Report No. 156
12.76. Under this clause section 420 is sought to be substituted by a new section with some changes. Likewise a new section 420A relating to cheating of public authorities in performance of certain contracts is sought to be inserted. Yet two new sections, section 420B relating to publication of false advertisements and section 420C relating to fraudulent acts in relation to property of a company are also sought to be added.
The existing section 420 lays down that whoever cheats thereby dishonestly induces a person to deliver the property to any person or to make or alter, destroy etc. shall be punished. A question came up that in a case where by deceiving any person fraudulently induces to consent that any person shall retain any property would also be covered. The Law Commission in its 42nd Report recommended that such a clause be added. That is the only change in the proposed section 420 which makes the section more explicit. The change may be carried out.
The Law Commission in its 29th Report considered as to how to tackle the problem of cheating of government on a large scale by dishonest contractors while supplying goods. The Law Commission in its 42nd Report adverted to this aspect and recommended that a provision should be made making such offences punishable.
The new section 420A is fairly exhaustive to cover such offences and the punishment provided is not severe. In the modern trend of trade and commerce, a number of false advertisements are being made to mislead the public. Though the Law Commission in its 42rid Report has not adverted to that, the proposed new section 420B appears to be salutary.
Fraudulent transfer of property in relation to companies is sought to be covered by this section. This section lays down that whoever with an intent to mislead or injure a person or public, makes or causes to make any transfer of property belonging to a company by a gift, sale etc. or with such intent alters, removes and conceals any sign or name plate of the company to indicate that the company has ceased to exist shall be punishable. This is in line to check fraudulent acts by way of cheating as mentioned therein.