Misrepresentation regarding property title, which is mortgaged, constitutes cheating under IPC Sections 415 and 420, thus justifying the dismissal of bail.

JUDGMENT

Jasmeet Singh, J. (Oral)--This is an application seeking bail in FIR No. 198/2022 dated 15.02.2022, registered at Police Station-Mayapuri, Delhi under section 420 IPC.

2. The applicant herein (Mohit Tayal) is the son of the directors Umesh Kumar and Sangeeta Tayal (applicant in 1543/2022 and BAIL APPLN. 1565/2022 respectively).

3. As per the FIR, it is stated that the complainant approached the parents and the applicant and showed his interest in purchasing the said property as it was adjacent to his already existing industrial unit (H-932). Pursuant to the negotiations, an Agreement to Sell dated 07.03.2019 was executed. The price of the property was fixed at Rs.81,50,000/- and the complainant over a period of time has admittedly paid Rs.33,50,000/- Although, it is stated by learned counsel appearing for the complainant that they have paid a sum of Rs.39 lakhs.

4. It is stated in the FIR that the applicant kept on insisting and alluring the complainant about this beneficial deal and also assured him that the said property is clean, with free title and without any sort of encumbrances. It is only subsequently after paying substantial amount of money, that the complainant got to know that the property was already mortgaged with Bank of India and the said fact was hidden from the complainant.

5. Mr Modi, learned counsel appearing for the applicant states that in the present case,

a. The dispute is of a civil nature,

b. The complainant knew about the mortgage as he has made RTGS payments to the Bank,

c. The property was sold on `as is where is basis' and hence the applicant is entitled to bail.

6. I am unable to agree with the contention of learned counsel for the applicant. The Agreement to Sell categorically stated "The plot is not restricted from loan, sale, lease and rent etc. Nor I have taken the loan from any Bank of Financial Institution by mortgaging the plot, that is, it is free from all type of encumbrances." This is clearly contrary to the factual matrix especially when the property was mortgaged with Bank of India. The complainant has invested substantial amounts of money and without knowing that the property was mortgaged.

7. Although the applicant is not the director of the company on whose behalf this agreement to sell was executed, he is the witness to the agreement to sell. In fact, the property in question i.e. H-1/933, RIICO Industrial Area, Chopanki, Bhiwadi, Distt-Alwar, Rajasthan, was initially mortgaged with the Bank of India, Hauj Khas branch against loan facility of Rs.1.26 Crores from the bank, then a lien was created by RIICO over the said property against loan facility of Rs.75 lacs availed by the sister concern of the alleged company in which the applicant was the proprietor. There was nothing which prevented the applicant from disclosing correct fact to the complainant.

8. In `Archana Rana vs. State of Uttar', (2021) 3 SCC 751 the Supreme Court has opined that-

"7...As observed and held by this Court in R.K. Vijayasarathy [R.K. Vijayasarathy v. Sudha Seetharam, (2019) 16 SCC 739: (2020) 2 SCC (Cri) 454], the ingredients to constitute an offence under Section 420 are as follows:

(i) a person must commit the offence of cheating under Section 415; and

(ii) the person cheated must be dishonestly induced to

(a) deliver property to any person; or

(b) make, alter or destroy valuable security or anything signed or sealed and capable of being converted into valuable security.

Thus, cheating is an essential ingredient for an act to constitute an offence under Section 4