Cheating (Sec 425-420 IPC/Sec 318-319 BNS)

Introduction

Cheating is considered as a criminal offence under the

Indian Penal Code. It is done in order to gain profit or
an advantage from another person by using some
deceitful means. The person who deceives another
knows for the fact that it would place the other person
in an unfair situation. Cheating as an offence can be
made punishable under Section 420 of the IPC.

Scope of Section 415

Cheating is defined under Section 415 of the Indian

Penal Code as whoever fraudulently or dishonestly
deceives a person in order to induce that person to
deliver a property to any person or to consent to retain
any property. If a person intentionally induces a person
to do or omit to do any act which he would not have
done if he was not deceived to do so and the act has
caused harm to that person in body, mind, reputation
or property, then the person who fraudulently,
dishonestly or intentionally induced the other person is
said to cheat. Any dishonest concealment of facts which
can deceive a person to do an act which he would not
have done otherwise is also cheating within the meaning
of this section.

Essential Ingredients of Cheating

The Section requires:

• deception of any person.

• fraudulently or dishonestly inducing that person

to deliver any property to any person or to
consent that any person shall retain any property;
or

• intentionally inducing a person to do or omit to

do anything which he would not do or omit if he
were not so deceived, and the act or omission
causes or is likely to cause damage or harm to
that person in body, mind, reputation or
property.

Important Ingredients of Deception and Inducement

Deception

One of the important ingredients which constitute the

offence of cheating is deception. Deception can be done
to induce the other person to either deliver or retain the
property or to commit an act or omission. Deceiving
means to make a person believe what is false to be true
or to make a person disbelieve what is true to be false
by using words or by conduct.

In the case of K R Kumaran vs State of Kerala, a person

who was admitted in the hospital was checked by the
doctor and the doctor knew that the person was in a
condition that he won’t be able to survive. The doctor
conspired with other accused to issue a life insurance
policy for the person who was going to die and in order
to do so, he certified to be fit and healthy. This was done
by accused in order to get the amount from the
insurance company after the patient dies. The court
held the accused liable for the offence of cheating and
deceiving the insurance company in order to earn
benefits. The accused was held guilty of cheating under
IPC.

Wilful Representation and Cheating

In deception, a fraudulent representation or willful

misrepresentation of a fact is made directly or
indirectly with an intent to commit the offence of
cheating. In order to prove the offence, it is not only
important to prove that a false representation was made
by the accused but also that the accused had the
knowledge that the representation was false and
wilfully made it in order to deceive the prosecutor. If
the accused knowingly makes a representation which is
false then the accused can be held liable for the offence
of cheating under IPC.

Cheating and Misappropriation

Cheating and misappropriation are closely related. In

cheating, the act of misrepresentation starts from the
beginning of the act, whereas, in case of
misappropriation it is not important that the offence of
cheating will start from the beginning. The accused may
obtain a property in good faith and then further
misappropriate it in order to sell it for an advantage. It
may be done against the will or without the consent of
the owner.

It is seen that misappropriation is generally done by a

person who is a relative, friend or a known person. The
offence of misappropriation is defined under Section
403 of the IPC. It deals only with immovable properties
and not with body, mind, reputation, or immovable
property.
Deception and Cheating in Connection with False
Promise of Marriage

In the case of Deception and cheating with a false

promise of marriage, there can be no action for a breach
of a promise under IPC unless there is a contract made
by parties to marry each other. There are no specific
requirements regarding the formation of the contract. It
need not necessarily be in writing and there isn’t a
particular set of words which needs to be used for the
contract of marriage. A promise by one person to marry
another will not be a binding promise unless and until
that other person also reciprocates and promises to
marry the first person. Mutual promises to marry
between two parties may be implied from the conduct
of the parties. A declaration of intention to marry
another person made to a third person will not
constitute a proper promise and an offer to marry
unless his proposal is communicated to that person
whom he intends to marry. It is not necessary that the
mutual promises between the parties to be concurrent,
it should be made within a reasonable time after the
offer is made by a party to another. An action for breach
of promise to marry may be taken under deception and
cheating.
Inducement

When one person uses deceitful practices to convince

the other person to agree on anything which is harmful
to that person, it is known as Inducement. It generally
occurs when two parties enter into a contract and a
party uses fraudulent inducement to gain advantage on
the other party. The fraudulent inducement can be done
when a person persuades another by giving false
information about a thing to be beneficial for that
person but in reality, it is not. Fraudulent inducement
differs from fraud as inducement needs a person to
convince the other person for the object which he wants
to achieve and the latter needs the person to commit a
deceitful conduct by himself for the object which he
wants to achieve.

Effect of Absence of Dishonest Inducement

The offence of cheating does not necessarily need the

person who is being deceived is induced to do any act
which could cause harm to him. In case there is an
absence of dishonest inducement, it is enough to
constitute the offence of cheating that the person
deceived is induced to an act which is likely to cause
harm to him.
Critical Aspects Relating to the Offence of Cheating

Dishonest Intention Should be Present at the Time of

Making the Promise

Deception and dishonest intention are important

elements to constitute the offence of cheating under
IPC. The presence of dishonest intention is important to
hold a person guilty of the offence. The fact that
dishonest intention was present at the time of making
the promise is to be proved in order to hold the accused
guilty for the offence of cheating. Dishonest intention
at the time of making the promise cannot be inferred by
subsequent non-fulfilment of promise.

Absence of Intention to Honour the Promise at the

Time of False Representation

The offence of cheating has an element of fraudulent or

dishonest intention from the very beginning. When a
party makes a false representation to another party in
order to gain some profit, the intention to honour the
promise at the time of false representation is presumed
to be absent.
Dishonesty is Causing Either Wrongful Gain or
Wrongful Loss

Acting dishonestly is defined under Section 24 of IPC as

doing an act or omitting to do any act which causes a
wrongful gain to one person or a wrongful loss of a
property to a particular person. The act done in order to
gain a property wrongfully or cause a loss to another
person wrongfully is said to be done dishonestly.

False Pretence to be Inferred From Circumstances

False statements and representations made with

fraudulent intent in order to gain a profit by cheating
are known as a false pretence. It is not necessary that
every pretence will be a false one, it has to be inferred
from the circumstances. For instance, a person may
have induced the credit or delivery of property but still,
it might not be sufficient as it can be a false pretence
and the credit or delivery would not have been given or
delivered. A false pretence can be used where the party
wants to come in a contract with the other party. There
should be an intention to cheat, deceive or commit
fraud on the part of a person. Intention to commit
cheating plays an important part. False pretence must
be inferred from the circumstances of the case.
Mens Rea as Essential Ingredients of the Offence of
Cheating

Mens rea refers to the mental state or intention of a

person in committing a crime. It is a mental state of the
accused which is taken into consideration while
deciding the liability for a crime. Mens rea has to be
proved as it an essential ingredient for the offence of
cheating. It has to be proved that the accused
deliberately committed the offence of cheating with a
prearranged plan. If mens rea for the offence is proved
then the accused can be held liable for the offence of
cheating under IPC.

On the Issue of Damages Caused or Likely to be Caused

Damage to Body, Mind, Reputation or Property

Caused or Likely to be Caused

Cheating is done by a person to another by making him

believe something to be true which actually is not.
Cheating affects a person’s body, reputation or property
of which the person may be in possession or ownership
of. Cheating can be done by a person who is in a
fiduciary relationship, it affects the mind of the person
who has been cheated. Cheating can be done by a person
by misrepresenting the facts or by using false evidence
in order to deceive the other party. The person who is
deceived believes the representations made by the party
deceiving to be true and then it further miserably
affects the person both mentally and physically.
Cheating can result in stress, tension, and affect a
person’s mental health miserably. It can even result in
trust issues and make it difficult for the person who has
been cheated on to trust another person again. After
being cheated on a person can experience low self-
esteem and loss in monetary form by loss of the
property.

When no Damage Caused to Complainant

In case when no damages are caused to the complainant

by the act of cheating, still the accused according to
Section 420 of the IPC will be liable for the offence of
cheating as it does create an apprehension in the mind
of an individual when he is cheated on by a person. The
intention and objective of the person cheating are also
taken into consideration and if it is found that the
accused had a malafide intention to cheat on the person
then the accused will be held guilty for the offence of
cheating under Section 420 of the IPC.
The intention of the accused is important and has to be
taken into consideration while deciding the guilt of the
accused. Generally, the complaint is filed under Section
420 of IPC when a person suffers from a defect in the
services or product which is consumed by him from the
cheater, or in case the individual is charged with more
price than the MRP for a product or a service, or when a
person suffers from losses and damages from unfair
trade practices etc. but in case if the person cheated on
does not suffer from a monetary loss or damage, the
accused can still be held liable for cheating under
Section 420 of the IPC.

When no Benefit Accrued to Accused but Loss to

Complainant

Since cheating is both a civil as well as criminal wrong

and if there is no benefit enjoyed by the other party and
loss have been inferred to the party who is been
cheated, then, in that case, the complainant company
can sue the accused for cheating.

In the case of Sebastian vs R. Jawaharaj, it was held that

the accused was liable for cheating and forgery under
section 420 and 465 of IPC respectively as he cheated
on the complainant by providing faulty services to him
but still no benefit was enjoyed by the accused after
providing faulty services but because of it the
complainant suffered from losses.

Even if the accused does not earn a profit or enjoys a

benefit but the complainant suffers a loss then the
complainant can bring an action for cheating under IPC.

Sustaining Loss, not a Criterion for Establishing the

Offence of Cheating

Under sec 420 of IPC, only a person who is not a

consumer of the said cheated goods or did not purchase
the services or goods for commercial and selling
purpose or is not entitled to enjoy the benefits from the
goods or services is not entitled to sue the accused for
cheating under IPC. A consumer or a person entitled to
benefit from the goods or services can sue the accused
for the offence of cheating irrelative of the fact whether
any loss was suffered by him or not. Even if the
complainant does not sustain a loss, he can still bring a
lawsuit under IPC for cheating.

Civil Liability versus Criminal Liability

The intention of the accused is an important aspect to

constitute the offence of cheating. It is often seen that
in issues relating to commercial transactions, it
becomes difficult to separate the offence in terms of
civil and criminal liability. The main difference between
a criminal cause of action and a civil one is that of
intention. If the accused does an act knowingly and
intentionally in order to induce the other person then
the accused can be held liable for criminal liability. In
case the accused does an act after the dispute arose and
not pre-planned his act deliberately then he will be
liable for civil liability.

In the case of Nageshwar Prasad Sinha V Narayan Singh,

the respondent entered into an agreement with the
accused. A part of the payment was given in exchange
for the possession which was delivered to accused. The
accused then failed to make the full payment for the
delivery of possession as it was agreed upon by him.
The respondent also didn’t complete the legal
formalities in relation to the delivery of possession as
he did not receive full payment for it. The accused filed
a civil suit for specific performance against the
respondent. The respondent filed a criminal complaint
against accused under Section 420 of the IPC. The court
held that the liability of the accused was of civil nature
and not a criminal one as the accused made a part of the
payment for delivery of possession and it cannot be
proved that his intention was to cheat from the very
beginning.

The difference between civil and criminal liability can

be ascertained by the intention of the accused. The
intention of the accused at the time of inducement
should be taken into consideration to decide whether
the liability of the accused will a civil or criminal
liability. Mere breach of contract cannot be considered
to be cheating under Section 420 of IPC unless it is
proved that dishonest intention was present from the
very beginning of the transaction.

Vexatious Criminal Proceeding in Civil Dispute:

Imposition of Costs

Vexatious litigation is an action which is brought by a

party to harass another party. It is a lawsuit which is
solely brought to harass or burden the other party by
filing a meritless suit. Vexatious proceedings are
considered as an abuse of judicial procedures. The
accused is charged with costs in order to compensate
the other party for the harassment which was caused by
vexatious proceedings.
The provision for imposition of costs on the accused on
the vexatious criminal proceeding in a civil dispute is
included under Section 35A of the Civil Procedure Code.
If the court is satisfied that the criminal proceeding is
brought by the accused by a vexatious motive then the
court can impose compensatory costs under this
section on the accused for the harassment which the
respondent suffered because of the proceeding.

This section applies to suits which are brought with the

vexatious motive and to the appeals or revisions. The
maximum cost which can be imposed by the court under
this Section is Rs 3000 and no appeal lies against an
order by the court for compensatory costs.

Punishment for Cheating

Cheating and Dishonestly Inducing Delivery of

Property

According Sec 420 of IPC when a person cheats and

thereby dishonestly induces the other person who is
deceived to deliver any property to any other person or
makes, alters or destroys 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. Sec 420 of IPC is an
aggravated form of cheating.

Simple cheating is punishable under Section 417 of IPC.

Section 417 of IPC states that whoever is held liable for
the offence of cheating shall be punished with
imprisonment for a term which may extend to one year
or with fine, or with both fine and imprisonment.

In case where there is delivery or destruction of any

property or alteration or destruction of any valuable
security from the act of the person who is deceiving, the
offence is punishable under Section 420 of the IPC.

Under Section 420 of IPC, it is necessary to prove that

the complainant was acting on a representation which
was a false representation and the accused had a
dishonest intention for it.

In the case of Ishwarlal Girdharilal vs the State of

Maharashtra, it was observe’\d by the Court that the
word ‘property’ mentioned under Section 420 of IPC
does not necessarily include only those properties
which have money or market value. It also includes
those properties which do not have a monetary value.
In case a property does not have a monetary value for
the person who is in possession of it but after being
cheated by another person it becomes a property of
some monetary value for the person who gets
possession of it by cheating then it can be considered
as an offence of cheating under Section 420 of the IPC
and the property will be considered as a property under
Section 420 of the IPC.

In the case of Abhayanand Mishra v. State of Bihar, the

appellant was a candidate who applied for M.A.
examination to Patna University for permission to
appear in the M.A. examination in English as a private
candidate. He represented himself to be a graduate who
has already obtained his B.A. degree and wants to
pursue his M.A. degree from the University. Later, just
before the commencement of his entrance examination,
it was discovered that the certificates presented by the
candidate for his M.A. entrance was forged and he did
not actually obtain his B.A. degree. The court held the
candidate guilty of making a false statement about him
being a graduate as he did not obtain his B.A degree. He
made an application and deceived the University and
hence, was guilty of attempting to cheat under Section
420 of IPC as read with Section 511 of the IPC.

Cheating by Personation

Under Section 416 of IPC, cheating by personation is

explained as if a person cheats on someone by
pretending to be a particular person, or if a person
knowingly substitutes a particular person for another,
or represents a person to be some other person then he
is said to cheat by personation. The person substituting
a person for another should have knowledge that such
other person is a different person from the person he is
representing. The offence of cheating by personation is
committed when the person who is personated is a real
person and not an imaginary person.

In the case of Sushil Kumar Datta vs State, the accused

personated himself as a scheduled caste candidate and
appeared for the examination of Indian Administrative
Service. He was appointed in that cadre because of his
false representation of being a scheduled caste. It was
held by the court that he was guilty of the offence of
cheating by personation under Section 416 of IPC as he
did not belong to scheduled caste and falsely
represented himself as scheduled caste and hence, his
conviction for cheating was held to be justified under
the said section.

Cheating Out of Fiduciary Relation

A fiduciary relationship is any relationship which exists

between two parties where they share utmost good faith
and confidence for a transaction. Section 418 of IPC
applies to the cases of cheating wherein there was a
fiduciary relationship between the parties. Cheating out
of the fiduciary relationship can be done by guardians,
trustees, agents, solicitors, manager of a Hindu Family,
managers or directors of a company or a bank in fraud
to the shareholders etc. Section 418 of IPC deals with
the cases in which trust exists between the parties and
there is an abuse of the trust by cheating. Section 418
punishes those parties in the case of cheating who owed
a special responsibility towards the other party. The
parties are punished for misusing and breaching the
trust which existed between them.

It is the liability of parties who are in a fiduciary

relationship to protect the interest of the parties and
not to misuse the trust which exists between them. It is
the responsibility of the party to protect the interest of
the other party and if he fails to protect it and breaches
the trust by cheating, he can be held liable for the
offence of cheating under Section 418 of the IPC. The
person who makes a statement in a fiduciary
relationship knowing that it is a false statement with
dishonest intention then the person will be liable for the
offence of cheating.

Intention plays an important part in the offence if there

isn’t an intention to cheat then it cannot be established
as an offence under cheating. The offence is a non-
cognizable offence and is bailable and triable by a
Magistrate.

In the case of S. Shankarmani v. Nibar Ranjan Parida, a

lawsuit was filed for cheating by a landlord against the
bank. The bank wanted to take the landlord’s house on
hire and for that, the landlord furnished his house. He
incurred a huge expense in furnishing the house but the
bank because of some reasons which were under its
control could not take the house on rent. The bank did
not intend to cheat or deceive the landlord. It was held
by the court that the bank was not liable for cheating
under Section 418 as the intention which plays an
important part in the offence was not present.
Conclusion

Cheating is an offence under IPC in which a person

induces the other by deceiving the person to do any act
or to omit to do an act. The intention of the accused
plays an important part and is taken into consideration
while deciding his liability. The two main elements that
have to be considered in order to constitute the offence
is deception and inducement. The intention to cheat on
part of the accused at the time of making a false
representation is needed to be proved. It must be shown
that a promise was made by the accused and he failed
to keep the promise and further, no effort was put in by
him in order to keep the promise.