PARAG KISHORE SATOSKAR VS. STATE OF JHARKHAND

2026 INSC 846Page 1 of 15

NON REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. OF 2026

[ARISING OUT OF SLP (CRL.) NO.3933 OF 2025]

PARAG KISHORE SATOSKAR

AND OTHERS … APPELLANT(S)

VERSUS

STATE OF JHARKHAND

AND ANOTHER … RESPONDENT(S)

WITH

CRIMINAL APPEAL NO. OF 2026

(ARISING OUT OF SLP (CRL.) NO. 3996 OF 2025)

J U D G M E N T

AUGUSTINE GEORGE MASIH, J.

1. Leave granted.

2. These appeals arise from the common judgment and

order dated 19.02.2025 passed by the High Court of

Jharkhand at Ranchi in W.P. (Cr.) No. 1041 of 2024 and

W.P. (Cr.) No. 1042 of 2024, by which the High Court

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declined to quash the first information report registered

as Kotwali P.S. Case No. 323 of 2024 for the offences

punishable under Sections 316(2), 318(4) and 3(5) of the

Bharatiya Nyaya Sanhita, 2023 (for short, “the BNS”),

and dismissed both the writ petitions. As the two appeals

assail a common judgment and are directed against one

and the same first information report, they are being

disposed of by this common judgment.

3. The respondent No. 2, the original informant, is the sole

proprietor of M/s D.K. Enterprises, a firm carrying on

wholesale trade in camphor at Ranchi. M/s Oriental

Aromatics Limited (for short, “the Company”)

manufactures specialty aroma chemicals and camphor.

The appellants in the appeal arising out of S.L.P.

(Criminal) No. 3996 of 2025 are its Chairman and

Managing Director and its Executive Director while those

in the appeal arising out of S.L.P. (Criminal) No. 3933 of

2025 are its Chief Executive Officer, Chief Operations

Officer and a clerk. On 26.11.2024, upon the written

information of the respondent No. 2, Kotwali P.S. Case

No. 323 of 2024 came to be registered at Police Station

Ranchi Kotwali, District Ranchi, naming the five

appellants before us as the accused.

Page 3 of 15

4. The case set up in the first information report, shortly

stated, is as follows. The respondent No. 2 was offered the

distributorship of ‘Saraswati’ camphor for the State of

Jharkhand by the Company with effect from 01.04.2024

to 01.04.2027, and over these three years he would have

to pay Rs. 20,00,000/- and in return for which he would

receive many kinds of gifts and benefits. He transferred

Rs. 52,000/- as token money in December 2023. An

agreement was thereafter drawn up on 29.03.2024 for the

term 01.04.2024 to 01.04.2027, which he signed and

returned on 04.05.2024. He paid Rs. 73,00,000/- as

advance in six remittances made between 04.04.2024

and 26.06.2024, against which goods worth Rs.

31,49,167/- were supplied under four bills. Thereafter,

upon his raising the question of the lower rate at which

goods were supplied to others as compared to respondent

No.2, the Company stopped supplies, demanded more

money, and neither sent the goods nor returned the

balance of Rs. 41,50,833/-.

5. The submission urged on behalf of the appellants was

that the first information report, read as a whole and

accepted at its face value, discloses no more than a

dispute over price, supply and accounts arising out of a

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written commercial contract, to which a criminal overtone

has been imparted.

6. Learned counsel for the respondent No. 2, on the other

hand, submitted that the appellants have endeavoured to

portray a course of deliberate conduct as a mere

contractual dispute, and that the intention to deceive is

writ large in the termination of an agreement intended to

run for three years within about a month and a half,

without forewarning and upon dues said to be fictitious.

Reliance was placed upon C.S. Prasad v. C.

Satyakumar1 and Neeharika Infrastructure Pvt. Ltd.

v. State of Maharashtra2, for the propositions that civil

and criminal liability may arise from the same set of facts,

that a first information report is not required to be an

encyclopaedia, and that a legitimate investigation into a

cognizable offence ought not to be thwarted. The learned

Standing Counsel for the State adopted these

submissions and added that the investigation is at a

seminal stage and should be permitted to run its course.

7. Having heard the learned senior counsel for the

appellants in both the appeals, the learned counsel for

1 2026 INSC 39

2 (2021) 4 SCR 1044

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the respondent No. 2 and the learned Standing Counsel

for the State of Jharkhand, and having perused the

impugned judgment and the documents placed on

record, the questions that fall for our consideration are:

(i) Whether the allegations made in the first

information report, taken at their face value when

accepted in their entirety, disclose the commission

of the offences alleged.

(ii) Whether a civil/commercial dispute between the

parties has been sought to be given a criminal

overtone, if yes, the consequence thereof.

8. Section 318(4) of the BNS, which provides for the

punishment for cheating, corresponds to Section 420 of

the Indian Penal Code, 1860 (for short, “the IPC”); and

Section 316(2) BNS i.e. criminal breach of trust, to

Section 406 IPC.

9. This Court while dealing with the core and essence of the

offence of cheating in Delhi Race Club (1940) Ltd. v.

State of U.P.3, elaborated in Para 30, the relevant extract

reads as under:

“30. ….. In case of cheating, the intention of the accused

at the time of inducement should be looked into which

3 (2024) 10 SCC 690

Page 6 of 15

may be judged by a subsequent conduct, but for this, the

subsequent conduct is not the sole test. Mere breach of

contract cannot give rise to a criminal prosecution for

cheating unless fraudulent or dishonest intention is

shown right from the beginning of the transaction i.e. the

time when the offence is said to have been committed.

Therefore, it is this intention, which is the gist of the

offence.”

10. This principle is not new. In Hridaya Ranjan Prasad

Verma v. State of Bihar4, this Court, while dealing with

a complaint arising out of a transaction of sale of land,

held that a culpable intention at the time of making a

promise cannot be presumed from the mere failure to

keep it; where the averments in the complaint, when read

in their entirety and accepted as true, neither expressly

state nor indirectly suggest an intentional deception at

the beginning of the negotiations. The core postulate of

dishonest intention in such a situation is not made out.

The continuance of the proceeding in such a case would

be an abuse of the process of the court.

11. The guiding principles with regard to the exercise of

powers by the High Court under Article 226 and Section

482 CrPC have been laid down by this Court in State of

Haryana v. Bhajan Lal5, where in paragraph 102, it was

4 (2000) 4 SCC 168

5 1992 Supp (1) SCC 335

Page 7 of 15

set out illustratively, and not exhaustively, the categories

of cases where such power can be exercised to prevent

abuse of the process of any court or otherwise to secure

the ends of justice. The category which would cover the

case in hand would be the following:

“(1) Where the allegations made in the first information report

or the complaint, even if they are taken at their face value and

accepted in their entirety do not prima facie constitute any

offence or make out a case against the accused.”

12. The above category of cases call for no assessment of the

truth of the allegations and no weighing of evidence. It

requires only that the allegations be read as they stand

and measured against the ingredients of the offence

alleged. Where they fall short of the test, the deficiency is

one of law, and no investigation can supply an averment

that the informant has not made. The power is, of course,

to be exercised sparingly and with circumspection.

13. So measured, the first information report in the case at

hand is wanting in the essentials of the offence

punishable under Section 318(4) of the BNS. It contains

no averment of fact from which a dishonest intention at

the inception could be inferred. It is not alleged that the

offer of distributorship was made without any intention

of conferring it or that the appellants knew, when the

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agreement was drawn up or when any of the six

remittances was received, that they would not or could

not supply the goods. It is not asserted that the

distributorship had already been conferred upon another

or that any representation was made as to an existing fact

false to the knowledge of the maker. Nor is it stated when,

where, in whose presence and in what terms the deceitful

representation was made, or which of the five named

persons made it. The word “cheated” and the expression

“I got deceived” although appear in the information as

conclusions but are bereft of the facts from which these

conclusions might be drawn and thus the offence would

not be made out.

14. The averment which comes closest to a representation is

that the respondent No. 2 was told that he would receive

gifts and benefits in return for a payment of Rs.

20,00,000/- spread over three years. Accepting that

averment as true, it is a promise as to the future and not

an assertion as to an existing fact. A promise of future

advantage becomes a deception only if it was made

without any intention of performing it, and the

information contains nothing from which such an

absence of intention could be gathered. It is not even

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stated that the sum of Rs. 20,00,000/- was in fact paid.

Section 318(4) of the BNS postulates a deception which

precedes the delivery of property and induces it. The

information points to no deception preceding the six

remittances. It says only that the agreement was drawn

up on 29.03.2024, signed and returned on 04.05.2024 by

him, and that the remittances were made between

04.04.2024 and 26.06.2024 as advance for goods yet to

be received. The payments were therefore made under the

contract, and a contract lawfully entered into and acted

upon is not a deception.

15. The information is also its own answer upon the question

of inception. It records that the distributorship promised

from 01.04.2024 was in fact conferred; that an agreement

was in fact executed for the full term of three years; that

goods were in fact supplied; and that bills were in fact

raised and sent. On the showing of the respondent No. 2

himself, supplies worth Rs. 31,49,167/- were made. Part

performance is not, of itself, a conclusive answer to a

charge of cheating. But where the information pleads no

fact whatever pointing to dishonesty at the inception and

the conduct, it does plead, is consistent with an intention

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to perform, an initial fraudulent intent becomes a matter

of speculation rather than of allegation.

16. The termination of the distributorship carries the matter

no further. It is enough to say that the exercise of a power

under the contractual terms is not, by itself, an act of

deception. Where a contracting party brings the contract

to an end in the manner the contract permits, the remedy

of the other party, if the termination is wrongful, is to

claim damages. To convert that into the offence of

cheating, the information would have to allege facts

showing that the termination was the culmination of a

design formed at the outset. It alleges no such thing, and

in the absence of such an allegation the information

furnishes no foundation for action under the BNS.

17. In Mohammad Wajid v. State of U.P.6, this Court held

that the averments of the information are not the sole

material, and that in frivolous or vexatious proceedings

the Court owes a duty to look into the attending

circumstances emerging from the record. Those

circumstances here are these. The agreement was

terminated on 08.07.2024. Within a fortnight, on

6 2023 SCC OnLine SC 951

Page 11 of 15

23.07.2024, the respondent No. 2 caused a legal notice

to be issued, and on 29.07.2024 he addressed a further

communication to the Managing Director. Neither

breathes a word of an advance of Rs. 73,00,000/-, or of

Rs. 41,50,833/- wrongfully retained; the grievance in

both is that goods were supplied to him at a price higher

than that charged to another, and in the second he

asserts that he continues to hold the Company's goods

worth about Rs. 6,00,000/-. The Company replied on

11.09.2024, rejecting the complaint and demanding Rs.

5,79,239/-. The information report followed more than

two months later, and the case of an unreturned advance

was made in it for the first time. That is a circumstance

which this Court is persuaded to weigh in.

18. As regards the offence punishable under Section 316(2)

of the BNS, the difficulty is more basic. Criminal breach

of trust presupposes entrustment, which requires that

the beneficial interest in the property remain with the

person handing it over, the recipient taking no more than

custody or dominion for the benefit of another. Money

paid to a supplier as the price of goods, or in advance of

their supply, passes to the supplier as his own; he holds

it as consideration under a contract, and is neither

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trustee nor bailee of it. If he takes the money and does

not deliver, he is in breach of his contract but has not

committed a breach of trust, because there was no trust.

19. There is no averment on behalf of Respondent No.2 that

any money or goods was made over to any of the

appellants to be held on his behalf, or to be applied to any

specified purpose and to no other, or to be returned in

specie. In the absence of such an averment, the

ingredient of entrustment is simply not pleaded, and the

offence under Section 316(2) of the BNS cannot be said

to be disclosed upon any reading of the information.

20. There is a further and connected difficulty. The

information alleges both cheating and criminal breach of

trust upon the identical set of facts. As Delhi Race Club

(supra) explains, the two offences are antithetical. In

cheating, the property is parted with because the owner

has been deceived, and the dishonest intention exists at

the inception. In criminal breach of trust, the property

comes lawfully into the hands of the accused and is

dishonestly dealt with thereafter. The registration of the

first information report for both offences upon one

indivisible set of allegations is an indication that the

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allegations were not measured against the ingredients of

either.

21. The decisions relied upon by the respondent No. 2 do not

carry the matter further. Neeharika Infrastructure

(supra) states, and this Court reiterates, that a first

information report is not required to be an encyclopaedia

and that a legitimate investigation into a cognizable

offence ought not to be stifled. The test it lays down is

whether the allegations, taken at face value, disclose the

commission of a cognizable offence. This Court has

applied that very test. The complaint here is not that the

information lacks detail. It is that the information,

however detailed as to remittances and bills, does not

allege the one thing without which cheating cannot exist,

namely, a dishonest intention at the time of the

inducement; and does not allege the one thing without

which criminal breach of trust cannot exist, namely,

entrustment.

22. If the respondent No. 2 is right that Rs. 41,50,833/- is

due to him, the law affords him a remedy, and an effective

one. What it does not afford him is the use of the criminal

process to compel its payment. Stripped of its

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conclusions, the information asserts that money was

paid, that goods of a lesser value were delivered, that

supplies ceased, and that the difference has not been

returned. Each of those assertions, if established, will be

the foundation of a claim and not of a crime.

23. Taking the allegations in the first information report at

their face value and accepting them in their entirety, this

Court is satisfied that the ingredients of the offence

punishable under Section 318(4) of the BNS are not made

out, no fact being alleged from which a dishonest or

fraudulent intention at the inception could be inferred;

and that the ingredients of the offence punishable under

Section 316(2) BNS are not made out, entrustment not

being alleged at all. The matter falls within the first of the

categories enumerated in Bhajan Lal (supra) as stated

above. To permit the proceeding to continue would be to

permit a dispute arising from a written commercial

contract, to be pursued through the machinery of the

criminal law, and that would be an abuse of the process

of the court.

24. In the result, both the appeals are allowed. The common

judgment and order dated 19.02.2025 passed by the High

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Court of Jharkhand at Ranchi in W.P. (Cr.) No. 1041 of

2024 and W.P. (Cr.) No. 1042 of 2024 is set aside. The

first information report registered as Kotwali P.S. Case

No. 323 of 2024 at Police Station Ranchi Kotwali, District

Ranchi, for the offences punishable under Sections

316(2), 318(4) and 3(5) of the Bharatiya Nyaya Sanhita,

2023, and all proceedings arising therefrom, stand

quashed.

25. Nothing said in this judgment shall be construed as an

expression of opinion upon the merits of any civil, arbitral

or other proceeding between the parties, whether pending

or hereafter instituted in accordance with law.

26. Pending applications, if any, shall stand disposed of.

.……..………..……………………..J.

[ SANJAY KAROL ]

.……..………..……………………..J.

[ AUGUSTINE GEORGE MASIH ]

NEW DELHI;

AUGUST 12, 2026.