Alerts & Updates 27th Aug 2025

Criminal Liability in Commercial Transactions under Section 405 IPC

Authors

Mukesh ChandSenior Counsel | Mumbai

Latest Thought Leadership

TAX
Newsletter/Booklets 8th Jun 2026

Recent Developments in Direct & Indirect Tax

Read More
Podcasts 8th Jun 2026

ELP Podcast Series: Decoding data breaches under the DPDP framework

Read More
Alerts & Updates 4th Jun 2026

EU CBAM: Draft Rules on Carbon Price Paid in a Third Country Released – Implications for Indian Exporters

Read More
international trades
Alerts & Updates 4th Jun 2026

USTR Issues Determination in Section 301 Investigations on Forced Labour Imports

Read More

Attempts by lenders to criminalise ordinary loan defaults by invoking provisions such as Section 405 IPC have consistently been met with judicial resistance. Courts have underlined that every breach of repayment terms does not amount to criminal breach of trust or cheating, and that the criminal process cannot be used as a tool to recover debts. The Hon’ble Supreme Court in its recent decision in Sunil Sharma v. Hero Fincorp Ltd., has reiterated that such efforts to convert commercial defaults into criminal proceedings are an abuse of law and contrary to the principle that penal statutes must be strictly construed.

This update examines the issue in the context of RBI Guidelines on declaration of accounts as fraud and wilful defaulter.

Read the detailed update here

Privacy Policy

As per the rules of the Bar Council of India, lawyers and law firms are not permitted to solicit work or advertise. By clicking on the "I Agree" button, you acknowledge and confirm that you are seeking information relating to Economic Laws Practice (ELP) of your own accord and there has been no advertisement, personal communication, solicitation, invitation or any other inducement of any sort whatsoever by or on behalf of ELP or any of its members to solicit any work through this website.