Indian Penal Code, 1860
Section 420
repealedCheating and dishonestly inducing delivery of property
Whoever cheats and thereby dishonestly induces the person deceived to deliver 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 imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.
Why this exists
This section addresses the most serious and commonly prosecuted form of cheating, one that actually results in the victim delivering property or altering valuable documents due to the deception, unlike simple cheating which may not always involve such tangible loss. Because these consequences, losing property or having valuable securities manipulated, cause direct financial harm, the law imposes a much heavier punishment than ordinary cheating under Section 417. Under the Bharatiya Nyaya Sanhita, 2023, this corresponds to Section 318(4).
How courts read it
Courts have repeatedly held that mere breach of contract does not amount to cheating under this section unless dishonest intention existed from the very beginning of the transaction. This section is one of the most frequently invoked provisions in fraud cases, including financial scams, fraudulent property deals, and business fraud, and courts distinguish genuine business failures from cases where deception was the intended plan from the outset.
Common misconceptions
- Myth: Any failed business deal or investment can be prosecuted under this section.
Fact: This section requires proof of dishonest intention existing from the beginning of the transaction; genuine business failures without fraudulent intent do not amount to cheating.