SECTION 420 IPC - Indian Penal Code - Cheating and dishonestly inducing delivery of property

Description of IPC Section 420

According to section 420 of Indian penal code, 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.

Introduction

Under the Indian Penal Code, cheating is a crime. By using some dishonest methods, it is done to benefit or get an advantage over another individual. A person who intentionally misleads someone is aware that doing so would put them in an unfair situation.

Cheating has been defined under Section 415 of the Penal Code and the punishment for the same is defined under Section 420

This article will cover all you need to know about Cheating as a crime and also what defences are available against cheating.

WHAT IS SECTION 420, IPC?

Section 420 of the Indian Penal Code, 1860 (“IPC”) prescribes punishment for the offence of ‘cheating and dishonestly inducing delivery of property’.

The essential ingredients that go into the making of an offence under Section 420, IPC are:

1. That the representation made by the accused was false;

2. That the accused knew that the representation was false at the very time when he made it;

3. That the accused made the false representation with the dishonest intention of deceiving the person to whom it was made; and

4. That the accused thereby induced that person to deliver any property or to do or to omit to do something which he would otherwise not have done or omitted.

To understand Section 420, IPC, better, let us imagine the following –
-A purposely lies to Z and claims to work for the civil service. This makes Z believe in A and lets him buy goods on credit. A, however, intends to avoid paying for these items. A has cheated in this instance, which is against IPC Section 420.

-To trick Z into believing that a certain manufacturer created the item, A applies a false mark to it. Z therefore purchases the item and makes the payment. The conduct of A constitutes cheating and is therefore prohibited by Section 420 of the IPC.

-A purposefully presents Z with a fake sample of a product, leading Z to assume that the real item matches the sample. As a result of this false representation, Z purchases the item and pays for it. A's behaviour is illegal under IPC Section 420 since it constitutes cheating.

Scope of Section 415

Indian Penal Code's Section 415 defines cheating as using deceit or dishonesty to induce someone to transfer their property to another person or agree to keep the property of another person. A person who willfully uses fraud, dishonesty, or the purpose to deceive another person to cause injury to that person's body, mind, reputation, or property—harm that wouldn't have occurred without the deception—is regarded as a cheater. This rule also holds when information is purposefully withheld to persuade someone to take a step they otherwise wouldn't have. This definition includes instances of online fraud as well.

To understand this better, let's dive into the essential ingredients required to commit cheating

Essential ingredients required for cheating

In the landmark judgement of Ram Jas v State of Uttar Pradesh, the Supreme Court laid down the essential ingredients required for cheating.
Forcing someone to act in a way that they otherwise wouldn't have if they hadn't been deceived. This rule is applicable if the deceived person suffers physical, mental, reputational, or material harm as a result of the action or inaction.
Perform an act to deceive the other person.
Doing a fraudulent act or dishonestly making someone deliver or restrain a property the person otherwise would not have agreed to.

Examples of cheating- What can be considered cheating?

1. Inducing a person to deliver or not deliver goods, knowing that it may cause harm to him.

2. Example- Asking a shopkeeper to deliver goods but not paying for the same.

3. When someone commits a fraudulent act while acting dishonestly and pretending to be someone else. Example- Personating as a Police Officer to obtain information that is not available to the general public

4. When a person knows that the victim of the loss may suffer harm because the offender failed to uphold the victim's interests. This is usually the case in a fiduciary relationship. Example- if a doctor knowingly does not provide the patient with the right treatment, it will fall under cheating

5. When a person makes a false promise or deceives another person by making a false representation. Example- a person, to obtain property or get any other benefit, falsely promises marriage.

WHEN CAN A PERSON BE HELD GUILTY FOR COMMITTING AN OFFENCE UNDER IPC?

In general, a person must meet the requirements outlined in the IPC section number for that specific offence for criminal culpability to arise under the IPC, i.e., for a person to be found guilty of having committed an IPC offence.

Broadly, IPC defines offences by laying down two of its essential components –

a. Actus Reus i.e., the criminal act which the accused must have compulsorily performed.

AND

b. Mens Rea i.e., the criminal mind which the accused must have compulsorily entertained while performing the above-stated criminal act.

From the perspective of the law, an accused can only be deemed to have committed an offence when he does a criminal act while under the influence of a criminal mind (as per the necessary elements of a specific crime).

To put it another way, a criminal action and a criminal mind must coexist for an act to be an offence under IPC and for criminal liability to arise thereunder.

WHEN CAN A PERSON BE HELD GUILTY UNDER SECTION 420, IPC?

For a person to be held guilty for the offence of ‘cheating and dishonestly inducing delivery of property’ under Section 420, IPC it is important for the prosecution to necessarily prove the following:

1. Nature of the criminal act under Section 420, IPC:

The criminal act for the purpose of Section 420, IPC is that as a result of the deception practised by the accused upon the victim, the former (accused) must have dishonestly induced the latter (deceived victim) –

• to deliver any property, or

• to make/alter/destroy a valuable security or anything which is capable of being converted into a valuable security.

Deception

For the offence of cheating, the accused must have practised deception upon the victim i.e., he must have made a false representation to the victim that he knew to be false at the time when he made it. Such deception must precede the act of fraudulently or dishonestly inducing the deceived-victim to deliver any property/ valuable security to any person including the accused himself.

Property

The term property has not been defined under IPC. In generic terms, property means anything that is owned by a person. It includes movable property such as car, immovable property such as land, tangible which can be seen or touched as well as intangible which cannot be seen or touched such as ownership etc. Property includes anything that is owned by a person who has a right of possession and exclusive use over the property which has monetary value. Delivery of property refers to transfer of rights over the property to another person. Such transfer may be of all or any one or more of the rights in the property. Property includes a passport, admission card to an exam.

Valuable Security

IPC defines ‘valuable security’ under Section 30 as –
‘The words “valuable security” denote a document which is, or purports to be, a document whereby any legal right is created, extended, transferred, restricted, extinguished or released, or whereby any person acknowledges that he lies under legal liability, or has not a certain legal right.’ For e.g., will, power of attorney, cheque, promissory note etc.

2. Nature of the criminal mind under Section 324, IPC:

The accused must have committed the above criminal act while entertaining either a dishonest intention or with an intent to defraud.

Dishonest Intention

To hold a person guilty of the offence of cheating it has to be established that his intention was dishonest at the time of making a promise. Such dishonest intention can’t be inferred from the mere fact that he could not subsequently fulfil the promise.

The dishonest act must be done to wrongfully gain possession of a property or to cause loss of the same to the victim.

The case of cheating is made out when the accused cheats with the intention to cheat from the very start. In other words, to hold a person guilty of the offence of cheating it has to be proved that his intention was dishonest at the time of making the promise and such dishonest intention cannot be inferred simply from the fact that he could not subsequently fulfil the promise.

For e.g., merely because a cheque given a month later was dishonoured is not enough to infer dishonest intention at the initial stage by giving it a retrospective application. Dishonour of cheque does not give rise to criminal case under Section 420, IPC for cheating.

3. Performance of the criminal act accompanied by the criminal mind i.e., execution of the offence:

While entertaining the above-stated criminal mind (dishonest intention) the accused must have committed the above-stated criminal act (deception and inducement of delivery of property). This would constitute the offence of ‘cheating and dishonestly inducing delivery of property’ under Section 420, IPC.

The co-existence of the criminal mind and the criminal act should be proved by the prosecution in order to establish guilt under Section 420, IPC.

Defences available against Section 415

Several defences may be available to a person when they are accused of cheating. It is significant to note that the applicability of these defences will depend on the particular facts and circumstances of each case. Here are a few typical defences that defendants may take-

1. Absence of dishonest purpose: To establish the crime of cheating, the accused must be shown to have a dishonest intent to deceive. It may be a defence against the accusation of cheating if the defendant can show that he had no ulterior motive in the transaction.

2. No wrongful gain or loss: Another defence could be that the transaction did not result in any wrongful gain or loss. The prosecution's case against the accused may be undermined if they can demonstrate that there was no element of gain or loss involved.

3. Absence of intention to deceive: The accused may raise this defence if they can show that there was no purpose to trick the claimed victim. For instance, if the persons involved misunderstood or miscommunicated, the element of cheating may not have occurred.

In the recent case of Rekha Jain v State of Karnatka and Ors the case was filed against Rekha’s husband who deceitfully stole more than 2 kg of gold, Rekha was running away while she had the gold with her and hence was considered co-accused by the HC. The Appellate court held that there is no evidence which would constitute that Rekha deceitfully stole the gold or was involved in the fraudulent act of her husband. Since there is no intention to deceive Section 420 was dismissed.

WHAT ARE SOME OF THE LATEST SUPREME COURT JUDGEMENTS ON SECTION 420, IPC?

Some of the famous and most important judgements of the Honourable Supreme Court of India on Section 420, IPC are as follows:

1. Syed Yaseer Ibrahim v. State of U.P.
   Azim Wasif filed a lawsuit in 2008 when the appellant claimed possession of a property through a gift deed and Azim Wasif claimed ownership based on a will. A sale deed for the property was purportedly signed by the appellant in 2014 during this time. Then, in 2020, a second respondent filed an FIR, charging the appellant with IPC Section 420 fraud using a questionable Special Power of Attorney. Due to factual disagreements, the appellant's attempt to have the FIR dismissed through a CrPC Section 482 petition was rejected. However, the court found that the IPC Section 420 accusation lacked evidence since crucial components of the FIR and charge sheet were missing. The charge was dismissed through a section 482 petition when the appeal was successful in overturning the 2021 High Court decision.

2. Archana Rana v. State of Uttar Pradesh and Anr.
   In this instance, the respondent reported the appellant for several offences, including cheating (IPC Section 420), in an FIR. The accusation was that the respondent's son's son was promised a job by the spouse of the appellant, but the employment never materialised. The respondent claimed that the appellant beat him physically and falsely accused him and his kid of committing crimes when they asked for a refund. The FIR and legal proceedings were contested by the appellant following CrPC Section 482, but her appeal was rejected. In the judgement, which described the components of deceit and fraudulent inducement, it was emphasised that cheating lies at the heart of IPC Section 420. As a result, the charges brought against the appellant under IPC Sections 419 and 420 were dropped.

3. Ram Narain Popli v. CBI
   In this case, a three-judge bench of the Supreme Court of India was considering the elements required to establish the offence of cheating under Section 420 of the Indian Penal Code. The court held that to establish the offence of cheating, it is necessary to prove that there was deception and inducement and that the accused had a fraudulent or dishonest intention. The court also noted that the prosecution must establish the essential ingredients of the offence beyond a reasonable doubt.

4. Abhayanand Mishra v. State of Bihar
   In this case, a single-judge bench of the Supreme Court held that by making a false statement about his being a graduate and a teacher in the application submitted to the University, the accused did deceive the University. He intended to make the University permit him to appear in the M.A. examination. An admission card is a property within the meaning of Section 420, IPC. The accused would have succeeded in the commission of the offence of cheating if the admission card had not been withdrawn. Under the circumstances, the accused was guilty of attempting to cheat under Section 420, IPC read with Section 511, IPC.

5. Bakshish Singh Dhaliwal v. State of Punjab
   In this case, the appellant submitted some false claims to the Government of Burma while located in Shimla, in respect of various works which he claimed he had executed and for supply of materials under the instructions of the various units of the Army. The Supreme Court held that the very fact that the claims were bogus and did not accord with the facts, led to the inference that the appellant knew that the representations that he was making in his claims were false, The appellant was held guilty under Section 420, IPC.

6. Mahadeo Prasad v. State of West Bengal
   In this case, it was held that to constitute the offence of cheating, the intention to deceive should be in existence at the time when the inducement was offered. It is necessary to show that a person had fraudulent or dishonest intentions at the time of making the promise, to say that he committed an act of cheating. A mere failure to keep up probation cannot be presumed as an act leading to cheating.

7. Hari Prasad Chamaria v. Bishun Kumar Surekha and others
   In this case, it was held that unless the complaint showed that the accused had dishonest or fraudulent intentions at the time the complainant parted with the money it would not amount to an offence under Section 420, IPC and it may only amount to breach of contract.