The main legal point established in the judgment is that the mere breach of an obligation arising from a contract for the sale of immovable property, without the element of inducement with dishonest intention, does not attract the offences under Section 418 and 420 IPC. It emphasized the importance of establishing fraudulent or dishonest intention at the beginning of the transaction to initiate criminal proceedings.

JUDGMENT :

P. SOMARAJAN, J.

1. It is against the conviction rendered for the offence punishable under Section 418 and 420 IPC, the sole accused came up in revision.

2. Both the courts below found the accused guilty of the offences punishable under Section 418 and 420 IPC and convicted thereunder and sentenced to undergo six months rigorous imprisonment for the offence under Section 418 IPC and two year rigorous imprisonment for the offence under Section 420 IPC. It is pertaining to an agreement for sale entered into by the parties, the complainant and the accused under a consensus ad idem specifying the terms and conditions to do certain things in future, that is to say, execution of a sale deed pertaining to an immovable property.

3. A mere breach of an obligation arising out of a contract for sale of immovable property though involves entrustment of money by way of part consideration or by way of security/earnest money would not by itself attract the offence punishable under Section 418 or 420 IPC. The expression “deliver any property” incorporated under Section 420 IPC does not include the amount received by way of security to contract or earnest money or advance deposit under a contract for sale unless the same is the result of “inducement” with dishonest intention. The phraseology of Section 417 and also 420 IPC mandates delivery of property under deception, which may include either alteration or conversion of valuable security or anything, which is signed or sealed capable of being converted into a valuable security. Delivery of property or valuable security for any specific purpose under a contract between the parties, though involves dishonest intention, will not attract either of the offences under Section 418 or 420 IPC, unless there is element of “inducement” to do or not to do any act. The contract entered into should be the result of “inducement” and it may be direct or indirect. The reason behind it is that in order to attract the criminal liability under Section 418 and 420 IPC, the vital ingredient “inducement” to the person to whom the deception was played has to be established. The word “inducement” and “dishonest intention” are having different connotations in its application. The word “inducement” stands for something which will have the force of prompting or forcing or persuading any particular person to do or not to do any act and when materialized, it may result in “deception.” But mere existence of dishonest intention to deceive a particular person cannot be substituted in the place of the required vital ingredient “inducement.” In order to bring up a case of inducement, there should be some act or forbearance from the part of the person to persuade the other to do or not to do certain act. The contract or delivery of any money either by way of advance or earnest money must be the result of such “inducement” played on the person and mere existence of dishonest intention unless coupled with necessary ingredient i.e. inducement may not be sufficient to attract the offence under Section 418 or 420 IPC.

4. The ingredient which would constitute 'cheating' as defined under Section 415 IPC is an inseparable part of offence punishable under Section 420 IPC. Hence, when there is delivery of any property either movable or immovable or money in trust for the performance of contractual obligation arising out of a contract for sale, unless there is “inducement” to deliver such property or to enter into a contract, it would not attract the criminal liability under the said provision even if it is found that the contract was entered into and the other person had entertained a dishonest intention at that time. There should be something to show that the other person was compelled or persuaded to enter into such contract and deliver any money or property. If the existence of dishonest intention is of such a nature sufficient to persuade the other directly or indirectly to enter into a contract or to deliver property, it would