News Citation : 2026 LN (HC) 27
Ranchi, January 09, 2026 : The High Court of Jharkhand has quashed criminal proceedings initiated against two partners of a Raipur-based industrial firm, holding that a dispute arising out of non-payment for goods supplied was purely civil in nature and did not attract criminal liability under the Indian Penal Code.
Justice Anil Kumar Choudhary passed the order while allowing a criminal miscellaneous petition filed by Ravi Vaswani and Yashwant Vaswani, partners of M/s Kwality Industries. The petition challenged the continuation of C.P. Case No. 248 of 2022 pending before a Judicial Magistrate in Dhanbad, in which cognizance had been taken for offences under Sections 406 and 420 IPC.
The case originated from a complaint filed by a coal-supplying company, alleging that the accused had purchased coal over a considerable period but failed to clear outstanding dues amounting to about ₹11.92 lakh. Based on the complaint, statements on solemn affirmation, and inquiry witnesses, the trial court had summoned the accused for criminal breach of trust and cheating.
After hearing the parties and examining the record, the High Court noted that the business relationship between the parties had continued for a long time and payments were regularly made, though in round figures. There was no allegation that the accused had any dishonest intention at the inception of the transactions, which is a mandatory requirement to constitute an offence of cheating under Section 420 IPC.
Relying on settled Supreme Court precedents, the Court reiterated that mere non-payment or underpayment of the price of goods does not amount to cheating or criminal breach of trust. Justice Choudhary observed that every breach of contract cannot be given a criminal colour and that criminal law should not be used as a pressure tactic in disputes that are essentially civil.
The Court further held that the offence under Section 406 IPC was also not made out, as there was no allegation of dishonest misappropriation of entrusted property. The dispute, at best, involved recovery of money arising out of a commercial transaction, for which the appropriate remedy lay in civil law.
Concluding that the continuation of the criminal case would amount to an abuse of the process of law, the High Court quashed the entire criminal proceeding, including the order taking cognizance dated July 6, 2023, insofar as it related to the petitioners. The petition was accordingly allowed by an order dated January 5, 2026.
Case Reference: Cr.M.P. No. 1706 of 2024, Ravi Vaswani, Raipur & Another v. State of Jharkhand & Another; Counsel for the Petitioners: Mr. Anurag Kashyap, Advocate; Counsel for the State: Mr. Sunil Kr. Dubey, Additional Public Prosecutor.
