Satishchandra Ratanlal Shah v. State of Gujarat Case Law Summary

Satishchandra Ratanlal Shah v. State of Gujarat Case Law Summary - 

In the case of Satishchandra Ratanlal Shah v. State of Gujarat and Another [Criminal Appeal No.9 of 2019], while considering a dispute arising out of a loan transaction between the appellant and respondent no.2-complainant (Director of money lending company), the Supreme Court came to examine the charge under Section 415 IPC punishable under Section 420 IPC. It was held that, on facts, “the mere inability of the appellant to return the loan amount cannot give rise to a criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, as it is this mens rea which is the crux of the offence.”

The Court held that “in the context of contracts, the distinction between mere breach of contract and cheating would depend upon the fraudulent inducement and mens rea” and in the case at hand, even if all the facts in the complaint and material were “taken on their face value, no such dishonest representation or inducement could be found or inferred.”

It was held that “the legislature intended to criminalize only those breaches which are accompanied by fraudulent, dishonest or deceptive inducements, which resulted in involuntary and in-efficient transfers, under Section 415 of IPC.” Accordingly, the application filed by the appellant under Section 482 of Cr.P.C. was allowed and the proceedings initiated based on the FIR instituted at the instance of respondent no. 2 were quashed.


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