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Analysing the retrieved Case Laws
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Searching Case Laws & Precedent on Legal Query.....!
Analysing the retrieved Case Laws
Scanned Judgements…!
Suits for recovery of mortgage dues do not negate the criminal liability for cheating if concealment or fraudulent inducement was involved during the transaction ["DAMODAR HARIRAM vs STATE REP BY - Madras"], ["Abdul Rashid Khan VS Emperor - Allahabad"].
Analysis and Conclusion:
In the complex world of property transactions in India, questions often arise about the line between civil disputes and criminal offenses. One pressing issue is: Mortgage in Cheating – can securing a loan with a mortgage on property, followed by its sale without disclosure, lead to charges under the Indian Penal Code (IPC)? This blog delves into the legal nuances under IPC Sections 415 and 420, drawing from judicial precedents and statutory interpretations to clarify when such actions may constitute cheating.
Property buyers and sellers frequently encounter scenarios where mortgages are involved, raising concerns about fraud. Understanding the essentials can help avoid pitfalls or build a strong defense. Note: This is general information based on legal analyses and case laws; it is not specific legal advice. Consult a qualified lawyer for your situation.
Cheating is defined under Section 415 of the IPC, which requires specific ingredients to be proven for a criminal charge. Courts consistently emphasize that the act must involve dishonest inducement, deception, or misrepresentation at the time of the transaction. State VS Ramados Naidu and Others - Madras (1976)Rekha Bharana VS Satinder Garg - Punjab and Haryana (2008)Inayathullah VS Guruswamy and others - Madras (1993)
Key elements include:- Fraudulent or dishonest intention from the outset, inducing the victim to deliver property, money, or consent to something they wouldn't otherwise do. M. L. Goel VS Mukhtiar Singh - Punjab and Haryana (1991)Binod Kumar Singh VS State of Jharkhand - Jharkhand (2012)- Mere breach of contract or subsequent failure does not suffice; the intent must exist when the promise or representation is made.
For instance, 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, a culpable intention right at the beginning... cannot be presumed. Ramesh Boghabhai Bhut VS State - 2020 Supreme(Del) 540SUBHKARAN LUHARUKA VS STATE (GOVT. OF NCT OF DELHI) - 2010 Supreme(Del) 496
A mortgage deed serves as security for a loan, but it does not automatically negate cheating if the loan or subsequent sale involved deception. The core question remains: Was there dishonest inducement to obtain the loan or property? State VS Ramados Naidu and Others - Madras (1976)
In property sales, if a seller mortgages the property to secure a loan and then sells it without disclosing the encumbrance, this can trigger cheating allegations. Courts have held that securing a loan with mortgaged property followed by non-disclosure in the sale deed constitutes prima facie cheating. For example:- The de facto complainant was aware of the mortgage. They had deliberately not mentioned that fact in the sale deed... All these facts clearly lead to the complicity of the applicant and it is prima facie clear that he had committed an offence of cheating. ABDUL AZEEZ Vs STATE OF KERALA - 2021 Supreme(Online)(KER) 24799
Here, anticipatory bail was denied because failure to disclose the mortgage was deemed significant evidence of cheating.
Similarly, Suppression of facts itself through mortgage and the sale deed will prima facie amounts to cheating or misrepresentation as the case may be. Porkodi VS State rep. by The Sub Inspector of Police, Virudhunagar - 2023 Supreme(Mad) 2794
Concealing material facts like existing mortgages or prior claims, with dishonest intent to induce parting with money or property, squarely falls under cheating. M. L. Goel VS Mukhtiar Singh - Punjab and Haryana (1991)Binod Kumar Singh VS State of Jharkhand - Jharkhand (2012)D. Thangavel VS Jaswantrai P. Mathuria & another - Bombay (1986)
However, not every non-disclosure is criminal. If there's no dishonest intent – perhaps it's a mere civil breach – charges may fail. Mere misrepresentation or concealment, without dishonest intent to cause wrongful gain or loss, does not constitute cheating. M. L. Goel VS Mukhtiar Singh - Punjab and Haryana (1991)Binod Kumar Singh VS State of Jharkhand - Jharkhand (2012)
Indian courts balance criminality with commercial realities, often denying bail or quashing proceedings based on facts:
Another example: In a case of a mortgage of property at the most amounting to a breach of agreement, which cause no prejudice to the complainant much less the alleged offence of cheating... the order... are quashed. SUBHKARAN LUHARUKA VS STATE (GOVT. OF NCT OF DELHI) - 2010 Supreme(Del) 496
Anticipatory or regular bail often hinges on prima facie cheating evidence. Courts scrutinize:- Conduct and material concealment. Mohit Tayal vs State (Govt. of NCT of Delhi)- Whether the sale was as is where is, potentially negating fraud claims.
Cheating is an essential ingredient for an act to constitute an offence under Section 420 IPC. Bail denied where elements are met. Mohit Tayal vs State (Govt. of NCT of Delhi)
In summary, while mortgage-related non-disclosures can lead to cheating charges under IPC 415/420, courts demand proof of dishonest intent. Many cases turn on prima facie evidence, affecting bail outcomes. Always prioritize due diligence in property deals.
Disclaimer: This article provides general insights based on reported cases and is not a substitute for professional legal advice. Laws and interpretations may vary by jurisdiction and facts.
#MortgageCheating #IPC420 #PropertyFraud
Cheating-Concealing fact. of seizure from mortgage-Inmmbramee-Fraud-Penal Code, s. 403. ... cheating him. ... A person who obtains money on a mortgage of property, which at the date of such mortgage is under seizure, by concealing from the mortgagee the fact of such seizure, is guilty of cheating under section 403 of the Penal Code. Emperor v. ... - In this case the appellant has been convicted of cheating under section 408 of the Penal Code a....
of the disputed property to the complainant then it could be said that cheating
L R. 369] a person obtained money on a mortgage of property, which at the date of the mortgage was under seizure, without disclosing the fact that it was under seizure, and was held guilty of cheating. ... The learned Judge said: "It was clearly, therefore, the duty of the accused to have disclosed the existence of this mortgage to the intending purchaser. He did not do so. ... One was an unreported case, in which Schneider A.J. upheld the conviction in a case in which the accused treated for the sale of property ....
to a mortgage. ... The appellant was charged under section 400 of the Penal Code with cheating a Proctor and Notary by falsely representing to him that certain premises described in the schedule to a mortgage bond attested by him were free from all encumbrances when, in fact, the said premises were subject ... C , Colombo, 48,955 Cheating - Ingredients which should be proved - Penal Code, ss e33400. ... All these cases relate to cheating by personation and I can well understand that a Notary wou....
He went to a Chetty, who agreed to lend the sum of money on a mortgage of a land described in the title deed, provided both accused and his mistress jointly and severally bound themselves by the mortgage bond. ... The only question to decide is whether such personation amounts to cheating by personation as defined in the Penal Code. By section 398 cheating is defined, first, as fraudulently or dishonestly inducing a person by deception to deliver any property. ... to cheat the said Arumugam Chetty by personation, by f....
The de facto complainant was aware of the mortgage. They had deliberately not mentioned that fact in the sale deed. ... All these facts clearly lead to the complicity of the applicant and it is prima facie clear that he had committed an offence of cheating. He is therefore not entitled to the extraordinary remedy of anticipatory bail. ... The company received a notice from the bank regarding the mortgage and the bank demanded a sum of Rs.24 lakhs as the balance of the loan amount. ... Going by the facts and circumstances of this case, it....
Cheating-Penal Code, s. 403-Representation by mortgagor that land was free from encumbrance-Land subject to lease. ... - 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 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. ... Two years afterwards ....
the offence of cheating. ... Thus, cheating is an essential ingredient for an act to constitute an offence under S.420 IPC.” ... The specific allegation is that, accused Nos.1 and 2 availed loan to the tune of Rs.1,50,000/-(Rupees One Lakh Fifty Thousand only) from Kadakkal Service Co-operative Bank No.3456 and offered the property of the complainant towards security of the loan by creating mortgage. ... going by the available materials, it is emphatically clear that, loan was availed by accused Nos.1 and 2 for the treatment of cancer suf....
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. ... Thus, cheating is an essential ingredient for an act to constitute an offence under Section 420 IPC. 8. "Cheating" is defined under Section 415 IPC. ... In view of the aforesaid reasons, I am not inclined to entertain the present bail application as all the above three grounds pale into insignificance in view of the conduct and material concealment which c....
Suppression of facts itself through mortgage and the sale deed will prima facie amounts to cheating or misrepresentation as the case may be. This itself disentitles the petitioners to claim the discretionary relief. 10. ... Per contra, the learned counsel appearing for the intervenor/de-facto complainant would rely upon the mortgage deed executed by the first accused. 8. ... A mortgage deed was executed by the first accused for the above said loan amount, mortgaging the property situated in TS No.8 measuring about 974 sq....
Even otherwise a subsequent breach of a contract i.e. creation of Mortgage cannot be construed as cheating. From his mere failure [Crl.M.C.Nos.6122-23/2005 & Crl.M.C.Nos.6133- 34/2005 The assignee of the rights of the Company has already constructed the Flats over the land. 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.
The Hon’ble Supreme Court held that the criminal proceedings initiated by the complainant are nothing but an abuse of process of law for settling a civil dispute. In Criminal Appeal No.834 of 2017 decided on 08.08.2019, the Hon’ble Apex Court has laid down as under, ie. “the complainant himself paid the mortgaged money and got the mortgage redeemed and thereafter he got the sale deed executed in his name and filed the complaint alleging cheating by the sellers”.
4. Considering this significant fact, this Court is of the firm opinion that apparently Saidittamal committed no offence whatsoever while taking mortgage loan from the Bank because even after 5.15 hectares of land had been sold by the petitioner to the complainant's grandfather, 2.253 hectares remained in his name and he was entitled to use the same as per his requirement. However, the bank never raised any grievance regarding the loan transaction and since admittedly, the loan has been repaid, apparently, the accused cannot be held responsible for the offence of cheating. It is fu....
The complainant company was thus not in a position to shift its banking to another bank without the release of title deeds and in this process the accused bank started charging penal rate of interest @ 15% per annum since the BPLR increased to 17.75 whereby the interest was to be charged after giving a margin of 5.50, which would have resulted into rate of interest at 12.25%. Alwar, Neemrana, Rajasthan under an equitable mortgage and it was pointed out that the action of the accused amounted to cheating, defrauding and extortion. The complainant company had already deposite....
Even otherwise a subsequent breach of a contract i.e creation of Mortgage cannot be construed as cheating. 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, a culpable intention right at the beginning, that is, when he made the promise cannot be presumed. The assignee of the rights of the Company has already constructed the Flats over the land.
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