Cheating or Not

Now a day’s a number of criminal cases are being filed on the failure to perform the agreement to sell or execute the sale deed in favor of the buyer. But the question that comes to everybody’s mind is whether the same amount to cheating as well as criminal breach of trust on the part of the seller/accused or is it just a breach of the contract and the remedy lies in the civil court seeking specific performance of the contract. There are cases wherein the buyer/complainant forge the signature of the seller or takes his signature secretly and then demand the sale of the particular property wherein no agreement or contract was ever entered into between the buyer and seller.

The courts are failing to take note of the fact that a number of fresh cases are coming forward because of the rise in the price of the property and some of them are filed for ulterior motives best known to the buyers/complainants. Now the question comes whether failure on the part of the seller to execute the document if at all entered into between the buyer and seller amounts to cheating as well as criminal breach of trust or the true remedy lies before the civil court seeking specific performance of the contract. In order understand the same let me explain what are the ingredients which need to be satisfied before a case for cheating or criminal breach of trust wherein the seller fails to perform his part of the contract.

The first and paramount ingredient for an offence of criminal breach of trust to be made out it is required to be shown that some property was entrusted to the accused or he having dominion over such property dishonestly misappropriated or converted for his own use that property and the word cheating has been defined under Section 415 IPC, which provides 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. It is now well settled legal position that in order to constitute an offence of cheating the intention to deceive should be in existence at the time when the inducement was made.

Now if we see that the mere handing over of the sale consideration by the buyer/complainant to the seller was entrustment or the seller had dominion over it in any manner on behalf of the complainant when the parties had themselves entered into the agreement to sell. The answer to same is NO because the Hon’ble Rajasthan High Court in “Raghunath Meena & Anr State of Rajasthan” held that when the essential ingredient to make an act of an accused to be criminal breach of trust within the meaning of Section 405 IPC is absent, the offence under Section 406 IPC cannot be said to be made out even prima facie against the seller, therefore the FIR to that extent is liable to be quashed. And in so far as the cheating part is considered the Hon’ble Court has held that for an offence of cheating a person had fraudulent or dishonest intention at the time of making the promise to say that he committed an act of cheating. A mere failure to keep up promise subsequently cannot be presumed as an act of committing cheating, but at the same time it is also well settled legal position that subsequent conduct of the accused is also a relevant factor to infer whether he had fraudulent or dishonest intention at the inception i.e. when the offence was committed.

Cases of these nature are coming up when the builder fails to deliver the possession in the time bound manner or delays the possession, but the courts time and again are applying the same principle in order to find out whether the case of cheating is made out or not.

Warm Regards

Kapil Chandna

Advocate

Supreme Court of India

Advocate.kapilc@gmail.com