1916 Present: Shaw J.

THE KING v. APPU.

69-D. C. Negombo, 3,086.

Cheating-Penal Code, s. 403-Representation by mortgagor that land was free from encumbrance-Land subject to lease.

A representation by a person that a land is " free from encumbrance " amounts to a representation that it is not subject to any lease

A person mortgaging a land representing that it is " free from encumbrance " would be guilty of cheating, if the land was subject to a lease at the time.

Accused in this case was acquitted on the ground that there was no evidence of a criminal intention on his part.

THE facts are set out in the judgment.

A. St. V. Jayewardene (with him Amerasekera), for appellant.

Dias, C.C., for respondents

April 6, 1916. SHAW J.-

The accused has been convicted of cheating, under section 403 of the Penal Code, and sentenced to pay a fine of Rs. 500, or in default three months' rigorous imprisonment.

The accused was the owner of some land situated at Dagonna, which was subject to a mortgage for Rs. 500, and in respect of which he had, on May 8, 1913, granted a lease to one Pelis Appuhamy for ten years, the whole rent for the term, viz., Rs. 500, having been paid in advance.

Shortly after this lease had been granted one Peduru Appu, who was at one time an accused in this case, and has been discharged, entered into negotiations with Sithambarampulle, the complainant, who was acting for his son-in-law Chelliah, for a mortgage for Rs. 1,500, to be secured on this land and two other lands belonging to Peduru Appu, the arrangement being that, prior to the execution of the mortgage, Peduru Appu should purchase the land from the

accused and obtain a transfer from him. The negotiations with Sithambarampulle were conducted by Peduru Appu in the presence
of the accused; no disclosure was made by either of them of the  existence of the lease to Pelis.

Sithambarampulle, having inspected the land and agreed to , make the loan on behalf of his son-in-law put the matter into the hands of Mr. Croos Daberera, his proctor and notary. Mr. Daberera made search at the Registrar's office and found no registered deed affecting the land except the mortgage for Rs. 500, which it was arranged should be paid off at the time of completion out of the money to be borrowed from the complainant. On June 11 the parties attended at Mr. Daberera's office for the completion. The transfer to Peduru was executed, the purchase price being Rs. 2,500; the mortgage from Peduru to Chelliah for Rs. 1,500 was executed, and Rs. 1,300 of the amount of the loan was paid by Sithambarampulle; the Rs. 500 mortgage, with the interest due, was paid off and discharged, and Rs. 750 of the balance was paid to the accused and Peduru Appu gave him a promissory note for Rs. 1,500, the balance of the purchase money. No mention was made by either the accused or Peduru of the lease to Pelis, and both Peduru and the accused, at the request of Mr. Croos Daberera, signed declarations, the first, that all the lands mortgaged by him, and the second, that the land in question, were " free from all encumbrances ".

Two years afterwards the mortgage bond was put in suit by Chelliah, and this land was sold by the Fiscal. The lease to Pelis was then for the first time discovered, and was found to have been registered the day after the mortgage was executed, and one day before the mortgage itself was registered. The land was bought at the Fiscal's sale by Chelliah for Rs. 350. the low price being no-doubt accounted for by the existence of the lease, which had still some eight years to run. The other lands mortgaged by Peduru having failed to realize the full sum due on the mortgage, the present proceedings were instituted.

I quite agree with the finding of the District Judge that the representation that the land was free from encumbrances was made by the accused to Sithambarampulle, Chelliah's agent, for the purpose of inducing