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Mere breach of contract is not cheating unless dishonest intention is shown right at beginning of transaction

The Allahabad High Court in Vivek Kumar Singh Vs. State of U.P. and Ors., while deciding on an application for quashing the summoning order passed by Additional Chief Judicial Magistrate held that in determining the question cheating, it has to be kept in mind that the distinction between mere breach of contract and the offence of cheating is a fine one. It depends upon the intention of the accused at the time of 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. To hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise. From his mere failure to keep up promise subsequently such a culpable intention right at the beginning, that is, when he made the promise cannot be presumed.

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