Section 420 IPC Cheating different From Agreement to Sell| Latest Supreme Court Judgment 2025

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The Supreme Court's recent judgment in Rikhab Birani & Anr. v. State of Uttar Pradesh & Anr. (2025 INSC 512) underscores a pivotal legal principle: not every breach of contract amounts to the criminal offence of cheating. This decision reinforces the distinction between civil disputes and criminal offences, cautioning against the misuse of criminal law to address civil grievances

Case Overview

In this case, the appellants entered into an oral agreement in June 2020 to sell a godown in Kanpur for ₹1.35 crore. The respondent claimed to have paid ₹19 lakh as part of the sale consideration. However, a cheque of ₹10 lakh issued by the respondent was dishonoured due to insufficient funds. Subsequently, the appellants sold the property to another party for ₹90 lakh, citing the respondent's failure to fulfill the agreement. No civil proceedings were initiated by either party. Instead, the respondent pursued criminal complaints, leading to the registration of an FIR under Sections 420, 406, 354, 504, and 506 of the Indian Penal Code (IPC) .

Supreme Court's Observations

The Supreme Court emphasized that for an offence under Section 420 IPC (cheating) to be established, there must be proof of dishonest intention at the inception of the transaction. Mere failure to honor a contractual commitment does not constitute cheating unless it is shown that the accused had fraudulent intent from the beginning. Similarly, for an offence under Section 406 IPC (criminal breach of trust), there must be evidence of entrustment and subsequent dishonest misappropriation. In this case, the Court found that the essential elements of these offences were not present.

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