The Jharkhand High Court, in quashing criminal proceedings against Director Prakash Jha, declared that initiating criminal proceedings in a breach of agreement case solely based on an allegation of failure to keep a promise is insufficient.

The accused Director/Producer Prakash Jha had entered into a written agreement with the complainant, who was an authorized agent of Classic Multiplex Private Limited (Company), on behalf of the Chairman-cum-Managing Director of the Company.

According to the agreement, the director had promised the company a portion of his land for constructing a multiplex. The complainant had also handed over bank drafts to the director for booking the specified land. However, the director retained the money and failed to make any bookings.

A Single Bench of Justice Sanjay Kumar Dwivedi observed, “It is well settled that a breach of contract does give rise to criminal prosecution for cheating unless the fraudulent and dishonest intention is there at the beginning of the transaction. Merely based on the allegation of failure to keep premises will not be enough to initiate criminal proceeding…Criminal courts are not meant to use for settling scores or pressurize the parties to settle the dispute.” The Court pointed out that since the bank drafts were not encashed by the director, the provisions of Section 25 of the Contract Act could be invoked. Section 25 of the Contract Act stipulates that in the absence of consideration, a contract is considered void.

The Court elucidated that according to the definition of Section 415 of the Indian Penal Code (IPC), to establish someone's guilt of cheating, it is imperative to demonstrate fraudulent and dishonest intent at the time of making a promise.

The Court held that “if criminal proceedings are allowed to continue against the petitioners before the learned court will amount the abuse of process of law.”

Accordingly, the High Court quashed the criminal proceedings and allowed the petition.

Cause Title: Prakash Jha & Ors. v. The State of Jharkhand & Anr.

Appearance: Petitioners: Sr. Advocate Umesh Prasad Singh, and Advocates Jitendra S. Singh and Surbhi Opposite Parties: Spl. P.P. ​​Prabhu Dayal Agrawal