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TMI Blog2021 (9) TMI 943X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned appellate court also considered the conduct of the petitioner and held that it was never his intention to repay the amount to the complainant and considered that in part payment of the loan amount the petitioner issued cheque in favour of the complainant, but the same also stood dishonoured twice and the cheque issued to Suresh Agarwal was also dishonoured - Considering the conduct of the petitioner including the agreement which was entered into after the institution of the case, the learned appellate court was convinced that it was never the intention of the petitioner to repay the loan amount to the complainant and with these findings, the learned appellate court upheld the conviction of the petitioner for offence under Section 420 IPC. It is a well-established principle of law that every breach of contract or every dispute under an agreement or every dispute in connection with transaction of money and failure to repay does not amount to the offence of cheating. It would amount to cheating only in those cases where there was any deception played at the very inception. To establish the offence of cheating, the accused should be shown to have had fraudulent or dishones ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and sentenced for the offence under Section 420 Indian Penal Code to undergo rigorous imprisonment for three years and to pay a fine of ₹ 5,000/- and in default of payment of fine, he was directed to undergo further imprisonment of two months. The order of conviction was passed by the learned Judicial Magistrate, 1 st Class, at Jamshedpur, in Complaint C/1 Case No. 1128 of 2001. Submission on behalf of the petitioner 5. Learned Senior counsel for the petitioner submits that on the basis of the materials on record and the findings recorded by the learned court below, the basic ingredients of offence under Section 420 of Indian Penal Code are not satisfied. He also submits that it has been specifically recorded that upon perusal of the evidences adduced by the witnesses examined by the complainant, it transpired that the money was given by the complainant to the accused as friendly loan. He submits that once the finding of friendly loan has been arrived at by the learned appellate court, under such circumstances, the criminal intent which is required to convict the petitioner under Section 420 Indian Penal Code is totally absent. He submits that at best this is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the petitioner. In the month of March, 2001, the petitioner came to Jamshedpur and on demand of the complainant he assured to return his amount at the end of March, 2001 but failed to do so. The complainant met the petitioner and demanded his money and then the petitioner issued a cheque for an amount of ₹ 50,000/- as part payment by the cheque dated 07.04.2001 which was dishonoured on 17.05.2001 showing fund insufficient. The complainant informed the petitioner and at the request of the petitioner the cheque was again deposited but thereafter it was again bounced on 5.09.2001 for the same reasons. In the month of April, 2001, the complainant had to pay an amount of ₹ 49,000/- to one Suresh Agarwal and in this regard the petitioner issued a cheque for an amount of ₹ 49,000/- dated 25.04.2001 in the name of Suresh Agarwal, but the said cheque was also dishonoured on 19.09.2001. It has also been also alleged that the petitioner had taken an amount of ₹ 5,000/- from the complainant to manage the loan of ₹ 1,00,000/- from Prime Minister s Fund in the name of the son of the complainant, but the petitioner managed the loan in the name of his son and thus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Suresh Agarwal. It has also been alleged by the complainant that the petitioner also took an amount of ₹ 5,000/- in the name of managing loan from the Prime Minister s Employment Scheme, but his son did not get any loan. Thus, the complainant has alleged that the petitioner took an amount of ₹ 2,65,000/- from him but did not return the same in spite of correspondences made for the purpose and issuance of legal notice. 11. The learned trial court also recorded that on 21.04.2003 an agreement was prepared between both the parties and the accused had put his signature. The said agreement was identified by the complainant which was marked as exhibit-6 with objection from the side of the petitioner. 12. Ram Kailash Mishra was examined as C.W. 1 who deposed that both the complainant and accused, worked together in the Telco company, and both of them, took E.S.S. in the year 2000. On 20.11.2000, he (witness) went to the residence of complainant, where, he found the son of the petitioner named Santosh Choubey, and all three of them (this witness, complainant and Santosh Choubey) went to the Bank of Baroda, Bhuiyadih, where after withdrawing an amount of ₹ 50,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd acquitted the petitioner for such offence. 16. Learned trial court considered the offence under Section 420 of Indian Penal Code and recorded its finding at para 19 of the judgment that the petitioner with a dishonest intention induced the complainant, not only to take E.S.S. from the company, but also, on false assurance of handsome return, as well as, of employment of son and son-in-law of the complainant, and took a huge amount from the complainant and convicted the petitioner for offence under section 420 of IPC. The trial court also recorded that it is admitted that both the sides were in very good family relation since long, but even then, the petitioner failed to return back the money of the complainant. The trial court also considered that during trial, the petitioner entered into an agreement (Ext.-6) with complainant, but even-then, he failed to repay the amount of a retired person and in the view of the learned trial court, this fact alone was sufficient to show the dishonest intention of petitioner and further the cheques issued by the petitioner were not honoured by the bank, which also showed dishonest intention of the petitioner. 17. This Court finds that al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endly loan. The learned appellate court also considered the conduct of the petitioner and held that it was never his intention to repay the amount to the complainant and considered that in part payment of the loan amount the petitioner issued cheque in favour of the complainant, but the same also stood dishonoured twice and the cheque issued to Suresh Agarwal was also dishonoured. Learned Appellate court also considered the circumstance that after the institution of the case, the petitioner executed an agreement with the complainant with promise to repay the entire amount of loan in instalment, but not even a single instalment was given by him to the complainant. Considering the aforesaid conduct of the petitioner including the agreement which was entered into after the institution of the case, the learned appellate court was convinced that it was never the intention of the petitioner to repay the loan amount to the complainant and with these findings, the learned appellate court upheld the conviction of the petitioner for offence under Section 420 IPC. 20. In the case of V.Y. Jose and Another Vs. State of Gujarat and Another reported in (2009) 3 SCC 78, the Hon ble Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 or representation .. 23. In Hira Lal Hari Lal Bhagwati Vs. CBI, New Delhi reported in (2003) 5 SCC 257 , the Hon ble Supreme Court reiterated the legal position as under: 40. It is settled law, by a catena of decisions, that for establishing the offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. From his making failure to keep promise subsequently, such a culpable intention right at the beginning that is at the time when the promise was made cannot be presumed .. 24. In the case of Satishchandra Ratanlal Shah Vs. State of Gujarat and Another reported in (2019) 9 SCC 148 , the Hon ble Supreme Court considered the legislative intent to criminalize the nature of breaches of contract as under: 13. Now coming to the charge under Section 415 punishable under Section 420 IPC. In the context of contracts, the distinction between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he complainant in his evidence that at the very inception there was any intention on behalf of the accused person to cheat which is a condition precedent for an offence under Section 420 IPC. The witnesses have clearly stated that the transaction was in the nature of friendly loan which was not paid in spite of demand. The appellate court has also recorded a clear finding that the transaction was in the nature of friendly loan. The learned appellate court, while upholding the conviction under section 420 IPC, recorded the conduct of the petitioner relating to events after the completion of entire transaction i.e. bouncing of cheques issued by the petitioner and non-adherence to the agreement to pay the amount which was entered into between the parties during the pendency of the case to give a finding that the petitioner never intended to return the amount. Such consideration of the conduct of the petitioner subsequent to completion of transaction could not have been relied upon by the learned appellate court to sustain the conviction of the petitioner under Section 420 of Indian Penal Code as the basic ingredient of the offence is dishonest intention of the petitioner since incepti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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