SECTION 420 IPC
SUMMARY
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.
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.
INTRODUCTION
The offense of cheating and it constitutes has been defined under
section 415 of the INDIAN PENAL CODE (IPC), and 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 the property or
meddles with valuable security.
CHEATING (SECTION 415 IPC)
Cheating is defined under section 415 of the Indian penal code. It
explains a case where an offender deceives someone to deliver
any property or intentionally induces the person deceived to do
0r 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 action under section
420.
ELEMENTS
The first part of section 415 deals with a situation where there
are:
- Deceit by the accused.
- Inducement of someone by 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 in
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 vs, the State of Uttar Pradesh (1970), the
Apex court laid the following elements as essential in
constituting the offense 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 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,
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.
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 included delivering 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 capable of being
converted into a valuable security. - A guilty intention must exist at the time of inducement
or 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 ARE
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 word or conduct. It may be expressed or implied in the
nature of a transaction. However, what actually constitutes
deception on the facts and circumstances of each case.
For an offense 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 practiced
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 14 of
the IPC. It covers any act that is done with the 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 the 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
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 offense 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 Vishwanand 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 offense under Section 420.
Damage
For an offense 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 was caused
A situation where no benefit accrues to the accused but the deceit
causes loss to another is covered under the offense 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 offense of cheating.
Punishment for Section 420 IPC
Punishment for an offense 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 offense 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 who cheated with the
permission of the court.
Comparison to other offenses
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.
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