Intention to cheat must exist at the time of initial formation of contract

In Sri Uttam Deb vs The State Of Tripura, appeal was filed before the Tripura High Court against the judgment and order of conviction and sentence  by the lower court.

The High Court decided that the matter involved among others, the following questions :-

(i)  whether there is any legal evidence as to inducement?

(ii)   whether making of payment without any receipt or the agreement of high return can be believed in the course of human conduct?

The complaint was filed against the appellant claiming that he had fraudulently induced the accuser to invest money in a company UNIPAY 2 U which did not exist.

The High Court observed that in the statements of the victims were recorded by the police no single line would be available in the complaint that at any point of time, the petitioner had introduced that if he had invested the money in UNIPAY 2 U, that it will fetch high return in the form of interest. The victims have stated in the trial that he had inquired about the company but it revealed that there did not exist any such company in the name of UNIPAY 2 U, non-banking financial company. But in the complaint  has categorically stated that subsequently he went to the office of UNIPAY 2 U marketing private limited company and on his query he could know that the petitioner did not deposit his money which he had given to the petitioner for investment in UNIPAY 2 U. This kind of diametrically opposite statements has taken out the credibility of the victims.

The court was not inclined to believe that someone had been depositing money through an agent without asking for any receipt or without any agreement and decided that the story of making investment through the petitioner is visited by serious doubt and hence, the benefit would go to the petitioner.

The court observed that the accusers have embellished their statement to ensure the conviction of the petitioner by completely deviating from their statement, recorded by the investigating officer during the investigation. The investigating officer has categorically stated that the facts of inducement for making payment or demanding for money receipt or denying to pay back the money were never stated to him. Thus, those testimonies have become susceptible to doubt. Thus, the cumulative effect of such development is that the petitioner is entitled to get the benefit as there is no legal evidence to show there existed dishonest intention from inception of the transaction or the delivery of money was made under inducement. 

The court decided that 'Cheating' by the petitioner has not been established beyond reasonable doubt. Even, there is no element of mens rea. Referring to judgements of the Supreme Court  in Harmanpreet Singh Ahluwalia and Others vs. State of Punjab and Others reported in (2009) 7 SCC 712 and Uma Shankar Gopalika vs. State of Bihar and Another reported in (2005) 10 SCC 336], the High Court observed that it has been clearly held by the apex court that fraudulent or dishonest intention must exist at the time of initial promise or formation of contract. Such fraudulent or dishonest inducement at the inception of transaction has not been proved by the prosecution to the hilt. If the intention to cheat has developed later on, the same cannot amount to cheating.