Legal provisions regarding Meaning of Cheating under section 415 of Indian Penal Code, 1860.
The essential ingredients of the offence of cheating are:
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1) The accused must deceive the complainant fraudulently or dishonestly or intentionally.
2) The complainant must have been induced, to:
a) Deliver any property or allow any person to retain any property; or
b) Do or omit to do anything which he ought not have done, if he was not so deceived.
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3) The act or omission likely to cause any harm to the complainant in body, mind, reputation or property.
Explanation to Section 415 says that a dishonest concealment of facts is a deception within the meaning of Section 415.
According to Justice Raghubir Dayal, Cheating can be committed in either of the two ways described in Section 415, IPC namely:
i) A person deceived may be fraudulently or dishonestly induced to deliver any property or to consent to the retention of any property by any person.
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ii) The person deceived may also be intentionally induced to do or to omit to do anything which he would not have done if not deceived, and which act of his caused or was likely to cause damage or harm in body, mind, reputation or property.
Thus, Section 415 has two parts; in the first part, inducement must be dishonest or fraudulent, and in the second part, inducement should be intentional. ‘Deception’ is common element in both the parts. It is, however, not necessary that deception should be expressed in words but it may be by conduct or implied in the nature of transaction itself.
Deception:
One of the initial ingredients which have to be proved to establish the offence of cheating is deception, which must precede and thereby induce the other person to either (a) deliver or retain property; or (b) To commit the act or omission defined to in the second part of Section 415. Generally speaking, ‘deceiving’ is to lead into error by causing a person to believe what is false or to disbelieve what is true and such deception may be by word or by conduct.
A fraudulent representation can be made directly or indirectly. A willful misrepresentation of a definite fact with intent to defraud constitutes an offence of cheating. It is not sufficient to prove that a false representation had been made but it must be proved that the representation was false to the knowledge of the accused and was made to deceive the complainant.
Where a person knows that statements made by another are false, but still acts upon them with a view to entrap that person, the accused will be guilty of attempt to commit this offence.
By virtue of explanation to Section 415, a dishonest concealment of facts is tantamount to deception. Not all concealment of material facts but dishonest concealment of facts amounts to deception. It does not necessarily deal with illegal concealment of facts but with dishonesty even in the absence of legal obligation or duty to speak.
Where there is willful representation with intent to defraud, it has been considered to amount to cheating. To establish offence, what is important is to see whether the misrepresentation was false to the knowledge of the accused at the time when it was made.
To constitute the offence of cheating it is not necessary that the act which the person deceived is induced to do should actually cause harm to him. It is enough that the act which the person deceived has been induced to person deceived is likely to cause damage or harm to him.
Inducement:
The second essential ingredient to the offence of cheating is the element of ‘inducement’ leading to either delivery of property or doing of an act or omission. Section 415 clearly shows that mere deceit is not sufficient to prove the offence. Likewise, committing something fraudulently or dishonestly is also not sufficient.
The effect of the fraudulent or dishonest act must be such that it induces the person deceived to deliver property or do something (in the form of an act or omission). Thus, in either of the two situations covered by Section 415, the element of inducement leads either to delivery of property or doing of an act or omission to do anything.
As per the Supreme Court (AIR 1999 SC 1216), the crux of the postulate is the intention of the person who induces the victim of his representation and not the nature of the transaction which would become decisive in discerning whether there was the commission of an offence or not.
It is necessary to consider that for the offence of cheating to be made out; the inducement by the accused to the complainant must have been made in the initial or early part of the transaction itself. Here too, what is important is to prove that at or about the time that the person induced was made to part with money, the respondents (i.e., alleged accused persons) ought to have known that their representation was false and that the representation was made with the intention of deceiving the other person. If this is not shown, then the dispute is only civil in nature.
The second crucial aspect is that the complainant has to show that at the time the alleged false representation was made or the inducement offered by the accused, the accused had no intention of honouring the same.
Otherwise, the entire transaction would only be civil in nature. However, if the accused had no intention whatsoever to pay, but merely said that he would do so in order to induce the complainant to part with the goods, then a case of cheating could be established.
A person can be said to have done a thing dishonestly when he does so with the intention of causing wrongful gain to one person or wrongful loss to another person.
Wrongful gain occurs when a person who is not entitled to property acquired it through unlawful means conversely, wrongful loss is loss of property sustained by a person through unlawful means. There is no requirement in law to establish both wrongful gain and wrongful loss. It is sufficient to establish the existence of any one of them.
False pretence need not be in express words for constituting offence of cheating. It can be inferred from all the circumstances, including the conduct of the accused.
Mens rea is one of the essential ingredients of the offence of cheating under Sections 415 and 425, IPC and where mens rea is not established no offence of cheating can be made out.
The use of the term ‘cause’ in Section 415 postulates a direct and proximate connection between the act or omission and the harm and damage to the victim. It excludes damage occurring as a mere fortuitous sequence, unconnected with the act induced by deceit.
The definition of cheating includes all damages resulting or likely to result as a direct natural or probable consequence of the induced act. The loss or damage to the victim arising from the act of cheating must be proximate and not vague or remote. It must be a natural consequence of the act or omission in question and not a contingent one.
To establish cheating, it is necessary that it has to be proved that the accused induced someone fraudulently or dishonestly so as to deliver any property. Property may be movable or immovable.
The property need not necessarily belong to the person deceived. A passport, an admission card to an examination, title deeds, salary of a person, health certificate, etc., are deemed as property for the purpose of Section 415 and Section 420.