Cheating and Criminal Breach of Trust Under the BNS

What is cheating under Section 318 BNS?

Cheating is deceiving a person and, through that deception, fraudulently or dishonestly inducing him to deliver property to someone, or to consent that someone keep property, or to do or omit something he would not otherwise have done, which causes or is likely to cause him harm in body, mind, reputation or property. That is the definition in Section 318(1) BNS, carried over almost word for word from Section 415 of the IPC.

Three things must exist together. First, a deception: a false representation, a dishonest concealment, or a promise the person never meant to keep. Second, inducement: the victim acted because of the deception. Third, a dishonest or fraudulent intention, and for cheating that intention must exist at the time of the deception, not develop later. If a person honestly meant to supply goods when he took an advance and later could not, or chose not to, the later failure does not convert the original transaction into cheating.

That last point decides more cheating cases than any other. The question a court asks is not 'did the accused fail to pay or deliver?' but 'was the accused dishonest at the moment he took the money?' The evidence for that comes from what happened around the transaction: false documents, a non-existent company, a property already sold to someone else, an identity that turns out to be fake, or the same promise made to many people at once.

What is criminal breach of trust under Section 316 BNS?

Criminal breach of trust is committed by a person who has been entrusted with property, or with control over property, and who dishonestly misappropriates it, converts it to his own use, or uses or disposes of it in violation of a legal direction or a contract about how it should be dealt with. Section 316(1) BNS carries over Section 405 of the IPC, including the explanation that an employer who deducts an employee's contribution to a provident fund or similar fund and does not deposit it is treated as having committed the offence.

The starting point is the opposite of cheating. In criminal breach of trust, the property came to the accused honestly: a partner holding firm money, an agent holding sale proceeds, a director holding company funds, an employee holding cash or stock, a friend holding jewellery for safe keeping. The offence lies in what happened afterwards. The complainant must show the entrustment and then show dishonest misappropriation or use against the terms of the trust.

Not every failure to return property is misappropriation. An agent who is owed commission and holds back the balance in a genuine dispute over accounts is in a different position from an agent who quietly spends the client's money. Courts look for signs of dishonesty: false accounts, denial of the entrustment itself, transfer of the money to relatives, or flight.

What is the difference between cheating and criminal breach of trust?

The difference is when the dishonesty began. In cheating, the accused was dishonest from the start and used deception to get the property. In criminal breach of trust, the accused received the property lawfully and became dishonest later. The same handing over of money cannot usually be both: either the transfer was obtained by deceit, or it was a genuine entrustment that was later abused.

The Supreme Court made this explicit in Delhi Race Club (1940) Ltd v State of Uttar Pradesh (2024), holding that the two offences are distinct and cannot both be made out on the same set of facts, because cheating requires dishonest intention at the inception and criminal breach of trust requires entrustment followed by misappropriation. FIRs in Delhi still routinely list Sections 316 and 318 together. That does not make the FIR invalid, but it gives the defence a clear argument at the stage of charge or in a quashing petition: the complainant has to choose which story he is telling.

For a complainant, the practical point is to describe the facts honestly and let the sections follow. If you handed over money because of a false statement, say what the statement was and why it was false. If you handed it over for a purpose and it was used for something else, say what the purpose was, how it was recorded and what happened to the money.

Cheating and criminal breach of trust: sections and punishments

These are the main forms. Bail and cognizability are as per the First Schedule to the BNSS; check the current schedule when the classification is in issue.

The BNS raised several of these maximums: basic cheating went from one year to three, and basic criminal breach of trust from three years to five. That matters for the seven-year line under the BNSS. Every offence in the table except Section 316(5) is punishable with seven years or less, so the police should ordinarily issue a notice under Section 35 BNSS rather than arrest, unless they can record reasons for arrest. If the acts took place before 1 July 2024, the old IPC sections and punishments apply; our post on whether the IPC or the BNS applies explains how to work that out.

Is non-payment of money cheating?

Not by itself. Failing to repay a loan, failing to pay for goods supplied or failing to perform a contract is a breach of contract, for which the remedy is a civil suit. It becomes cheating only if the person never intended to pay when he took the money or goods and used a deception to get them. The Supreme Court has repeatedly said that criminal courts are not recovery agents, and that giving a civil dispute a criminal colour is an abuse of process.

This is where most complaints fail. A supplier who extends credit for two years, receives part payment, then files an FIR alleging that the buyer was dishonest from the first invoice, will struggle to show deception at the start. A buyer who paid an advance to a seller who, the evidence shows, had already sold the same goods elsewhere, or who gave a false address and disappeared, is in a much stronger position.

When Advocate B.K. Singh is asked by a business whether to file a police complaint over unpaid money, the first thing he looks for is a fact from the beginning of the deal that was false when it was stated. If there is none, he usually advises the civil route, which is slower to start but more likely to end with the money. Our post on summary suits under Order 37 for recovery explains the fastest civil route where there is a written contract, invoice or acknowledgment.

Signs a court looks for: crime or civil dispute?

No single factor decides the question. These are the facts courts commonly treat as pointing one way or the other.

• False statement of an existing fact. A lie about ownership, identity, licences, financial position or the existence of a project points towards cheating. A promise about the future, honestly made, does not.
• Conduct soon after the money was received. Diverting the money at once, switching off phones or closing the business suggests dishonesty from the start.
• The same pattern with others. Several victims with identical stories make innocent failure less likely.
• Long performance before default. Years of regular dealing followed by a dispute usually points to a commercial disagreement.
• Written terms and an accounts dispute. A genuine disagreement over quality, quantity or set-off is civil, even if bitter.
• Timing of the complaint. An FIR filed only after a civil suit was lost, or to answer the other side's suit, invites suspicion.
• Documents that were forged or fabricated. Forgery to support the transaction strongly suggests dishonest intention.

How do I file a cheating complaint in Delhi?

Start with a written complaint to the SHO of the police station where the deception took place, where the money was paid or where the loss was suffered. Set out the facts in order, attach copies (not originals) of the documents, and ask for a receipt. For offences punishable with three to seven years, which includes Section 318(4) and Section 316(2), Section 173(3) BNSS allows the police to hold a preliminary enquiry, to be completed within 14 days, to see whether a prima facie case exists before registering an FIR. Expect to be called to explain the documents.

Large cases may be handled by specialised units. In Delhi, the Economic Offences Wing takes up cheating and breach of trust cases above a monetary threshold and in certain categories such as investment, banking and housing fraud. Cyber fraud goes to the cyber police stations and the national helpline 1930. If the police neither register an FIR nor give a reasoned reply, you can send a complaint to the DCP and then apply to the magistrate under Section 175(3) BNSS for a direction to investigate. Our post on what to do when the police refuse to register an FIR covers that route step by step.

The other route is a private complaint to the magistrate under Section 223 BNSS, where the complainant leads evidence first and the accused is heard before cognizance is taken. It suits cases where the facts are documentary and the complainant does not need police powers of search or arrest. It is slower to produce pressure, but it keeps control of the case with the complainant.

Building a cheating or breach of trust complaint that holds up

A complaint that is sharp and documented at the start saves months at the police station and avoids a quashing petition later.

1. Write a dated timeline

   List every meeting, call, message and payment in order, with amounts and modes of payment. The timeline is what the IO and later the court will follow.

2. Identify the deception or the entrustment

   Pinpoint the exact false statement (for cheating) or the exact terms on which the property was handed over (for breach of trust). Quote the message or clause if there is one.

3. Show the dishonest intention

   Explain the facts that show dishonesty: what the accused knew was false, what he did with the money, or how he concealed it. Avoid adjectives and stick to what can be proved.

4. Attach documents in an indexed set

   Agreements, receipts, bank statements, messages and any public records, each marked and listed. Keep the originals safe for the IO to seize later with a proper memo.

5. Name the right people

   Name individuals who personally made the representations or handled the money. Naming every director or family member without a specific role invites a quashing petition.

6. Decide whether to file a civil case too

   A criminal case punishes; it does not, by itself, return your money. Where recovery is the goal, a parallel civil suit or summary suit is often needed.

Can directors and partners be made accused for the company's cheating?

Only if they personally took part. The BNS has no general rule making directors vicariously liable for offences committed by a company, unlike Section 141 of the Negotiable Instruments Act in cheque cases. A complaint that names a company's entire board, or every partner of a firm, without saying what each person said or did, is vulnerable to a quashing petition under Section 528 BNSS. The courts expect specific allegations of each person's role.

For a complainant, that means identifying the person who made the false statement, signed the document, received the money or gave the instruction to divert it. For a director or partner named in an FIR, it means collecting proof of what his role actually was: board minutes, delegation of powers, his absence from the meetings in question, or his resignation before the events. Independent and non-executive directors are often in this position.

I am accused of cheating: what are my options?

Read the FIR and the documents first. Then decide on three things: whether you need protection from arrest, whether the case can be ended early, and how to answer the allegations on merits. For most cheating and breach of trust cases, which carry up to seven years, arrest is not the default; the police should issue a Section 35 BNSS notice and you should comply with it. Where arrest is a real risk, for example because the amount is large, there are many complainants or recovery is claimed, apply for anticipatory bail under Section 482 BNSS before the Sessions Court. Our post on the anticipatory bail process in Delhi explains how that application is prepared.

Early closure comes in two forms. If the FIR, read as a whole, discloses only a civil dispute, a petition under Section 528 BNSS before the Delhi High Court can ask for it to be quashed. If the dispute is genuinely private and the parties have settled, the case can be compounded (basic cheating can be compounded by the person cheated, and the aggravated form with the court's permission) or quashed on settlement. Our post on quashing an FIR on settlement covers the second route.

On merits, the defence usually rests on documents showing honest intention at the start: performance of the contract for a period, part payments, correspondence acknowledging a genuine dispute, or proof that the representation was true when made. Courts weigh these heavily. What they do not accept is a bare claim that 'it is a civil dispute' when the record shows a lie at the outset.

Other provisions that often appear alongside Sections 316 and 318

Cheating and breach of trust FIRs rarely come alone. These are the companion sections you are most likely to see.

Documents that decide cheating and breach of trust cases

Whichever side you are on, these are the papers that usually matter most.

Will a criminal case get my money back?

Sometimes, but not directly. A criminal court can order compensation to the victim on conviction under Section 395 BNSS, and the police can seize and freeze money or property traced to the offence. In practice, much money in cheating cases comes back through settlement, because an accused facing a non-bailable offence has a reason to pay. That is a legitimate result of a genuine case. Using an FIR purely to force payment of a civil debt is not, and courts notice it.

If recovery is the real aim, a civil remedy should run alongside. A summary suit, a regular recovery suit, arbitration under the contract or, for a large ponzi-type loss, the special remedies described in our post on ponzi and chit fund fraud recovery may each be more effective than waiting for the criminal trial. Limitation for most money claims is three years, and it does not stop running because a police complaint is pending.

What to do this week

Whichever side you are on, these steps put you in a better position before the police or the court look at the matter.

• Write a dated timeline of the transaction from the first contact.
• Collect every document, message and bank record in one indexed folder, with backups.
• Identify the exact statement that was false, or the exact terms of the entrustment.
• Check the dates: IPC or BNS, and limitation for both the criminal case and any civil claim.
• If you are the complainant, file a written complaint and keep the receipt.
• If you are accused, get the FIR copy, check the sections and decide on anticipatory bail.
• Do not threaten, approach or post about the other side on social media.
• Consider whether a civil suit or arbitration should be filed alongside.

When not to file a criminal case

Do not file a cheating or breach of trust complaint if your real complaint is that a business partner performed badly, a buyer paid late, or a contractor did poor work. Those are civil wrongs. A criminal complaint in such cases tends to stall at the preliminary enquiry, or is quashed by the High Court after a year or two, by which time the limitation for your civil claim may be running short. It can also expose you to a counter-complaint or a claim for malicious prosecution.

File when you can point to a deception at the start or a clear misappropriation of entrusted property, backed by documents. A point Advocate B.K. Singh often makes is that the strength of a cheating complaint is fixed by the papers available on the day it is filed; police investigation adds to a good complaint but rarely rescues a weak one.

If you are deciding whether a dispute belongs in a criminal court, a civil court or both, the team of Advocate B.K. Singh at B.K. Singh & Associates can read the documents and tell you which route fits. You can write to us through the online enquiry page, or read more about the criminal process on our page on criminal law practice under the BNS, BNSS and BSA.