Hridaya Ranjan Pd. Verma v. State of Bihar

Introduction and FACTS:

The appellants signed a registered sale deed in favour of respondent No 2 who was the secretary of a cooperative society (‘Society’) that purchased land and sold it after splitting it into tiny portions. The sale was agreed upon for a sum of Rs 16,00,000, of which respondent No 2 paid Rs 11,00,000 in drafts. The appellants gave the society custody of the land on the same day. Respondent No 2 handed over three cheques for Rs 5,50,000 to the appellants after the sale deed was registered. However, the cheques were returned due to insufficient funds in the drawer’s account.

The appellants submitted many requests to respondent No 2 for payment of the amount and even served him with a notice, but there was no response. Finally, the appellants filed a first information report under sections 406, 420, and 120 B of the IPC, as well as three cases to recover the money owed to them. Shortly after, respondent No 2 filed a case against the appellants before the Chief Judicial Magistrate, alleging commission of offences under sections 120 B, 418, 420, 423, 469, and 504 of the Indian Penal Code 1860 (IPC). Respondent No. 2 claimed that by working together, all of the appellants had defaulted and defrauded society and himself by providing false, fabricated, and erroneous information, causing him to enter into talks and loan them a large sum. The appellants petitioned the High Court to dismiss the lawsuit as well as the procedure before the Chief Judicial Magistrate, which was denied. The appellants filed an appeal.

Issues at hand:

The issue at hand is whether the appellants’ case falls under any of the categories that were listed in State of Haryana and others v. Bhajan Lal and others.

 Is it possible that the claims in the first information report or the complaint, even if taken at face value and accepted in their whole, do not constitute a case against the accused?

It is necessary to consider the nature of the offenses accused against the appellants, the elements of the offenses, and the allegations contained in the complaint in order to answer the question.

A reading of the complaint, some of which have already been extracted, reveals that the major offence alleged to have been committed by the appellants is ‘cheating,’ which is punishable under Section 420 IPC.

Rules/Relevant Section:

Cheating is defined under section 415 of IPC requires:

1. Deception of any person
2. Fraudently or dishonestly inducing that person
3. To deliver any property to any person
4. ii) to consent that any individual may keep any property; or
5. (b) knowingly causing that person to do or omit anything that he would not do or omit if not duped, and which act or omission causes or is likely to cause injury or harm to that person’s body, mind, reputation, or property.

Judgment:

Reading the section, it is clear that the concept establishes two distinct sorts of activities that the person deceived may be induced to perform. First and foremost, he may be falsely or dishonestly induced to deliver any property to any person. The section’s second type of acts is the doing or failing to do something that the person deceived would not do or fail to do if he were not fooled. The inducement must be deceptive or dishonest in the first class of situations. The inducement must be purposeful but neither deceptive or dishonest in the second class of behaviors.

When answering the question, keep in mind that the line between a simple violation of contract and the crime of cheating is thin. It is dependent on the accused’s purpose at the time of inducement, which can be determined by his future behavior, but this is not the only criteria. A simple breach of contract cannot give rise to a criminal prosecution for cheating unless fraudulent or dishonest intent is demonstrated right from the start of the transaction, when the offence is deemed to have been committed. As a result, the gist of the offense is the intention.

Based on the aforementioned criteria, we believe that the current case merits intervention because the elements of the offence of cheating punishable under section 420 IPC and its linked offences under sections 418 and 423 have not been proven. In the case of Sections 469, 504, and 120B offenses, the complaint lacks even the essential allegations necessary to establish a case. That being the case, the case falls under the first type of cases described in State of Haryana & Ors. v. Bhajan Lal and Ors. (Supra), and as such, the Court should intervene. Reading the claims in the complaint in its entirety and accepting the allegations as genuine, the ingredients of purposeful deception on the part of the accused right at the start of the transaction talks have not been expressly stated or implicitly suggested in the complaint. All that respondent No. 2 has claimed against the appellants is that they failed to inform him that one of their brothers had filed a pending partition suit. The condition that the appellants did not knowingly divulge the facts in order to force respondent No. 2 to part with property is not established expressly or even impliedly in the complaint. Even if all of the averments in the complaint are taken at face value, the essential premise of dishonest intent to deceive the

complainant-respondent no.2 is not established. Continuing the criminal proceedings against the accused in such a situation would, in our opinion, constitute an abuse of the court’s procedure. The High Court erred in rejecting to dismiss the complaint and the proceedings commenced as a result of it. Even if all of the averments in the complaint are taken at face value, the essential premise of dishonest intent to deceive the complainant-respondent no.2 is not established. Continuing the criminal proceedings against the accused in such a situation would, in our opinion, constitute an abuse of the court’s procedure. The High Court erred in rejecting to dismiss the complaint and the proceedings commenced as a result of it.

Analysis and conclusion:

“There is a fine line between a simple breach of contract and the crime of cheating.” It is dependent on the accused’s purpose at the time of inducement, which can be determined by his future behavior, but this is not the only criteria. A simple breach of contract cannot give rise to a criminal prosecution for cheating unless fraudulent or dishonest intent is demonstrated right from the start of the transaction, when the offence is weighed to have been committed.”

• Hridaya Ranjan Prasad Verma v. State of Bihar

Scope of 415:

As per s.415 of IPC if a person fraudulently, dishonestly, or intentionally induces another person to do or omit doing any act that he would not have done if he had not been deceived, and the act causes harm to that person in body, mind, reputation, or property, the person who fraudulently, dishonestly, or intentionally induced the other person is said to cheat. Any dishonest concealing of facts that can lead to a person doing something he would not have done otherwise is also considered cheating.

The very first factor required for the offence of cheating is the accused’s deception of the complainant. The charge of cheating cannot be proven in the absence of such deception. Once deception has occurred, the deluded individuals should be persuaded to do or refrain from doing anything. Cheating requires criminal intent ‘at the time of entrustment,’ i.e. demonstrating that the person had fraudulent or dishonest purpose at the time of making the pledge. It cannot be assumed that a person had malevolent intent from the start only because he failed to keep the commitment later. An plea was filed to dismiss and set aside a FIR for the act punishable under Sections 406 and 420 of the IPC in a case heard by the Gujarat High Court, which principally concerned with non-payment of salary to security guards at GMDC projects. While noting that there was no allegation in the FIR that the accused had ‘dishonest or fraudulent purpose at the time the complainant parted with the money,’ the Court decided that this would not constitute an offence under Section 420 IPC and could only amount to breach of contract. The court further stated that, given the civil nature of the factual disagreement, enabling the respondent to continue his complaint in criminal proceedings is nothing more than “abuse of process of law.”

The distinction between plain violation of contract and cheating in the context of contracts would be determined by the fraudulent inducement and mens rea.

Criminal proceedings should not be seen as a ‘shortcut’ to other legal remedies [11]. In general, in order to establish criminal guilt in pay disputes regarding employment contracts in India, it is required to show that the employer willfully acted dishonestly or fraudulently, and this depends on the specific circumstances of each case.To commit a criminal offense of cheating, it is necessary to demonstrate that the person had a fraudulent or dishonest intention to mislead a person into believing the unreal as existent and genuine, and it is also necessary to demonstrate that the person had such dishonest intention to deceive from the time the promise was made, not later.

********

This case analysis is written by S Abhipsha Dash, first year law student as an intern under legal vidhiya.

Admin