This article is written by Akshita Rohatgi, from Guru Gobind Singh Indraprastha University, New Delhi. It explains Section 420 of the Indian Penal Code, 1960 and sheds light on the nuances surrounding this section.
This article has been published by Sneha Mahawar.
Table of Contents
Introduction
From classroom quips to Bollywood movies, ‘chaur sau bees’ or ‘420’ is used to refer to someone who is deceitful or a backstabber. This practice of calling people ‘420’ owes its origin to India’s colonial-era law on cheating.
The offence of cheating and its constituents have been defined under Section 415 of the Indian Penal Code 1860 (IPC). The punishment for cheating in itself is laid down under Section 417 of the Code. Despite this provision, there was a need for punishment for aggravated forms of cheating. This was dealt with by Section 420, which punishes a case of cheating whereby the offender dishonestly induces the delivery of a property or meddles with valuable security.
Cheating (Section 415 IPC)
Cheating is defined under Section 415 of the Indian Penal Code, 1860. It explains a case where an offender deceives someone to deliver any property or intentionally induces the person deceived to do or omit to do something that causes or is likely to cause damage or harm to that person in body, mind, reputation or property. It is essential to establish cheating to punish an act under Section 420.
Elements
The first part of Section 415 deals with a situation where there is-
- Deceit by accused
- Inducement of someone by the deception
- The inducement so caused is fraudulent and/or dishonest
- The person induced either delivers some property or consents for the retention of any property by any other person
The second way cheating can take place under this section is cases where
- The accused deceived someone
- The deceit caused the inducement of someone
- The inducement so caused was intentional
- The person induced, committed or omitted to do something that they wouldn’t have done otherwise
- The act or omission either caused or was likely to cause damage or harm to the person induced in their body, mind, reputation or property.
In the case of Ram Jas v State of Uttar Pradesh (1970) the Apex Court laid the following elements as essential in constituting the offence of cheating-
- Fraudulent or Dishonest inducement by the person deceiving, and
- The person deceived should be
- Induced to deliver the property to a person or consent that any person shall retain a property; or
- The person deceived should be intentionally induced to do something or omit to do something that they would not have done in case they had not been deceived, and
- In case of b), the act or omission of intentional inducement should be of a nature that is likely to cause or actually causes damage or harm to the person so induced. This damage may be to their body, mind, reputation or property.
Section 420 IPC
Cheating is defined in section 415 of the IPC. Section 420 lays down the punishment for aggravated forms of cheating where the offender dishonestly induces a person so deceived to deliver any property or interfere with any valuable security.
In other words, Section 420 specifically punishes aggravated cases of cheating. Any act of cheating, whether fraudulently or dishonestly, is punishable under Section 417. In contrast, Section 420 specifically punishes a case where cheating is done by dishonest inducement and its subject matter is property or valuable security.
Under this section, the person so deceived is
- Either induced to deliver any property to some other person, or
- Make, alter or destroy
- The whole or any part of valuable security, or
- Something that is signed, sealed and is capable of being converted into a valuable security
- A guilty intention must exist at the time of inducement or of delivery of property
Here, it is essential to prove that the parting of the property is by virtue of dishonest inducement of the accused. Moreover, the delivered property has to be of some monetary value to the person who has been cheated.
Ingredients of cheating
Deception
Proving deception is integral to a successful prosecution under Section 420. In common parlance, deception is understood to mean intentionally leading someone to believe something that is not true or false. This deliberate leading may be direct or indirect and by words or conduct. It may be expressed or implied in the nature of a transaction. However, what actually constitutes deception is dependent on the facts and circumstances of each case.
For an offence under Section 420, the fraudulent or dishonest intention to conceal facts must be present at the time of making a promise or representation. The prosecution needs to prove that the offender had known or ought to have known that the representation made by them was false. Moreover, the representation has to be made specifically with the intent to deceive another person. According to the explanation under Section 415, dishonest concealment of facts is deception. This concealment itself need not be illegal and can even be practised when there is no legal obligation to speak.
A case where the accused makes a promise that they had no intention to keep would fall under cheating. This lack of intention must be proved at the time the representation was made or when the inducement was offered by an accused. If someone has the intention of keeping a promise but subsequently fails, the prosecution under Section 420 would fail. The case might create civil liability but not a criminal one.
Dishonestly (Section 24 IPC)
The word ‘dishonestly’ has been defined under Section 24 of the IPC. It covers any act that is done with an intent to cause wrongful gain or wrongful loss of property. Harm to reputation is not covered under Section 24.
To be within the ambit of this section, the act must cause gain or loss by unlawful means. The consequence of such an act should be the gain in property that one is not legally entitled to or loss of property from another who is legally entitled to it.
Fraudulently (Section 25 IPC)
‘Fraudulently’ is defined under Section 25 of the IPC. The only element needed to make an act fraudulent under the IPC is for it to be done with an intent to defraud and actual or possible injury.
In the case of Dr Vimla v. Delhi Administration (1962), the test of deceit was laid down. The offender intentionally represents something false or untrue as the truth. Moreover, they must derive some benefit from the act that would not have been possible had the truth been known.
Intentional inducement
For an act to fall under this element, there must be an intentional inducement for any person to do any activity that is detrimental to them. The act to the advantage of the inducer should not have been possible if the induced was not deceived. This inducement should actually damage or be likely to damage that person in body, mind, reputation or property.
Wilful representation
Mens rea is essential to the crime of cheating. Wilful misrepresentation with the intent to deceive amounts to cheating. Thus, the person constructing the misrepresentation must be aware that their representation is false at the time of making it.
Inducement
For the offence of cheating, a fraudulent or dishonest act must induce the person deceived to deliver property or interfere with valuable security.
In the case of Shri Bhagwan Samardha Sreepadha Vallabha Venkata Vishwanandha Maharaj v State of Andhra Pradesh, 1999, a godman’s claim that his touch could cure a little girl of her disability for money was held to be an inducement. The court explained that simply offering prayers would not amount to inducement. However, the representation that the man had divine powers was made and in consequence, he was given money. Thus, it would amount to an offence under Section 420.
Damage
For an offence under Section 420, it is essential to prove that some damage has accrued to the victim or is likely to have been caused.
Causal connection
The definition of cheating under Section 415 covers all direct, proximate natural and probable consequences of an inducement. However, a causal connection must exist between dishonest inducement and damage. The harm so caused must not be remote, vague, contingent or by chance.
No damage caused
A situation where no benefit accrues to the accused but the deceit causes loss to another is covered under the offence of cheating.
In Hari Sao v. State of Bihar, (1969), a railway station master made an endorsement on a receipt pursuant to a false representation. This act did not cause any damage to the railway or the master. The Supreme Court held that damage or likelihood to cause damage is essential under Section 420. No offence of cheating would be constituted without this. Thus, the accused were acquitted.
In State v. Ramados Naidu (1976), the Madras High Court was faced with a peculiar case. The accused obtained loans by virtue of fraudulent misrepresentation. However, the bank did not suffer any losses. It was not likely to either, since the loans were fully covered by the securities given by the accused. However, wrongful gain accrued to the accused. They were thus convicted for the offence of cheating.
Punishment for Section 420 IPC
Punishment for an offence under Section 420 is for up to seven years along with a mandatory fine. This imprisonment may be simple or rigorous, depending on the discretion of the court.
Evidence
For a case under Section 420, it is advisable to retain anything that can be used to prove that there was an intent to cheat right from when the accused made a representation. All acts and omissions of the accused after this would help prove the deception if there was no effort by the offender to perform their promise. Any document, records of conversations (including text messages), witness accounts, etc. may be used to achieve this.
Nature of the offence
Under Schedule 1 of the Code of Criminal Procedure, 1973 (‘CrPC’), an offence under Section 420 is cognizable and non-bailable. It is not triable by any court lower than a magistrate of the first class. Section 320 of the CrPC allows cheating to be compounded or settled by the person cheated with the permission of the court.
Comparison to other offences
Section 417 IPC
Section 417 of the IPC punishes a simple case of cheating. The person cheated is injured because of reasons other than being induced to part with property or interference with valuable security.
This section deals with the second part of Section 415 which is punished leniently as compared to the first part. It provides for a maximum of one-year imprisonment, a fine, or both. A fine is not mandatory in 417 as opposed to being mandatory in section 420.
According to Hari Singh Gaur, there is another significant distinction between the two. If the delivery of a property is due to fraudulent ways, 417 will be applicable. In case it is delivered because of dishonesty, 420 will apply. To illustrate, take the following example.
A falsely represents something to induce B into giving him money. A is aware B might risk loss but does not intend to cause wrongful loss. This is acting fraudulently and the act is punishable under 417. However, if they intended to cause wrongful loss too, this is dishonesty and is covered by Section 420.
Section 416 and 419 IPC
Section 416 and 419 of the IPC deal with cheating by personation. Section 416 explains cheating by personation as circumstances where one pretends to be another real or imaginary person; knowingly substitutes one for another, or represents that they or another person is someone else. Section 419 allows a case described under 416 to be punished by up to three years, a fine, or both.
Section 418 IPC
Section 418 defines and punishes the offence of cheating with the knowledge that the offender is likely to cause wrongful loss to someone whose interest they must protect. The cheating must be related to a transaction in which the offender is legally bound to protect the one they deceive. It covers fiduciary and financial relationships like that of a principal and agent, banker and customer and advocate and their client. Imprisonment under this is defined as three years, with a fine or both.
Misappropriation
In the case of Shankerlal Vishwakarma v State of Madhya Pradesh (1990), the petitioner deceived another to deliver money to him. This sum was misappropriated. The Madhya Pradesh High Court explained that cheating is different from criminal misappropriation because, in cheating, the offender has a dishonest intention right from the beginning. In case of misappropriation, a dishonest intention may be formed later.
Miscellaneous
Promise to marry
In the case of Venkatesh And the State of Karnataka (2022), the petitioner claimed that the respondent promised to marry her. He subsequently failed to make good on his promise and married someone else. The court held that breach of a promise to marry per se would not amount to cheating under 420. It needs to be proven that there was no intent to marry at the time of making the promise and there was a loss of property or interference with valuable security in consequence. In case of a failure to prove this, the prosecution would not be successful.
Twin charges under 138 and 420
In Sangeetaben Mahendrabhai Patel v. State Of Gujarat & Anr (2012), the respondent complained that the appellant had taken a hypothecation loan of Rs. 20 lakhs and had not repaid the same. In order to meet the said liability, the appellant issued a cheque which on presentation, was dishonoured. The dishonour of Cheques is covered under Section 138 of the Negotiable Instruments Act. The appellant contended that they can not be prosecuted under Section 138 as well as Section 420 for the same offence as it violated the doctrine of double jeopardy, which says that no one shall be prosecuted and punished for the same offence more than once. The Supreme Court held that the ingredients of offences under Section 420 and Section 138 are entirely different. Thus, a person can be prosecuted under both provisions.
Conclusion
Different reforms have been proposed to Section 420. Among the most significant is the Fifth Law Commission’s recommendation of the insertion of Sections 420A and 420B to the IPC. This was endorsed by the Fourteenth Law Commission.
The Indian Penal Code (Amendment) Bill, 1978, accepted both these reforms. However, the Bill never gained parliamentary assent and lapsed. Thus, it is not effective. The proposed changes are given below:
- Insertion of Section 420A to deal with cheating by public authorities through dishonest contractors in supplying goods, executing works and dealing with commercial corruption; and
- Section 420B to deal with the publication of false advertisements.
- The Indian Penal Code (Amendment) Bill 1978 also encouraged the insertion of Section 420C, related to fraudulent acts concerning the property of a company.
Another noteworthy suggestion is the Fifth Law Commission’s suggestion to delete the word ‘that’ in Section 415, from ‘harm to that person’. It opined that harm may be caused to a person other than the one deceived. This section should be broadened to cover those claims as well.
While reforms and changes are needed, Section 420 has been commendable in deterring and punishing cases of deceit and cheating. From the inception of the IPC to the phrase ‘chaar sau bees’ gaining popularity to cyber frauds and novel methods of 21st-century cheating, Section 420 has proved itself to withstand the test of time.
References
- PSA Pillai- Criminal Law, 12th Edition
- Section 420 in The Indian Penal Code (indiankanoon.org)
- Breaching Promise To Marry Will Not Amount To Offence Of Cheating Under IPC : Karnataka High Court
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