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SUPREME COURT OF INDIA
Doraiswamy Raju : Arijit Pasayat
Devender Kumar Singla
Versus
Baldev Krishan Singla
Case No. : 1036 of 1997 (with crl.a. no. 1050 of 1997)
Date of Decision : 2/17/04
Advocates Appeared: O.P.Sharma : R.C.Gubrele : Eliza Rumthao : Aruna Gupta : Hemantika Wahi
Section 420 - Cheating - Indian Penal Code, 1860 - Section 420
Fact of the Case:
The accused were charged with the offence punishable under Section 420 of the Indian Penal Code for a transaction involving the purchase of shares with a post-dated cheque, which was subsequently dishonored. The trial court acquitted the accused, but the High Court convicted one of the accused while acquitting the other.
Finding of the Court:
The High Court found that the accused had induced the complainant to deliver the shares and that the receipt executed by the accused clearly stated that the shares had been received. The High Court convicted one accused and acquitted the other based on the evidence and discrepancies in their statements.
Issues: The main issue was whether the accused had dishonestly induced the complainant to deliver the shares and whether the essential elements of cheating under Section 420 of the Indian Penal Code were established.
Ratio Decidendi: The court held that the essential ingredients to attract Section 420 are cheating, dishonest inducement to deliver property, and mens rea of the accused at the time of making the inducement. The court also emphasized that the making of a false representation is one of the key ingredients for the offence of cheating under Section 420.
Final Decision: The High Court convicted one accused under Section 420 of the Indian Penal Code and sentenced him to undergo imprisonment for three months and a fine of Rs. 10,000, while acquitting the other accused.
Certainly. Based on the provided legal document, here are the key points:
The core legal principle established is that for an offence of cheating under Section 420 of the Indian Penal Code, the prosecution must prove dishonest inducement, mens rea (intent) of the accused, and the making of a false representation (!) (!) .
The offence involves deception that leads to the delivery of property, with the essential ingredients being cheating, dishonest inducement, and mens rea at the time of inducement (!) .
A false representation or false statement is a critical component of the offence, and the act of dishonestly inducing another person to deliver property or alter security documents forms the basis of the offence (!) .
In the factual scenario, the accused issued a cheque in connection with a transaction involving shares, which was dishonored, and the accused had represented that the shares had been received, which was a false statement. The court emphasized that the receipt explicitly stated that the shares had been received, and this was a significant factor in establishing the offence (!) (!) .
The court clarified that the mere filling of a cheque by the complainant does not negate the evidence of delivery, especially when there is a receipt indicating that the shares were received by the accused. The absence of records proving the transfer of shares does not automatically disprove the transaction, but the initial evidence must support the claim of delivery (!) (!) .
The legal definition of cheating involves deception that induces a person to deliver property or alter valuable securities, with the intention to cause harm or loss. The offence can be committed even if no transfer of property occurs, as deception itself is central (!) .
The statement under Section 313 of Cr.P.C. by the accused is only a stand or explanation and is not evidence. The absence of suggestions during cross-examination about the non-delivery of shares does not weaken the prosecution’s case, especially when there is a clear receipt indicating delivery (!) (!) .
The court highlighted that the timing of the transaction, the conduct of the parties, and the absence of evidence to support the accused’s claims are crucial in determining whether the elements of cheating are satisfied. Discrepancies in the accused’s version and the evidence supporting the receipt of shares are significant factors (!) (!) .
The court reduced the custodial sentence to a shorter period considering the circumstances, emphasizing that the conviction was well-founded but the sentence was slightly excessive (!) .
The appeal filed by the accused was allowed only in relation to the sentence, not the conviction, which was upheld. Conversely, the appeal by the complainant against the acquittal of the co-accused was dismissed due to lack of evidence of deception or delivery of shares (!) (!) .
These points collectively underscore the importance of clear evidence showing dishonest inducement, false representation, and delivery of property to establish the offence of cheating under Section 420.
JUDGMENT
Arijit Pasayat, J.
1. These two appeals are inter-linked being directed against the common judgment of a Division Bench of the Punjab and Haryana High Court whereby Devender Kumar Singla, appellant in Criminal Appeal No. 1036 of 1997 was found guilty of offence punishable under Section 420 of the Indian Penal Code, 1860 (in short the IPC), while Mala Singla, the respondent in Criminal Appeal No. 1050 of 1997 was acquitted. Dr. Baldev Krishan Singla, the respondent in the first appeal and the appellant in the second appeal was the complainant on the basis of whose complaint case was registered and the trial was held.
2. Complainants case in a nutshell is as under:
On 7th August, 1992 the accused Devender Kumar Singla in the company of his wife the order accused Mala Singla, purchased 7000 Master plus shares for Rs. 1,69,000/- from the complainant Baldev Krishan in the presence of Teja Singh son of Sajjan Singh. The complainant wanted that the payment thereof be made in cash, but accused Devender assured him that as he was a reputed dealer in the sale and purchase of shares, and his business ran into lacs, the payment by cheque would be more in order. The complainant acting on his representation accepted a post dated cheque No. 447131for a sum of Rs. 1,69,000/- drawn on New Bank of India, Moga, and issued by accused Mala Singla, and was payable on 8th August, 1992. The complainant also delivered 7000 shares and in token of having received the same, Devender executed a receipt Ex. PW 3/B. When the cheque was presented for encashment on 8th August, 1992, it was dishonoured on the ground that the payment had been stopped by the drawer and this fact was conveyed to the complainant vide memo Exh. PW 3/C dated 8th August, 1992. As the subsequent efforts to recover the money from the accused proved futile, the complainant filed the complaint in the Court of the Sub-Divisional Judicial Magistrate, Moga. After recording the preliminary evidence, both the accused were summoned to face trial for offences punishable under Sections 420 and 109 IPC. On a consideration of the pre-charge evidence of the complainant. Baldev Krishan (PW-3) as also that of Ram Adhar (PW-1) an employee of the Union Bank of India, Moga. Tarsem Lal (PW-2) an employee of the New Bank of India. Moga, Teja Singh (PW-4) and Naresh Kumar (PW-5) a clerk of Punjab National Bank, Moga, a prima facie case punishable under Section 420 read with Section 34 IPC was found to have been made out against both the accused and they were charged accordingly to which they pleaded not guilty and claimed trial.
3. The Trial Court held that the complainant has not been able to establish several relevant factors. It was held that the transaction took place on 27th July, 1992 as claimed by the accused, and not on 7th August, 1992 as alleged by the complainant. There was no material to show that any shares were delivered to the accused. There was no record as regards the identity of the owner of the shares or as to whether they had in fact been transferred to the names of the accused. The existence of the alleged 7000 Master Plus shares was doubted. It was held that if the complainant was having 7000 Master Plus shares, he could have proved this fact by summoning the relevant records, but such records were not produced. Each share certificate has a distinction mark, and if the complainant had purchased the shares he should have been aware of the person from whom he had purchased them and there was no material to show that the accused had transferred any Master Plus shares in their names. With these observations the Sub-Divisional Judicial Magistrate. Moga directed acquittal of the accused persons.
4. Aggrieved by the said order, the complainant preferred an appeal before the Punjab and Haryana High Court. By the impugned judgment the High Court accepted the appeal so far as accused Devender Kumar Singla is concerned, but dismissed the same so far as Mala in concerned. It took note of the f
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