Legal provisions regarding Cheating and dishonestly inducing delivery of property under section 420 of Indian Penal Code, 1860.
Cheating and dishonestly inducing delivery of property:
While simple cheating is covered by Sections 417 and 419, Section 420 applies when due to the actions of the cheat there is destruction or delivery of property or alteration or destruction of any valuable security.
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Section 420 deals with certain aggravated forms or specified classes of cheating. Section 420 deals with cases of cheating, whereby, the deceived person are dishonestly induced:
a) To deliver any property to any person; or
b) To make, alter or destroy;
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i) The whole or any part of a valuable security; or
ii) Anything which is signed or sealed, and which is capable of being converted into a valuable security.
A fraudulent representation within the meaning of Section 420 may be made directly or indirectly. A fraudulent representation got made through a person acting as an agent for the accused amounts to fraudulent representation by and on behalf of the accused.
In Ram Prakash Singh v. State of Bihar [AIR 1998 SC 296], it was held that where the officers of LIC introduced fake proposals without any actual gain for themselves as well as a real loss for corporation, still they are liable for cheating under Section 420, as such fake proposals are likely to harm the reputation of corporation. The aim of such officers was to show inflated business in their branch and secure the promotion in future on its basis.
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The term ‘property’ as used in Section 420 is wide enough to include anything capable of ownership. For example, an admission card which enables a candidate to sit for the M.A. Examination of a University is ‘property’.
‘Valuable security’ has been defined in Section 30 of IPC and it implies a document which is sufficient to be classed as, and to pass for, a valuable security. In short, so long as a document is a security for a value, it is a valuable security whether it is negotiable or not. Consequently, not only bills of exchange, such as hundi, cheque, or the like, which are payable to bearer, are valuable security, but other document, such as, simple bonds fall within the term ‘valuable’ security.
The word ‘make’ implies completion of a valuable security by due execution, attestation as well as its registration, where its registration is compulsory. If it is not so ‘made’, it may still be ‘signed’ or ‘sealed’, which, being an act of its execution converted a draft into a deed, has the same effect as the making of a valuable security.
The word ‘alter’ implies any change in the text of the valuable security. For instance, if a person is induced to raise or lower the rate of interest stipulated therein, it would be an alteration, and punishable here if it was induced dishonestly. It is not necessary that the alteration should have been made by this executant if it is made with his consent obtained by dishonest inducement.
The ‘destruction’ of a security would ordinarily be induced in token of the extinguishment of an obligation. This may be done by a person falsely representing that he had discharged the debt, or that the security had become unenforceable in law, or that he would upon its destruction execute another security, or, indeed, under any circumstances which constitute the offence of cheating provided only that the inducement was ‘dishonest’ and not merely ‘fraudulent’.
In Sri Bhagwan Samardhan Sreepada Vallabha Venkata Vishwandadha Maharaj v. State of AP & Others [AIR 199 SC 2332] it was held that if somebody offers his prayers to God for healing the sick, there cannot normally be any element of fraud. But if we represents to another that he has divine powers and either directly or indirectly makes that another person’s believe that he has such divine powers, it is inducement referred to Section 415 of the IPC.
Anybody who responds to such inducement pursuant to it, and gives the inducer money or any other article and does not get the desired result is a victim of the fraudulent representation and such act was the cheating falling within the ambit of Section 420, IPC.
Hari Singh Gour distinguishes the Section 417 and 420 with the following illustration:
“A may by false representation, induce В to advance him a sum of money in such circumstances that A is aware that he is exposing В to risk of loss but without intention of causing him wrongful loss. A then would be acting fraudulently and would be punishable only under Section 417, IPC. However, if he intended to cause wrongful loss, he would be acting dishonestly and would be punished under Section 420, IPC.”
The offence under Section 420 is cognizable, and warrant should, ordinarily, issue in the first instance. It is non-bailable and compoundable with the permission of the court and is triable by a Magistrate of the first class.