Legal Proceedings and the Case of Kapila Nishshanka Kumarage
In July 2008, a legal case was initiated in the Magistrate’s Court of Ratnapura against an individual known as the Appellant. He was charged with three offenses: cheating, criminal breach of trust, and criminal misappropriation of property. The Appellant pleaded "not guilty" to all charges, but after a trial, he was found guilty on all counts in 2014. He received a one-year sentence of rigorous imprisonment and a fine of Rs. 1,500 for each charge.
The Appellant appealed this decision to the High Court of the Sabaragamuwa Province. In its ruling, the High Court acquitted him of the criminal breach of trust and criminal misappropriation charges, effectively nullifying the associated sentences. However, it upheld the conviction for cheating. This decision became the subject of a further appeal to the Supreme Court, which is currently under review.
The Supreme Court granted leave to appeal, focusing on two key legal questions: (a) Whether the Provincial High Court failed to analyze the lack of mens rea on the part of the Petitioner to constitute an act of cheating. (b) Whether the Provincial High Court failed to consider that the virtual complainant had not been deceived by the Appellant's actions, which is essential to proving a charge of cheating.
The Cheating Charge
The specific charge against the Appellant involved allegations that he cheated a woman named Chandralatha in 2007 by obtaining Rs. 800,000 from her for a business purpose. To gain her trust, he provided her with a post-dated cheque for the same amount, drawn on his National Development Bank (NDB) account. He promised that she could deposit the cheque on the specified date to retrieve her money. However, he never deposited any funds into the account, leading to the cheque being dishonored.
The complainant testified that she had known the Appellant for five to six years. He was a friend of her son and even prepared accounts for him. In late 2007, the Appellant asked her for a loan of Rs. 800,000 for a business venture. Although hesitant at first, she eventually agreed, gathering the money from various sources. She later handed over the cash to the Appellant. He offered her a cheque, but she initially refused, stating that she knew there was no money in his account. The Appellant insisted she keep the cheque “for the purpose of having confidence.” She accepted the post-dated cheque, trusting that he would repay the loan by December as she needed the money for an eye operation.
When December arrived, the Appellant failed to return the money and stopped answering her calls. On December 27, 2007, her son deposited the cheque, which was dishonored. The bank issued a Notice of Dishonour, which was presented in court. The complainant emphasized that she had “utmost confidence” in the Appellant and accepted the cheque as a form of “security.” She denied that she had charged any interest on the loan.
Prosecution Evidence
The prosecution’s second witness, an assistant manager at NDB, testified that the Appellant’s account had been closed since January 2007, following the dishonor of three previous cheques. He confirmed that the cheque given to the complainant was drawn on this closed account. A police sergeant also testified, confirming the complainant’s report and the investigation conducted.
The Appellant did not present a defense during the trial.
Legal Arguments
The Appellant’s counsel argued that for a charge of cheating to be valid, the complainant must have been deceived by receiving the cheque. He contended that the lending of the money was based on the trust the complainant had in the Appellant, not the cheque itself, which she knew to be without funds. He cited a section of the Penal Code that defines cheating as intentionally deceiving someone to induce them to lend money. He argued that the facts of the case were distinguishable, as the complainant’s decision was based on trust, not the cheque.
The Senior State Counsel, representing the Respondent, countered that the cheque was given as an “assurance” and served as an “instrument of inducement.” She pointed out that the complainant initially had reservations but was persuaded by the Appellant to take the cheque to gain her confidence.
Legal Analysis
The judgment focused on Section 398 of the Penal Code, which defines the offence of cheating. The core of the offence is “deception,” and it can be committed in several ways, including fraudulently or dishonestly inducing someone to deliver property.
The judge highlighted that while the Appellant’s conduct of drawing a cheque on a closed account may have been illegal, it does not automatically constitute cheating. The prosecution failed to prove that the Appellant had a dishonest intention from the outset. The court considered the possibility that the Appellant, at the time of accepting the loan and tendering the cheque, genuinely intended to repay the loan later, either with cash or by depositing funds into the account. Given this reasonable possibility, it could not be “unequivocally concluded that the Appellant had... engaged in deception... by the dishonest concealment of certain relevant facts.”
Indian Case and Character Evidence
The judgment addressed two other points raised by the prosecution. First, it critiqued the citation of the Indian case, Arvindbhai Ravjibhai Patel v. State of Gujarat (1998 Cr.L.J. 463). The court noted that this was a High Court decision in a pre-trial procedural matter, not a final judgment on a conviction. The evidence threshold in that case—determining if there was “well-founded information” to warrant a police inquiry—was fundamentally different from the “proof beyond a reasonable doubt” required in the present appeal.
The court also rejected the prosecution’s attempt to use the Appellant’s alleged “bad character” and past criminal record as evidence. Citing Section 54 of the Evidence Ordinance, the court stated that an accused person’s bad character is generally “irrelevant.” It emphasized that evidence of previous convictions and misconduct cannot be used to support an argument that the accused is the kind of person who would commit the crime charged.
Final Determination
The court expressed regret that the lower courts—both the Magistrate’s Court and the High Court—failed to properly analyze the evidence in relation to the legal ingredients of the offence of cheating. The Magistrate’s Court focused on witness credibility but did not connect that testimony to the specific elements of the crime. Similarly, the High Court incorrectly assumed that the Appellant’s actions had created a belief that the money would be repaid, without considering the pre-existing trust between the parties or whether a deceptive act was the true cause of the complainant’s decision.
In its final determination, the court answered two key questions of law: (i) The Provincial High Court failed to analyze whether the Appellant had the requisite mens rea of cheating—a dishonest intention. (ii) The Provincial High Court failed to conclude that the virtual complainant had not been deceived (i.e., beyond reasonable doubt) by the Appellant’s conduct, which means a cheating charge cannot be sustained.
Based on this analysis, the court concluded that the judgments of the lower courts were “against the weight of the evidence and are not lawful.” The court allowed the appeal, acquitted the Appellant of the charge of cheating, and overturned the conviction.