant had parted with property, that is to say made further supplies and suffered wrongful loss. It is nobody’s case after the subsequent agreement further supplies had been made or the 2nd nonapplicant had been subjected to wrongful loss.”
“Vicissitudes in the commercial market are well known. Failure to pay due to unfortunate business losses cannot be clothed with culpability and the process of criminal law utilized to recover outstanding dues,” the Bench remarked.
Consequently, the Court held, “For the aforesaid reasons, the impugned order is set aside and the proceeding arising out of FIR…registered under Section 420 IPC…is hereby quashed.”
Accordingly, the Supreme Court allowed the Appeal.
Cause Title: Manish v. State of Maharashtra & Anr. (Neutral Citation: 2025 INSC 430)
Appearance:
Appellant: AOR Rajat Joseph; Advocates Sailesh Sitani, Hrishikesh Chitaley and Kaustubh Kadasne
Respondent: AOR Aaditya Aniruddha Pande and Venkita Subramoniam T.r; Advocates Yatin M.jagtap and Siddharth Dharmadhikari