The Supreme Court has quashed a cheating prosecution arising from an unpaid steel transaction, holding that criminal law cannot be used as a substitute for recovering disputed contractual debts.
In Yogesh Premjibhai Suvariya v State of Gujarat, the directors of a steel-trading company faced proceedings over ₹1.19 crore in supplies and dishonoured post-dated cheques. The Gujarat High Court had discharged them from criminal breach of trust but retained the cheating charge.
The Supreme Court said cheating requires dishonest intention and deception at the inception of the transaction. Neither the complaint nor the record showed a false representation or inducement when the purchase orders were placed. The parties had conducted business for years, and the grievance concerned non-payment.
The bench said police cannot function as a civil recovery forum. Continuing the prosecution would therefore abuse the judicial process. It set aside the High Court and magistrate orders and quashed the criminal case, leaving the complainant free to pursue civil remedies.