Study Notes by Akinchan Aggarwal, Advocate — B.A. (Hons.) Gold Medalist, LL.B., LL.M. (Disputes Resolution), UGC–NET, Ph.D. (pursuing)
Section 420 no longer exists.
No number in Indian law was better known. Chaar sau bees entered the language as a word for a swindler; a film was named after it; complainants who could not name a single other section could name that one. Since 1 July 2024 it is Section 318(4) of the Bharatiya Nyaya Sanhita, 2023 — same seven years, same ingredients, different number. The vocabulary of a century and a half will take longer to change than the statute did.
But the number was never the difficulty. The difficulty is the question that sits underneath it, and that is put to every practising lawyer in this country almost weekly: my money is gone and the other side will not return it — is this a crime, or only a civil suit?
The Supreme Court has answered that question the same way for sixty years, and lower courts continue to get it wrong. This note sets out where the four offences in this group actually divide — criminal misappropriation, criminal breach of trust, receiving stolen property, and cheating — and what the Sanhita changed about each.
The BNS position in one line: the definitions are carried over from the IPC essentially verbatim, but the punishments have gone up almost everywhere — criminal breach of trust from three years to five, simple cheating from one year to three, cheating by personation from three years to five — and criminal misappropriation has acquired a mandatory minimum of six months, which it never had before.
Contents
- The Section Map — IPC to BNS
- The Grid: Four Offences, Two Questions
- Criminal Misappropriation — Section 314
- The Law of the Finder
- The New Six-Month Minimum
- Criminal Breach of Trust — Section 316
- What Counts as Entrustment
- Proving Misappropriation Without Proving How
- Stolen Property — Section 317
- Cheating — Section 318
- Civil Dispute or Criminal Offence?
- Cheating by Personation — Section 319
- Punishment and Classification
- Points to Remember
- Frequently Asked Questions
1. The Section Map — IPC to BNS
| Offence | IPC, 1860 | BNS, 2023 |
|---|---|---|
| Dishonest misappropriation of property | s 403 | s 314 |
| Misappropriation of property of a deceased person | s 404 | s 315 |
| Criminal breach of trust — definition | s 405 | s 316(1) |
| Criminal breach of trust — punishment | s 406 | s 316(2) |
| CBT by carrier, wharfinger or warehouse-keeper | s 407 | s 316(3) |
| CBT by clerk or servant | s 408 | s 316(4) |
| CBT by public servant, banker, merchant or agent | s 409 | s 316(5) |
| Stolen property — definition | s 410 | s 317(1) |
| Dishonestly receiving stolen property | s 411 | s 317(2) |
| Receiving property stolen in a dacoity | s 412 | s 317(3) |
| Habitually dealing in stolen property | s 413 | s 317(4) |
| Assisting in concealment of stolen property | s 414 | s 317(5) |
| Cheating — definition | s 415 | s 318(1) |
| Cheating — punishment | s 417 | s 318(2) |
| Cheating a person whose interest one is bound to protect | s 418 | s 318(3) |
| Cheating and dishonestly inducing delivery of property | s 420 | s 318(4) |
| Cheating by personation — definition | s 416 | s 319(1) |
| Cheating by personation — punishment | s 419 | s 319(2) |
Eighteen IPC sections have become six. As with theft and robbery, the sub-section is now doing the work the section number used to do. An FIR that says "under s 318 BNS" is incomplete; s 318(2) and s 318(4) are different offences with different maxima and — as we shall see — opposite answers on cognizability and bail.
2. The Grid: Four Offences, Two Questions
Students and, frankly, a good many draftsmen treat theft, misappropriation, breach of trust and cheating as four labels to be tried in turn until one sticks. They are not. Two questions separate them completely.
Question one: how did the accused come to have the property?
Question two: when did the dishonesty arise — before he got it, or after?
| Offence | How possession arose | When the dishonesty arose | Section |
|---|---|---|---|
| Theft | He took it out of another's possession | Before — it precedes the taking | s 303 |
| Criminal misappropriation | He found it, or came by it innocently — no entrustment | After — a later change of intention | s 314 |
| Criminal breach of trust | It was entrusted to him, or he had dominion over it | After — a later change of intention | s 316 |
| Cheating | The victim delivered it, deceived into doing so | Before — the deception must precede delivery | s 318 |
Read the two right-hand columns together and the whole chapter organises itself. Theft and cheating are offences of a guilty mind at the outset. Misappropriation and breach of trust are offences of a mind that turns guilty later. And the only thing separating misappropriation from breach of trust is a single word: entrustment.
This is also why the same set of facts can rarely support both a s 318 and a s 316 charge. If the accused was lying when he took the money, it was never entrusted to him — it was obtained by deception, and the offence is cheating. If he was honest when he took it and dishonest afterwards, there was no deception, and the offence is breach of trust. The Supreme Court has said so, and complaints that plead both in the alternative usually plead neither properly.
3. Criminal Misappropriation — Section 314
Section 314, BNS: "Whoever dishonestly misappropriates or converts to his own use any movable property, shall be punished with imprisonment of either description for a term which shall not be less than six months but which may extend to two years and with fine."
Pillai calls this offence "a new offence carved out from theft", and that is exactly what it is. Theft requires removal from another's possession. Misappropriation begins where the property is already, innocently, with the accused. The classic sequence: you pick a watch off the road — no offence. You wear it. Now it is an offence.
Three ingredients must be proved:
- The property was the complainant's;
- The accused misappropriated it or converted it to his own use; and
- He did so dishonestly.
You cannot misappropriate your own property
In Velji Raghavji Patel v. State of Maharashtra, AIR 1965 SC 1433, the managing partner of a firm took money out of the business and used it himself. The Supreme Court held there was no misappropriation. A partner has undefined ownership along with the other partners over all the assets of the firm. If he uses one of them for his own purposes he may be accountable civilly to his partners, but he commits no offence. This remains one of the most frequently cited answers to partnership FIRs.
The same reasoning acquitted the accused in Ramaswamy Nadar v. State of Madras, AIR 1958 SC 56. A prize-competition proprietor collected entry fees for competition no. 92, and used them to clear other debts rather than pay that competition's winners. The Madras High Court convicted. The Supreme Court reversed: the entry fees rightly belonged to the accused, and there was no term of the contract requiring the prize money to come from that particular collection. Running a business at a loss is not a crime.
Temporary misappropriation is enough
Explanation 1 says a dishonest misappropriation for a time only is still misappropriation. In Khandu Sonu Dhobi v. State of Maharashtra, an agricultural assistant falsely certified bund rectification work as complete, and only did the work months later after complaints. That he eventually applied the money to its proper purpose made no difference.
And conversion need not mean spending. In Kesho Ram's case a servant given money to buy grain went off to a different town, gave a false account, and was arrested with the entire sum intact on him. Convicted: the misappropriation lay not in any expenditure but in the mental act of intending to deprive his master, inferred from his conduct.
4. The Law of the Finder
Explanation 2 to s 314 is the most practically useful paragraph in this part of the Sanhita, and almost nobody reads it. It says a finder who takes property in order to protect or restore it to the owner commits no offence — but he does commit one if he appropriates it to his own use:
- when he knows or has the means of discovering the owner; or
- before he has used reasonable means to discover the owner and give him notice; or
- before he has kept the property a reasonable time for the owner to claim it.
What is "reasonable" is a question of fact. And the finder need not know who the owner is — it is enough that, when he appropriated it, he did not believe it was his own, or honestly believe the owner could not be found.
| Facts | Result |
|---|---|
| A picks up a rupee on the road, owner unknown | No offence |
| A finds a letter containing a bank note and learns the owner from its contents; appropriates it | Offence |
| A finds a bearer cheque; the drawer's name appears and could lead him to the owner; he appropriates it without trying | Offence |
| A picks up Z's dropped purse meaning to return it, then keeps it | Offence |
| A finds a valuable ring and sells it immediately without attempting to find the owner | Offence |
Contrast the position under English law, which Explanation 2 was drafted precisely to reject. There, only the intention at the moment of taking counts; an innocent taking followed by a later conversion is a civil wrong, not a crime. In India, the subsequent change of mind is itself the offence.
Two boundary cases. Abandoned property cannot be misappropriated — the newspapers a traveller leaves behind in a railway carriage, or a bull let loose in a religious ceremony. But property mislaid in a place where the owner would naturally return to look for it — a shop, a railway carriage, a taxi — remains his, and appropriating it is an offence. And in R v. Sita, the Bombay High Court set aside a conviction where the accused sold a gold coin found in an open plain and no owner had come forward months later: in such cases every presumption ought to be made in favour of the accused.
5. The New Six-Month Minimum
This is the quiet change in this chapter, and it will alter outcomes in magistrates' courts across the country.
Section 403 IPC read: "shall be punished with imprisonment ... for a term which may extend to two years, or with fine, or with both." A magistrate could dispose of a petty misappropriation with a fine and no imprisonment at all, and routinely did.
Section 314 BNS reads: "shall be punished with imprisonment ... for a term which shall not be less than six months but which may extend to two years and with fine."
Two things happened. The "or with fine" option was deleted, so fine is now mandatory in addition to imprisonment; and a floor of six months was inserted where none existed. A finder who keeps a dropped purse now faces a minimum custodial sentence on conviction.
Note the contrast with s 303(2), where the Sanhita moved in the opposite direction and introduced community service for a first-time petty theft under ₹5,000. Theft got softer at the bottom; misappropriation got harder. There is no obvious principle reconciling the two, and it is a point worth making in mitigation.
6. Criminal Breach of Trust — Section 316
Section 316(1), BNS: "Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits criminal breach of trust."
Two ingredients, and only two:
- The accused was entrusted with property, or with dominion over it; and
- He dishonestly misappropriated or converted it, or dealt with it in violation of the trust.
The offence has two limbs in time — first the creation of an obligation in relation to property over which the accused acquires dominion, and second a dishonest dealing contrary to that obligation. It is the Indian equivalent of embezzlement, and the only thing distinguishing it from criminal misappropriation is that first limb.
The punishment rose from three years to five. Section 406 IPC carried three years; s 316(2) BNS carries five, or fine, or both. The aggravated forms are unchanged: seven years for a carrier, wharfinger or warehouse-keeper (s 316(3)), seven for a clerk or servant (s 316(4)), and life or ten years for a public servant, banker, merchant, factor, broker, attorney or agent (s 316(5)).
Property here is not limited to movables. In R.K. Dalmia v. Delhi Administration, AIR 1962 SC 1821, the Supreme Court held there is no reason to read "property" in this section as confined to movable property when the word is used without qualification. Immovable property, and a chose in action, can both be the subject of criminal breach of trust — which is a real difference from misappropriation, where s 314 says "movable property" in terms.
7. What Counts as Entrustment
"In any manner entrusted" is deliberately wide language. The word "entrust" is not a term of art; it covers every case where a thing is handed over by one person to another for a specific purpose, and entrustment may be implied as well as express.
But there are limits, and they decide cases.
A sale is not an entrustment
State of Gujarat v. Jaswantlal Nathalal, AIR 1968 SC 700. Government sold cement to the accused on condition that it be used for construction; he diverted part of it to a godown. No criminal breach of trust. Entrustment carries the implication that the person handing over the property continues to be its owner, and that there is a fiduciary relationship between the parties. A mere transaction of sale creates neither. Breach of the condition was a matter for the cement control law, not s 405.
This holding does an enormous amount of work in practice. A great many commercial FIRs describe what is on any reading a completed sale, and then call it entrustment because the buyer did something the seller disliked.
A partnership is not, without more
Every partner has dominion over firm property by virtue of being a partner — but that is not an "entrustment of dominion" within s 316 unless there is a special agreement between the partners creating one. Read this together with Velji Raghavji Patel above, and the ordinary partnership dispute is a civil matter twice over.
What does count
| Situation | Authority |
|---|---|
| Securities pledged with a bank for a specific purpose on specified conditions | Jaswantrai Manilal Akhaney v. State of Bombay, AIR 1956 SC 575 |
| Company property in the hands of directors — directors are to an extent in the position of trustees | Shivnarayan v. State of Maharashtra |
| Money taken by a police officer from a suspect for verification and returned short | State of U.P. v. Babu Ram |
| A wife's stridhan entrusted to the husband or his family | Rashmi Kumar v. Mahesh Kumar Bhada |
| Gold bangles given to a goldsmith for repair and pledged by him with a bank | Kundanlal v. State of Maharashtra |
| Money paid as illegal gratification | Not entrustment |
Rashmi Kumar deserves separate mention because it is the doctrinal foundation of s 406 (now s 316) counts in matrimonial cases. Where a wife entrusts her stridhan with dominion to her husband or another member of the family and he misappropriates it, that is criminal breach of trust. Failure to hand back marriage gifts and ornaments when she is driven out is equally covered. In Kundanlal, note the careful splitting of liability: the goldsmith to whom the bangles were entrusted was convicted under s 406, but his son — to whom nothing had been entrusted — was convicted only under s 403. Entrustment is personal.
Two further limits. The Explanations to s 316(1) deem an employer who deducts an employee's provident fund or ESI contribution from wages and fails to deposit it to have been entrusted with that amount and to have dishonestly used it. But in ESIC v. S.K. Aggarwal the Supreme Court held that where the factory is owned by a company, the company is the principal employer and its directors are not — and quashed the proceedings. A managing director cannot be held vicariously liable for a breach of trust committed by the company.
8. Proving Misappropriation Without Proving How
This is the single most useful proposition in this chapter for a prosecutor, and the one defence counsel most often fail to anticipate.
The prosecution does not have to prove the precise manner in which the property was misappropriated. It has to prove entrustment and a failure to account.
In Krishan Kumar v. Union of India, AIR 1959 SC 1390, an assistant storekeeper took delivery of a wagonload of iron and steel which never reached his organisation. He gave a false explanation, then another. The prosecution could not establish what he had actually done with the goods. The Supreme Court held that the question is one of intention, not of direct proof of misappropriation: it is enough that the servant received the goods, was under a duty to account, and did not.
Jaikrishnadas Manohardas Desai v. State of Bombay, AIR 1960 SC 889 puts it the same way — where entrustment or dominion is established and the accused offers a false explanation for his failure to account, an inference of dishonest misappropriation may readily be drawn. And in Surendra Prasad Verma v. State of Bihar, the accused alone held the keys to a safe; he was liable unless he could show he had parted with them.
The practical consequence. In a criminal breach of trust trial the real battleground is entrustment, not misappropriation. Once entrustment is proved, the burden of explanation shifts in substance to the accused, and a false explanation is close to fatal. Defend the first limb, not the second.
Two qualifications the defence should hold on to. Mismanagement is not misappropriation — it is not enough to show that money was unaccounted for or badly handled; dishonest use must be established. And Anil Kumar Bose v. State of Bihar holds that failure to follow a duty chart or departmental procedure may be an administrative lapse or an error of judgment, and cannot by itself be equated with dishonest intention.
9. Stolen Property — Section 317
The rationale is stated by Pillai in a sentence: a market for stolen goods is the best encouragement for theft. Section 317 attacks the market rather than the thief.
Section 317(1) defines stolen property as property whose possession has been transferred by theft, extortion or robbery, or which has been criminally misappropriated, or in respect of which criminal breach of trust has been committed — whether within or outside India. It ceases to be stolen property the moment it comes into the possession of a person legally entitled to it.
The gap nobody notices: property obtained by cheating is not "stolen property." The definition lists theft, extortion, robbery, misappropriation and breach of trust. It does not list cheating or forgery. So a person who knowingly receives goods obtained by a s 318(4) fraud does not commit an offence under s 317. English law under the Larceny Act covered it; the Indian definition never has. This is worth checking in every receiving case built on a fraud.
Three ingredients under s 317(2): the property was stolen property; the accused dishonestly received or retained it; and he knew or had reason to believe it was stolen. The principal offender need not have been convicted, or even identified.
"Received" and "retained" are not the same thing. In dishonest reception the dishonesty attends the acquisition; in dishonest retention it supervenes afterwards. A man who receives honestly and later, on learning the truth, keeps the goods is as liable as one who took them knowing.
Two refinements on identity. Once property is restored to its lawful owner it ceases to be stolen property, and a subsequent controlled delivery to a receiver cannot found a conviction — the two English cases Pillai sets out both turned on this. But a change of form is not a change of identity: a stolen gold necklace melted into an ingot is still the same stolen gold. Convert it into cash, however, and the cash is not stolen property.
10. Cheating — Section 318
Section 318(1), BNS: "Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to cheat."
Explanation: A dishonest concealment of facts is a deception within the meaning of this section.
The definition has two limbs, and they are not alternatives to be pleaded loosely — they have different ingredients and different consequences.
| First limb | Second limb | |
|---|---|---|
| What the victim does | Delivers property, or consents to its retention | Does or omits to do something he otherwise would not |
| Quality of the inducement | Must be fraudulent or dishonest | Need only be intentional |
| Damage | Not a separate ingredient | Must cause or be likely to cause damage or harm to body, mind, reputation or property |
| Punished by | s 318(4) if property is delivered — 7 years | s 318(2) — 3 years |
Deception is common to both, and it must precede the delivery. It need not be in express words — false pretence may be inferred from all the circumstances, including conduct, and by the Explanation a dishonest concealment of facts is itself deception. Concealment can be dishonest even where there is no legal duty to speak.
Deception and inducement are two ingredients, not one
Mere deceit is not enough; the deception must have induced the delivery or the act. In Shri Bhagwan S.S.V.V. Maharaj v. State of Andhra Pradesh, AIR 1999 SC 2332, a godman represented that he could cure a child's congenital dumbness by his divine touch and took money for it. The Supreme Court drew the line precisely:
"If somebody offers prayers to God for healing the sick, there cannot normally be any element of fraud. But if he represents to another that he has divine powers and either directly or indirectly makes that another person believe that he has such divine powers, it is inducement referred to in Section 415..."
Conversely, in Dr Sharma's Nursing Home v. Delhi Administration, (1998) 8 SCC 745, a patient was promised an air-conditioned room, given one that was not, and charged for one that was. Deception, plainly. But the Supreme Court found nothing to show dishonest inducement — no material from which it could even prima facie be held that the complainant had been dishonestly induced to part with his money — and the offence failed. The lower courts had examined deception and stopped there. That is the recurring error.
Damage and gain
The damage must be a proximate and natural consequence of the induced act, not a remote or contingent one. But it need not be the accused's gain.
In Ram Prakash Singh v. State of Bihar, an LIC employee forged insurance proposals in the names of non-existent persons to inflate his business figures and win promotion. He gained nothing directly; the Corporation's loss on issuing the policies was negligible. Conviction upheld — such fake proposals were bound to affect the insurer's reputation. And in State v. Ramados Naidu, borrowers obtained bank loans on false representations about digging wells and buying oil engines; the loans were fully secured and repaid in full, so the bank lost nothing. Convicted anyway: each borrower had made a wrongful gain to himself, and wrongful gain or wrongful loss will each suffice — the prosecution need establish only one.
The negative case is Hari Sao v. State of Bihar, AIR 1970 SC 843, where a false endorsement was procured from a station master. Even taking the act to be dishonest, it caused no damage or harm to the railway, and no question of cheating arose.
False promise of marriage
The Madras High Court has held in Mailsami and in Ravichandran v. Mariyammal that a man who obtains sexual intimacy on a promise of marriage he never intended to keep may be prosecuted for cheating. But the qualification is strict and decisive: it must be proved that the promise was false when it was made, with the fraudulent intention of not honouring it and for the purpose of obtaining the intimacy. A promise sincerely made and later broken is not cheating — it is the ordinary tragedy of a relationship that ended.
11. Civil Dispute or Criminal Offence?
Here is the question this whole chapter exists to answer, and the answer is a single sentence:
The dishonest intention must have existed at the moment the promise or representation was made. If it arose later, the liability is civil, and only civil.
Illustration (g) to s 318 states the whole law:
"A intentionally deceives Z into a belief that A means to deliver to Z a certain quantity of indigo plant which he does not intend to deliver, and thereby dishonestly induces Z to advance money upon the faith of such delivery. A cheats. But if A, at the time of obtaining the money, intends to deliver the indigo plant, and afterwards breaks his contract and does not deliver it, he does not cheat, but is liable only to a civil action for breach of contract."
The authorities apply that illustration with some consistency.
- Hari Prasad Chamaria v. Bhisun Kumar Surekha, AIR 1974 SC 301 — a failure to honour promises after the transaction creates civil liability only. Criminal liability cannot be fastened.
- Misrepresentation from the very beginning is a sine qua non of cheating. Mere failure to keep a promise is not cheating.
- Anil Kumar Bose — mens rea is an essential ingredient, and where it is not established, no offence of cheating is made out.
But the complaint need not be a pleading
The counterweight, and the reason a High Court should not quash reflexively, is Rajesh Bajaj v. State (NCT of Delhi), AIR 1999 SC 1216. A Delhi garment manufacturer complained that a German importer had induced him to ship goods on a promise to pay within fifteen days of invoice, had not paid, and had sold the goods on. The Delhi High Court quashed on the ground that the transaction was civil in nature. The Supreme Court restored it, holding that:
"The crux of the postulate is the intention of the person who induces the victim of his representation and not the nature of the transaction which would become decisive in discerning whether there was the commission of an offence or not."
It is not necessary for a complainant to reproduce the ingredients of the offence verbatim, or to state in so many words that the accused's intention was dishonest. If the factual basis is laid, the court should not hasten to quash at the investigation stage.
And a vexatious criminal case can cost the complainant
In Nageshwar Prasad Singh @ Sinha v. Narayan Singh, AIR 1999 SC 1480, an advocate-complainant who had already filed a civil suit for specific performance, and who was himself the party in default on payment, also filed a s 420 complaint. The Supreme Court quashed the prosecution — applying illustration (g) — and imposed compensatory costs of ₹10,000 on the complainant for the vexatious proceeding.
Read Rajesh Bajaj and Nageshwar Prasad Singh together and the working test emerges. Ask what the accused intended on the day the money changed hands. If there is material suggesting he never meant to perform, the complaint survives however commercial it looks. If the only complaint is that he did not perform, it is a suit, and dressing it as an FIR may cost the complainant money.
12. Cheating by Personation — Section 319
Section 319(1), BNS: A person is said to cheat by personation if he cheats by pretending to be some other person, or by knowingly substituting one person for another, or by representing that he or any other person is a person other than he or such other person really is.
Explanation: The offence is committed whether the individual personated is a real or imaginary person.
Because s 319(1) says "cheats by", every ingredient of cheating must first be made out. Personation is the manner, not a substitute for the offence.
Two useful propositions. It is not necessary to prove who was impersonated — the person personated may be imaginary, non-existent or unknown. But it is necessary to prove that the accused impersonated somebody; without that, the offence is not established. The section says nothing about the form personation must take — words, dress or conduct will all do.
The punishment has risen from three years to five. Section 419 IPC carried three; s 319(2) BNS carries five. Given how much identity fraud has moved online since 1860, an increase here was overdue, though the Sanhita has not added any provision dealing specifically with electronic impersonation, which continues to be handled under the Information Technology Act, 2000.
13. Punishment and Classification
| Offence | BNS | Punishment | Was (IPC) |
|---|---|---|---|
| Dishonest misappropriation | s 314 | Not less than 6 months, up to 2 years, and fine | 2 years, or fine, or both |
| Misappropriation of a deceased person's property | s 315 | Up to 3 years + fine; 7 years if a clerk or servant of the deceased | Same |
| Criminal breach of trust | s 316(2) | Up to 5 years, or fine, or both | 3 years |
| CBT by carrier or warehouse-keeper | s 316(3) | Up to 7 years + fine | Same |
| CBT by clerk or servant | s 316(4) | Up to 7 years + fine | Same |
| CBT by public servant, banker, merchant or agent | s 316(5) | Life, or up to 10 years, + fine | Same |
| Dishonestly receiving stolen property | s 317(2) | Up to 3 years, or fine, or both | Same |
| Receiving property stolen in a dacoity | s 317(3) | Life, or RI up to 10 years, + fine | Same |
| Habitually dealing in stolen property | s 317(4) | Life, or up to 10 years, + fine | Same |
| Assisting in concealment of stolen property | s 317(5) | Up to 3 years, or fine, or both | Same |
| Cheating (simple) | s 318(2) | Up to 3 years, or fine, or both | 1 year |
| Cheating one whose interest the offender is bound to protect | s 318(3) | Up to 5 years, or fine, or both | 3 years |
| Cheating and dishonestly inducing delivery of property | s 318(4) | Up to 7 years + fine | Same (s 420) |
| Cheating by personation | s 319(2) | Up to 5 years, or fine, or both | 3 years |
Classification — and why it matters more here than anywhere else
| Offence | Cognizable? | Bailable? | Triable by |
|---|---|---|---|
| s 314 — misappropriation | Non-cognizable | Bailable | Any Magistrate |
| s 316(2) — criminal breach of trust | Cognizable | Non-bailable | Magistrate of the first class |
| s 316(4) / 316(5) — aggravated CBT | Cognizable | Non-bailable | Magistrate of the first class |
| s 317(2) — receiving stolen property | Cognizable | Non-bailable | Any Magistrate |
| s 318(2) — cheating (simple) | Non-cognizable | Bailable | Any Magistrate |
| s 318(3) — fiduciary cheating | Non-cognizable | Bailable | Any Magistrate |
| s 318(4) — cheating with delivery of property | Cognizable | Non-bailable | Magistrate of the first class |
| s 319(2) — cheating by personation | Cognizable | Bailable | Any Magistrate |
Look at the s 318 rows. Sub-sections (2) and (3) are non-cognizable and bailable; sub-section (4) is cognizable and non-bailable. The difference between an FIR the police must register and a complaint the magistrate must take on his own file — between an arrest and no arrest — turns entirely on whether property was delivered. This is why "s 318 BNS" on a complaint is not merely sloppy; it is unusable. Readers should verify the entry for the precise sub-section against the First Schedule to the Bharatiya Nagarik Suraksha Sanhita, 2023, which classifies sub-section by sub-section.
14. Points to Remember
- Section 420 is now s 318(4), and the ingredients are unchanged: cheating plus dishonest inducement to deliver property or deal with a valuable security.
- Misappropriation and breach of trust differ only in entrustment. Everything else about them is the same.
- Theft and cheating require dishonesty at the outset; misappropriation and breach of trust are complete on a later change of mind.
- You cannot misappropriate your own property — Velji Raghavji Patel. A partner using firm assets is civilly accountable, not criminally liable.
- A sale is not an entrustment — Jaswantlal Nathalal. Entrustment implies continued ownership and a fiduciary relationship.
- Section 314 now carries a six-month minimum and a mandatory fine. The "or with fine" option in s 403 IPC is gone.
- Criminal breach of trust rose from 3 years to 5; simple cheating from 1 year to 3; personation and fiduciary cheating from 3 years to 5.
- Property under s 316 is not limited to movables — R.K. Dalmia. Under s 314 it is.
- The prosecution need not prove how the property was misappropriated — only entrustment and a failure to account, from which a false explanation permits an inference — Krishan Kumar, Jaikrishnadas Desai.
- Property obtained by cheating is not "stolen property" under s 317(1).
- Deception without dishonest inducement is not cheating — Dr Sharma's Nursing Home.
- Illustration (g) to s 318 is the civil/criminal boundary. Intention at the moment of the promise decides everything.
- A complaint need not plead the ingredients verbatim — Rajesh Bajaj; but a purely civil dispute dressed as a s 420 case can attract costs — Nageshwar Prasad Singh.
- Within s 318, cognizability turns on the sub-section. (2) and (3) are non-cognizable and bailable; (4) is cognizable and non-bailable.
15. Frequently Asked Questions
What is Section 420 in the new law?
It is Section 318(4) of the Bharatiya Nyaya Sanhita, 2023 — cheating and thereby dishonestly inducing the person deceived to deliver property, or to make, alter or destroy a valuable security or anything capable of being converted into one. The punishment is unchanged: imprisonment up to seven years, and fine. The offence is cognizable and non-bailable.
What is the difference between criminal breach of trust and cheating?
Timing and entrustment. In cheating, the accused was dishonest before he obtained the property, and he obtained it by deceiving the victim into handing it over. In criminal breach of trust, the property was lawfully entrusted to him and his dishonesty arose afterwards. The same facts cannot ordinarily support both: if he lied at the outset there was no entrustment, and if he was honest at the outset there was no deception.
Can a partner be prosecuted for misappropriating partnership funds?
Ordinarily no. In Velji Raghavji Patel v. State of Maharashtra the Supreme Court held that a partner has undefined ownership along with the others over all firm assets, so using them for his own purposes makes him civilly accountable to his partners but not criminally liable. Nor does a partner's dominion over firm property amount to "entrustment of dominion" under s 316 unless there is a special agreement creating one. The remedy is a suit for accounts.
If someone takes money and does not return it, is that a criminal offence?
Only if he never intended to return it when he took it. Illustration (g) to s 318 says this directly, and Hari Prasad Chamaria v. Bhisun Kumar Surekha confirms that a failure to honour promises after the transaction creates civil liability alone. A breach of contract, however serious, is not cheating without proof of dishonest intention at the inception.
Is keeping something you found a crime?
It can be. Under Explanation 2 to s 314, a finder who takes property to protect or return it commits no offence — but he does if he appropriates it to his own use when he knows or has the means of discovering the owner, or before using reasonable means to find the owner and keeping the property a reasonable time for him to claim it. Picking up a rupee whose owner is unknown is no offence; keeping a dropped purse you meant to return is.
Has the punishment for criminal breach of trust changed under the BNS?
Yes. Section 406 IPC carried up to three years; s 316(2) BNS carries up to five. The aggravated forms are unchanged — seven years for a carrier or warehouse-keeper and for a clerk or servant, and life or ten years for a public servant, banker, merchant, factor, broker, attorney or agent.
Is buying goods you know were obtained by fraud an offence under s 317?
No. Section 317(1) defines stolen property as property transferred by theft, extortion or robbery, or criminally misappropriated, or in respect of which criminal breach of trust has been committed. Cheating and forgery are not in that list. Other offences may be attracted, but not s 317.
Conclusion
The offences in this group are usually taught as four definitions to be memorised. They are better understood as one story told at four different moments.
At the first moment, a man decides to take what is not his, and takes it — theft. At the second, he decides to lie in order to be given it — cheating. At the third, he has it honestly and only then decides to keep it: if it merely came into his hands, misappropriation; if it was placed there in trust, breach of trust. At the fourth, someone else buys it from him knowing what it is — receiving stolen property.
The Sanhita has not changed a word of that structure. It has renumbered it, raised the price of almost every rung, and put a six-month floor under the one offence that had none.
What it has not done — what no legislature can do — is answer the question that will still be argued in every trial court tomorrow morning: what was in his mind on the day the money changed hands? Illustration (g) has been supplying that answer since 1860, and it is doing so still.
Disclaimer: These notes are prepared for educational purposes for law students, judiciary and AIBE aspirants, and practitioners, and do not constitute legal advice. Statutory provisions have been summarised and, in places, paraphrased for clarity; readers must verify the exact language against the enacted text of the Bharatiya Nyaya Sanhita, 2023, the Bharatiya Nagarik Suraksha Sanhita, 2023 and the Indian Penal Code, 1860 before relying on them in argument or examination. Section numbering, and the classification of offences in the First Schedule to the BNSS, are subject to amendment and should be checked afresh. Case holdings are stated in summary form; readers should consult the full reports before citation.
