JUDGMENT : 1. By this application under Section 482 of the Code of Criminal Procedure, 1973, the applicant seeks to invoke inherent powers of this Court, praying for quashment of the chargesheet, filed in connection with the FIR being C.R.No.I-37 of 2016 registered with Gorva Police Station, Vadodara for the offences punishable under Sections 406, 420, 504 and 506(1) of the Indian Penal Code. 2. Facts and circumstances giving rise to file present application are that the applicant - Nilesh Seth is the Director and/or owner of M/s.Nivida Web Solution Pvt. Ltd. doing business in the I.T. Sector at Vadodara. Respondent no.2 – Future Link Visa Consultant Pvt. Ltd. is doing Visa Consultancy Work and rendering coaching for different foreign courses. Respondent no.2 approached the applicant for designing and development of a website for online application system for CAIPS/FOSS/GCMS. Parties entered into mutual agreement on 13.02.2015 and 30 days’ time limit was agreeable to the parties. Initial payment as agreed was made by the respondent no.2- complainant. Respondent no.2 lodged an FIR against the applicant under Sections 406, 420, 504 and 506(1) of the Indian Penal Code stating inter alia that despite making a full payment, the applicant herein failed to develop website as per the terms and conditions of the agreement and repeatedly asked to pay more amount despite the payment of additional amount, the applicant herein failed to provide software for the web-portal and also did not redesign the website. It is further alleged that the complainant was lured to part with the money and with dishonest intention, made a false promise to develop the website, thereby, he has committed offence of cheating and criminal breach of trust. 3. In the aforesaid facts, the FIR came to be registered against the applicant herein and after completion of investigation, chargesheet came to be filed against the applicant for the offences as referred hereinabove. 4. The applicant herein preferred the instant application invoking inherent powers of this Court, seeking quashment of the criminal proceedings mainly on the ground that merely a breach of contract cannot give rise to a criminal proceedings for cheating and criminal breach of trust and therefore, the allegations levelled, do not prima facie constitute an offence under Sections 406, 420, 504 and 506(1) of the Indian Penal Code. 5. 5. This Court has heard Mr.J.M. Malkan, learned advocate appearing for and on behalf of the applicant herein, Mr.P.P. Majmudar, learned advocate appearing for respondent no.2 and Ms.Vrunda Shah, learned APP for the respondent-State. 6. Mr.J.M. Malkan, learned advocate has urged that in order to attract the offence of criminal breach of trust, defined in Section 405 of the IPC, the complainant has to prima facie establish that the accused must have been entrusted with the property and must have misappropriated the property in violation of the trust and therefore, an offence under Section 405 can be said to have been committed only when all the ingredients of offence as defined in the statute are found to have been satisfied. In the facts of present case, nothing being alleged that at the time of making money, fraudulent intention was there on the part of applicant-accused. 7. Mr.Malkan further submitted that in the facts of present case, it is alleged that the applicant accused has breached the terms of the contract, however, every failure in complying with the terms of the agreement, would not attract the provisions of cheating and criminal breach of trust. 8. Mr.Malkan further submitted that looking to the averments made in the complaint, essential ingredients of cheating as defined in Section 415 of the IPC are not attracted; that before lodgement of the FIR, respondent no.2-complainant served a notice through his lawyer called upon the applicant herein either complying with the conditions of the contract or return back the paid amount. Pursuant to the notice, the applicant herein replied to the notice wherein it is alleged that the complainant made default and has breached the terms and conditions of the agreement. In the reply, it is specifically stated that the applicant herein provided services and website was made live as well as at www.caipsfile.ca/profile/admin and user login at www.caipsfile.ca/profile/login. Initially the website developed only for respondent and his agent and thereafter, they asked for additions in the website to enable college module, bank management module and same was developed with a condition to make further amount and accordingly, it was paid by the respondent. Initially the website developed only for respondent and his agent and thereafter, they asked for additions in the website to enable college module, bank management module and same was developed with a condition to make further amount and accordingly, it was paid by the respondent. It is further replied in the notice that the complainant again approached the applicant herein for further development of website and accordingly, the web application CAIPS developed by the applicant herein and thereafter, also for the third time, they asked for further development for which necessary inputs as required having not been provided and balance amount payable pursuant to the second and third round of development were also still due to the complainant. 9. In the aforesaid contentions, Mr.Malkan, learned advocate submitted that there was no intention on the part of the applicant herein to induce the complainant to part with the money, but after successful completion of the designing of the website, the respondent – complainant repeatedly demanded the development of the website for the other segment of the business for which they failed to make balance amount. Thus, there was no intention to cheat from the inception of the transaction and therefore, the requirement of Sections 405 and 415 for the commission of the offence, criminal breach of trust and cheating would be satisfied. 10. Lastly he submitted that the entire dispute is of business transaction and essentially a civil dispute which has been given a colour of criminal offence to exert the pressure on the applicant herein to settle the dispute. 11. In support of aforesaid contentions, he has relied on the following judgments: (i) Sushil Sethi and others Vs. State of Arunachal Pradesh and others (AIR 2020 Supreme Court 765); (ii) V.Y. Jose and another Vs. State of Gujarat ( 2009 (3) SCC 78 ); (iii) Vesa Holdings Pvt. Ltd. and others. Vs. State of Kerala ( 2015(8) SCC 293 ); 12. In the aforesaid background facts and considering the law laid down by the Apex Court in the aforesaid judgment, Mr.Malkan would submit that there is no allegation in the FIR that accused-applicant acted in dishonest and fraudulent intention from the very inception of the contract with the complainant and considering the dispute, relates to breach of conditions of the contract, which is essentially a civil in nature. Thus, therefore, he prays that the allegations leveled in the FIR and chargesheet, even if they are taken at their face value and accepted in their entirety do not prima facie constitute an offence under Sections 406 and 420 of the IPC and same is nothing but an abuse of process of law and Court. 13. On the other hand, Mr.P.P. Majmudar, learned counsel appearing for the complainant as well as Ms.Vrunda Shah, learned APP for the respondent - State, have vehemently opposed the prayer of quashing and contended that existence of a civil remedy is no bar to initiation of criminal proceedings if the prima facie offences are made out for the cheating and criminal breach of trust. That grounds urged by learned counsel for the applicant are nature of their defence which can only be examined during the trial; that the applicant herein after receiving the substantial amount of Rs.1,10,000/- failed to provide necessary services for development of the website, in a time frame manner, therefore, considering the facts, may give rise to civil claim and also amount to an offence. Thus, merely because a civil claim is maintainable does not mean that criminal complaint cannot be maintained. 14. Mr.Majmudar, would further submit that after investigation, the chargesheet in the case has been filed against the applicant herein. Thus, when the allegations made in the FIR and chargesheet case papers prima facie disclosed an offence of cheating and criminal breach of trust, no case is made out for exercising inherent powers of this Court. 15. In support of the aforesaid contentions and relying on the decisions of the Apex Court (i) Trisuns Chemicals Industry Vs. Rajesh Agarawal, ( 1999 (8) SCC 686 )) and (ii) Lalmuni Devi Vs. State of Bihar ( 2001 (2) SCC 17 ), it is prayed to dismiss present application. 16. Having regard to the facts and circumstances of present case, issue arises for determination is whether the case has been made out to quash the FIR and chargesheet against the applicant for the offences under Sections 406, 420, 504 and 506(1) of the IPC in exercise of powers of Section 482 of the Code of Criminal Procedure. 17. Before adverting to the merits of the submissions, it would be worthwhile to reproduce Sections 405 and 420 of the IPC which define criminal breach of trust and cheating as under: “405. 17. Before adverting to the merits of the submissions, it would be worthwhile to reproduce Sections 405 and 420 of the IPC which define criminal breach of trust and cheating as under: “405. Criminal breach of trust.—Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits “criminal breach of trust”.” "420. Cheating and dishonestly inducing delivery of property.- Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine." 18. In order to attract allegations of "cheating", following things must exist: (i) deception of a person; (ii) (A) fraudulent or dishonest inducement of that person, (a) to deliver any property to any person; or, (b) to consent that any person shall retain any property, (B) intentional inducing that person to do or omit to do any thing, (a) which he would not do or omit if he was not so deceived, and, (b) such act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property. 19. Then in order to attract Section 420 I.P.C., essential ingredients are: (i) cheating; (ii) dishonest inducement to deliver property or to make or destroy any valuable security or any thing which is sealed or signed or is capable of being converted into a valuable security; and, (iii) mens rea of accused at the time of making inducement and which act of omission. 20. The Apex Court time and again in its various judgments held that mere a breach of contract is not an offence. Failure to honour promise is not cheating. 20. The Apex Court time and again in its various judgments held that mere a breach of contract is not an offence. Failure to honour promise is not cheating. Subsequent non-fulfillment of promise is no cheating unless dishonest intention exists from the inception of the transaction. 20.1 In Mahadev Prasad Vs. State of West Bengal (1954 AIR Supreme Court 724), it was observed that to constitute an offence of cheating, intention to deceive should be in existence at the time when inducement was offered. 20.2 In Jaswantray Manilal Vs. State of Bombay (1956 AIR Supreme Court 575), the Apex Court said that a guilty intention is an essential ingredient of the offence of cheating. For the offence of cheating “mens rea” on the part of the person must be established. 20.3 In G.A. Rao Vs. L.H.V. Prasad and others ( 2000 3 SCC 693 ), Court said that Section 415 has two parts. While in the first part, the person must "dishonestly" or "fraudulently" induce the complainant to deliver any property and in the second part the person should intentionally induce the complainant to do or omit to do a thing. In other words in the first part, inducement must be dishonest or fraudulent while in the second part, inducement should be intentional. 20.4 In Hridaya Ranjan Prasad Verma and others Vs. State of Bihar and another ( 2000 4 SCC 168 ), Court said that in the definition of 'cheating', there are two separate classes of acts which the person deceived may be induced to do. In the first place he may be induced fraudulently or dishonestly to deliver any property to any person. The second class of acts set forth in the section is the doing or omitting to do anything which the person deceived would not do or omit to do if he were not so deceived. In the first class of cases, inducement must be fraudulent or dishonest. In the second class of acts, the inducement must be intentional but not fraudulent or dishonest. It was pointed out that there is a fine distinction between mere breach of contract and the offence of cheating. It depends upon the intention of the accused at the time to inducement which may be judged by his subsequent conduct but for this, subsequent conduct is not the sole test. It was pointed out that there is a fine distinction between mere breach of contract and the offence of cheating. It depends upon the intention of the accused at the time to inducement which may be judged by his subsequent conduct but for this, subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, that is the time when the offence is said to have been committed. Therefore it is the intention which is the gist of the offence. In order to hold a person guilty of cheating it would be obligatory to show that he had fraudulent or dishonest intention at the time of making the promise. Mere failure to keep up promise subsequently such a culpable intention right at the beginning, i.e, when he made the promise cannot be presumed. 20.5 In Hira Lal Hari Lal Bhagwati Vs. CBI, New Delhi ( 2003 (5) SCC 257 ), Court said that to hold a person guilty of cheating under Section 415 IPC it is necessary to show that he has fraudulent or dishonest intention at the time of making promise with an intention to retain property. The Court further said that Section 415 of the Indian Penal Code which defines cheating, requires deception of any person (a) inducing that person to: (i) to deliver any property to any person, or (ii) to consent that any person shall retain any property OR (b) intentionally inducing that person to do or omit to do anything which he would not do or omit if he were not so deceived and which act or omission causes or is likely to cause damage or harm to that person, anybody's mind, reputation or property. In view of the aforesaid provisions, the appellants state that person may be induced fraudulently or dishonestly to deliver any property to any person. The second class of acts set forth in the Section is the doing or omitting to do anything which the person deceived would not do or omit to do if he were not so deceived. In the first class of cases, the inducing must be fraudulent or dishonest. In the second class of acts, the inducing must be intentional but not fraudulent or dishonest. 20.6 In Vir Prakash Sharma Vs. In the first class of cases, the inducing must be fraudulent or dishonest. In the second class of acts, the inducing must be intentional but not fraudulent or dishonest. 20.6 In Vir Prakash Sharma Vs. Anil Kumar Agarwal and another ( 2007 (7) SCC 373 ), it was held that if no act of inducement on the part of accused is alleged and no allegation is made in the complaint that there was any intention to cheat from the very inception, the requirement of Section 415 read with Section 420 IPC would not be satisfied. The Court relied on the earlier decisions in Hridaya Ranjan Prasad Verma (supra) and Indian Oil Corporation Vs. NEPC India Ltd.(supra). 20.7 In the case of Anil Mahajan Vs. Bhor Industries Ltd ( 2005 (10) SCC 228 ), the Apex Court laid down a distinction between a mere breach of contract and the offence of cheating. It reads as 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. 21. In Vesa Holdings P. Ltd. and others Vs. State of Kerala and others ( 2015 (8) SCC 293 ), the Apex Court held that every breach of contract would not give rise to an offence of cheating and only in those cases, breach of contract would amount to cheating where, there was any deception played at the very inception. If the intention to cheat as developed later on, the same cannot amount to cheating. On other words, for the purpose of constituting an offence of cheating, the complainant is required to show that the accused had fraudulent and dishonest intention at the time of making promise or representation. Even in a case where the allegations are made in regard to failure on the part of the accused to keep his promise, in the absence of culpable intention at the time of initial promise being absent, no offence under Section 420 of the IPC can be said to have been made out. 22. Even in a case where the allegations are made in regard to failure on the part of the accused to keep his promise, in the absence of culpable intention at the time of initial promise being absent, no offence under Section 420 of the IPC can be said to have been made out. 22. In light of the settled principle of law enunciated by the Apex Court in its various judgments and applying to the facts of the case on hand, I am of the opinion that no any allegation levelled in the FIR to the effect that the applicant acted in dishonest and fraudulent intention in relation to the breach of the conditions of the contract and no averments made in the complaint that he had fraudulent and dishonest intention at the time of making promise to develop website. On reading of the FIR, and considering the chargesheet case papers, it appears that during the subsisting of the contract, Rs.1,10,000/- in two parts paid by the complainant. Prior to registration of the FIR, two advocate notice were being served upon the applicant herein and same was replied by the applicant herein. It needs to be noted that in the FIR, the facts of notices and reply thereof having not been disclosed by the complainant. The main allegation is to the effect that from 14.11.2014 to till date of the FIR, the applicant failed to develop a website, as agreed and at the later stage, additional demand of money was made. In order to appreciate the allegations in the FIR, the reply of notice given by the applicant herein also required to be considered. This Court is conscious about the settled law that, while dealing with the matter of quashing of the FIR, the Court has to consider whether the uncontroverted allegations made in the complaint prima facie established the case and the Court at this stage would not consider the defence of the accused. In the case of Cargo Movers(I) Pvt. Ltd. Vs. Dhanesh Bhadarmal Jain (AIR 2008 247 Supreme Court), the Apex Court held that for exercising inherent jurisdiction of the High Court, the Court can look into admitted documents to determine the issue. It is further held that the criminal proceedings should not be encouraged when it is found to be malafide or otherwise an abuse of process of the Court. Dhanesh Bhadarmal Jain (AIR 2008 247 Supreme Court), the Apex Court held that for exercising inherent jurisdiction of the High Court, the Court can look into admitted documents to determine the issue. It is further held that the criminal proceedings should not be encouraged when it is found to be malafide or otherwise an abuse of process of the Court. Superior Court exercising this power should also strive to serve the ends of justice. Thus, in the facts on hand, the parties have not produced the copy of the MOU. Copies of the notice and reply thereof placed on record by the accused herein, which are not disputed documents. In such circumstances, after receiving of amount of Rs.1,10,000/- from the complainant, he again assigned the task of further development of website and accordingly, after the MOU, parties have agreed to develop website on the basis of agreeable amount and subsequently, dispute arises with respect to non-providing of necessary particulars from the complainant as well as the balance amount for the addition and modification of the website. So far first project of the website is concerned, it is stated in the reply of the notice that it has become functional. 23. For the foregoing reasons, it is a simple case of breach of contract of reciprocal promises and therefore, the allegations of failure on the part of the applicant-accused to keep his promise, in the absence of intention at the time of entering into contract, prima facie the allegations made in the FIR and chargesheet case papers, taken at their face value to be true, do not constitute an offence criminal breach of trust, cheating and criminal intimidation. The case on hand is fully covered by the categories (i), (ii) and (vii), as enumerated by the Apex Court in the case of State of Haryana Vs. Bhajanlal (AIR 1992 Supp. (1) SCC 345). 24. Resultently, application is allowed. The FIR being C.R.No.I- 37 of 2016 registered with Gorva Police Station, Vadodara and consequential proceedings therefrom are quashed. Rule is made absolute accordingly. Direct Service is permitted.