The Jharkhand High Court has held that if there is an absence of any allegation of inducement, false promise or deception, at the time of the transaction, breach of undertaking to repay the loan cannot solely be a base for conviction under Section 420 of the Indian Penal Code.
The Jharkhand Court also observed that the dispute between the petitioner and the informant was within the realm of civil dispute and since there was no evidence on record showing the petitioner’s intention to cheat the informant, from the inception of the transaction of extending friendly loan over mobile, the conviction of the petitioner under Section 420 of Indian code cannot be sustained within the eyes of the law.
In the trial, the sole Petitioner and the accused, Saluka Dogma, was found guilty of an offense under Sections 406/420, and Section 323 of IPC read with Section 34 of IPC and acquitted for an offense under Section 452 of IPC. On appeal, the court acquitted the Petitioner for the offense under Section 406 and 323 of IPC but the conviction was upheld under Section 420 of IPC, sentencing him to rigorous imprisonment for two years along with a fine of Rs.500/-.
The Court stated that it is a well-established principle of law that every dispute of agreement or every breach of contract does not amount to the offense of cheating. It would be considered cheating only where any deception happened during the inception. It also noted that to establish an offense of cheating, the accused should prove to have a fraudulent or dishonest intention while making a promise or during the representation.
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