Murali Reddy
Asked February 16, 2017

Cheating

  • 1 Answer
  • 399 Views

Respected Sir/Madam, in July 5th 2016, I made Rate agreement with Sunder, Hyderabad for a land of 6 acres by giving 5 lakhs cash in advance in 100 bond paper. That land is under SBT bank auction for 50 lakhs, where sunder convinced me that he is going to get that property through bank auction and showed his EMD slip of 10%. As he is delaying day by day for Sale agreement. Recently I went to SBT bank and came to know that he deposited EMD 5 lakhs in Feb 2016 and took his EMD amount back on April 2016. At that time I came to know that he intentionally cheated me. Please guide me whether I should approach Police station or Court. Thank you....

Answer 1

In this case, there can be two aspects to it.

One, since you have executed a Rate agreement with the alleged wrong-doer, you have a contractual claim based on this contract. Therefore, you can file a suit for breach of contract and claim damages under Section73 of the Indian Contract Act, 1872 , i.e., compensation for your loss. For that you will have to prove fraud as defined in section 17 of the Indian

Contract Act, by proving the following -

1) Mr. Sundar had made the claim of handing over the property after the auction, though he did not believe that himself,

2) He actively concealed that he had withdrawn the EMD money from the bank,

3) He made the promise made without any intention of performing it; and

4) Take note of any other act he had done to mislead you Second, since you think that the person has intentionally cheated on you, if the act of cheating is proven, Mr. Sundar can be held liable under section 417 of the IPC [Indian Penal Code,1870]. If the offence is proven, the punishment would be imprisonment for 1 Year, or fine, or both. However, since cheating is a con-cognizable offence 1 , the police would file a General Diary [GD] and would not have any power to arrest without the permission of a Magistrate of First Class. Also, as cheating is a compoundable offence, you can come to a compromise and pressurise the accused to return your money in exchange of settling the case with prior permission of the court.But note that in case of a criminal complaint, the burden of proof is higher. Further, it was pointed out in the case by the Supreme Court in the case, Arun Bhandari vs State Of U.P.&amp Ors, “in determining the question it has to be kept in mind that the distinction between mere breach of contract and the offence of cheating is a fine one. It depends upon the intention of the accused at the time of inducement which may be judged by his subsequent conduct but for this subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at 1 Schedule I of the CrPC [Code of Criminal Procedure, 1973], the beginning of the transaction , that is the time when the offence is said to have been committed. ... To hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise. From his mere failure to keep up promise subsequently such a culpable intention right at the beginning, that is, when

he made the promise cannot be presumed.”As laid down by the Supreme Court in the case P. Swaroopa Rani Vs. M. Hari Narayana alias Hari Babu, 2 civil proceedings and criminal proceedings can proceed simultaneously. Therefore it would be advisable to file the civil and criminal complaints simultaneously.

Sources:

Cases:

 P. Swaroopa Rani Vs. M. Hari Narayana Alias Hari Babu, Air 2008 Sc 1884

 Arun Bhandari Vs State Of U.P.& Ors, Criminal Appeal No. 78 Of 2013

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