V. Ganesan vs State Police - Criminal Appeal

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• Know your Kanoon - Doc Gen Hub - Counter Argument - Case Predict AI - Talk with IK Doc -... Upgrade to Premium [Cites 11, Cited by 0 ] ### Supreme Court of India

V. Ganesan vs State Rep By The Sub Inspector Of Police on 19 March, 2026

Author: Pamidighantam Sri Narasimha

Bench: Pamidighantam Sri Narasimha

2026 INSC 265

                                                                     REPORTABLE

                                       IN THE SUPREME COURT OF INDIA
                                      CRIMINAL APPELLATE JURISDICTION
                                      CRIMINAL APPEAL NO. 1470 OF 2026
                                  (Arising out of SLP Criminal No. 10478 of 2023)

                                V. GANESAN                            …APPELLANT

                                                     VERSUS

                               STATE REP BY THE SUB INSPECTOR
                               OF POLICE & ANR.             …RESPONDENT(S)

                                                    JUDGMENT MANOJ MISRA, J.

1. Leave granted.

2. This appeal impugns the judgment and order of

                               the High Court at Madras1 dated 06.04.2023 in Crl.
   
                               O.P. No. 847 of 2021 and Crl. M.P. No. 518 of 2021,
   
                               whereby the prayer of the appellant to quash final
   
                               report and consequential proceedings in C.C. No. Signature Not Verified Digitally signed by CHETAN ARORA Date: 2026.03.19 3569 of 2020 on the file of the Metropolitan
   

   15:55:10 IST
   Reason:

1

The High Court SLP (Crl.) No. 10478/2023 Page 1 of 16 Magistrate (CCB and CBCID, Metro Cases), Egmore,

Chennai-600008, under Section 406 and 420 of the

Indian Penal Code, 18602, was partly allowed to the

extent of indictment under Section 406 IPC; however,

the prayer to quash indictment under Section 420 IPC was declined.
3. In brief, the prosecution case, as could be evinced

       from the final report (i.e., police report) submitted

       under [Section 173](https://indiankanoon.org/doc/1412034/) of the Code of Criminal Procedure,

       19733, is that the accused (the appellant herein) was

       producing a ‘movie’. In the course of its production,

       he ran short of funds. He, therefore, requested the

       de-facto complainant (i.e., the second-respondent

       herein) to lend him money on assurance that it would

       be returned by a share in profits to the extent of

       30%. Later, further money was lent on promise of an

       additional 17% share in profits. Ultimately, two post-

       dated cheques of Rs.24 lacs each were issued by the 2 [IPC](https://indiankanoon.org/doc/1569253/) 3 [CrPC](https://indiankanoon.org/doc/445276/) SLP (Crl.) No. 10478/2023                              Page 2 of 16 accused to the de facto complainant towards return

      of the principal amount which returned unpaid for

      insufficient funds in the account. Based on above, it

      was alleged that the accused had cheated the

      complainant and had also committed offence of

      criminal breach of trust.

1. Aggrieved by the police report and the

     consequential proceedings, the appellant invoked the
   
     jurisdiction of the High Court under [Section 482](https://indiankanoon.org/doc/1679850/) of
   
     CrPC, inter alia, to quash the report and the
   
     consequential proceedings on the ground that a pure
   
     civil cause of action was given colour of a criminal
   
     offence.
   

2. By the impugned order, the High Court quashed

     the indictment of an offence punishable under [Section      406](https://indiankanoon.org/doc/988620/) IPC    but   declined   to     quash     the
   
     proceedings qua the offence of cheating punishable
   
     under [Section 420](https://indiankanoon.org/doc/1436241/) IPC.
   

SLP (Crl.) No. 10478/2023 Page 3 of 16

1. We have heard the learned counsel for the parties.

2. On behalf of the appellant it is submitted that

     admittedly          the   second-respondent     had     invested
   
     money in a movie project on expectation of good
   
     returns. There is no dispute that the movie project
   
     was completed. However, it could not generate
   
     profits. In such circumstances, the appellant could
   
     not fulfil its commitment of providing good returns on
   
     the investment. Therefore, there was no dishonest
   
     intention and the dispute between the parties is
   
     purely      civil    in   nature.   Hence,    institution     and
   
     continuation of criminal proceedings is nothing but
   
     abuse of the process of Law.
   

3. Per contra, on behalf of the respondent(s) it is

     submitted that dishonest intention of the appellant
   
     was there from the very beginning which is evident
   
     from the fact that the two cheques got dishonoured
   
     for want of funds. Besides, on appellant’s false SLP (Crl.) No. 10478/2023                                       Page 4 of 16 assurance of profits, money was lent. In these
   
     circumstances, offence of cheating is made out.
   

4. We have accorded due consideration to the rival

     submissions and have perused the record.
   

5. The police report indicted the appellant for

     offences of criminal breach of trust and cheating
   
     punishable        under [Sections     406](https://indiankanoon.org/doc/988620/) and [420](https://indiankanoon.org/doc/1436241/) IPC
   
     respectively. The High Court came to the conclusion,
   
     and rightly so, that no offence punishable under [Section 406](https://indiankanoon.org/doc/988620/) of IPC is made out as there was no
   
     entrustment. Regarding the offence of cheating, the
   
     High Court concluded that prima facie it is made out.
   
     The reasoning of the High Court in support of its
   
     conclusions can be found in paragraph 6 of its
   
     judgment, which is extracted below:
   

“This Court on perusal of the impugned final
report finds that the offence under Section 406 IPC is not made out. There is no entrustment
made to the petitioner, in order to attract the
offence of criminal breach of trust. However, this
Court finds that there was an Agreement
between the petitioner and the de-facto
complainant on 30.12.2013. The Agreement SLP (Crl.) No. 10478/2023 Page 5 of 16 shows that the petitioner promised 30% interest
on the initial invested amount on Rs.
19,60,000/-. Thereafter, the de-facto
complainant paid Rs. 27,00,000/- on
03.04.2014; and the petitioner had promised
47% profit on the invested amount. The
petitioner had not made any payment to the de-
facto complainant/second-respondent as
promised. While so, the de-facto
complainant/second-respondent objected to the
petitioner releasing the movie. The petitioner had
given one more undertaking letter, wherein, he
had promised to pay the principal sum in two
instalments, profit on a subsequent date; and
that if the project did not yield any profit, he
would pay an interest on the said sum of Rs.
48,00,000/-. All the above facts, disclose that at
every stage, the representation has been made to
the de-facto complainant to induce him to part
with money. The allegations prima facie disclose
the offence under Section 420 IPC. In the facts of
the instant case, the question whether it was
only a breach of promise or cheating has to be
adjudicated only during trial. Therefore, this
Court is not inclined to quash the impugned
final report in so far as the offence under Section
420 IPC. Hence, the impugned final report is
quashed only in respect of offence under Section
406 IPC. However, the learned Metropolitan
Magistrate may try the case on the basis of
evidence adduced before him without being
influenced by any of the observations made in
this order. The learned Metropolitan Magistrate
(CCB and CBCID, Metro Cases), Egmore,
Chennai – 600 008 may conduct the trial as
expeditiously as possible4”.

1. The above extract makes it clear that the High Court

      was of the view that as the money was advanced on a
   
      promise          of    good        returns         and,       subsequently,                an 4 Extracted from typed copy of the judgment placed on record. May contain typographical mistakes. SLP (Crl.) No. 10478/2023                                                               Page 6 of 16 undertaking was also given to return the principal
   
   amount if the project did not yield any profit, it could be
   
   taken that the complainant parted with his money on
   
   the inducement of the appellant and therefore, prima
   
   facie, an offence punishable under [Section 420](https://indiankanoon.org/doc/1436241/) IPC is
   
   made out.
   

2. In Iridium India Telecom Ltd. v. Motorola Inc.5,

    this Court laid down the ingredients of an offence of
   
    cheating as defined in [Section 4156](https://indiankanoon.org/doc/1569253/) of IPC. It was
   
    observed that [Section 415](https://indiankanoon.org/doc/1306824/) of IPC has two parts. The
   
    first part makes it necessary that the deception by the
   
    accused of the person deceived, must be fraudulent or
   
    dishonest. Such deception must induce the person to
   
    either: (a) deliver property to any person; or (b) consent
   
    that any person shall retain any property. The second
   
    part also requires that the accused must by deception 5 (2011) 1 SCC 74, paragraph 68 6 [Section 415](https://indiankanoon.org/doc/1306824/). Cheating. -- Whoever, by deceiving any person, fraudulently or dishonestly induces the
   

   person so deceived to deliver any property to any person, or to consent that any person shall retain any
   property, or intentionally induces the person so deceived to do or omit to do anything which he would
   not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage
   or harm to that person in body, mind, reputation or property, is said to ‘cheat’.
   Explanation. --- A dishonest concealment of facts is a deception within the meaning of this section. SLP (Crl.) No. 10478/2023 Page 7 of 16 intentionally induce the person deceived either to do or

   omit to do anything which he would not do or omit, if

   he was not so deceived. Besides, such act or omission

   must cause or must be likely to cause damage or harm

   to that person in body, mind, reputation or property.

   Thus, deception is a necessary ingredient for the

   offence of cheating under both parts of this section.

   Besides, the complainant must allege/ prove that the

   inducement had been caused by the deception

   exercised by the accused. In other words, such

   deception must produce the inducement to part with or

   deliver property, which the complainant would not have

   parted with or delivered, but for the inducement

   resulting from such deception. The explanation to the

   section clarifies that non-disclosure of relevant

   information would also be treated as a

   misrepresentation of facts leading to deception.

3.   In order to constitute an offence of cheating the
   

   intention to deceive should be in existence when the SLP (Crl.) No. 10478/2023 Page 8 of 16 inducement was made. It is necessary to show that a

       person had fraudulent or dishonest intention at the
   
       time of making the promise. Mere failure to keep the
   
       promise subsequently cannot be the sole basis to
   
       presume that dishonest intention existed from the very
   
       beginning.
   

4. In [Vesa Holdings Private Limited and Another

       v. State of Kerala](https://indiankanoon.org/doc/85280669/) and others7, this court held that
   
       every breach of contract would not give rise to an
   
       offence of cheating. Only in those cases breach of
   
       contract would amount to cheating where there was
   
       any deception played at the very inception. If the
   
       intention to cheat has developed later, the same cannot
   
       amount to cheating. In other words, for the purpose of
   
       constituting an offence of cheating, the complaint is
   
       required to show that the accused had fraudulent or
   
       dishonest intention at the time of making promise or
   
       representation. Even in a case where allegations are 7 (2015) 8 SCC 293, paragraph 12 SLP (Crl.) No. 10478/2023                                Page 9 of 16 made about failure on part of the accused to keep his
   

   promise, in absence of a dishonest intention at the time

   of making the initial promise, no offence under [Section

   420](https://indiankanoon.org/doc/1436241/) of IPC is made out.

5.   Whether non-fulfilment of promise/ commitment
   

   by the accused is a reflection of his or her dishonest

   intention at the time of making the promise is ordinarily

   a matter of trial. However, in our view, where the

   transaction between the parties is such that fulfilment

   of the promise is not entirely in the control of the

   promisor, or there is an inherent risk in fulfilment of

   the promise, the High Court may, in exercise of its

   inherent powers under the Code, or under Article 226 of

   the Constitution, as the case may be, upon

   consideration of the attending circumstances, take a

   decision whether the dishonest intention existed or not

   at the time of making the promise. And, if it comes to

   the conclusion that the alleged conduct of the parties

   does not reflect a dishonest intention of the accused SLP (Crl.) No. 10478/2023 Page 10 of 16 from the very beginning, it may quash the criminal

   complaint/ proceedings and relegate the aggrieved

   party to civil remedies.

6.   In    the      present   case,   what   the   High   Court
   

   overlooked is that money was advanced for movie

   making and initially the agreement was to share the

   profits. Importantly, when the first tranche of money

   was transferred by the de-facto complainant to the

   accused, the alleged promise was a share in profits.

   Second tranche of money was transferred when the

   project could not be completed for want of funds. It

   also appears from paragraph 2 of the impugned order

   that before the movie could be released, de facto

   complainant took objection to its release. However,

   when the appellant gave two post-dated cheques, the

   movie could be released.

7.   The aforesaid facts would indicate that the initial
   

   payment of money by the de-facto complainant to the

   appellant was for a movie project on promise of a share SLP (Crl.) No. 10478/2023 Page 11 of 16 in profits. Additional money was paid later for its

   completion under a promise of an enhanced share in

   the profits. Thereafter, post-dated cheques were issued

   to return the principal amount because of an objection

   taken by the de facto complainant to the release of the

   movie. Since there is no denial about the completion of

   the movie and its ultimate release, what is clear is that

   the promise to make a movie was not false. Therefore, it

   cannot be said the appellant made a false promise that

   he would make a movie with the aid of funds received

   by him. Insofar as promise qua sharing of profits is

   concerned, there are no allegations that the movie

   earned profits. Therefore, from the allegations made in

   the complaint it cannot be said that there was any

   dishonest intention of the appellant in making the

   promise which remained unfulfilled. In our view, the

   High Court overlooked that movie making is a high risk

   business. No one can be sure whether a movie would

   earn profits or would be a flop. If one agrees to share

   profits in lieu of his investment in a movie, he takes the SLP (Crl.) No. 10478/2023 Page 12 of 16 risk of a possible zero return. Thus, the nature of

   transaction between the parties was a crucial factor in

   determining whether the investor party should be

   allowed to bring in a criminal action or pursue civil

   remedies. Unfortunately, the High Court overlooked

   this vital aspect.

8.   Insofar as dishonour of those two cheques are
   

   concerned, it is clear that those were post-dated

   cheques issued not as an inducement to obtain delivery

   of money from the de facto complainant but to

   discharge an existing obligation at a future date. Thus,

   in essence, those cheques were not by way inducement

   to lend money or invest money in the proposed movie.

   Therefore, dishonour of those cheques, though may give

   right to initiate proceeding under Section 138 of the

   Negotiable Instruments Act, 1881, would not ipso facto

   amount to an offence of cheating, inasmuch as for an

   offence of cheating dishonest intention must exist from

   the very beginning. Ordinarily, post-dated cheques are SLP (Crl.) No. 10478/2023 Page 13 of 16 issued either by way of security to discharge an existing

   or future liability or to discharge the liability at some

   point of time in future. It is quite possible that at the

   time of issuance of a post-dated cheque, the drawer

   may have reason to believe that he would have

   sufficient balance in his account by the date of the

   cheque. Therefore, in our view, dishonour of a post-

   dated cheque by itself is not sufficient to presume

   existence of a dishonest intention on part of its drawer.

9.   In the instant case, there is nothing to indicate
   

   that the appellant had a dishonest intention from the

   very beginning. Had it been a case where the appellant

   had not made the movie despite borrowing funds to

   make one, an inference about existence of a dishonest

   intention was permissible. However, here there is no

   allegation that movie was not made. Rather, it was

   made and released. The prosecution case itself is to the

   effect that further advance was taken to complete and

   release the movie. However, when complainant took SLP (Crl.) No. 10478/2023 Page 14 of 16 objection to its release, the appellant issued post-dated

   cheques to repay the principal amount. Thus, those

   cheques were to discharge an existing liability and not

   by way of an inducement to take more money.

10.    Assuming that by issuance of those cheques, the
    

    de facto complainant was led to vacate his objection to

    movie’s release, even then an offence of cheating would

    not be made out for two reasons. First, those cheques

    were post-dated therefore, did not carry a

    representation of sufficient funds in the bank account

    at the time of its issuance. Second, initial agreement, as

    per the allegations, was to share profit on release of the

    movie. Thus, in absence of allegations that movie made

    profits, in our view, the complaint and the supporting

    materials failed to indicate that the appellant harboured

    a dishonest intention from inception. In conclusion, the

    allegations only disclosed a civil cause of action and the

    High Court fell in error in not quashing the criminal

    proceedings.

SLP (Crl.) No. 10478/2023 Page 15 of 16

1. For the foregoing reasons, the appeal is allowed.

The impugned judgment and order of the High Court is

   set aside to the extent it declined quashing of the

   proceedings under [Section 420](https://indiankanoon.org/doc/1436241/) IPC. The impugned

   criminal proceedings under [Section 420](https://indiankanoon.org/doc/1436241/) IPC are also

   quashed. Pending applications if any stands disposed

   of.

….………….......................................J.
(PAMIDIGHANTAM SRI NARASIMHA)

                         ……………......................................J.
                        (MANOJ MISRA)

      New Delhi;

March 19, 2026 SLP (Crl.) No. 10478/2023 Page 16 of 16