A false representation made dishonestly with the intention of taking advantage of the fact that many citizens are in need of flats, and which leads to the complainant parting with money, constitutes cheating under Section 420 of the Indian Penal Code.

Headnote:
CRIMINAL LAW - CHEATING - REPRESENTATION ABOUT TITLE TO PROPERTY - PROOF OF MISREPRESENTATION - INFERENCE OF INDUCEMENT - SENTENCE - MODIFICATION.
Fact of the Case:

The appellant, Dharamdas Hukamatrai Dorwani, was charged with cheating under Section 420 of the Indian Penal Code for fraudulently inducing the complainant, Chhotubhai Nagarji Desai, to enter into an agreement for the purchase of a flat and shop by falsely representing that the property was owned by him and was not subject to any mortgage.
Finding of the Court:

The High Court reversed the order of acquittal passed by the trial court and convicted the appellant, holding that the charge against him had been proved beyond a reasonable doubt.
Issues: 1. Whether the High Court was justified in reversing the order of acquittal passed by the trial court. 2. Whether the evidence on record established the guilt of the appellant beyond a reasonable doubt.
Ratio Decidendi: 1. The High Court was justified in reversing the order of acquittal passed by the trial court as the trial court's appreciation of evidence was vitiated by its failure to take note of the specific case made by the appellant in his written statement that he had informed the complainant and other allottees about the existence of the mortgage on the property at the time of entering into agreements with them. 2. The evidence on record, including the appellant's own admission in his written statement, established beyond a reasonable doubt that the appellant had made a false representation to the complainant about the title to the property, and that the complainant had parted with money as a result of this misrepresentation.
Final Decision: The appeal was dismissed, and the order of conviction and sentence passed by the High Court was confirmed.

Judgment

GAJENDRAGADKAR, J. : The appellant Dharamdas Hukamatrai Dorwani was charged with having committed an offence under S. 420 of the Indian Penal Code in that on or about March 22, 1953 he cheated chhotubhai Nagarji Desai by dishonestly or fraudulently inducting him to enter into and execute an agreement (Ex. F) on March 22, 1953 and to pay Rs. 2,875 and consent to appropriation towards the payment due under the said agreement earlier payments of Rs. 9,875 made by him on and between March 9, 1952 and July 14, 1952 in respect of Flat No. 15 in the Dorwani Mansion and a shop on the representation that the building, the shop and the land on which they stood were owned by him and were not subject to any mortgage. The learned trial magistrate who heard the case held that the charge had not been proved against the appellant beyond a reasonable doubt. The appellant was accordingly acquitted. The State then preferred an appeal against the said order of acquittal in the High Court at Bombay. The High Court held that the order of acquittal was wholly improper and that the charge against the appellant had been clearly proved beyond a reasonable doubt. That is why the High Court set aside the order of acquittal, convicted the appellant under S. 420 and sentenced him to suffer rigorous imprisonment for a period of six months and to pay a fine of Rs. 1,000, in default to suffer rigorous imprisonment for a further period of two months. The appellant then applied to the High Court for leave to appeal to this Court but his application was dismissed. Then he applied for and obtained special leave from this Court to file the present appeal. On his behalf Mr. Sethi has urged that the High Court was not justified in reversing the order of acquittal in exercise of its appellate powers, and on the merits he contends that the findings recorded by the High Court are wholly inconsistent with the evidence on record.

2. The facts on which the prosecution case is based can be briefly stated at the outset. On December 18, 1951 an agreement of sale was made in favour of the appellant in respect of a piece of land at Tulsi Pipe Road. In pursuance of this agreement the plot was purchased by the appellant on March 19, 1952 for Rs. 4,03,245. The appellant had inserted an advertisement in a Bombay newspaper in the third week of February 1952 offering certain flats for sale; and the complainant happened to read this advertisement. So the complainant wrote to the appellant and then met him in the third week of March 1952 along with his father-in-law Mr. T. B. Desai. They were introduced to the appellant by an advocate named Mr. Madnani. The appellant told the complainant and Mr. Desai that he had bought plots of land and was constructing flats and shops which he intended to sell on ownership basis. He also represented that he would be able to give possession within four months. On March 9, 1952 the complainant and Mr. Desai again went and talked to the appellant, and, after some discussion, the complainant selected Flat No. 15 on the ground floor of the Dorwani Mansion. Its price was fixed at Rs. 12,750. The complainant also selected a shop, No. 9, on the ground floor for his dispensary in the adjoining building, and its price was fixed at Rs. 7,000. Upon an enquiry made by the complainant the appellant informed him that the property had not been mortgaged or transferred. Thereupon the complainant signed two agreements Exs. S-1 and S-2. In pursuance of these agreements amounts were paid by Mr. Desai on behalf of the complainant to the appellant from time to time by cheques, the total amount thus paid was Rs. 9,875.

3. On March 22, 1953, the complaint and Mr. Desai again contacted the appellant and complained that since the work of constructing the flat which had to be given to the complainant had not even commenced they wanted the agreement to be cancelled. It appeared that certain alterations which the complainant wanted to be made when he selected Flat No. 15

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