In this article, Diksha Chaturvedi discusses the constituents, punishment and other legal issues related to cheating. 

Introduction

As we see cheating is a criminal offence and it has myriad of crimes associated with it. It can be seen in various forms. In the layman’s language cheating can be described as a dishonest or unfair act done to gain advantage over the other. Cheating is saying or doing something dishonesty which makes someone believe that something is true when it is not. It is a term we often hear in our daily lives but don’t know its legal aspects. To make a more clear understanding from legal point of view, this article would be dealing with cheating and its constituents, punishment for this offence and other legal issues related to it. Further, this article will also discuss the legal remedies available for this offence.

Cheating (Section 415-420 of IPC)

Indian Penal Code deals with this offence under section 415 to 420.

Section 415: Cheating

Cheating is defined under this section. It says that,
“Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to “cheat”.

Explanation: A dishonest concealment of facts is a deception within the meaning of this section.

Illustration:  A, sold an article to B saying that it is made up of gold when it is not, intentionally deceives him and thus commits the offence of cheating.

Constituents of Cheating

Acting Dishonestly

The term ‘acting dishonestly’ has been defined under section 24 of Indian Penal Code.
It is defined as, “when the doing of any act or not doing of any act causes wrongful gain of property to one person or a wrongful loss of property to a person, the said act is done dishonestly.”

Property

Property has a much wider meaning. It does not only include money but other things as well which can be measured in the terms of money. The property should be in a complete ownership of the person and he must have the full right to enjoy its possession.

Fraudulently

Being fraudulent means which involves deception mainly criminal deception. It is characterized by fraud. According to section 25 “a person is said to do a thing fraudulently if he does that thing with intent to defraud but not otherwise.”

Mens Rea

Mens rea is the intention or action to constitute a crime. It is a mental state of an offender while committing a crime. It has to be proved beyond any doubt that the accused has actively contributed in a crime and that crime has affected another person’s property.

Section 416: Cheating by Personation.

A person is said to cheat by personation when,
“he cheats by pretending to be some other person, or by knowingly substituting one person for another, or representing that he or any other person is a person other than he or such other person really is”.

Explanation -The offence is committed whether the individual personated is a real or imaginary person.

Illustration: A, by falsely pretending to be a government official deceives B, and induces B to sell his property to him for which he is not going to pay. A cheats by personation.

Section 417: Punishment for Cheating

Cheating is punishable under this section with imprisonment up to 1 year or fine or both. Imprisonment depends upon the quantum of the act done. If the act is not that grave, imprisonment won’t be imposed and will charge with fine only. But when the act done is so grave that merely fine and imprisonment won’t compensate, then the person will be charged with a mandatory imprisonment of 7 years along with fine.

Section 418: Cheating with knowledge that wrongful loss may ensue to person whose interest offender is bound to protect.
Under this section,

“Whoever cheats with the knowledge that he is likely thereby to cause wrongful loss to a person whose interest in the transaction to which the cheating relates, he was found, either by law, or by a legal contract, to protect, shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both”.

Explanation: Causing loss to the aggrieved party whose interest is to be protected by the offender, omits to do so with wrongful intention.

Section 419: Punishment for cheating by personation.

Under this section,  

“Whoever cheats by personation shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both.”

Section 420: Cheating and dishonestly inducing delivery of property

This section deals with offences which are committed by a person by cheating another person and inducing him to deliver his property to the offender.
According to this section “Whoever cheats and thereby dishonestly induces the person deceived any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine”.

Constituents of Section 420

The ingredients as to constitute an offence under this section are:

1. Cheating,
   
2. Dishonest intention to take the property of another person or induce him to deliver the property to alter, destroy or make any changes in the valuable security, or
   
3. Deceitful or malice intention.

Modes of cheating

There are various ways through which the offence of cheating can be committed. They are:

• Caste Misrepresentation:
  when a person represents himself as a member of a caste to which he do not belong is committing an offence of cheating.

• Showing false accounts:
  when a person shows false accounts of himself or of some other person to clear a debt, then is said to commit the offence of cheating.

• Creating false evidence:
  when a person gives false evidence regarding some event then he can be held liable for the offence of cheating.

• False professional qualification:
  when a person shows false professional qualification to acquire a post or job then he is said to commit the offence of cheating.

When does breach of contract amount to cheating

Case Law: S.W. Palanitkar V. State of Bihar- 2001(10) TMI 1150- Supreme Court
Under this case Supreme court held that to convict a person for the offence of cheating there should be pre-existing dishonest or fraudulent intention of the person from the beginning but in case of Breach of Contract the dishonest intention is not present in the beginning of the agreement

Fraud/ Cheating

Dishonour of Cheque/ Cheating

Dishonour of Cheque is maintained u/s 138 of Negotiable Instrument Act while the offence of Cheating is mentioned u/s 420 of Indian Penal Code. But in some cases Dishonor of Cheque can be taken as an offence of cheating.

For example, if the person who has issued the cheque has already closed his bank account but still issues a cheque to some other person in exchange of payment of goods he has purchased from that person, in this case the person issuing the cheque is dishonest as he is aware of the fact that the cheque will get bounce. The person has deceived the other by doing so as he knew from the start about the consequences of the same. So, this may be an example where offence u/s 420 can be made out for dishonor of cheque.

The offences under Section 138 N.I. Act and Section 420 IPC are two different offences altogether. Whether this offence or that offence is made out would depend on the facts of each case. You’ll have to check the ingredients of which particular offence are satisfied from the facts of your case.

Legal Remedies for the offence of Cheating

Jurisdiction

Under section 2 of IPC it is stated that “Every person shall be liable to punishment under this Code and not otherwise for every act or omission contrary to the provisions thereof, of which he shall be guilty within India.”

A national of Pakistan, falsely represented himself as the businessman of Bombay. He assured the complainant that he is having good quality of products and he would be glad to sell them to the complainant if he transfers the money to him. The complainant transferred the money but did not receive anything in return.
It was held that as the offence was committed in Bombay even though the accused is a national of Pakistan and was not physically present in India, the courts of Bombay has jurisdiction by virtue of Section 2 of IPC.

Cognizance of the offence

Offence of cheating is cognizable and non bailable. The trial is done by magistrate of first class. FIR or Application can be filed u/s 156(3) and In case of private complaint u/s 200.

Punishment

Minor cases

When the offence of cheating is not that severe or is a simple case of cheating then the offender is punished with imprisonment for a term of 1 year or fine or both.
Example: ‘A’ promised ‘B’ to sell his property but instead of that sold it to ‘C’. This case can be considered under it.

Severe cases

It covers the cases where cheating is done by guardian, trustee, solicitor, agents, manager of Hindu family etc. In such cases punishment is imprisonment for 3 years or fine or both.

Cheating by personation

In the cases where the offence of cheating has been committed along with personation then the person if guilty u/s  416 and punished u/s 419 for imprisonment up to 3 years or fine or both.

Conclusion

Cheating is an offence under which a person induces the other to deliver the property or commission or omission of an act done on the part of the offender with the intention of deceiving the person. Mainly two elements are necessary to constitute the offence of cheating i.e. deception and inducement. Cheating is confused with various other civil and criminal offences but it differs from each of them in some or the other way.

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