Two different things
A breach of contract is a civil matter. If a person agrees to pay and does not, or agrees to deliver and cannot, the remedy is a civil suit for the money or the performance. It is not a crime to fail to keep a promise.
Cheating is a criminal offence. Section 318 of the Bharatiya Nyaya Sanhita, 2023, which replaced Sections 415 to 420 of the Indian Penal Code, requires that a person was deceived, and that the deception was dishonest or fraudulent. Section 318(4), the successor to the old Section 420, covers cheating that dishonestly induces someone to hand over property.
The two can look alike from the outside. A deal that went wrong and a deal that was never meant to be honoured produce the same result for the person who lost money. The law separates them by asking what the accused intended at the start.
Intention at the time of the promise
The Supreme Court has held consistently that cheating requires a dishonest intention at the time the promise or representation was made. A dishonest intention that arises later, after an honest agreement has been entered into, does not turn the failure into cheating.
In Dalip Kaur v. Jagnar Singh (2009), the Court held that a simple breach of an agreement to sell does not constitute the offence unless a fraudulent intention existed when the agreement was made. In Vesa Holdings v. State of Kerala (2015), it held that a dispute over unpaid fees under a contract was a civil matter and quashed the criminal proceedings, because nothing suggested deception at the inception of the arrangement.
The question is not whether money was lost. It is whether the person who took it meant to deceive when they took it.
Preliminary inquiry and the station General Diary
In Lalita Kumari v. Government of Uttar Pradesh (2013), the Supreme Court listed commercial and financial disputes among the specific categories where police are permitted to conduct a preliminary inquiry before registering an FIR. The purpose is to determine whether the information discloses a cognizable criminal fraud or a purely civil disagreement.
During this preliminary inquiry, no record is uploaded to CCTNS or published on state portals. The complaint remains an internal entry in the station's General Diary. An FIR is registered only if the inquiry reveals prima facie dishonest inducement at the outset.
What a court may do afterwards
If an FIR is registered in what is in substance a civil contract failure, the accused may approach the High Court under Section 528 of the BNSS, corresponding to the old Section 482 of the CrPC, to have the proceedings quashed as an abuse of process. The High Court examines whether, taking the complaint at face value, the essential ingredients of dishonest intention at inception are made out at all.
This is a remedy for the accused, and it is not automatic. Many complaints that begin with a failed transaction do disclose deception at the outset, and those proceed. The courts intervene where the complaint, even if every word of it is true, describes a broken promise rather than a fraud.
What this means for a published FIR
An FIR under Section 318 records that a complaint of cheating was registered by the police. Because commercial disputes are frequently cloaked in criminal language to exert recovery pressure, the presence of an FIR on a public portal does not establish that anyone committed a fraud. It records that an allegation was made; whether it is a crime or a civil debt is a determination for the courts.