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DISTINCTION BETWEEN CHEATING AND BREACH OF CONTRACT

Other Topics - By: - Mr. M. GOVINDARAJAN - Dated:- 2-3-2016 - Cheating Cheating may be defined as a dishonest act in order to gain advantage. Section 420 of Indian Penal Code (IPC) provides that whoever cheats and thereby dishonestly induces the person deceived any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with impriso .....

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be confused with breach of contract. Criminal case could not be launched for the breach of contract in the guise of cheating . In this article the is discussed with decided case laws. Case laws In S.W. Palanitkar V. State of Bihar - 2001 (10) TMI 1150 - SUPREME COURT the Supreme Court held that in order to constitute an offence of cheating, the intention to deceive should be in existence at the time when the inducement was made. It is necessary to show that a person had fraudulent or dishonest .....

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nless fraudulent, dishonest intention is shown at the beginning of the transaction. The Supreme Court held that the substance of the complaint is to be seen. Mere use of the expression cheating in the complaint is of no consequence. Except mention of the words deceive and cheat in the complaint filed before the Magistrate and cheating in the complaint filed before the police, there is no averment about the deceit, cheating or fraudulent intention of the accused at the time of entering into MoU w .....

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RCI for transfer of technology for the manufacturing process of extruded ceramic honeycombs inclusive of transfer of extrusion die fabrication technology which is an integral part of the manufacturing process for a consideration of ₹ 10 lakhs exclusive of royalty amount on the sales. The respondent in pursuance of the agreement established his industrial unit within the campus of ARCI at Balapur, Hyderabad. ARCI conducted trial tests and succeeded and handed over a few samples of the final .....

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Cyberabad seeking prosecution of ARCI and its officers punishable under sections 405, 415, 418 and 420 of IPC read with Sections 34 and 120B of IPC. The Investigation Officer, after investigation, submitted final report stating that the dispute is purely of civil nature and that no offence was made out against the appellants and the same may be treated as closed. On protest by the respondent the Magistrate took cognizance of the case for the offences under Sections 419 and 420 IPC read with Sec .....

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were involved in the process of developing the technology wholly in their capacity as Associate Director and Director of ARCI and there was no dishonest intention on their part to cheat the respondent; The said agreement provides for a contingency that if the targeted specifications are not achieved, then ARCI is liable to pay damages to the tune of 20% of the lump sum technology transfer fee charged; The case is purely of a civil nature and for the alleged breach of contract, arbitral proceedi .....

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circumstances clearly show that the representation was a fraudulent one right from the inception. The Supreme Court considered the facts and rival contentions and also impugned order and the material on record. The Supreme Court held that the legal position is well settled that when a prosecution at the initial stage is asked to be quashed, the test to be applied by the Court is, as to whether uncontroverted allegations as made in the complaint establish the offence. It is to be seen that whethe .....

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estroy any valuable security or anything which is sealed or signed or is capable of being converted into a valuable security ; and mens rea of the accused at the time of making the inducement. The Supreme Court pointed out the distinction between the breach of contract and the cheating. The Supreme Court held that the distinction would depend upon the intention of the accused at the time of alleged inducement. If it is established that the intention of the accused was dishonest at the very time .....

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ade between the appellants and the respondents. The terms and conditions of technology transfer agreement clearly suggest that the Centre is to conduct performance guarantee to achieve the product quality/specification of extruded ceramic honeycombs as provided in the agreement. In the event of failure to achieve the guarantee even after second performance test, option was given to ARCI either to conduct another performance test or pay the liquidated damages equal to 20% on the lump sum technolo .....

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