Section 420 of The Indian Penal Code talks about the offence which is committed by the person who cheats another person and thereby induces the deceived to deliver any property. This provision provides punishment for the same.
According to the IPC, Section 420 states that whoever cheats and thereby dishonestly induces the person deceived to deliver 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.
Under IPC, section 420 the offence is cognizable and non- bailable. There are few essential elements under section 420 of IPC. Let us understand that-
Dishonest inducement to deliver property or to make, alter or destroy any valuable security or anything which is sealed or is capable of being converted into a valuable security and
Mens rea of the accused at the time of making the inducement.
Making of a false representation is one of the essential ingredients to institute the offence of cheating under Section 420 IPC.
In order to bring a case for the offence of cheating under IPC section 420, it is not merely satisfactory to prove that a false representation had been made, but it is further necessary to prove that the representation was false to the knowledge of the accused and was made in order to deceive the complainant. Only then 420 IPC can be invoked.
The term "cheating" has been defined under Section 415 of the Indian Penal Code. The element of cheating must be present in every offence under Section 420 of I.P.C.
Section 415 of IPC states 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 or 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".
For example – There are two persons A and Z. A exhibits the false sample of an article to Z and intentionally makes Z believe that the article corresponds with the sample. A here induces Z to buy and pay for the false sample of the article. A cheats Z.
Section 24 defines what is “acting dishonestly”. 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.
The word property may basically be defined as all things which can be measured in terms of money. The said thing should be capable of being possessed by a person for the exclusive use or enjoyment as owner of that thing.
Section 25 defines the term "Fraudulently". It says that a person is said to do a thing fraudulently if he does that thing with intent to defraud but not otherwise.
Mens rea is a legal phrase which is used to define the mental state of a person while committing a crime and that should be intentional. It can refer to a general intent to break the law or a specific prearranged plan to commit a particular offense. A criminal prosecutor must show beyond any reasonable doubt to convict an accused person that the suspect actively and knowingly contributed to a crime that affected another person or their property.
How Cheating is to be proved
You have to prove that there was an intention to cheat at the time of making the misrepresentation; and this fact is to be proved on the basis of all the subsequent conduct as acts and omissions of the accused. Therefore, all the acts and omissions of the accused must be clearly and legibly set out right from the date of making of false representation, till the filing of the complaint.
It must be shown that there is a failure of the promise which was made. It must be shown that there was no effort on the part of the accused to perform his promise. The test of prudent man must be applied to appreciate the evidence on record.
Who is a Prudent Man?
A prudent man is a wise man but may not be a genius. A prudent man who is not in haste. He is not influenced by his emotions and acts after weighing the circumstance. He rethinks and is willing to learn. He struggles. He is willing to see the point of view, which was never in his mind. He may not be learned but has robust common sense and has basic instinct that moves man and woman. The said definition of prudent man calls upon the judge to become realistic and practical. Good faith anticipates an honest effort to discover the facts upon which the exercise of power rests.
Cognizance of an offence under Section 420
The offence is cognizable and falls under the category of Non Bailable in IPC section 420. It is triable by Magistrate of the First Class and therefore FIR or Application u/s 156(3) or Private Complaint u/s 200 may be preferred.
Punishment of an offence under Section 420
The punishment under section 420 IPC which is given for the offence is imprisonment for a term which may extend to seven years, and also be liable to fine.
Distinction between mere 'breach of contract' and the 'offence of cheating'
Distinction depends upon the intention of the accused at the time of inducement which must be judged by his subsequent act but of which the subsequent act is not the sole standard. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction that is the time when the offence is said to have been committed. Therefore, it is the intention which is the substance of the offence. It is necessary to show that he had fraudulent or dishonest intention at the time of making the promise to hold a person guilty for the offence of cheating. From his mere failure to keep up promise consequently such a culpable intention cannot be presumed right at the beginning, that is when he made the promise.Section 73 to 75 deals with breach of contract whereas section 420 of IPC deals with offence related to cheating.