ABDUL FAZAL SIDDIQUIversusFATEHCHAND HIRAWAT AND ANR.

                            ABDUL FAZAL SIDDIQUI                                       A
                                           v.
                     FATEHCHAND HIRAWAT AND ANR.



-                                 AUGUST 20, 1996

                   (DR. A.S. ANAND AND K.T. THOMAS, JJ.]                               B

           Indian Penal Code, 1860: Sections 24, 25, 415, 420/120 and 420/34.

            Cheating-Essential ingredients of-Advance loan against stock in trade
     of business-Representation that business in question was free from all C
     encumbrances-Later it was found that property in question was encumbered
     property and receivers had been appointed in respect of that propeity by the
     High Court:-Trial for cheating-Conviction of accused by Trial Court-Con-
     viction and sentence upheld by High Court-Appeal-Held there was nothing
     on the record to show that the appellant- accused had any knowledge about
     the property being an encumbered property or about the appointment of the D
     Joint Receivers by the High Court in respect of that property-No evidence to
     show that the appellant knowingly made any false representation much less
     dishonestly or fraudulently--Basic ing:-edients of the offence of cheating are,
     therefore ntissing in the case--Evider1ce on tecord dves not connect the
     appellant 1vith the crinte alleged against hint at all-A nzere representation     E
     which is neiOzer claimed nor alleged to be dishonest or fraudulent does not
     attract the charge of cheating only because the complainant paits with his
     ntoney on the basis thereof-Conviction and sentence recorded against the
     appellant held unsustainable.

           CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.                        F
     42 of 1981.

           From the Judgment and Order 30.8.79 of the Calcutta High Court in
     Crl.A. No. 149 of 1972.

                                                                                       G
..         Rathin Das and Dipak Bhattacharyya for the Appellant.

           In-person for Respondent No. 1 (NP).

           Pranab Kumar Chatterjee (NP) for the State.

           The following Order of the Court was delivered :                            H
                                       807
    808                   SUPREME COURT REPORTS (1996] SUPP. 4 S.C.R.

A         Respondent No. 1 filed a complaint in the Court of Additional Chief
    Presidency Magistrate, Calcutta, against the appellant (Al), Kochi Mia
    (A.2) and Fazlur Rahman (A.3) alleging offence under Section 120-B read



B
    with Section 420 !PC and in the alternative under Section 420 !PC read
    with Section 34 !PC.

         According to the complainant, Kochi Mia (A.2) and the appellant
                                                                                   .,
  met him and requested him to advance money against the stock-in- trade
  of business of the Calcutta Cafe of which Fazlur Rahman (A.3) was
  represented to be the proprietor. The Complainant wanted to meet Fazlur
  Rahman (A.3) himself before agreein_g to advance the loan. After a few
c days, Fazlur Rahman (A.3), Kochi Mia (A.2) and the appellant went to the
  place of business of the complainant to meet him. A friend of the com-
  plainant by name Mangtulal Bagaria Was also present at that time with the
  complainant. The three accused represented to the complainant that Cal-
  cutta Cafe was free from all encumbrances and that the money could be
D advanced against hypothecation. Both the complainant and his friend
  Mangtulal Bagaria agreed to advance Rs. 30,000 to Fazlur Rahman. On the
  next date, a deed of hypothecation was drafted and executed in the office
  of Mr. G. Bagaria (PW.4) between the parties. In the deed of hypotheca-
  tion, it was stated that the business in question was free from all encwnbran-
  ces and charges etc. The deed of hypothecation was signed by Fazlur
E Rahman (A.3). On the basis of the specific representation made orally end
  in the deed, the complainant and Mangtulal Bagaria advanced a sum of
  Rs. 30,000 to Fazlur Rahman (A.3). The amount was advanced against six
  hundies. Fazlur Rahman (A.3) also executed a general irrevocable power
  of attorney in favour of the complainant and Mangtulal Bagaria authorising
F them to take charge to the management of the Calcutta Cafe in case of
  default of payment as agreed to in the deed of hypothecation. Sol!le
  payments were subsequently made towards repayment of the loan by Fazlur
  Rahman (A.3) to the complainant and Mangtulal Bagaria but after 28th
  November, 1966 admittedly no payments were made. On an enquiry made
  by the complainant, it transpired that the representation made by Fazlur
G Rahman (A.3), Kochi Mia (A.2) and the appellant was false because the
  property in question was an encumbered property and in a suit filed in the
  Calcutta High Court, Joint Receivers had been appointed regarding Cal-
   cutta Cafe. After recording the preliminary evidence all the three accused
  were sent up for trial. It transpires that no charge was framed against Kochi
H Mia (A.2) while Fazlur Rahman (A.3) died during the pendency of the
                       A.F.SIDIQUJv. FATEHCHANDHIRAWAT                        809

        trial. The defence of the appellant was that he was in no way connected A
        with the alleged crime nor had he cheated the complainant and his friend
        Mangtulal Bagaria and that he had not made any false representation to
        the complainant to induce him to part with his money. He asserted that he

·•      was not present al the time when the alleged representation was made by
        A.3. to the complainant, althe time of the drawing up of the hypothecation
                                                                                   B
        deed and that he had only subsequently identified the executant at the
        request of the complainant and Kochi Mia (A.2).


               In the Trial court the case, therefore, proceeded only against the
        appellant. The learned trial Magistrate vide his order dated 24th April,
.   -   1972 convicted the appellant for an offence under Section 420/34 !PC and     c
        sentenced him to undergo rigorous imprisonment for six months and to pay
        a fine of Rs. 500 and in default to undergo further rigorous imprisonment
        for two month. The appeal filed by the appellant in that High Court failed
        on 30th August, 1979. By special leave the appellant is before us.
                                                                                     D
              We have examined the record and heard learned counsel for the
        parties. We find that the complainant who appeared as PW. 7 in the trial
        court in his examination-in-chief stated that the amount was advanced 11on
        believing in good faith on the representation of accused Nos. 2-3 that the
        property was not encumbered". There is no mention of any representation      E
        having been made by the appellant that the property was free from en·
        cumbrances. PW. 8, Mangtulal Bagaria has also not referred to any repre·
        sentation made by the appellant as regards the property of Calcutta Cafe.
        PW. 4 Mr. D. Bagaria, Solicitor, who drafted the hypothecation deed stated
        that he had prepared the hypothecation deed on the statement made to F
        him by Fazlur Rahman (A.3) and that at that time besides Fazlur Rahman
        (A.3), Mangtulal Bagaria and the complainant were present and that the·
        hypothecation deed was drafted under instructions of these three persons
        at his office. He stated that it was Fazlur Rahman (A.3), who on being
        asked by him, disclosed that Calcutta Cafe was not encumbered in any way.

    .   He also has not implicated the appellant in any manner. This is all the G
        crucial evidence in this case. According to the complainant, however, the
        appellant had alongwith A.2 and A.3 told the complainant that he may
        advance loan to A.3 against the stock in trade. Did the appellant know that
        the stock in trade stood hypothecated? There is no such averment much
        less any evidence on the record.                                            H
    810                  SUPREME COURT REPORTS [1996] SUPP. 4 S.C.R.

A         The evidence on the record does not show that the appellant made
    any statement to the complainant, which he knew to be a false statement.
    Section 415 !PC reads thus :

            "415. Cheating - Whoever, by deceiving any person, fraudulently
            or dishonestly induces the person so deceived to deliver any
B           property to any person, or to consent that any person shall retain
            any property, or intentionally 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 that person in body, mind reputation
c           or property, is said to "cheat".

            Explanation. - A dishonest concealment of facts is as deceiption
            within the meaning of this section."

          The expression "dishonestly" has been defined in Section 24 !PC as
D   "whoever does anything with the intention of causing wrongful gain to one
    person or wrongful loss to another person, is said to do that thing
    'dishonestly'". "Fraudulently" hs bf'en defined in Section 25 as 'a person is
    said to do a thing fraudulently if he does that thing with intent to defraud    •
    but not otherwise"'.

E          Although, there is some evidence on the record to show that the
    amoimt of Rs. 30,000 was advanced by the complainant and Mangtulal
    Bagaria to Fazlur Rahman (A.3) on a representation made by all the
    accused, including, the appellant, but taking the complainant's case at its
    best, even if it be assumed that the appellant had made a representation
F   in the manner deposed to by the complainant, there is nothing on the
    record to show that the appellant had any knowledge about the Calcutta
    Cafe being an encumbered property or about the appointment of the Joint
    Receivers by the Calcutta High Court in a suit in respect of that property.
    There is no evidence to show that the appellant, knowingly made any false
    representation much less dishonestly or fraudulently. The basic ingredients
G   of the offence of cheating are, therefore, missing in the case. The evidence
    on the record does not connect the appellant with the crime alleged against
    him at all. The courts below did not properly examine the legal position as
    adverted to by us. A mere representation, which is neither claimed or
     alleged to be dishonest or fraudulent would not attract the charge of
H    cheating only because the complainant parts with his money on the basis
                   A.F.SIDIQU!v. FATEHCHANDHIRAWAT                         811

    thereof. In the present case the dishonest representation, both orally and A
    in the deed of hypothecation, was made by A.3, proprietor of the Calcutta
    Cafe. The conviction and sentence against the appellant as recorded by the .
    trial court and confirmed by the High Court, under the circumstances is
    unsustainable. We accordingly accept this appeal and set aside the convic-
    tion arid sentence of the appellant and acquit him. The appellant is on bail.
    His bail bonds shall stand discharged.
                                                                                  B

    T.N.A                                                     Appeal allowed.




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