Can a breach of contract amount to Cheating or fraud?

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Image result for breach of contractThe Supreme Court of India has held that mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown at the beginning of the transaction. 


The court further held that in order to bring a case for the offence of cheating, it is not merely sufficient to prove that a false representation had been made, but, it is further necessary to prove that the representation was false to the knowledge of the accused and was made in order to deceive the complainant. Distinction between mere breach of contract and the cheating would depend upon the intention of the accused at the time of alleged inducement. 

Image result for breach of contract
If it is established that the intention of the accused was dishonest at the very time when he made a promise and entered into a transaction with the complainant to part with his property or money, then the liability is criminal and the accused is guilty of the offence of cheating. On the other hand, if all that is established that a representation made by the accused has subsequently not been kept, criminal liability cannot be foisted on the accused and the only right which the complainant acquires is the remedy for breach of contract in a civil court. International Advanced Research Centre and Others Vs. Nimra Cerglass Technics (P) Ltd & Anr. [LNIND 2015 SC 552]

 Reference: LexisNexis

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