“There can be no doubt, a mere breach of contract is not in itself a criminal offence. However, as held by this Court in Hridaya Ranjan Prasad, (2000) 4 SCC 168 the distinction between mere breach of contract and cheating, which is a criminal offence, is a fine one. Breach of contract would amount to cheating where there was any deception played at the very inception [Vesa Holdings, (2015) 8 SCC 293]. The phrase “deception played at the very inception” cannot be read out of context… phrases and sentences in a Judgment are to be understood in the context of the facts and circumstances of the case and the same cannot be read in isolation.

It is neither proper nor permissible for the Court to lay down any straitjacket formula for regulating the inherent power of the High Court under Section 482. Where the accused seeks quashing of a FIR, invoking inherent jurisdiction of the High Court, it is wholly impermissible for the High Court to enter into the factual arena to adjudge the correctness of the allegations in the complaint.

In this case, it cannot be said, there were no allegations which prima facie constitute ingredients of offences under Sections 420, 409 and 34 of The Indian Penal Code. There were clear allegations of fraud and cheating. The correctness of the allegations can be adjudged only when evidence is adduced. It was not for the High Court to enter the factual arena and adjudicate the merits of the allegations. Set aside.”

– Hon’ble Justice Indira Banerjee, V. Ravi Kumar v. Inspector of Police, District Crime Branch, Salem, Tamil Nadu, [Criminal Appeal No. 111 of 2011].

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Also see, Mitesh Kumar J. Sha v. State of Karnataka, [Criminal Appeal No. 1285 of 2021] decided on 26.10.2021.