Parag Kishore Satoskar And Others Vs State of Jharkhand And Another (Supreme Court of India)
A Breach of Contract Is Not a Crime and Criminal Law Is No Debt-Recovery Agent; Commercial Dispute Cannot Be Used to Recover Money Through Criminal Proceedings: Supreme Court Quashes FIR
In Parag Kishore Satoskar & Others v. State of Jharkhand & Another, the Supreme Court quashed an FIR registered under sections 316(2), 318(4) and 3(5) of the Bharatiya Nyaya Sanhita, 2023, concerning alleged criminal breach of trust and cheating arising from a distributorship agreement.
The informant was appointed distributor of “Saraswati” camphor and claimed to have advanced ₹73 lakh to the manufacturer. Goods worth ₹31.49 lakh were supplied, but supplies were subsequently stopped following a pricing dispute. Alleging that the balance ₹41.51 lakh was neither adjusted nor refunded, the informant initiated criminal proceedings against the company’s senior officials and employees.
The Supreme Court held that the allegations disclosed a commercial dispute concerning price, supply and settlement of accounts, and not a criminal offence.
For the offence of cheating under section 318(4) BNS, fraudulent or dishonest intention must exist at the inception of the transaction. The FIR contained no allegation that the company never intended to grant the distributorship or supply goods. On the contrary, the agreement was executed, distributorship was granted and goods worth ₹31.49 lakh were actually supplied. Mere subsequent termination or breach of contract could not establish cheating.
