1. Leave granted.

2. The appellant is the accused in a complaint filed against him by the respondent Company for offence under S.415, 418 and 420 IPC. As per the allegations made in the complaint dated 8-6-2001, filed in the Court of Judicial Magistrate, First Class, Bhor, the appellant was an authorised distributor of the respondent complainant Company for 15 years.

3. The allegations in the complaint are that a memorandum of understanding (MOU) dated 16-8-2000 was executed between the accused and the complainant for the period 16-8-2000 to 30-11-2000, which, inter alia, stipulated that 50% of the payments against monthly quantity would be given in advance and balance 50% on receipt of the goods by M/s Shikhar Enterprises or its sister concern. The accused had two firms, namely, (1) M/s Shikhar Enterprises, and (2) M/s Gulshan Agencies at Delhi. The complainant delivered 56,94,120 reels of steel grip tapes valued at Rs 3,38,62,860 to the accused during the period 19-8-2000 to 20-11-2000 and out of this amount, the accused made only part payment of Rs 3,05,39,086 leaving balance amount of Rs 33,23,774. The allegations are that after making this payment, the accused did not make further payment despite repeated demands and started giving reasons such as cash flow problems, non receipt of right type of colour assortment and sales tax problems, etc., besides raising disputes in respect of the material purchased six years back being defective. After making the aforesaid averments in the complaint, it is concluded that the MOU was signed with mala fide and criminal intention of grabbing money and goods from the complainants Company. The averments made in that regard are as under:

"From the above it is very clear that MOU was signed by the accused with mala fide and criminal intention of grabbing money and goods from the complainants Company and to deceive, cheat and cause wrongful loss to the complainants Company, but the complainant was not aware of the criminal intention of the accused while execution of above MOU."

4. The complainant had also sent a notice dated 9-4-2001 to the accused, the relevant part whereof reads as under:

"As per record my client has delivered reels of steel grip tapes of Rs 2,56,70,834. Against that you paid only Rs 2,09,91,559 to my client. For balance amount my client is repeatedly demanding you through telephone and writing letters to you but still you are not responding to it. By your said act my client is suffering major loss in his above business. So at end my client has decided to issue this legal notice to you. So I am informing you by this notice that within 8 days after receiving this notice by you, you should arrange to pay Rs 46,79,275 which are due from you to my client. My client is also demanding simple interest at the rate of 10% on above amount for loss of interest. If you failed to act upon as per notice, my client will take necessary action against you and you will be held responsible for all expenditure of it. Legal charges of this notice are kept on you."

In the aforesaid notice, there is no whisper about any deceit or cheating. On 3-5-2001, a complaint was filed by the complainant with Bhor Police Station where except a vague allegation about cheating, nothing of substance was stated. It would be useful to reproduce, as under, the said complaint:

"Shri Anil Mahajan is the dealer of the Company for goods. That by an agreement dated 12-8-2000 the said dealer has supplied the goods by the Company worth 42,60,660 reels (tapes) the price of which is about Rs 2,56,70,834 from 21-8-2000 to 30-11-2000. Out of that amount he has returned only Rs 2,09,91,559 and the remaining amount of Rs 46,79,257 is outstanding for recovery against him. In spite of repeated demands the said person has not paid the said amount. Consequently summons should be sent to him and criminal proceedings may kindly be started against Shri Anil Mahajan, the dealer. He has done cheating with the Company."

5. According to the complainant, on the advice of the police the complaint in question was filed. Learned Magistrate by order dated 25-6-2001 issued the process against the accused. The order of the Magistrate notices that the complainant has filed the documents on record in which the accused has promised to pay the amount but has not paid with the intent to deceive the complainant and, therefore, the complainant has made out a case to issue process against the accused under S.415, 418 and 420 IPC.

6. The order of the Magistrate was challenged before the Court of Session. The learned Additional Sessions Judge, Pune, by order dated 19-10-2001 has set aside the order of the Magistrate issuing process. It has been stated by the learned Additional Sessions Judge in the order that:

"In this case there is no allegation that the accused made unlawful representation. Even, according to the complaint, they entered into memorandum of understanding. Grievance seems to be that the accused failed to discharge obligations under the MOU. In the complaint, there was no allegation that there was fraud or dishonest inducement on the part of the applicant and thereby the opponent parted with the property."

Reliance has been placed, in that order, on various decisions of this Court holding that from mere failure of a person to keep up promise subsequently, a culpable intention right at the beginning, that is, when he made the promises cannot be presumed. A distinction has to be kept in mind between mere breach of contract and the offence of cheating. It depends upon the intention of the accused at the time of inducement. The subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent, dishonest intention is shown at the beginning of the transaction.

7. The order of the learned Additional Sessions Judge has been set aside by the High Court by the impugned judgment. The High Court, except noticing that the ratio of the judgment of this Court cannot be applied to all cases in a uniform way, has neither discussed the said judgment nor stated as to how it was wrongly applied by the learned Additional Sessions Judge. There is hardly any discussion in the impugned judgment for reversing a well considered judgment of the learned Additional Sessions Judge.

8. The substance of the complaint is to be seen. Mere use of the expression "cheating" in the complaint is of no consequence. Except mention of the words "deceive" and "cheat" in the complaint filed before the Magistrate and "cheating" in the complaint filed before the police, there is no averment about the deceit, cheating or fraudulent intention of the accused at the time of entering into MOU wherefrom it can be inferred that the accused had the intention to deceive the complainant to pay. According to the complainant, a sum of Rs 3,05,39,086 out of the total amount of Rs 3,38,62,860 was paid leaving balance of Rs 33,23,774. We need not go into the question of the difference of the amounts mentioned in the complaint which is much more than what is mentioned in the notice and also the defence of the accused and the stand taken in reply to notice because the complainants own case is that over rupees three crores was paid and for balance, the accused was giving reasons as above noticed. The additional reason for not going into these aspects is that a civil suit is pending inter se the parties for the amounts in question.

9. In Alpic Finance Ltd. v. P. Sadasivan (2001 (3) SCC 513 [LQ/SC/2001/433] : 2001 SCC (Cri) 565 [LQ/SC/2001/433] ) this Court was considering a case where the complainant had alleged that the accused was not regular in making payment and committed default in payment of instalments and the bank had dishonoured certain cheques issued by him. Further allegation of the complainant was that on physical verification certain chairs were found missing from the premises of the accused and thus it was alleged that the accused committed cheating and caused misappropriation of the property belonging to the complainant. Noticing the decision in the case of Nagawwa v. Veeranna Shivalingappa Konjalgi (1976 (3) SCC 736 [LQ/SC/1976/191] : 1976 SCC (Cri) 507 [LQ/SC/1976/191] ) wherein it was held that the Magistrate while issuing process should satisfy himself as to whether the allegations in the complaint, if proved, would ultimately end in the conviction of the accused, and the circumstances under which the process issued by the Magistrate could be quashed, the contours of the powers of the High Court under S.482 CrPC were laid down and it was held:

"10. The facts in the present case have to be appreciated in the light of the various decisions of this Court. When somebody suffers injury to his person, property or reputation, he may have remedies both under civil and criminal law. The injury alleged may form the basis of civil claim and may also constitute the ingredients of some crime punishable under criminal law. When there is dispute between the parties arising out of a transaction involving passing of valuable properties between them, the aggrieved person may have a right to sue for damages or compensation and at the same time, law permits the victim to proceed against the wrongdoer for having committed an offence of criminal breach of trust or cheating. Here the main offence alleged by the appellant is that the respondents committed the offence under S.420 IPC and the case of the appellant is that the respondents have cheated him and thereby dishonestly induced him to deliver property. To deceive is to induce a man to believe that a thing is true which is false and which the person practising the deceit knows or believes to be false. It must also be shown that there existed a fraudulent and dishonest intention at the time of commission of the offence. There is no allegation that the respondents made any wilful misrepresentation. Even according to the appellant, the parties entered into a valid lease agreement and the grievance of the appellant is that the respondents failed to discharge their contractual obligations. In the complaint, there is no allegation that there was fraud or dishonest inducement on the part of the respondents and thereby the respondents parted with the property. It is trite law and common sense that an honest man entering into a contract is deemed to represent that he has the present intention of carrying it out but if, having accepted the pecuniary advantage involved in the transaction, he fails to pay his debt, he does not necessarily evade the debt by deception.

11. Moreover, the appellant has no case that the respondents obtained the article by any fraudulent inducement or by wilful misrepresentation. We are told that the respondents, though committed default in paying some instalments, have paid substantial amount towards the consideration." (emphasis supplied by us)

10. We have examined the complaint and it is clear from its substance that present is a simple case of civil disputes between the parties. Requisite averments so as to make out a case of cheating are absolutely absent. The principles laid down in Alpic Finance Ltd. case (2001 (3) SCC 513 [LQ/SC/2001/433] : 2001 SCC (Cri) 565 [LQ/SC/2001/433] ) were rightly applied by learned Additional Sessions Judge and it cannot be said that the ratio of the said decision was wrongly applied. On due consideration, the learned Additional Sessions Judge had rightly set aside the order of the Magistrate issuing process to the appellant.

11. For the aforesaid reasons, we set aside the impugned judgment and restore that of the Additional Sessions Judge.

12. The appeal is allowed accordingly.