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Judgment
The revision petitioner is the accused in Calendar Case No.83 of 1996 on the file of the Judicial Magistrate, Manaparai and the appellant in
C.A.No.44 of 1998 on the file of the first Additional Sessions Judge-Cum-Chief Judicial Magistrate, Trichy. He was charged and tried for an
offence falling under sections 406 and 420 of the Indian Penal Code. The learned trial Magistrate found him guilty for the offence punishable u/s
420 of the Indian Penal Code alone and sentenced him to undergo rigorous imprisonment for six months together with fine of Rs.1000 carrying a
default sentence. His appeal was also dismissed on merits. Hence the revision. Heard Mr.A.Ramesh, learned counsel for the revision petitioner and
Mr.R.Karthikeyan, learned Government Advocate on the criminal side for the State.
It is the contention of the learned counsel for the revision petitioner that on the facts established, no offence of cheating at all is made out and
therefore the conviction cannot be legally sustained, though it had been concurrently held by the Courts below that the accused Is guilty of the
offence of cheating. The learned Government Advocate on the other hand would contend that the materials available on record do show that the
accused is guilty of the offence of cheating and therefore no exception could be taken to the finding of guilt arrived at by the Courts below
concurrently.
The revision petitioner was running a chit transaction. P.Ws.l to 3 are the subscribers. All the subscribers have remitted the instalments to the
credit of their respective chit. The accused did not reimburse the money due to each of the subscriber though they are entitled to get the
reimbursement of the same on the maturity of the chit. All these facts are not in dispute. The question is whether all these facts put together can
show that the accused is guilty of the offence of cheating as defined u/s 415 of the Indian Penal, Code. It is no doubt true that in Ex.P.2, the receipt
issued by the accused to the subscribers, namely P.Ws.l to 3, it is stated that the chit company run by the accused is a registered chit company. In
the complaint also it is stated that believing that the chit company run by the accused is a registered chit company, the subscribers have started
subscribing their money towards that chit. This statement in the complaint, no doubt, would attract the ingredients of Section 415 of the Indian
Penal Code. However in oral evidence there is absolutely no whisper at all by any one of the subscribers that at that time when they entered into
chit transaction they were made to believe either orally or by any documentary evidence that the chit company run by the accused was a registered
one, which alone made the subscribers to join in the chit transaction and subscribe to it. It is the dishonest intention on the part of the accused at
the inception which will be the guiding factor to decide whether the conduct of the accused would amount to cheating or not. In other words the
mens rea of the accused to cheat should be shown to be in existence at the inception when the parties met. In this case, that evidence is totally
lacking. It may be true, as spoken to by the witnesses, that the subsequent conduct of the accused had put them on caution resulting in the
complaint being lodged. Any amount of subsequent conduct on the part of the accused, even assuming it is thoroughly dishonest, would not bring
home the guilt of the offence of cheating unless the prosecution establishes that at the inception point of time the accused had the intention to cheat
the subscribers.
In Hari Prasad Chamaria Vs. Bishun Kumar Surekha and Others, it had been held that unless a dishonest intention is found at the inception any
amount of fraudulent conduct on the part of the accused at a later point of time would not by itself make the offence of cheating. In
Venkatachalapathi Chettiar, In re, 1971 L.W. (Crl) 252 the distinction between a breach of contract and a criminal intention had been high lighted
and it was held that a mere breach of contract cannot give rise to a criminal prosecution, the distinction between the case of breach of contract and
one of cheating depends upon the intention of the accused at the time of alleged inducement, which may be judged by his subsequent act, but of
which the subsequent act is not the sole criterion. In K.Periasamy v. Rajendran and another, 1985 (1) L.W. (Crl) 201 it has been held that a mere
breach of contract cannot give rise to a criminal offence, but it is only a civil liability.
Going by the materials placed by the prosecution I am of the opinion that the accused may be ""guilty of only committing a breach of a contract
entered into between the accused on the one hand and the various subscribers on. the other hand. Therefore on the facts so established I am of the
opinion that the ingredients in Section 415 of the Indian Penal Code are not made out. Therefore the judgment of the Courts below, though
concurrent, cannot be sustained in law. Accordingly the revision is allowed. The accused is acquitted of the charge. Fine amount, if any, paid shall
be refunded to him. Bail bonds, if any, shall stand cancelled forthwith.