Tag Archives: cheating

Negotiable Instruments Act, Section 139 – Rebuttable Presumption

Once the execution of cheque is admitted Section 139 of the Negotiable Instruments Act mandates a presumption that the cheque was for the discharge of any debt or other liability. The presumption under Section 139 is a rebuttable preumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.

        To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.

        It is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a pervasive burden.

        It is not necessary for the accused to come in the witness box to support his defence.  Basalingappa v. Mudibasappa, (2019) 5 SCC 418.

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Fraud – Meaning of

In Bhaurao Dagdu Paralkar v. State of Maharashtra, (2005) 7 SCC 605, it was held as under:
“By fraud is meant an intention to deceive; whether it is from any expectation of advantage to the party himself or from ill will towards the other is immaterial. The expression “fraud” involves two elements, deceit and injury to the person deceived. Injury is something other than economic loss, that is, deprivation of property, whether movable or immovable, or of money and it will include any harm whatever caused to any person in body, mind, reputation or such others. In short, it is a non-economic or non-pecuniary loss. A benefit or advantage to the deceiver, will almost always cause loss or detriment to the deceived. Even in those rare cases where there is a benefit or advantage to the deceiver, but no corresponding loss to the deceived, the second condition is satisfied.
A fraud is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by another’s loss. It is a cheating intended to get an advantage.
Fraud, as is well known, vitiates every solemn act. Fraud and justice never dwell together. Fraud is a conduct either by letter or words, which induces the other person or authority to take a definite determinative stand as a response to the conduct of the former, either by words or letters. It is also well settled that misrepresentation itself amounts to fraud. A fraudulent misrepresentation is called deceit and consists in leading a man into damage by willfully or recklessly causing him to believe and act on falsehood. It is a fraud in law if a party makes representations, which he knows to be false, and injury ensues therefrom although the motive from which the misrepresentations proceeded may not have been bad. An act of fraud on court is always viewed seriously. A collusion or conspiracy with a view to deprive the rights of others in relation to a property would render the transaction void ab initio. Fraud and deception are synonymous. Although in a given case a deception may not amount to fraud, fraud is anathema to all equitable principles and any affair tainted with fraud cannot be perpetuated or saved by the application of any equitable doctrine including res judicata. DDA v. Bankmens Cooperative Group Housing Society Limited. (2017) 7 SCC 636.

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Corruption – Meaning of

Corruption is antithesis of good governance and democratic politics. It is said, that when corruption is pervasive, it permeates every aspect of people’s lives. It can affect the air they breathe, the water they drink and the food they eat. Going further, some more terminology can also be given to different shades of corruption like, financial corruption, cultural corruption, moral corruption, idealogical corruption etc. The fact remains that from whatever angle it is looked into, the ultimate result borne out is that, and the real impact of corruption is, the poor suffers most, the poverty grows darker, and rich become more richer.
In Secretary, Jaipur Development Authority v. Daulat Mal Jain, (1997) 1 SCC 34 it was held as under:
“When satisfaction sought in the performance of duties is for mutual personal gain, the misuse is usually termed as ‘corruption’”.
In High Court of Judicature at Bombay v. Shirishkumar Rangrao Patil, (1997) 6 SCC 339, the court held:
“Corruption, appears to have spread everywhere. No facet of public function has been left unaffected by the putrefied stink of ‘corruption’. ‘Corruption’ thy name is depraved and degraded conduct…..In the widest connotation, ‘corruption’ includes improper or selfish exercise of power and influence attached to a public office.”
In B.R. Kapur v. State of T.N., (2001) 7 SCC 231, it was held:
“scope of ‘corruption’ in the governing structure has heightened opportunism and unscrupulousness among political parties, causing them to marry and divorce one another at will, seek opportunistic alliances and coalitions often without the popular mandate.”
In State of A.P. v. V. Vasudeva Rao, (2004) 9 SCC 319, the Hon’ble Court stated as under:
“The word ‘corruption’ has wide connotation and embraces almost all the spheres of our day-to-day life the world over. In a limited sense, it connotes allowing decisions and actions of a person to be influenced not by rights or wrongs of a cause, but by the prospects of monetary gains or other selfish considerations.” In the Matter of I.F.C.A.I. v. D.K. Agrawal F.C.A., 2017 (123) ALR 374.

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Breach of Contract vis a vis Offence of Cheating

In Rashmi Jain v. State of U.P., 2014 (1) SCALE 415, the court said that mere failure of a person to keep up promise subsequently, a culpable intention right at the beginning, i.e., when he made the promises cannot be presumed. A distinction has to be kept in mind between mere breach of contract and the offence of cheating. It depends upon the intention of the accused at the time of inducement. The subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent, dishonest intention is shown at the beginning of the transaction.
In Vesa Holdings Pvt. Ltd. v. State of Kerala, 2015 CRLJ 2455 the court held that every breach of contract would not give rise to an offence of cheating and only in those cases breach of contract would amount to cheating where there was any deception played at the very inception. If the intention to cheat has developed later on, the same cannot amount to cheating. In other words, for the purpose of constituting an offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise. Even in a case where allegations are made in regard to failure on the part of the accused to keep his promise, in the absence of a culpable intention at the time of making initial promise being absent, no offence under Section 420 IPC can be said to have been made out. Suneel Galgotia v. State of U.P., 2016 (92) ACC 40.

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Mere Failure to fulfill a promise – Is not enough to hold a person guilty of cheating

Mere failure to fulfill a promise cannot be a ground to draw proceedings for prosecution under Section 420 Indian Penal Code. The essential ingredient for an offence punishable under Section 420 Indian Penal Code is dishonest misrepresentation on the part of the accused at the time of making promise. In the case of V.P. Srivastava v. Indian Explosives Ltd., (2010) 10 SCC 361, the Apex Court held that mere failure to perform the promise, by itself is not enough to hold a person guilty of cheating. It is necessary to show that at the time of making promise he had fraudulent or dishonest intention to deceive or to induce person so deceived to do something which he would otherwise not do. It was observed that such a culpable intention right at the time of entering into an agreement cannot be presumed merely from his failure to keep the promise subsequently. Govind Chandra Gupta v. State of U.P., 2014 (85) ACC 743.

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Criminal Breach of trust vis-à-vis offence of cheating

The ingredients in order to constitute a criminal breach of trust are:
(1) Entrusting a person with property or with any dominion over property,
(2) That person entrusted (a) dishonestly misappropriating or converting that property to his own use; or (b) dishonestly using or disposing of that property or willfully suffering any other person so to do in violation (i) of any direction of law prescribing the mode in which such trust is to be discharged, (ii) of any legal contract made, touching the discharge of such trust.
The ingredients of an offence of cheating are:
(1) There should be fraudulent or dishonest inducement of a person by deceiving him,
(2) (a) The person so deceived should be induced to deliver any property to any person or to consent that any person shall retain any property; or
(b) The person so deceived should be intentionally induced to do or omit to do anything which he would not do or omit if he were not so deceived; and
(3) In cases covered by, 2(b) the act of omission should be one which causes or is likely to cause damage or harm to the person induced in body, mind, reputation or property. Arun Bhandari v. State of U.P., (2013) 2 SCC 801.

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