Mahadeo Prasad v State of West Bengal 1954

Case – Mahadeo Prasad v. State of West Bengal, 1954

Case Summary

Full Case Detail

N.H. BHAGWATI, J. – This is an appeal by special leave from a decision of the High Court of
Judicature at Calcutta upholding the conviction of the appellant under Section 420 of the
Indian Penal Code and the sentence of one year’s rigorous imprisonment passed upon him
by the Additional Presidency Magistrate of Calcutta.

2.The appellant agreed to purchase from the complainant Dulichand Kheria 25 ingots of
tin on 5th May, 1951. The complainant had in his stock 14 ingots only and purchased 11
ingots from the firm of M. Golam Ali Abdul Hussain. These 25 ingots were to be delivered by
the complainant at the guddi of the appellant and it was agreed that the price which was
fixed at the rate of Rs 778 per cwt. and amounted to Rs 17,324/12/6 was to be paid by the
appellant against delivery. The Jamadar of the complainant went to the Guddi of the
appellant. The appellant took delivery of the ingots but kept the Jamadar “awaiting and did
not pay the price to him. The Jamadar waited for a long time. The appellant went out and
did not return to the Guddi and the Jamadar ultimately returned to the complainant and
reported that no payment was made though the ingots were taken delivery of by the
appellant. The complainant who was induced to part with these 25 ingots of tin by the
appellant’s promise to pay cash against delivery realised that he was cheated. He therefore
filed on 11th May, 1951 his complaint in the Court of the Additional Chief Presidency
Magistrate, Calcutta charging the appellant with having committed an offence under Section
420 of the Indian Penal Code. The defense put up was that the appellant had no intention
whatever to swindle the complainant, that the transaction was on credit and that the story
of the promise to pay in cash was introduced by the complainant to give a criminal
complexion to the case. It was alleged that the appellant went of his own accord to the
complainant 7 or 8 days after the transaction in order to settle the money to be paid in view
of the fluctuations in the price of tin in the market and was arrested at the place of the
complainant while he was thus negotiating for a settlement.

3.It transpired in the evidence that the appellant had an overdraft account with the Bank
of Bankura Ltd. in which account he had overdrawn to the extent of Rs. 46,696-12-9 as on
4th May, 1951, the overdraft limit being Rs. 50,000. On 5th May, 1951 the appellant
hypothecated with the bank 70 ingots of tin as additional cover against the overdraft
account. There was no satisfactory evidence to show that these 25 ingots of tin which were
taken delivery of by the Appellant from the Jamadar of the complainant were included in
these 70 ingots which were thus hypothetical with the bank on this date. There was
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however sufficient evidence on the record to show that on 5th May, 1951 when such
delivery was taken by the appellant he had not with him any assets beyond the margin of
the overdraft account to the extent of Rs. 3,303-3-3 which certainly would not go a long way
towards the payment of the price of these 25 ingots. The question to be determined by the
Court of the Additional Presidency Magistrate was whether having regard to the surrounding
circumstances it could safely come to the conclusion that the appellant had no intention
whatsoever to pay but merely promised to pay cash against delivery in order to induce the
complainant to part with the goods which otherwise he would not have done. The
Additional Presidency Magistrate, Calcutta held that the charge against the appellant was
proved and convicted him and sentenced him as above. The appellant took an appeal to the
High Court against this conviction and sentence passed upon him. The High Court dismissed
the appeal and confirmed the conviction and sentence passed upon the appellant by the
Additional Presidency Magistrate, Calcutta.

4.The High Court observed rightly that if the appellant had at the time he promised to
pay cash against delivery an intention to do so, the fact that he did not pay would not
convert the transaction into one of cheating. But if on the other hand he had no intention
whatsoever to pay but merely said that he would do so in order to induce the complainant
to part with the goods then a case of cheating would be established. It was common ground
that the market of tin was rapidly declining and it went down from Rs. 840 per cwt. in about
April 1951 to Rs. 540 per cwt. in about August 1951. Even between 3rd May, 1951 and 5th
May, 1951 the two dates when the negotiations for the transaction took place between the
parties and the contract was actually entered into, the market declined from Rs. 778 per
cwt. to Rs. 760 per cwt. It was therefore urged on behalf of the appellant that the
complainant would be anxious to sell the goods to the appellant and there would be no
occasion for the appellant to induce the complainant to part with the goods on a false
promise to pay cash against delivery. It was further urged that the appellant was not shown
to have had no other resources except his overdraft account with the Bank of Bankura Ltd.,
that he had miscalculated his capacity to pay the price against delivery and that therefore
there was no justification for holding that he had initially no intention to pay for the ingots
when they would be delivered to him. It was also urged that the bill (Ex.1) which was given
by the complainant to the appellant stipulated that interest at the rate of 12 per cent per
annum would be charged on the price of goods which was not paid in cash against delivery
and this stipulation went to show that it was only a case of civil liability and did not import
any criminal liability on the part of the appellant. It was lastly urged that the appellant was
anxious to arrive at a settlement with the complainant and actually went to his shop and
was arrested there while negotiating a settlement and this showed that he had harboured
no fraudulent intentions against the complainant when he had taken delivery of the ingots.

5. All these contentions which have been urged on behalf of the appellant however are
   of no avail. The complainant had never known the appellant and had no previous dealings
   with him prior to the transaction in question. The complainant could therefore not be
   anxious to sell the goods to the appellant either on credit or even in a falling market except
   on terms as to cash against delivery. Whatever be the anxiety of the complainant to dispose
   of his goods he would not trust the appellant who was an utter stranger to him and give him
   delivery of the goods except on terms that the appellant paid the price of the ingots
   delivered to him in cash and that position would not be affected by the fact that the market
   was rapidly declining. There was no question of any miscalculation made by the appellant in
   the matter of his ability to pay the cash against delivery. He knew fully well what his
   commitments were, what money he was going to receive from outside parties and what
   payments he was to make in respect of his transactions upto 4th May, 1951. The position as
   it obtained on the evening of 4th May, 1951 was that he had not with him any credit beyond
   a sum of Rs. 3,303-3-3 as above and there is nothing on the record to show that he expected
   any further payments by 5th May, 1951 to enable him to make the payment of the price
   against delivery of these ingots. The stipulation as to payment of interest endorsed on the
   bill would not militate against an initial agreement that the price of the ingots should be paid
   in cash against delivery. It would only import a liability on the part of the purchaser to pay 12
   per cent interest on the price of the goods sold and delivered to him if he did not pay cash
   against delivery. That would indeed be a civil liability in regard to the payment of interest
   but would certainly not eschew any criminal liability of the purchaser if the circumstances
   surrounding the transaction were such as to import one
   The anxiety to arrive at a settlement could easily be explained by the fact that the
   appellant knew that he had taken delivery of the ingots without payment of cash against
   delivery and the only way in which he would get away from the criminal liability was to
   arrive at a settlement with the complainant. The state of the overdraft account of the
   appellant with the Bank of Bankura Ltd., the evidence of the complainant as well as the
   Jamadar, the hypothecation of 70 ingots of tin by the appellant with the Bank of Bankura
   Ltd. on the very 5th May, 1951 and the whole of the conduct of the appellant is sufficient in
   our opinion to hold that at the time when he took delivery of the 25 ingots of tin, the
   Appellant had no intention whatsoever to pay but merely promised to pay cash against
   delivery in order to induce the complainant to part with the goods. The appellant was
   therefore rightly convicted of the offence under Section 420 of the Indian Penal Code and
   both the courts below were right in holding that he was guilty of the said offence and
   sentencing him to one year’s rigorous imprisonment as they did. The appeal therefore is
   without any merits and must stand dismissed.