Important point
To hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise.

Headnote:(i) Indian Penal Code, 1860—Section 415 cheating—Definition of—Mere breach of contract cannot give raise to criminal prosecution for cheating—It is necessary to show that person making promise had fraudulent or dishonest intention at the time of making promise.
       In the defnition of Section 415 there are set forth two separate classes of acts which the person deceived may be induced to do. In the first place he may be induced fraudulently or dishonestly to deliver any property to any person. The second class of acts set forth in the section is the doing or omitting to do anything which the person deceived would not do or omit to do if he were not so deceived. In the first class of cases the inducing must be fraudulent or dishonest. In the second class of acts, the inducing must be intentional but not fraudulent or dishonest. In determining the question it has to be kept in mind that the distinction between mere breach of contract and the offence of cheating is a find one. It depends upon the intention of the accused at the time of inducement which may be judged by his subsequent conduct but for this subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, that is the time when the offence is said to have been committed. Therefore it is the intention which is the gist of the offence. To hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise. From his mere failure to keep up promise subsequently such a culpable intention right at the beginning that is, when he made the promise cannot be presumed. (Paras 14 and 15)
       (ii) Code of Criminal Procedure, 1973—Section 482—Quashing of FIR—Complaint under Sections 418, 420, 423, 469, 504 and 120 IPC—Accused appellants allegedly sold property to complainant-respondent stating that property fell to their shares on partition of family property—Complainant subsequently coming to know of pendency of suit by one of brothers of complainant alleging property not partitioned by metes and bounds—No injunction passed in civil suit against alienation of property in question—Allegation of complainant that accused appellant did not disclose about pending suit—Held, ingredients of intentional deception on part of accused at beginning of negotiation for transaction neither been expressly stated nor indirectly suggested in complaint—Offence of cheating not made out—FIR quashed.
       Held : Reading the averments in the complaint in entirety and accepting the allegations to be true, the ingredients of intentional deception on the part of the accused right at the beginning of the negotiations for the transaction has neither been expressly stated nor indirectly suggested in the complaint. All that the respondent No. 2 has alleged against the appellants is that they did not disclose to him that one of their brothers had filed a partition suit which was pending. The requirement that the information was not disclosed by the appellants intentionally in order to make the respondent No. 2 part with property is not alleged expressly or even impliedly in the complaint. Therefore the core postulate of dishonest intention in order to deceive the complainant-respondent No. 2 is not made out even accepting all the averments in the complaint on their face value. In such a situation continuing the criminal proceeding against the accused will be, in our considered view, an abuse of process of the court. The High Court was not right in declining to quash the complaint and the proceedings initiated on the basis of the same. (Para 16)
       Result : Appeals allowed.

JuDgment

D.P. Mohapatra, J.—Leave granted.

2. The three appellants, Hridaya Ranjan Prasad Verma, Manoranjan Prasad Verma and Rajiv Ranjan Prasad Verma are sons of Late Shri Kashi Nath Prasad Verma. They have three other brothers who are not directly involved in the present proceedings. Late Kashi Nath Prasad Verma was the owner of Khasra No. 213, Plot No. 1172, in Village Srinagar, within Siwan Police Station. On his death his six sons succeeded to the property. Appellant No. 1 is a neuro-surgeon at Patna; appellant No. 2 is the Manager of Pathar Jhora Tea Gardens in Jalapaiguri and appellant No. 3 is a retired marketing manager of Jay Shree Tea and Industries Ltd., Delhi. Respondent No. 2, Manish Prasad Singh, an advocate, is the secretary of Kanishka Sahkari Girh Nirman Samiti Limited, Sewan, (hereinafter referred to as the Society) a cooperative society engaged in purchasing land from different persons and after developing and dividing it into small pieces selling the plots to different customers. The appellants agreed to sell the land in village Srinagar to respondent No. 2 for a consideration of Rs. 16,00,000. The respondent paid a sum of Rs. 11,00,000 to the appellants by way of drafts drawn in their favour on 7.12.1992. The appellants executed a registered sale deed in respect of the land in favour of the Society. It is the case of the appellants that on insistence of respondent No. 2 two other brothers of the appellants signed the sale deed as witnesses. By way of a further safeguard the appellants executed a separate indemnity deed on the same day in which they undertook to indemnify any loss caused to the society on account of any objection which may be raised by any co-sharer against transfer of the land in future. The appellants assert that they have delivered possession of the land to the society on the same day. Another brother of the appellants Priya Ranjan Prasad Verma also executed a sale deed in favour of the society alienating his portion of the land.

3. On registration of the sale deed respondent No. 2 handed over three cheques to the appellants for the sum of Rs. 5,50,000. When the appellants presented the said cheques in the bank the same were dishonored on account of insufficiency of amount in the account of the drawer. The respondent No. 2 had issued a separate cheque in favour of Priya Ranjan Prasad Verma which was also dishonored for the same reason.

4. Prior to the execution of the sale deed Akhil Ranjan Prasad Verma brother of the appellants had filed a suit, Title Suit No. 118 of 1990 for partition alleging inter alia that though the properties left by their father had been partitioned amongst the brothers in 1971 no division by metes and bounds had taken place. On 5.12.1992 on the application filed under Order 39 Civil Procedure Code the learned Subordinate Judge, Siwan passed an interim order restraining the appellants from disturbing the status quo or transferring the land of Schedule I to the plaint but no injunction was passed in respect of the land described in Schedule -IV of the plaint in which the property in dispute in the present proceeding is included. According to the appellants the plaintiff Akhil Ranjan Prasad Verma did not press his prayer for injunction in respect of the Schedule IV properties. It is the further case of the appellants that between 9.12.92 to 18.12.92 the respondent No. 2 sold portions of the land sold by them to several other persons.

5. When the cheques issued by the respondent No. 2 in their favour bounced the appellants made several requests to the said respondent for payment of the amount. On each such occasion the said respondent avoided to pay the amount promising to do so within a short time. Finally on 21.10.1995 the appellants through their advocate sent a notice to respondent No. 2 reminding him that the cheques issued by him in favour of the appellants had bounced due to insufficiency of funds. Finding that respondent No. 2 had no intention to pay t

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Important pointTo hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise.

Cases Referred (3)

Important point
To hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise.