Tuesday, 10 April 2012

Sections 415, 417, 420 CHEATING

Section 415. 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.

Illustrations
(a) A, by falsely pretending to be in the Civil Service, intentionally deceives Z, and thus dishonestly induces Z to let him have on credit goods for which he does not mean to pay. A cheats.

(b) A, by putting a counterfeit mark on an article, intentionally deceives Z into a belief that this article was made by a certain celebrated manufacturer, and thus dishonestly induces Z to buy and pay for the article. A cheats.

(c) A, by exhibiting to Z a false sample of an article, intentionally deceives Z into believing. that the article corresponds with the sample, and thereby, dishonestly induces Z to buy and pay for the article. A cheats.

(d) A, by tendering in payment for an article a bill on a house with which A keeps on money, and by which A expects that the bill will be dishonoured, intentionally deceives Z, and thereby dishonestly induces Z to deliver the article, intending not to pay for it.A cheats.

(e) A, by pledging as diamonds article which he knows are not diamonds, intentionally deceives Z, and thereby dishonestly induces Z to lend money. A cheats.

(f) A intentionally deceives Z into a belief that A means to repay any money that Z may led to him and thereby dishonestly induces Z to lend him money. A not intending to repay it. A cheats.

(g) A intentionally deceives Z into a belief that A means to deliver to Z a certain quantity of indigo plant which he does not intend to deliver, and thereby dishonestly induces Z to advance money upon the faith of such delivery. A cheats; but if A, at the time of obtaining the money, intends to deliver the indigo plant, and afterwards breaks his contract and does not deliver it, he does not cheat, but is liable only to a civil action for breach of contract.

(h) A intentionally deceives Z into a belief that A has performed A’s part of a contract made with Z, which he has not performed, and thereby dishonestly induces Z to pay money. A cheats.

(i) A sells and conveys an estate to B. A, knowing that in consequence of such sale he has no right to the property, sells or mortgages the same to Z, without disclosing the fact of the previous sale and conveyance to B, and receives the purchase or mortgage money for Z. A cheats.


Section 417: Punishment for cheating
Whoever cheats shall be punished with imprisonment of either description for a term which may extend to one year, or with fine, or with both.


Section 420: Cheating and dishonestly inducing delivery of property
Whoever cheats and thereby dishonestly induces the person deceived, to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.

The word property may simply be defined as all things which can be measured in value in money terms, including the money itself, and the said thing capable of being possessed by a person, to the exclusive use/ enjoyment as owner of that thing from rest of the world.

Section 24 defines what is “acting dishonestly”. When the doing of any act or not doing of any act causes wrongful gain of property to one person or a wrongful loss of property to a person, the said act is done dishonestly. Wrongful means unlawfully. See section 471.

Section 23 defines what is Wrongful loss and Wrongful gain. The Wrongful means affecting a person of his legal right. For Wrongful loss or gain, any property, movable or immovable must be lost to the owner, or the owner must be, without any reason, is deprived of its beneficial use.

Wrongful gain occurs when a person who is not entitled to property acquires it through unlawful means, or wrongful loss is loss of property caused to the person by unlawful means, and it is sufficient to establish the existence of any one of them. [AIR 1963 SC 666]

Section 25: "Fraudulently"
A person is said to do a thing fraudulently if he does that thing with intent to defraud but not otherwise.


In cheating, first of all there should be deception by the accused; and by playing this deception, a person may be cheated in two ways –

(1) The Person is induced to deliver the property. This delivery of property is secured by fraudulent and dishonest means; or the Person is induced, fraudulently and dishonestly, to consent that any person shall retain any property. [AIR 1974 SC 1811;

(2) There is no delivery of property, but the Person is intentionally induced, to do or omit to do, something, which the said Person would not do, or he would omit to do, if he were not so induced; and his said act or omission caused or would have caused damage or harm to that person, in body, mind, reputation or property. [AIR 1970 SC 843; (2000) 4 SCC 168; AIR 1960 Bom 268; AIR 1934 Lah 833; AIR 1925 Cal 100; AIR 1970 SC 843;

It is not necessary that deception should always be by express words, but it may be by conduct or implied in the transaction itself. [(2003) 3 SCC 641; (2003) 3 SCC 1121 Hira Lal Hari Lal versus CBI]

Deception is one of the primary ingredient which should be proved / established. Deceiving is to lead into error by causing a person to believe what is false or disbelieve what is true, and such deception may be by words or conduct. The explanation appended to section 415 says that concealment of a fact is akin to deception. [1995 CrLJ 1810 Del; (1994) CrLJ 2238 Mad;

The second essential ingredient of the offence of cheating is element of inducement leading to either the delivery of property, or leading to the doing of any act or omission, as stated hereinbefore. [AIR 1999 SC 2332; (1998) 8 SCC 745]

The crux of the situation is, the intention of the person who induces the victim by his representation, and not the nature of the transaction, which would be decisive in discerning whether there was an intention to cheat or the inducement was bonafide. [AIR 1999 SC 1216]

What is important, is to prove that, at the time the inducement was offered or played, the accused ought to have known that the representation he is making is false, and the representation was made with the intention of deceiving the Person. [AIR 1974 SC 301; AIR 1957 SC 857; AIR 1954 SC 724]

False pretence need not be in express words, and it can be inferred from the circumstances, including the conduct of the accused. [AIR 1967 SC 986]

Section 417 and 420 provides punishment for the offence of cheating. Section 417 provides a much lesser punishment, i.e. a year or fine or both; however, 420 provides a much stringent punishment, which may extend to 7 years imprisonment and fine both.

According to rulings of the Court, section 415 contemplates a simple cheating, wherein, the victim of the offence is “injured” otherwise than being induced to deliver the property [AIR 1951 Assam 122]; whereas section 420 deals with aggravated forms of cheating involving parting of valuable properties. [1994 CrLJ 370 Ori; 1995 CrLJ 3663 SC; 1998 CrLJ 1430 Raj


Sr. No.
Ingredients of the offence / Facts to be Proved
The facts of the case
1
The Person accused has made false representation;

2
The said Person was fully aware that he was making a false representation;

3
The said Person, by making such false representation,

induces the other person, to deliver his property to any person;

or

induces the other person to consent that any person shall retain any property;

or

induces the other person, to do some act or omit to do some act, which the said Person would not do, or would have omitted to do, if said false representation were not so made; and the doing of such act or omission had caused or had likely to caused damage or harm to that other person in body, mind, reputation or property.

Inducement will entail such a nature of proposal / incentive being offered which any prudent person would readily entertain.



The offence is Non cognizable and Bailable; and triable by any Magistrate; and therefore Application u/s 156(3) or Private Complaint u/s 200 may be preferred.


Sr. No.
Ingredients of the offence / Facts to be Proved
The facts of the case
1
The Person accused has made false representation;

2
The said Person was fully aware that he was making a false representation;

3
The said Person, by making such false representation,

induces the other person, to deliver his property to any person;

or

induces the other person to make, alter or destroy the whole or any part of a valuable security;

or

induces the other person to make, alter or destroy anything which is signed or sealed, and which is capable of being converted into a valuable security.



The offence is cognizable and Non Bailable; and triable by Magistrate of the First Class; and therefore FIR or Application u/s 156(3) or Private Complaint u/s 200 may be preferred.


CHEATING – (2009) 3 SCC 78
Section 415 to 420 – (2003) 5 SCC 257
Section 420 – AIR 1957 SC 857
Sections 415, 420 – cheating – (2011) 1 SCC 74 – Paras 68, 72, 75
(2010) 8 SCC 383
Ram Chandra Singh V Savitri Devi and Ors 2003 8 SCC 319
Santosh V Jagat Ram and Anr MANU SC 0097 2010
SP Chengalvaraya naidu vs Jagannath AIR 1994 SC 853


Cheating –
AIR 1986 SC 2045;
(1970) 2 SCC 740;
AIR 1965 SC 333;
(1998) 5 SCC 694;
(2006) 6 SCC 736 Para 32;
(2007) 5 SCC 228, Para 8;
AIR 1961 Andh Pra 266.

I say that the said ______ made fraudulent representation to me and further induced me to cause the delivery of goods to him on the premise of purported bonafide cheques which would be given by him, and all the cheques given by said ___________ have dishonoured.


I say that the offence of cheating contemplated u/s 420 of IPC, 1860, involves fraudulent representation, inducement and delivery of property, and all these three ingredients are present in the existing facts of the case.

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