IPC 420, 406 – loss due to share market fluctuations

Tilak Marg Forum for Legal Questions Forums Criminal Law IPC 420, 406 – loss due to share market fluctuations


This topic contains 1 reply, has 2 voices, and was last updated by Dr. Ashok Dhamija Dr. Ashok Dhamija 10 months, 1 week ago.

  • Author
  • #3371



    from the last 2 months i was searching lot of websites regarding ipc 420,406 but could not find.

    today i was searching on the google and i found your beautifully written article on the ipc 420…..really informative and with the help of this articles,innocent accused will be out from the ipc 420. http://tilakmarg.com/answers/breach-of-contract-will-not-be-cheating-unless-deception-played-at-the-very-inception/

    iam not a lawyer…iam a hardware engineer….iam fighting my own case as party in person in metropolitan magistrate….i need legal advice from you as i cant afford lawyer as my father is suffering from the prostate cancer….

    brief facts of the case

    1)in the year 2009 my age was 29,i started to invest into the stock market of my personal income only,its not a business.

    2)one of my close friend whose age is 39 told me to invest his money into the stock market on my demat account even though my friend has his own demat account with the motilal oswal securities…he request me several time to invest his money into my demat account but i rejected his request because i was aware the working of the stock market as it can give profit or loss.

    3)i told him to invest into the equities through his demat account,he told me that he dont have time to monitor the share every often and told me to invest into my demat account…i told him that iam ready to invest into my demat account on one condition that if anything happend to the company share or suffered a huge loss then iam not responsible….my friend agree with this condition and gave me rs 220,000 by cheque….as my friend is bcom and was the chairman of the society…he is aware of the working of the ipc 420,crpc….he has a criminal intention at the time of investing that even if the company share suffered a loss….i(my friend) will file a criminal complaint under ipc 420 and 406 because he(my friend) has the evidence of the cheque proof of rs 3 lac

    4)in the year 2012 the company shares falls and i(myself) sold the shares at huge loss of rs two lac….i (myself) had given rs two lac by cheque to my friend….suddenly his mind changes and he told me to give back his remaining amount of rs 2 lac ,I did not agree,and he approach the metropolitan magistrate under ipc 420,406….

    5)he has also file a police complaint before filing a private complaint with the magistrate….police call me for the interrogation and during the interrogation of 2 hours after collecting statement of shares,cheque given by myself to my friend of rs two lac…the police officer advice my friend to approach the court….the police officer has not file an fir or chargesheet.

    ipc 420 my friend has levied on me is baseless as i had given him rs 2 lac by cheque by selling all the shares..i have the evidence (cheque,statement of shares)….he has written in the private complaint that i had given false promise that i will give the profit to him is absolutely false….. as he had invested his money at his own free will…..there was no written or oral statement that the profit will be given……the company share suffered a loss and withdraw rs 2 lac and had given him rs 2 lac by cheque….please help me….should i approach bombay high court for quashing as i have the statement of shares of selling and cheque given to him…..

    Second hearing n trial is going to commence in December….

    Please help as iam a non lawyer and had appeared party in person….

  • #3374

    It is very difficult to reply on facts of a case without actually going through all the relevant documents. Let me try to help you on the basis of whatever limited facts are known to me.

    Firstly, the burden is on the complainant to prove the offences alleged against you, such as cheating. You have said that there is no written or oral agreement or document. In such a situation, it would be difficult for him to show for what specific purpose the amount was given to you. Generally, it would appear that he had given a loan to you by giving you a cheque. But, if a loan is not repaid, partly or fully, it is generally not a case under Section 420, 406 IPC, but a civil matter, for which a civil suit for recovery of amount needs to be filed.

    On the other hand, if he himself states that the amount was paid to you for shares, then the value of shares is always subject to market fluctuations. But, in this situation, the question would also be as to whether you were licensed to trade shares on behalf of another person [such as a portfolio management service (PMS)].

    The amounts mentioned by you are mentioned differently at 3 places. At one place, you wrote Rs. 3 lakh, at another place Rs. 2.20 lakh, and at yet another you wrote about repayment of Rs. 2 lakh and a further demand of remaining amount of Rs. 2 lakh (which implies Rs. 4 lakh). Anyway, that is a separate issue. You know the correct amount.

    The fact that you have repaid Rs. 2 lakh to him, which may though be party payment only, shows that you had the intention to repay, which implies that you did not have intention to cheat since the beginning.

    Ultimately, it would depend on the detailed facts of the case. Your defence and reply would depend on what the specific facts of the case are, including his allegations. It is not possible for us on a forum like this to go into detailed facts of a case. We can help you about your doubts about legal points or procedures, but on facts our guidance may not be perfect in the absence of having seen the detailed facts and documents of the case. You should consult some local lawyer. If needed, you can approach Legal Aid Cell in the High Court or District Court, which generally provides free legal services or may be at a very nominal pay, and show them all your documents.


    Dr. Ashok Dhamija is a New Delhi based Supreme Court Advocate and author of law books. Read more about him by clicking here. List of his Forum Replies. List of his other articles. List of his Quora Answers.

You must be logged in to reply to this topic.

You may also like to read these topics:

What is punishment in case under Sections 324 325 and 506 r/w 34 IPC?
Can accused get bail from Supreme Court immediately after its rejection by High Court?
Section 420 IPC - can fake assessment order of tax lead to cheating?
Section 337 IPC - untrained doctor performing minor surgery on leg and damaging

Facebook Comments