Report No. 42
17.41. Damage or harm to one other than person deceived.-
The first part of the definition presents no difficulty, and has caused none to the courts. The second part, however, has First, the notion of harm is not clear-cut, and situations have arisen where no tangible harm to the person deceived is apparent, although undue and unfair advantage has been taken by the offender and the courts have had to stretch the meaning of harm to cover those situations. Secondly, where real harm has occurred, not to the person deceived, but to somebody else, the question whether there has been cheating has not been easy to answer.
17.42. In an Allahabad case,1 for instance, the accused pretended to be a well-known eye specialist, and induced the complainant to let him operate on the eye of his 12 years old son. It was held that, though bodily harm was done to the son, he was not the person deceived, but since the deceived father had also suffered harm in mind, because of the anguish caused to him, the conviction for cheating was upheld. This desirable result was reached indirectly.
In a Lahore case,2 A represented to a Patwari that one Ilahi Baksh had sold some land to A, and in corroboration, he produced B, who represented himself to be Ilahi Baksh. The Patwari made an entry to that effect in the mutation register. The mutation was placed before the Naib Tehsildar, and the same false representations were repeated before him. The trial court convicted A and B of cheating. The High Court, on appeal, set aside the conviction, holding that the person deceive.-the Naib Tehsilda.-did not suffer any "harm"3, and though Ilahi Baksh was likely to suffer damage or harm no deception had been practised on him. In the course of their judgment the learned Judges observed.-
"It appears to me that the definition of 'cheating' in section 415, Penal Code, requires modification in order to cover cases where one person is deceived and another person suffers, or is likely to suffer, damage or harm in body, mind, reputation or property. It has been revealed in a number of cases that serious deception has been practised on Government officials as a result of which certain other persons have suffered a great deal of harm in reputation or property.
As the definition of 'cheating' at present stands, such cases are not covered by section 415, Penal Code,. Persons who practise such deception, may be convicted under section 182, Penal Code, but the punishment prescribed for that offence is not sufficiently deterrent, and it is desirable that such convicts should be liable to be heavily punished under section 420, Penal Code, which prescribes a maximum sentence of seven years' rigorous imprisonment."
1. Baboo Khan v. State, AIR 1961 All 639.
2. Muhammad Baksh v. Emperor, AIR 1941 Lah 460 (464) (Bhide and Abdul Rashid, JJ.).
3. As to meaning of "harm", see Veeda Menezes, AIR 1966 SC 773: (1965) 2 SCR 577.
17.43. That harm must be caused to the person deceived has also been emphasised in cases decided by other High Courts.1
A recent Supreme Court case2 seems to support this view by implication. In that case, the two appellants were charged with having cheated an Assistant Station Master by dishonestly inducing him to make out a railway receipt with false particulars, which was capable of being converted into a valuable security. The receipt as made out stated that a wagon "said to contain 251 bags of chillies" had been despatched. The wagon was found to contain 197 bags of bhusa (chaff). The charge of cheating the Station Master could not be established, as the railway did not incur any additional liability by the false representation that the consignment contained 251 bags of chillies.
The issue of the railway receipt was not likely to cause any damage or harm to the railway as the freight due was paid. The Court therefore held that no question of cheating the railway or the Station Master arose, and acquitted the appellants. The facts of the case, the long-drawn trial and the final conclusion seem most unfortunate and deplorable, "both because the courts are reluctantly compelled to allow dishonesty to go unpunished and because of the serious waste of judicial time involved in the discussion of futile legal subtleties.3"
There is also a suggestion4 that misrepresentation of facts by any person which leads an officer of Government to pass orders to the detriment of third parties should be brought under the definition of cheating. This will be covered if cases of harm caused to third persons are included in the definition.
As against this, there is the plain fact that the idea of harm cannot be dispensed with, as that would widen the scope of this offence to the extent of taking innocent activities like practical jokes. In actual experience it is found that undue advantage to the cheat results in some harm to some person. We consider, therefore, that the idea of harm must be retained as a necessary element of cheating, but we would include within its scope harm to anybody, and not only to the person deceived.
1. Seetharam Rao, AIR 1954 Mys 9; Baboo Khan, AIR 1961 All 639.
2. Hari Sao v. State of Bihar, AIR 1970 SC 843.
3. (1956) 72 Law Quarterly Review 183, quoted by Lord Goddard C.J. in Russa/ v. Smith, (1957) 2 All ER 797.
4. F. 3(9)/56-L.C., S. No. 106 (Suggestion from Legal Remembrancer and Secretary to a State Government).
17.44. Amendment proposed.-
We propose accordingly to substitute for the words "harm to that person" the words "harm to any person".
17.45. Explanatio.-amendment proposed.-
Section 415 contains an explanation that "a dishonest concealment of facts is a deception within the meaning of this section". Since "concealment" conveys the idea of some thing active, the question was often arisen whether mere non-disclosure of facts, when there is no legal obligation to disclose them, is deception. The view generally taken by the courts is that such non-disclosure is not concealment and there is no deception. It would make for certainty if this is expressly mentioned in the explanation. We propose therefore to amplify it as follows.-
"Explanation.- A dishonest concealment of facts, or, where there is a legal duty to disclose particular facts, a dishonest omission to disclose those facts, is a deception within the meaning of this section."
17.46. Section 416.- Section 416 which defines cheating by personation needs no change.
17.47. Sections 417, 418 and 419.-
The next three sections provide the punishment for cheating simpliciter, cheating by personation and cheating in order to cause wrongful loss to one whose interest the offender is bound to protect. No change is required in these sections.
17.48. Section 420 overlapping section 415 in some respects.-
There is a noticeable overlap between the definition of the offence punishable under section 420 and the definition of cheating contained in section 415. Section 420 envisages, besides the essential actus reus of cheating with its concomitant mens rea as set out in section 415, one or other of three ingredients turning on delivery of property and tampering of valuable securities. The typical offence under section 420 is committed when the offender "cheats.-not merely deceive.-and by such "cheating", dishonestly induces the person deceived to deliver any property to any person. But then according to section 415, a person "cheats" when he deceives another, and dishonestly induces the person deceived to deliver any property to any person. Where a person "cheats" in this manner, it would appear that he is punishable under section 415 as well as section 420.
In fact, the earlier section curiously and unnecessarily mixes up the particular type of cheating for which a severe punishment is provided in section 420 and a general description wide enough to cover all forms of deception which should be regarded as culpable. As a general definition of cheating, section 415 should have confined itself to the latter, e.g., by stating that "whoever, by deceiving any person, fraudulently or dishonestly 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 any person in body, mind, reputation or property, is said to cheat". Delivery of property, making, altering or destroying of a valuable security, etc., specifically mentioned in section 420, would all be covered by the general formula and appropriately treated as aggravated forms of cheating. We, however, do not think that there is any great practical advantage in making this change.1
17.49. While the idea of inducing the person deceived to consent to the retention of property by a third person is expressly mentioned in section 415, it is not referred to in section 420 which appears to be an oversight. We think this should be rectified. The section may be redrafted in clauses as follows to facilitate understanding.-
"420. Cheating and dishonestly inducing delivery of property.- Whoever cheats and thereby dishonestly induces the person deceive.-
(a) to deliver any property to any person, or
(b) to consent that any person shall retain any property, or
(c) to make, alter or destroy the whole or any part of a valuable security, or
(d) to make, alter or destroy 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."
17.50. Cheating in respect of Government contract.-new section proposed.-
The Law Commission in an earlier Report1 considered how to tackle the problem of cheating of Government on a large scale by dishonest contractors while supplying goods or executing works, and recommended a specific provision penalising it as an aggravated offence of cheating. Considering the wide range of State activity at present (and it is likely to grow wider), there are, we think, sound reasons for enacting a special provision expressly covering such fraudulent conduct. The maximum punishment for such conduct, we think, could be more severe than that suggested in the earlier Report, and we propose a maximum of ten years' imprisonment. We propose that after section 420, a new section be inserted reading as follows.-
"420 A. Cheating public authorities in performance of certain contracts.-Whoever, in performance of any contract with the Government or other public authority for the supply of any goods, the construction of any building or the execution of any other wor.-
(a) in the case of a contract for the supply of goods, dishonestly supplies goods which are less in quantity than, or inferior in quality to, those he contracted to supply, or which are, in any manner whatever, not in accordance with the contract, or
(b) in the case of a contract for the construction of a building or execution of other work, dishonestly uses materials which are less in quantity than, or inferior in quality to, those he contracted to use, or which are, in any manner, whatever not in accordance with the contract, shall be punished with imprisonment of either description for a term which may extend to ten years, and shall be also liable to fine.
Explanation.- In this section "public authority" means
(a) a corporation established by or under a Central, Provincial or State Act;
(b) a Government company as defined in section 617 of the Companies Act, 1956; and
(c) a local authority".