Explained: The many legal differences between ‘cheating’ and ‘criminal breach of trust’
The Supreme Court explained that there are several distinct essential ingredients required to constitute each of these criminal acts.
The Supreme Court recently expressed its displeasure concerning the failure to distinguish between the two distinct offences of criminal breach of trust and cheating by the subordinate judiciary, in the matter of Delhi Race Club (1940) Ltd. & Ors. v. State of Uttar Pradesh & Anr. (2024). The apex court lamented the casual approach of the courts to this issue, which persisted 162 years after the enactment of the Indian Penal Code. The Supreme Court further emphasised that it was also crucial to impart proper training regarding the law to police officers to ensure that they understood the difference between these two offences.
Under the erstwhile Indian Penal Code, 1860 (IPC), the offence of cheating was provided under section 420, now under section 318 of the Bharatiya Nyaya Sanhita, 2023 (BNS); and the offence of criminal breach of trust was provided under sections 405 and 406 of the IPC, now under section 316 of the BNS, which came into effect from July 1, 2024. In the landmark judgement of S.W. Palanitkar & Ors. v. State of Bihar & Anr. (2001) the Supreme Court elaborated upon the difference between the ingredients required to constitute each of these similar, but wholly separate offences.
The apex court explained that there are several distinct essential ingredients required to constitute each of these criminal acts. In the case of criminal breach of trust, first, a person must be entrusted with property or with dominion over certain property. Secondly, such a person must have either dishonestly misappropriated or converted that property to their own use. Alternatively, such a person must be dishonestly using or disposing of that property or, wilfully suffering any other person to do so, which is violative of any direction of law prescribing the mode in which such trust is to be discharged, of any legal contract regarding the discharge of such trust.
On the other hand, in the instance of the offence of cheating, the necessary elements required are, first, deception of any person, either by making a false or misleading representation or by any other action or omission. Second, fraudulently or dishonestly inducing any person to deliver any property, or, the consent that any person shall retain any property and finally intentionally inducing that person to do or omit to do anything which they would not do or omit.
Another important element in both these offences is mens rea i.e., dishonest intention or the presence of intention to defraud. The difference here is that in order to amount to the offence of cheating, mens rea must have existed from the very beginning. Contrarily, it is significant to note that every act of breach of trust may not necessarily result in the penal offence of criminal breach of trust. A criminal breach of trust will only arise when there is evidence of a manipulative act of fraudulent misappropriation. Consequently, an act of breach of trust involves a civil wrong in respect of which the person may seek their remedy for damages in civil court, but any breach of trust with a mens rea would give rise to a criminal offence.
Thus, there is a clear difference between criminal breach of trust and cheating. For cheating, criminal intention is necessary at the time of making a false or misleading representation i.e., since inception.
As opposed to in criminal breach of trust, mere proof of entrustment is sufficient. Thus, in case of criminal breach of trust, the offender is lawfully entrusted with the property, and he dishonestly misappropriated the same.
Whereas, in the case of cheating, the offender fraudulently or dishonestly induces a person by deceiving him to deliver any property. In such a situation, both offences cannot co-exist simultaneously. Thus, it is crucial to note that, the offences of cheating and criminal breach of trust are antithetical to each other and cannot co-exist simultaneously given the same set of facts, as highlighted by the Supreme Court in the Delhi Race Club judgement.
Denouncing the mechanical issuance of summons to the accused, the Supreme Court further emphasised the importance of the magistrate applying their mind to the facts of a given case before issuing summons in a criminal matter.
The Supreme Court further clarified that in the Delhi Race Club matter, the complainant ought to have approached the Additional Chief Judicial Magistrate and filed a civil suit of recovery instead of filing a complaint of cheating and criminal breach of trust. The court further admonished the magistrate stating that in this instance, the magistrate had erroneously recognised the offence of criminal breach of trust without conducting a suitable analysis and had neglected to make this important distinction.
Avanti Deshpande is a lawyer and researcher. Her interests include human rights law, criminal law, and gender justice. The views expressed are personal